Business Overview

4. INFORMATION ON OUR GROUP 4. INFORMATION ON OUR GROUP
4.1 History and Business Our Company was incorporated in Malaysia as a private limited company under the Act on 17 February 2000 as I.T. Marvel Sdn Bhd. We commenced operations on 1 March 2000 and subsequently changed our name to My E.G. Oot Com Sdn Bhd on 20 March 2000 before assuming the name, My E.G. Services Sdn Bhd, on 13 October 2001. We converted to a public limited company on 13 April 2005 as an integral part of our listing exercise. On 23 May 2000, we entered into a concession agreement with the Government for the electronic delivery of driver and vehicle registration, licensing and summons services, utility bill payments and Ministry of Health online information system for a minimum tenure of 15 years. Within the same year, we signed a service level agreement with POX.com Sdn Bhd, the Gateway Provider for the same services. We also entered into an acquiring bank agreement with RHB Bank Berhad as the acquiring bank in May 2000 to facilitate online payment transactions of our services. On 16 August 2000, our Company was awarded MSC status which enables us to enjoy tax-free incentives for five (5) years with a renewable to ten (10) years feature, and the opportunity to leverage on the MSC infrastructure. The tax-free period commenced on 18 July 2001. We have submitted an application to the MOEC in May 2006 for an extension of another five (5) years until 17 July 2011 for us to continue enjoying the said tax incentives and are currently awaiting the MDEC’s approval on the application. In November 2001, we launched our JPJ online driving theory test service. Our first E-Service Centre in Malaysia was established in Kuala Lumpur, followed by Selangor. We proceeded to expand our operations to undertake more Government projects, following our appointment on 20 April 2001 by PORM as their Service Provider for the electronic delivery of its services. We started to develop software application for the electronic delivery of PDRM summons and information services in April 2002. In May 2002, we commenced the development of software application for the electronic delivery ofDBKL’s compound, licensing, assessment and information services. The PORM services were made available to the masses in January 2003, while the DBKL services were subsequently launched in March 2005. On 28 January 2003, we formalised our arrangement with PDRM following the execution of a 15-year concession agreement for the electronic delivery of summons and information services of PORM. In February 2003, we launched the issuance of LDL. The first kiosk was located in Kelana Jaya, Selangor. Following that, we launched our online payment of PORM summons in April 2003. In November 2004, we expanded our target market to East Malaysia with the establishment of our first East Malaysian E-Service Centre in Sarawak. On 19 September 2005, we were effectively appointed by JIM to carry out the delivery of online transactional services of JIM. Development of software application for the delivery of JIM’s online services commenced in May 2005, and was subsequently commercialised in September 2005. In addition to providing E-Services to DBKL, JIM, JPJ and PORM, we also extend our E-Services to other Service Suppliers such as TELEKOM and TNB. The scope of services provided to TELEKOM and TNB are essentially for electronic bill presentment and payment. Citizens are able to access their electric and telephone bills using Internet delivery channels provided by us. The advantage offered by these channels over conventional over-the-counter services is that these bills can first be called upon and verified, before the bills are paid using credit card or GMPC/PMPC. GVSB, our wholly-owned subsidiary, commenced operations on 1 January 2004. GVSB is principally involved in the provision of software solutions and maintenance services. GVSB’s business is complementary to our existing activities as GVSB develops innovative solutions for the automotive industry focusing on informative and transactional services. In addition, GVSB also provides software solutions to assist in the integration of the operating system of its clients with third-party software. 4. INFORMATION ON OUR GROUP (Conl’d) PNSB, our other subsidiary, commenced operations on I January 2005, and is principally involved in the provision of E-Insurance solutions and other insurance-related services. PNSB currently provides electronic computer linkages, through its software applications and Internet technologies, between insurance companies and JPJ on the issuance ofE-Cover Notes. A summary information and percentage interest held in our subsidiaries are as follows: % effective  Issued &  Date I Country  equity  paid-up  Subsidiaries of incorporation  interest  capital  Principal activities  RM  GVSB  28.10.2002  100.0  2  Provision  of software  solutions  and  !Malaysia  maintenance services  PNSB  03.01.2000  54.5  99  Provision of E-Insurance solutions and  /Malaysia  other insurance-related services
Our Group’s corporate structure is depicted as follows:
Our mission is to be a one-stop centre for the Malaysian public and business community with the provision of a channel for interacting with federal, state and local authorities through vertically­integrated information services, marketing and online bill-payment processing services. Our Group’s vision is to be a high value added provider ofglobally competitive IT services. In order to realise our vision, our Directors and management strongly believe that we have to expand our business activities through appropriate and effective strategies to steer us towards the right direction in the IT industry. The strategies to be adopted by us are to optimise our current technology capabilities, retain employees’ and stakeholders’ confidence and increase revenue growth through market expansion, product expansion and improvement in process and technology upgrade along the value chain.
4. INFORMATION ON OUR GROUP (Cont’d) 4.2 Share Capital Our present authorised share capital is RM25,OOO,OOO comprising 250,000,000 Shares. Our issued and paid-up share capital is RM10,075,000 comprising 100,750,000 Shares as at the LPD. The changes in our issued and paid-up share capital since our incorporation are as follows: Date of No. of Cumulative issued allotment ordinary shares Par value Consideration and paid-up capital RMRM 17.02.2000 2 1.00 Subscribers’ shares -cash 2
02.082000 999,998 1.00 Cash 1,000,000 07.01.2002 800,000 1.00 Cash 1,800,000 28.01.2002 2,800,000 1.00 Cash (RM200,000) and 4,600,000 Otherwise than cash (RM2,600,000)

12.11.2002 400,000 1.00 Cash 5,000,000 01.04.2004 50,000,000 0.10 Sub-division of shares on the basis of 5,000,000 one (1) ordinary share of RM1.00 each into ten (10) ordinary shares of RMO.10 per Share 26.04.2004 3,500,000 0.10 Cash 5,350,000 10.07.2004 413,000 0.10 Cash 5,391,300 11.07.2004 15,000,000 0.10 Otherwise than cash 6,891,300 11.08.2004 1,837,000 0.10 Cash 7,075,000 02.09.2004 10,000,000 0.10 Otherwise than cash 8,075,000
20.11.2004 20,000,000 0.10 Otherwise than cash (Acquisition of 10,075,000 GVSB) Our issued and paid-up share capital would subsequently be increased to RM12,625,000 comprising 126,250,000 Shares by way of Public Issue of 25,500,000 Public Issue Shares at an issue price of RM0.55 per Share. 4.3 Listing Scheme Our listing scheme was approved by the SC vide its letters dated 26 January 2006, 27 April 2006, 28 July 2006, 12 September 2006 and 29 September 2006. In addition, Bursa Securities had, vide its letter dated 1 November 2006, granted its approval in-principal for our Listing. Our listing scheme entails the following: (1) Public Issue In conjunction with our listing on the MESDAQ Market, we will implement a public issue of 25,500,000 new MYEG Shares at the issue price of RM0.55 per Share. Upon completion of the Public Issue, our issued and paid-up share capital will be increased from RMI0,075,000 to RM12,625,000. The Public Issue Shares shall rank equally in all respects with our existing Shares in issue, including voting rights and rights to all dividends and/or distributions that may be declared, paid or made subsequent to the date of this Prospectus. 4. INFORMATION ON OUR GROUP (Cont’d) (ll) Listing Thereafter, we will seek admission to the Official List of Bursa Securities and the listing of and quotation for our entire enlarged issued and paid-up share capital of RM12,625,000 comprising 126,250,000 MYEG Shares on the MESDAQ Market.
4.4 Business Overview 4.4.1 Principal Activities We are principally involved in the E-Government Initiative, providing E-Services to the Malaysian community, a strategic component in the building of the Government’s technology vision for Malaysia. The overall E-Government Initiative focuses on allowing citizens to access their personal data held by various Service Suppliers via the Internet and other electronic means. Citizens are able to retrieve information and perform transactions with these Service Suppliers in a convenient and timely manner by utilising our services which comprises GES and G2C respectively.
4.4.2 Principal Products and Services Our Group’s application products and services are principally categorised into 2 business divisions, G2CandGES: (i) G2C -Government to Citizen G2C services refer to services that are available over the Internet and through our Group’s kiosks. Presently, our main focus is on Malaysian users due to the nature of services currently available. Services available within G2C are bookings, issuance and renewal of licences, electronic bill presentment and payment (EBPP) as well as online information services. We developed the G2C portal to provide a one-stop portal for Government-related E-Services. Users are able to find information and services in user-centric packages integrating public services across different Service Suppliers. We intend to build a leading E-Government portal that delivers convenience and benefits to users. The current functions of our G2C portal are as follows: • Enable users to search for and access information from various Service Suppliers such as DBKL, JIM, JPJ, PDRM, TNB and TELEKOM; and
• Enable users to conduct online real-time transactions with Service Suppliers such as booking for the driving theory test, application of LDL and payment of bills, with Service Suppliers.

The following are services offered under our G2C business division: (a) Driving Theory Test Booking Test booking refers to the bookings for driving theory tests made by candidates for a preferred time slot at their preferred E-Service Centre location. Candidates who need to obtain their driving licences are required to take their driving theory test at one of our E-Service Centres or other JPJ approved test centres. However, candidates are able to make online bookings via the Internet for a preferred time slot to take the driving theory test at their preferred location with any of our E-5ervice Centres located nationwide.

 

4. INFORMATION ON OUR GROUP (Cont’d) (b) IssuanceandRenewal ofLicences • LDL -Learners’ Driving Licence Upon passing the driving theory test, JPJ will issue LDLs to candidates for the purpose of attending the practical driving course conducted by driving institutes or driving schools. LDL is applied through the Internet and can be printed out through our kiosk with the assistance of our employees. • Renewal ofTrader’s Licences & Permits Together with DBKL, we developed the electronic renewal of trader’s licence and permits services. We enable citizens to make payments and submit applications to DBKL through its various electronic channels. This was implemented in Kuala Lumpur initially and will be extended to other local municipal offices in the whole country. DBKL services can be classified into the following four categories: » DBKL Assessment Payment and Information Services; » DBKL Compound Payment and Information Services; » DBKL Business Premise Advertising and Sign Board Application; and » Payment Status.
With the establishment of DBKL services, citizens are able to make payment to the above-mentioned services online via electronic means. In addition, citizens are also able to request for and obtain general and personal information relating to each of the services. (c) Electronic Bill Presentment & Payment • E·Payment of Utility Bills The scope of services provided to TELEKOM and TNB is essentially for bill presentment and payment where citizens are able to access their electric and telephone bills through the Internet. The advantages provided by these channels over conventional over-the-counter services are: » Bills can first be called upon and verified, before payment is made conveniently using credit cards or GMPC/PMPC; » Citizens who lose their bills can easily retrieve their account information simply by keying in their name and account number; » The latest available bill and all transaction history can be made available conveniently online; and ~ Our bill presentment and payment is user friendly.
4. INFORMATION ON OUR GROUP (Conl’d) (d) Online Transactional Services We envision that the range of Internet-based services available on our G2C portal will expand in pace with the Government’s adoption of E-Services. As Internet-based services are borderless in nature, we foresee the provision of our G2C services to expand internationally. The scope of the E-Services project is far broader than the DBKL, JIM, JPJ, PDRM, TNB and TELEKOM services presently offered. The project will eventually be extended to deliver other Government services electronically to the Malaysian community under a single Internet! electronic platform. It is the Government’s intention to consolidate its various services to the public under a one-stop portal for better recognition, administration and efficiency of services. The online transactional service presently available is: • Summons Checking Under E-Services, PDRM allows citizens to check, verify and pay for traffic summons through our E-Services portal. This is expected to improve summons collection for PDRM as traffic offenders generally are not aware that they have been issued summonses as well as the relatively few avenues to pay these summonses. This service was launched in January 2003. • E-Insolvency This is an online service which allows electronic bankruptcy or liquidation status searches. This service is available through our website and kiosk, and does not necessitate the presence of any individual at JIM’s offices to conduct a search of the database. Payments for our online service may be made in cash or via the provision of a valid credit card number or a pre-paid account. The apparent benefits of E-Insolvency are: ~ Immediate official search results compared to a 3 to 4 weeks waiting period previously; ~ No additional charges for the issuance of an official “Certificate Original Copy” from JIM; and ~ User-friendly, cheaper and convenient, as the cost and time associated with travelling to JIM’s offices to submit search applications are eliminated. (ii) GES -Govemment/Enterprise Solution GES refers to non-Internet based services which include services and products such as provision of software and enterprise solutions, system development and maintenance as well as services rendered at our E-Service Centres. The provision of services at our E-Service Centres encompasses all aspects of the driving theory test under the driver’s licensing course, from digital imaging for security, purchase of test cards to test takings. These services are non-Internet based and as such, cannot be transacted by citizens independently. Our GES services are currently focused on the Malaysian market. Our GES services offer scalable and easy-to-manage programming solutions, which encompass software development and software customisation of our proprietary application. 35
4. INFORMATION ON OUR GROUP (Cont’d) The following are products and services offered under our GES business division: (a) Software Solutions and Maintenance Services • Software Customisation Software customisation refers to customised versions of our existing proprietary solutions and applications mainly targeted at SMEs. Our strength lies in our ability to customise different modules and applications to suit the needs of our enterprise clients. Our aim is to develop innovative solutions focusing on informative and transactional services. We intend to build a portfolio of software building blocks that allows rapid configuration of application to address the challenges faced by Service Suppliers, such as to streamline Government processes, to develop applications that can deliver data through multiple channels, to facilitate higher transparency and to automate the Government regulated processes. • Maintenance Services We consider customer support and satisfaction as top priorities as they form a vital part of our core areas of excellence. Besides undertaking the E­Government Initiative, we provide support services to our clients as part of our maintenance programme. This is done via our subsidiary, GVSB. Our trained support consultants and staff work hand-in-hand with customers to troubleshoot existing problems faced by customers on and off site. • Software Solution -PDX Premium OdysseyAGENT PDX Premium OdysseyAGENT (or OdysseyAGEN1) is a custom-designed software solution which is targeted at insurance intermediaries. PDX Premium OdysseyAGENT offers the following advantages: ~ Allows intermediaries to conduct sales transactions in an advanced online computerised environment; ~ Delivers information from the insurer’s core system in a user­friendly GUI application to support improved access and process; and Utilises productivity tools to monitor status of quotations given and proposals received, which facilitates the process cycle and production reporting. OdysseyAGENT enables its users to monitor their daily operations which include client management, quotation/proposals, cover notes & certificates issuance, underwritings and document processing:
4. INFORMATION ON OUR GROUP (Cont’d) Client Management Quotations/Proposals Cover Notes & Certificates Issuance OdysseyAGENT maintains all details of the client in a central database -ensuring up-to­date information about the individual client’s policies, claims experience and payment details. The intermediary can analyse his client’s portfolio profitability easily via queries and reports. OdysseyAGENT supports a browser-based user interface to handle client information through the complete cycle -from quotation to proposal to actual policy insured status. The quotation/proposal facility contains automated premium rating and document issuance. The intermediary may produce quotation documents, retrieve and change proposal details before submitting to the back-office for underwriting. The QuotationlProposal system is able to handle packaged policy types -combined classes products, which was designed to cater for personal lines of business. For motor class, the system caters for the points rating mechanism in addition to traditional tariff structures. The current version of the quotation/proposal module covers product classes like Motor, Fire and General Accident. OdysseyAGENT has an integrated, browser based online cover notes system that enables the insurance intermediary to issue cover notes and certificates of insurance. Subject to tight system control, the issuance of cover notes and certificates of insurance are driven by user­defined parameters. The system provides key controls such as: -Sum insured limits authorisation -Permitted vehicle makes -Fraud vehicle checks -Float limits per branch and intermediary The current version of the cover notes and certificates module covers product classes like Motor, Marine Cargo, Personal Accident, Fire and General Accident.
4. INFORMATION ON OUR GROUP (Conl’d) (b) Underwriting OdysseyAGENT provides a comprehensive policy administration system for all types of general insurance including package policies. The intermediary can easily issue policies, make endorsements and process policy renewals. Documents Processing OdysseyAGENT automatically prints all essential documentation required in the day-to­day operations, from standard letters, quotations, cover notes, policies, endorsements and renewal notices. There are various means of such production ­from standard print programs to user-defmable document formats that support pre-signature.
Test Taking andAncillary Services • Test Taking As part of the concession to digitise the driver’s licensing course, we have developed applications for the electronic theory test taking segment of the driver’s licensing course. Test taking refers to the act of the students who must be physically present at one of our E-Service Centres located nationwide to sit for the driving theory test via computer terminals. Candidates must register themselves online before sitting for the driving theory test. For the convenience of the students, IPI test cards are provided in aU our E-Service Centres. This process is protected by several levels of security including verification of the identity of students, secured location for test taking and physical processing of the test results. Confidential data will not be stored in our external database servers to avoid compromising data security. • Security Digital Imaging Security digital image refers to the digital photos taken for every candidate who sits for the driving theory test at our E-Service Centres. For security purposes, this image is encrypted at 128-bit, uploaded and stored on secured servers. Security digital imaging also acts as an added security for the LDL printed by us. The security digital image is also used throughout the complete process of the driving licence application such as the issuance of the probationary driving licence and confirmed driving licence. It also functions as an additional security feature to minimise the possibility of fraud. 4. INFORMATION ON OUR GROUP (Cont’d) Our involvement in the JPJ driving licence application is shown in the following diagram: A candidate who wishes to obtain a driving licence can go through the following two channels: I. register with driving institute/ driving school 2. register online
The candidate has to attend a 5-hour seminar conducted by driving institute before they sit for theory test. ~ The candidate sits for driving theory test at one ofthe E-Service ~ Centres located nationwide. ‘$ The candidate attends another 6-hour seminar conducted by driving institute. JPJ will issue Learner’s Driving License to the candidate who passes the driving theory test. The candidate undergoes pratical driving lessons with a driving school’s instructor (minimum 10 lessons). The candidate sits for practical test. JPJ issues Probationary Driving License to the candidate who successfully passes the driving theory and practical tests. ~ G2C C) GES 4. INFORMATION ON OUR GROUP (Cont’d) (c) Transmission ofVehicle Insurance DaUl • E-Cover Notes In order to minimise the forgery of insurance cover notes, the Government has launched the E-Cover Note project on 5 October 2004. This project requires all insurance companies to sign up with an “appointed” Service Provider, whereby upon underwriting the insurance purchased by the motorist, details of the insurance policy will be updated online and real time to JPJ’s server via the Service Provider. This appointment takes effect as long as the Service Providers do not breach any of the terms of appointment. E-Cover Note is a digitised/soft copy of the motor insurance cover note which is recognised by JPJ for the renewal or issuance of the road tax disc with effect from 1 January 2005. Upon renewal of one’s motor insurance, the insurers will transmit an E-Cover Note electronically to JPJ while a confirmation slip will be issued to the payer as proof of purchase. Under a new directive from JPJ, motorists no longer need to produce their physical insurance cover notes for any motor vehicle transactions, such as the renewal of their road tax. JPJ will be able to check details of the motorists’ vehicle insurance coverage through their computer system, which would be linked to insurance companies. PNSB, one of our subsidiaries, has been appointed by PDX.com Sdn Bhd as an intermediary to facilitate the E-Cover Notes link-up between insurance companies and JPJ through its software applications and Internet technologies. Under the E-Cover Notes project, PNSB will provide electronic computer linkages on the issuance of E-Cover Notes. This project aims to enhance service efficiency and productivity. At the same time, it would also be convenient for motor insurance policyholders to register or renew their vehicle insurance. (d) Ancillary Services for E-Insolvency • E-Fulfilment With our E-Fulfilment service, customers using our E-Insolvency service no longer need to go to JIM’s offices to collect the official “Certificate Original Copy” of the search results. When an individual uses our E-Insolvency service, he will only need to indicate to us whether he wants to use our E­Fulfilment service and state the address where the certificate should be delivered. We will then collect the certificate from JIM and deliver it to the address provided. The delivery service is only limited within the country. As with our E-Insolvency service, payments for the E-Fulfilment service may be made in cash or via the provision of a valid credit card number or a pre­paid account. Users can track the status of their certificate by calling our helpdesk, as every search request is electronically recorded and monitored. 4. INFORMATION ON OUR GROUP (Cont’d) 4.4.3 Technology Our services are based on the application products designed using our own Middleware, MESP. The products under the MESP are designed to run either on a standalone or modular basis. Its applications can cater for large organisations, be it a Government agency or a large corporate organisation whose requirements are to conduct voluminous transactions through the Internet/Virtual Private Network. In short, MESP is a Middleware designed and developed as a fully object-oriented, component-based architecture that enables software modules to be implemented in a flexible and step-by-step manner. These software modules will help us roll out services rapidly thus providing our customers with the scalability to grow as their business grows.
MESP is the platform on which we can develop, test, deploy and manage our services. Our developers can use ready modules within MESP to develop services. These modules include portal module, payment, user profiles, EBPP module, multi-channel delivery, and an open architecture that quickly integrates new technologies and components. MESP represents a new class of Middleware that makes extensive use of XML as the platform of choice for data transmissions. In addition, MESP supports open source protocols such as UDDI, WSOL and SOAP. MESP has an intelligent tool that converts conventional services into web services, and thus provides accessibility of the web services to users on the Internet. External web services can also be registered in MESP making them accessible to service developers. The unique feature of MESP is its support for XML which is a cross-platform, extensible, and text­based standard for representing data. When XML data is exchanged between parties, the parties are free to create their own tags to describe the data, set up schemas to specify which tags can be used in a particular kind ofXML document, and use XML style sheets to manage the display and handling ofthe data. This provides total flexibility for us to create application infrastructure services that are customised and user-friendly. In addition, our adoption of open source protocols promotes cost efficiency as the licence for open source software is free. In addition, we are also in line with the Government’s initiative towards the widespread adoption of open source software in the public sector as dictated in the Government’s Open Source Software Master Plan 2004. Open source software provides optimum performance and scalability for the foundation of business applications. The technology platform has proven quality and speedy delivery in approximately 30% of the typical resources used to deliver similar project targets. Business solutions that leverage on this technology platform will be an independent operating system on its own and are also able to run on Microsoft Windows, UNIX, Sun, IBM and Linux. Examples of the web services developed using MESP are modules developed for DBKL, nM, JPJ, PORM, TNB and TELEKOM. 41

 

4. INFORMATION ON OUR GROUP (Conl’d) An illustration of our overall system architecture is highlighted as follows:
r:.pes and Laptops ~ Users access Mobile Phoneaccess through the
I I I

PDRM JIM Others The above diagram illustrates MESP and the flow of our overall system architecture. When a user is browsing a site on the Internet, he or she uses what is called a ‘User Interface’ to interact with the web site, in this case a web browser (such as Internet Explorer, Netscape, Mozilla or Opera). When a user sends a request, it goes through the format transcoding stage before reaching the client-server, in this case JPJ, JIM or PDRM. All the complicated process is handled by a middle-layer gateway developed by us but is invisible to the user. The request is then shown on the user’s browser as simple web pages either in the form of plain text files, database records, or special files tagged with HTML or XML coding. 4. INFORMAnON ON OUR GROUP (Conf’d) 4.4.4 Patents and Trade Marks We have filed the following trade mark application with the Intellectual Property Corporation of Malaysia: Trademark Application No. Filing Date Status and Remarks MYEGlogo: 05005102 6 April 2005 Pending registration ~ ~
We plan to strategically build our in-house MYEG brand to spearhead our expansion into selected vertical markets. The application for the abovementioned trade mark was filed in the name ofMYEG. Save for the above, we currently do not hold any franchises from any third PartY nor any trade marks, industrial designs or patents registered with the Malaysian authorities. We also enjoy copyright protection for our entire line of software solutions under the general category of literary work pursuant to the Copyright Act, 1987.
4.4.5 Development Process Our development process is an interactive process in which improvement, planning, production and quality control are interwoven throughout the development steps. In repeated short cycles, the product’s changing requirements, experience and test results flow into the development process which is highlighted as follows:

4. INFORMATION ON OUR GROUP (Cont’d) Development Stages Details Requirement Phase Product managers, developers, consultants and clients come together and agree on the process objectives. The resulting details are laid down in the product specification documentation. Implementation Phase Our engineers construct a stable basic framework. This is then filled in, step by step, over multiple reviews, with the required functionalities. The architecture of the product is modular, which means that additional modules can be added over time without endangering the stability of the basic platform. Modules can be completely new elements, or be based on existing components supplied by third parties. The development process for each module reflects the process for the entire module, consisting of multiple sub­phases, each ending at a specific milestone. The milestones define deadlines and objectives that are to be met in each phase. When each milestone is reached, the team offers a “mini-release” of the module. This tested, documented version can be used and further tested by other departments or partners. Experiences, test result and knowledge then flows into the next review cycle. Quality Assurance Check that the applications developed are free of technical problems. Phase
Maintenance Phase Consists of ongoing improvements to the product through the systematic identification and elimination of bugs. Our actual workflow spans across a number of phases. In the planning workflow, project plans are developed which are then refined gradually. Within the implementation workflow, specifications are revised and expanded as the project progresses. Prototype codes is written and developed into its final code. All codes are tested and documented. In line with the principle of multiple iterations during software development, the implementation workflow consists of many repeat cycles of producing, testing and documenting. The result of the implementation is the alpha release of the application. The quality workflow begins with the implementation phase and continues until the finalisation stage. Software engineers check the quality of the output by defining the test cases and installation routines, adding them to the test specifications. The test plan also includes automatic and manual test that are carried out using software tools. Bugs in the product are systematically identified and prioritised, then eliminated and documented. Our software engineers will engage in project management review every week to review the bug rate and adjust the development process in response, if necessary. After completion, each module is released by installing it automatically in the network, running it on the broadest range of support platforms and then, tested both manually and automatically. The test management system records all test behaviours and saves it for later analysis. Within the document workflow, the documentation for our Group’s services is progressively recorded. The maintenance workflow starts the moment the first version of the module goes online. We have a support team to ensure that our clients/users get expert support for technical problems. In addition, the technical problems and bug fixes are logged and recorded for review by our R&D team. Information on significant updates, known problems, fixed bugs, and other issues are addressed in release notes circulated to customers on a periodic basis. 4. INFORMATION ON OUR GROUP (Com’d) The conceptualisation process of our G2C and GES services are as illustrated below: G2C GES 1. Research into a particular E-Service on the G2C : 1. Participate with the Government or other Service platform by conducting surveys, focus groups : Suppliers in re-engineering the existing services and internal research. : to provide new services. 2. Participate with the Government or other Service : 2. Perform project feasibility studies. Suppliers in re-engineering of the existing services: 3. Identify the IT functional, system security and into a relevant, useful and user-friendly E-Service. : transactional requirements.
3. Identify the IT functional, system, security and : 4. Leverage on existing MYEG data centre for transactional requirements. : utility computing.

 

1. Based on the solutionle-service definition, map the proposed solution architecture with the existing MESP platfonn.
2. Extend existing modules if solution requirements match closely. Ifnothing exist, then evaluate external off-the-shelf packages and based on internal evaluations, decide on internal development or integrate with off-the-shelf package.

. “. ‘3 Partnership’WithotherSYSlo”;integrator may’be········ required if client have preference for a non·Java platform. 1. Solution is constructed based on MYEG software engineering methodologies.
An Object Oriented Approach is used to model the solution. The OOSE methodology is typically used.
2. Extensive testing procedures are put in place to ensure compliance with the solution requirements.

: 3. Audit modules will be implemented extensively : to ensure accountability and accurate billing. ——-~_••.•!._————_••————_.———–­4. Stress test will be conducted to ensure that the solution can meet the required performance. 1. Documentation of the code is required for each module.
2. Professionally written user manual is required so that adoption of the solution will be easy.

1. Training of MYEG Group’s customer support tearn will be conducted Full product knowledge is passed to lTainers to ensure that they can guide citizens/consumers to use the new solution effectively.
2. Issue tracking procedures will be in place to lTack, prioritise and resolve the solution once it is rolled·out to the public.

 

 

4. INFORMATION ON OUR GROUP (Conl’d) 4.4.6 Development Methodology We embrace Object Oriented Solution Engineering (OOSE) in all our development projects to ensure high quality of project delivery. Object Oriented Solution Engineering is a collection of process patterns that has been proven to have the following advantages: • Successfully deliver applications using object technology
• Develop applications that are easy to maintain and enhance
• Quality of the services are controlled

The Object-Oriented Solution Engineering based software development process comprises the following 4 phases: Phase Description Initiate • The foundation of a project • Consists of definition and validation of initial requirements, managing documents, definition of project infrastructure -Initial requirements enable us to start the software development process -Managing documentation enables us to manage the project in a systematic way -Project infrastructure enables us to put in place a collection of documents that describe the tools that the project team uses, how they use it, the standard that the team follows, how their work will be evaluated and the deliverables that they must produce during the project Construct • Goal: Build an easy to maintain and enhance application • Requires modelling the application via traditional object-oriented techniques such as Cyclical Redundancy Check modelling, use case, class diagrams, etc.
• Programming is written using SAVA, an industry standard
• Project team modelling and programming efforts are verified using techniques such as use-case scenario testing, design walk-through, class testing and user acceptance testing.

Deliver • Goal: Deliver a working, high-quality and well-documented application to client • Additional testing: system testing, installation testing, stress testing and user acceptance testing
• Provide training to users
• Conduct internal project review to capture lessons learned during project implementation.

Maintain • Goal: Keep application running and up-to-date & • Provide training to user, off-site support Support • Bug fix
• Change-control process: identify any defects and improvise it for future release 4. INFORMATION ON OUR GROUP (Cont’d) 4.4.7 Development Modules Our development tools in the implementation of our G2C and GES solutions are listed as follows: (i) Format Transcoder Part of the vision of a service-oriented economy is to deliver services to customers via their medium of choice. The Format Transcoder module in MESP makes this possible by allowing services deployed using MESP to be delivered over multiple channels, which include mobile channels and SMS alerts. (ii) EBPP -Electronic Bill Presentment and Payment Module EBPP module provides comprehensive customer access to account information via the Internet. This EBPP module provides clients with a single platform and repository that manages ‘content’ and provides a channel for electronic presentment and payment of bills. The key features are: • One repository for archive and electronic presentment
• Email delivery and notification options
• Access to a robust, secure and scalable infrastructure
• Operational expense -no upfront capital
• Flexible electronic presentment (pDF, HTML or XML)

(ill) SMC • System Management Console SMC is a one-stop console used for administering all the modules within MESP using a standard web browser. The SMC employs a privilege-based system based on the Security Module to determine if a user can access a particular function. (iv) User Profiling Users are able to save multiple user profiles for auto-completion of electronic forms. It can also be extended searnlessly as the user profile is specified through a series of XML based configuration file. (v) Payment Service developers can select the payment modes required for use within a service. It allows payment to flow to banks based on standards such as MEPS. (vi) Security Service developers can select the level of security required for use within a service rather than develop security features from scratch. It provides both a role and capability based security model.

4. INFORMATION ON OUR GROUP (Cont’d) (vii) Vetting and Migration MESP provides a unique structured testing service to ensure quality application delivery before deployment. There are four environments within the MESP to ensure quality service delivery -development, testing, quality assurance and production (where the services are finally deployed). (viii) EDX -Electronic Data Exchange MESP decouples the front and back offices with regards to service delivery. Services are no longer built on the operating system of the Service Provider but on the MESP. The services are then connected back to the database of the Service Provider or to any other database within or even beyond the organisation. The module that connects with databases or other back office systems is the EDX. Data is exchanged in XML format, and for security, is transmitted over in both lITI’P and lITI’PS. This enables organisations to launch multiple services and share services across departments and divisions without having to reintegrate to its back end system each time a new service is launched. 4.4.8 Quality Assurance Prior to implementation of the various modules hosted on MESP, the software application will undergo three levels of testing and review for the system and services: • Unit-level testing
• System-level testing
• User acceptance testing

(i) Unit-level testing Unit-level testing confirms the functionality and error-free execution of the software application and appropriate codes. During this testing process, potential production errors are initiated, documented and tracked to verify that the error handling function performs properly and that the error messages are displayed to the user. This test encompasses a range of test cases and expected results. If improper processing or functionality is found, modifications are made and a new test plan is created for the programme containing the changes. The programme will undergo this level of testing until improper processing or functionality is eliminated. (ii) System-level testing System-level testing creates a simulated production environment that is scheduled and monitored by experienced systems engineers. This level of testing will verify that outputs and processes of the comprehensive application functions properly. Also included in the system testing are quality assurance measures. Before testing, each component’s function and method of validating it is identified. Test cases are prepared, and anticipated results are documented. Once testing begins, team members compare expected and actual results. Iferrors are found, the correction process similar to that performed during unit-level testing will be used. When all functions are determined to be operating correctly, the application is released for user­acceptance testing. 4. INFORMATION ON OUR GROUP (Conl’d) (iii) User acceptance testing User acceptance testing is an organised testing process that provides a framework for evaluating the navigation, validity of content displayed and accuracy of internal and external system interfaces. We will meet with the appropriate Government personnel to review the test plan which consists of components and processes to be tested, processes to validate test data and method of documenting identified errors and proposed solutions. We will work with the liaison officer to refine data to test all aspects of the system. Forms may be developed and loaded to test reference file integrity. Changes will be entered using screens specifically designed to update only the test files. All team members will participate in this testing process to build the team’s understanding of the system processes prior to implementation. The key activities during this testing process are to test the manual and automated functions as well as external interfaces.
4.4.9 Estimated Market Coverage and Position As there are only 3 players involved in the E-Services project, our positioning will be carried out based on the assumption that the aggregate revenue of the three players constitutes the entire E-Services market size, which amounted to RM26.7 million in 2005. In terms of market share, we ranked first with a market share of 45.2% of the total market size of the E­Services project in 2005. (Source: Independent Market Research Report)
4.4.10 Principal Markets We are principally involved in the E-Government and E-Services industry. Presently, E-Government services provided by us under the E-Government Initiative encompass the electronic delivery of driver and vehicle registration, licensing and summons services and utility bill payments. The overall E­Government Initiative focuses on allowing Malaysian citizens to access their personal data held with the various Service Suppliers through the Internet and other electronic means. The main Service Suppliers that currently employ our E-Government services and solutions are DBKL, JIM, JPJ, PDRM, TNB and TELEKOM. Besides that, we provide GES services such as software solutions and maintenance services, test taking and ancillary services as well as transmission of vehicle insurance data to commercial markets as well as bankruptcy and liquidation status searches. The target markets for such services are driving schools, driving institutes, insurance companies, financial institutions and law firms, amongst others.
4.4.11 Mode ofMarketinWDistribution Our marketing philosophy is based on relationship marketing and brand building. We focus on building and sustaining long-term relationships with our customers while providing services to citizens by emphasising on security, convenience and efficiency. Our Directors practice a hands-on approach in marketing for the purpose of enhancing customer relationships as well as developing relationships with targeted customers. Leveraging on our existing customer base together with the combination of good rapport and customer satisfaction in terms of service and portal efficiency are likely to result in business referrals.

4. INFORMATION ON OUR GROUP (Con/’d) With the intention of successfully penetrating the local markets further, we shall establish our brand name in the industry to enable end-users to differentiate us from the other competing companies in the market. If successful, we may leverage on this attribute, extending it to cover other future products in the pipeline. It also provides an intangible advantage over other competing products in the market, such as raising the barrier of entry for potential new entrants, increase product differentiation, reducing marketing costs and the ability to command a certain degree of brand loyalty among customers. We are committed to establishing our portal as user-friendly and the provision of good after-sales service and support. To increase brand awareness, we plan to carry out promotions and shall participate in trade showslIT fairs and presentations. In addition to advertising our products and services, we will also be able to establish new business contacts and meet customers through this avenue. Direct marketing through our kiosk will also serve to enhance our visibility and public awareness of our brand name. A summary of our marketing strategies is highlighted as follows: • Evaluate the global technology road map and market acceptance trends;
• Continuously observe the implementation of laws and intellectual property rights;
• Actively promote the use of technology and brand into citizens’ minds;
• Explore and understand competitors’ technology, strengths and weaknesses prior to the release of our own products and services;
• Participate actively in international trade exhibitions and in building market presence at peer level;
• Provide training to our customers such as driving schools and insurance companies in operating our Group’s systems; and
• Provide convenient services to customers by bundling related services together (e.g. to offer E-Cover Note with road tax renewal, registration of vehicle number plate, etc.).

We strive to foster good working relationships with driving schools and driving institutes nationwide. As at the LPD, our customer base consists of about 79 driving schools and driving institutes. In order to compete with other players within the same industry, we provide favourable credit terms to these driving schools and driving institutes. We also provide technical support and training to driving schools’ and driving institutes’ staff, to familiarise them with our system and software. E-Services are currently delivered to the Malaysian community over several innovative delivery channels namely Internet PCS and kiosks with future additional delivery channels such as SMS. These delivery channels will be targeted at users of varying Internet skills and at different locations. The Web will be used to deliver E-Services where users have Internet access at home or in the office. On the other hand, kiosks (similar to the ATM machines used by banks) will be strategically placed across the cities and in towns in all Malaysian states to allow users without ready Internet access to tap on the convenience of E-Services. The kiosks will also be upgraded with bar code reading capabilities to read various bills and accept payments from credit cards and bank ATM cards. Citizens will be able to pay their bills and services using credit cards, ATM cards, debit cards and smart cards such as GMPC/PMPc. The level of security for payment and confidentiality of information will be at the highest level possible, as our security architecture needs to comply with the security standards of various organisations such as Visa, MasterCard, MEPS and our local banks. 4.
INFORMATION ON OUR GROUP (Conl’d) We seek to make available E-Services to a wide audience of Malaysian users with the following strategies: • Multiple delivery channels -Internet, interactive TV, telephony and kiosks; One stop delivery point -all services may be accessed through all different channels; Multilingual capabilities -services can be delivered in Bahasa Malaysia and English; and Equal access -services will be offered regardless of age, economic situation, physical location or IT experience through a fully integrated network of service outlets and input devices. Additional marketing resources will be deployed to build brand awareness and customer loyalty. We plan to secure more industry customers in our marketing efforts to accelerate the process of brand building and market expansion. Our marketing efforts shall cover sales calls as well as organising road shows and seminars to present product briefings to prospects in addition to establishing potential collaboration with appropriate technology partners. 4.4.12 R&D We are committed to continuously carrying out R&D efforts by keeping abreast with market developments and trends. As at the LPD, there are 7 qualified technical personnel involved in R&D wbich includes programmers and system analysts who have various experience in software engineering and development. Our core competency in software and middleware development is bighlighted as follows: Experienced in integration with systems typically found in Government systems; Ability to connect legacy systems to new E-Services based on open standard approach, i.e. web services; Experienced in building highly available E-Services (extensive use of redundant servers, data replication, clustering architecture); Experienced in building bighly responsive platform (minimal time taken by the system during a transaction, continuous improvement in the response time of the platform, code review to ensure that there is no unnecessary coding); Follow established design patterns and enterprise design patterns (i.e. 12EE Blueprint) thus ensuring scalability of the software; and Key emphasis on proper unit, system, and user acceptance testing. Testing is conducted early in the development process. This has resulted in obtaining reliable codes.
Software development process will be conducted using the building blocks and development modules witbin the framework of MESP. This will ensure knowledge is retained effectively within our Group. We believe that continuous R&D is crucial to compete effectively. Hence, we place great emphasis on the development of software solutions, wbich are able to meet the rapid technological advances and changing needs of end-users. In addition, we intend to employ additional R&D staff to enhance our software development and shorten the development cycle and implementation period. Product enhancement requirements are constantly gathered from end-users by our product development team. Thcse efforts are focused on improving the efficiency and capabilities of our existing products and services, in addition to developing new proprietary systems. 4.
INFORMATION ON OUR GROUP (Cont’d) Our product conceptualisation model takes into account the following points: Studying trends in technological development in developed countries; Studying the needs ofcustomers; Fresh ideas generated through internal brainstorming sessions with industry professionals; and Natural extensions to solutions previously developed by us.
Being in the software development field, we are operating in an ever-changing technology industry. We ride on the existing platform of our products and develop products that have solid conceptual and architectural foundation to support any future development requirements. Our core R&D objectives are: To study the cost-saving measures and to improve the value of our solutions; To reduce software and application development lead time by upgrading and revising technology processes; and To explore all the technical aspects of processes which may include modification to source programs as part of its technology enhancement strategy. (i) R&D Policy (a) Management Policy Our R&D team shall report to the management on all current and future R&D activities. (b) InteUectual Property Rights Policy Our staffs are required to sign a non-disclosure agreement which prohibits them, during or after their appointment with us, from disclosing any trade secrets or information of a confidential nature relating to our Group, our businesses or our obligations to maintain confidentiality of any third parties’ information. (c) ProductDevelopmentPolicy The main areas of our product development policy are: Continuous product innovation, idea generation, prototyping and development; Investment in technology infrastructure to provide reliability of service; and Focus on Internet-based global distribution solutions to lower distribution costs. (ii) R&D Strategies (a) Increase R&D Manpower Our R&D activities are carried out by an R&D team selected from the management team. Wong Thean Soon, the Managing Director of our Group, leads the R&D Department. A team of senior software engineers assist him in R&D, product testing and design activities. Besides that, Jason Chan Ling Khee, our Technical Advisor, also supports our R&D team. Our R&D team is mainly involved in new product developments, whereby a substantial amount of pre-launch testing (beta testing) is normally conducted before a new product is officially marketed. 4. INFORMAnON ON OUR GROUP (Cont’d) Our management plans to expand staff strength of our R&D team from the existing 7 personnel to 10 members by FYE 2007. Total R&D staff strength is expected to increase to 16 personnel by FYE 2010. This would enable us to continually meet the unique needs of our customers and improve the technological aspect of our products and services. (b) Keep Abreast with New Technologies We believe that we have to continuously enhance and upgrade our technology proficiency by incorporating new technologies into our development process to meet customers’ specifications. We expect to invest in new hardware, software and equipment to ensure our products stay competitive. Besides that, we plan to upgrade the platform of our software by leveraging on our current solutions’ core system in order to develop more products and services. (iii) R&D Facilities and Technical Personnel The key members ofour R&D team are highlighted in the organisation chart below: ;””R&DChief W~l1g::rhean Soon

TechnicalAdvisor , ,,!lI§<J~gllan Ling Kh~
:Technic~IJIt~DMliDager NandyalaVc;I].KataRamana Murty;”.:,: I
As an MSC status company, we have an R&D office located at Technology Park Malaysia, which is a MSC-designated cybercity. It houses 7 employees who are responsible for the development of our E-Insurance and other insurance-related projects. Our main servers are located at Technology Park Malaysia. Our R&D team members have vast experience in the software development industry and are fully developing our resources to handle new product development and troubleshooting (de-bugging) activities. Besides internal discussions, our R&D staff participates in various websites and online forums containing vast knowledge-base to seek the information they require. Our employees participate in Internet discussions with other engineers or programmers from our R&D team to enhance their understanding in various programming issues and solutions. Our management plans to expand the R&D team in the next few years and is expected to have 10 members in the R&D team by FYE 2007. Total R&D staff strength is expected to increase to 16 personnel by FYE 2010. FYE 30 June 2002 2003 2004 2005 2006 2007 2008 2009 2010 Total R&D staff I 3 4 5 71012 14 16 4. INFORMATION ON OUR GROUP (Cont’d) (iv) Present Status of R&D
We have recently completed the R&D for the electronic application of motor vehicle registration numbers and motor vehicle registration (phase 1 & 2), and issuance of probationary driving licence. Currently, we are awaiting approval from JPI for the commercial launch of these services, which is expected to take place in FYE 2007.
(v) Achievements in R&D

Our R&D achievements over the years are as follows: Service Development Date Commercialisation Date GlC Test Booking March 2000 November 2001 LDL March 2000 February 2003 Licensing March 2000 February 2003 E-Insolvency May 2005 September 2005
GES Test Taking March 2000 November 2001 Security Digital Imaging March 2000 February 2003
E-Fulfilment May 2005 September 2005 (vi) Future R&D Milestones (a) DevelopmentofthePortalFramework Our experience in developing and maintaining EBPP-enabled websites such as our Group’s website has led to a proliferation of E-Services catered to the citizens. Rather than building a succession of websites, a portal framework allows the service administrator to share and re-use various components between websites and save on development time. We plan to develop a portal module which will allow the flexibility of replicating new portal sites for customers, employees, suppliers and partners with further service offerings. The portal module will offer support for the industry-standard portlet programming interface, and will help us in expanding our markets overseas. Built-in application portlets for groupware, content contribution, application integration and EBPP applications will quickly increase citizen productivity and collaboration, while a shared portal component repository maximises replication between successive portal initiatives.

4. INFORMATION ON OUR GROUP (Cont’d) Our portal framework is as illustrated below:
Porlal Lifl’C~ dc ‘Iana~l’rnl’nl
I niticd I’orlal FnllllC\\ or-!,
(b) Development ofthe Kiosk Manogement System A kiosk management system will be developed to support the management and deployment of its kiosk network module. This will allow a secure, cost effective management of our resources. Our kiosk framework is as illustrated below: (onlignr:tlion (l’nln’
Ih’plil’alion 1′.n~illl·

4. INFORMATION ON OUR GROUP (Conl’d) • Configuration Centre Allows modelling of software profiles, user-defined software configurations and specify the order in which software is to be distributed and installed. The administrator can also specify configuration parameters for systems, software, data or users. The Kiosk Management System determines all the actions necessary to give systems the target status modelled in the profile and to configure them appropriately. • Replicfltion Engine Covers the entire software lifecycle which connects compatible software to the correct system at a desired time. It will install, configure, activate, de­activate and delete the software automatically. The site administrator, thus, can specify how the systems are to be used from a remote location. After an identity check, the replication engine integrates new destination systems in the kiosk network automatically. It also automatically removes the kiosk network old destination systems and systems that are no longer used. It also facilitates replication of applications and data, as well as additional information on installation or configuration, in the form of software packages, attributes and parameters. • Automatic Kiosk Discovery Automatic kiosk discovery uses configurable agents for software discovery. On the basis of specified rules or information from resources or other files, the agents detect the software on clients’ systems. For hardware discovery, the automatic kiosk discovery uses configurable agents for hardware discovery. The agents detect the details of our clients’ system hardware which is built on DMI interfaces that run on Windows operating systems. • Dispute Resolution Moduk An effective dispute resolution process is crucial to gain the confidence of the citizens using Government E-5ervices. Even though businesses and organisations have been facilitating electronic services, the accompanying customer support (i.e. feedback forms, emails) has often been lacking and the citizens may have a perception of unresponsiveness in regards to their feedbacks. With this module, the user can ensure that disputes (relating to bill payment or JPJ vehicle number tendering, for instance) are dealt with effectively and rapidly. In addition, this module enables the interaction center agents to handle all types of finance-related inquiries with citizens by providing access to finance-related data e.g. in bill payment. The interaction center agent also can access the transaction history balance and display additional information as well as a list of documents/document items grouped by several grouping criteria. This easy-to-use finance-related module functions as a call centre agent and allows amongst other things, the creation of a bank statement or the creation of a credit memo. 56 4. INFORMATION ON OUR GROUP (Conl’d) • Advance Search Module Integrated search and taxonomy management deliver relevant and secured search results that organise and categorise information from across the E­Services portal. Advanced search interface allows portal users to easily search on defined or customised meta-data associated with content. It will be essential as more E-Services are bundled within the E-Services portal. Typically citizens would use the search to find the functions and content that they would like to see. Our kiosk infrastructure is as follows:
Kiosk ___Oodo/$ • ~”””” —_.-..
rn ~~ (vii) Investment in R&D Our total investments in R&D for the last three (3) financial years was approximately RMO.8 million which represented approximately 1.9% of our total turnover for the same period. We have budgeted an annual R&D expenditure of approximately 2.0% -6.0% of our annual consolidated revenue up to FYE 2010, to finance our R&D activities as set out in Section 4.4.12 (vi) of this Prospectus. The breakdown of our investment in R&D for the past three (3) financial years is as illustrated below: FYE 30 June 2004 2005 2006 RM’OOO RM’OOO RM’OOO R&D staff remuneration 134 186 244 Other expenses 49 33 26 Total R&D expenditure 183 219 270 Total R&D capital expenditure 34 69 28 Total R&D investment 217 288 298 % of the total R&D expenditure ovcr total revenue 2.2 2.4 1.5 4. INFORMATION ON OUR GROUP (Cont’d) 4.4.13 Interroptions in Operations We did not experience any disruption in business which has a significant effect on our operations for the twelve (12)-month period prior to the date of this Prospectus. 4.4.14 Information on Employees As at the LPD, we have 7 Directors (out of which 2 are Independent Non-Executive Directors) and 72 employees, of which 4 are foreign employees under contractual employment. The tenure of the employment contracts for our foreign employees is for a period of 2 years. Our Board has confirmed that all of our foreign workers hold valid working permits and are not in breach of any immigration laws in Malaysia. None of our employees belong to any union and they enjoy a good relationship with our management. There has not been any industrial dispute in the past between our employees and management. The total number of Directors and employees with the breakdown into categories and length of service as at the LPD are as follows: <——–····Lengtb or service——–··-> Categories or statY 1 to S years Less than 1 year Total Executive Directors 3 2 5 Non-Executive Directors 1 1 2 Management and professionals 3 3 Technical and supervisory 34 12 46 Clerical and related operations 15 8 23 Total S6 23 79 We provide a series of continuous training and development programmes for our employees, which include in-house workshops to update all employees on the new developments in our Group. Our employees receive technical and operational training from our Group’s senior personnel. The main objective of our training and development programme is to keep our staff informed about recent developments in technology and hence, further encourage overall productivity and efficiency. We believe strongly in staff and human resource development programmes, as the growth of our Group is partially dependent on the growth of our employees’ knowledge and capabilities. As such, we provide continuous staff training and development programmes to keep abreast with the latest progress in R&D, system implementation and customer support. Our planned training and development programmes in the future are as illustrated below: Training Programmes  Consultant  Increase Efficiency through Data Warehousing  Open Source Systems Sdn Bhd  Network Security Technology  Training.org.my  Dealing with Difficult Customers  Proven Training Solutions  Improving On the Job Training  Pembangunan Sumber Manusia Berhad
4. INFORMATION ON OUR GROUP (Cont’d) 4.4.15 Key Achievements or Milestones Summarised below are our key achievements/milestones since 2000: Year Milestones ____,__________ • •• ·w • __• ._,. March 2000 Commenced development of software applications for the electronic delivery of driver and vehicle registration, licensing and summons services, utility bill payments and Ministry of Health online information system -Phase 1 ~–=::-::c:—–:::-. —-.————————.——-.-..—–.. May 2000 Signed agreement with the Government for the electronic delivery of driver and vehicle registration, licensing and summon services and utility bill payments __~_ .••_ .’OM ,”‘_” ·_-._···_·,~_’w~_·._.·· •. ··· __.w._. .._ ____. ___ Signed service level agreement with PDX.com Sdn Bhd, the Gateway Provider for the electronic delivery of driver and vehicle registration, licensing and summons services, utility bill payments and Ministry of Health online information system”•. ·._•..•.._._ ·. •··•·•__••·.·H..·. ~ Signed acquiring bank agreement with RHB Bank Bhd as the acquiring bank for the electronic delivery of driver and vehicle registration, licensing and summons services, utility bill payments and Ministry of Health online information system ,-” _——-~~~—~-_.,-,.._-,——,—_.,._,——–~——-“._—~~-_.–.———._—–_–­August 2000 Granted MSC Status by MDEC ‘._____V~~~ ~. “• ~ •”<_._._.__ yA_______________ July 2001 Commencement of tax free period for 5-year period from 18 July 2001 onwards ___•••__•• ~”C ~._~__~~ ••__ “‘__ ‘__~~ _ ~ __.~._._~..~ ._.. _~ .._._~ ~_~ • __ ~ ~_. November 2001 Our online driving theory test was launched ___~_~ . • • __ • ._,_’••,. • • H_ __ H_._ _., __••_._~ • ._•._ April 2002 Commenced development of software application for the electronic delivery of PDRM summons and information services —–~_._–~—–.._~—–_. -~-~_._._-~ ~…..—–~_ ….~–~~. ..~._­May 2002 Commenced development of software application for the electronic delivery of DBKL compound, licensing, assessment and information services ———–. -._–_. ._,——­January 2003 Signed agreement with the Government for the electronic delivery of PDRM summons and information services—-c-:—-,:-.—————.—-.————-.——-.—­February 2003 Issuance of Learner’s Driving Licence (LDL) was launched • ._. .__•__, • ._•••,•••• __ • __,._._. • H •__ • 00 April 2003 Online payment of PDRM summons launched ——_. . —-..-~.. ~ –­~..~–.­January 2005 Sponsors for the Islam Hadhari portal which was launched by the Prime Minister of Malaysia ———_.. March 2005 Commercialisation of renewal of trader’s licence, permits and assessment services for DBKL .._-_._-_.—–~—_. __ ._—‘–‘–…._———-_.~._–_…… _…_—_……._…__._-……_._-_._—­May 2005 Commenced development of software application for JIM’s online transactional services September 2005 Commercialisation of online transactional services for JIM In an effort to contribute to the nation’s social responsibility, we have also done our part by contributing to the Islam Hadhari portal project which is an effort to bring the Ummah back to basics as prescribed in the Qur’an and the Hadith that form the foundation of Islamic civilisation. The objectives of Islam Hadhari are to achieve the following ten principles: • Faith and piety in Allah
• A just and trustworthy Government
• Free and independent people
• Mastery of knowledge

4. INFORMATION ON OUR GROUP (Conl’d) • Balanced and comprehensive economic development
• A good quality of life
• Protection of the rights of minority groups and women
• Gdtural and moral integrity
• Safeguarding the environment
• Strong defences

In addition, we have also contributed to the relief aid disaster fund organised by non-governmental organisations for tsunami victims, namely “Project Kasih”. Project Kasih was a blog (web journal) that was inspired by the market driven business model used by Pierre Omidyar, the founder of eBay. Social and aid workers were able to share what they were doing, and what kind of problems the victims were facing following the tsunami catastrophe in December 2004 through this channel. Project Kasih was an avenue for donations and for the citizens to be posted on how the tsunami survivors were coping, as well as to provide moral support to the social workers. 4.4.16 LocationofOperationsandCapacityofE·ServiceCentres We are currently operating from Unit 606, Block G, Phileo Damansara 1, No.9 Jalan 16/11, 46350 Petaling Jaya, Selangor Darul Ehsan. This rented premise occupies a built-up area of 5,057 square feet. It houses our sales and administrative office. As an MSC status company, we have an R&D office located at Technology Park Malaysia, which is a MSC-designated cybercity. Our R&D office is located at Lot Ll-I-l, Enterprise 4, Technology Park Malaysia, Bunt Jalil, 57000 Kuala Lumpur with a built-up area of 600 square feet. It houses 7 employees who are responsible for the development of our E-Insurance and other insurance-related projects. Our main servers are located at Technology Park Malaysia. In addition, as at the LPD, we have twenty-nine (29) E-Service Centres, approved by JPJ, located nationwide within Peninsular and East Malaysia, of which twenty-seven (27) E-Service Centres are operating from rented premises. Our remaining two (2) E-Service Centres namely, the Kuala Kubu Bharu and Tapah branches, are located within the premise of driving institutes, and have been allowed to operate rent-free by the respective driving institutes. Presently, we operate an average of 982 tests per day, representing 48% of our test taking capacity. Below is a list of our E-Service Centres and their respective local council licences as at the LPD: Local coUJlCillicence No. Branches Address Dumber Operational -, ,…….•…_._. .tIat~ . 1. Ialan lpob No. 6-1, Ialan 4/18A DBKLJPU1I4237/1010 1 November Taman Mastiara, Batu 5~, Ialan lpoh 1-SK 2001 51200 Kuala Lumpur .. •…•. ._._Wilay’~R~rse\s!1!U_~_~__. ._._.._ .••__,. ……_,…. ” 2. Bangi Lot 907G, Tingkat Bawah MPKI/CU10/42/200S 1 Ianuary 2002 Kompleks Diamond Bangi Business Park, Ialan Medan Bangi OffPersiaran Bandar 43650 Bandar Baru Bangi .._~Iang.orI2.aruI ~S!!!I ..•, .• _ 3. Cheras No. 28, Ialan Emas 5, MPKI/CU6/32312OO4 28 Ianuary 2002 Taman Emas, 43200 Cheras Kuala Lumpur __________W=il=-a,yah J’ersekutuan 4. INFORMATION ON OUR GROUP (CoRt’d) -_..——_…_– .. LocIIl rouncillicence Operational No. Branches Address Dumber date ——–_. –_….._–_._…_ ……._–~_…….—_….­4. tnuBemam No.3, Jalan Samundra 1 090100000500092 29 January 2002 Taman Samudra 35900 tnu Bemam Selangor Darul Ehsan —–_…_–…… ———-_….–:-:-::-.. _-_._—~_ ….-_.–….–… 5. Klang No. 204, Lorong Sentosa 45 01-20′{)1-3936..2005..3 1 April 2002 Off Jalan Batu Belah 41050 Klang .~lllllgor I)<lr)IIJ3lJSllIl .._ _.._. ._ _ _ _. 6. Ipoh No. 176 (Bawah) MBI.GIIBI3/537/02 20 January 2003 Jalan Sultan Azlan Shah Utara Taman Anda, 31400 Ipoh Perak Darul Ridzuan ••••N'”” .” ……···H,H ••• 7. Setiawan No. 47, Lorong SS2/2 MPM.449819813 15 February Taman Sentosa 2 2003 32000 Setiawan __________._~_~RiJ!z.11!lD . . _.__ ..”” _,o__ 8. Teluk Intan No. 25. Tingkat 1 UlOO6753-1 1 April 2003 Lorong MerllUk 4, Taman Merbuk Jalan Sultan Abdullah 36000 Teluk Intan ____• Perak Darul Ridzuan _ _ _· H ._ _ ••• _••••O_._. .H.•_.” •• __•.__ ~ 9. Taiping Lot 3263, Jalan Mata Kuching M.P.1PG.D 7/18-2003 1 April 2003 Kampung Jambu 34000 Taiping Perak Darul Ridzuan.———_._———-_._—————_.__.. -~—~–_.——–_.~ ..­.._–~­10. Butterworth No.8, Tmgkat KeIjasama 4 35/220110/6446 31 May 2003 Taman KeIjasama 14000 Bukit Mertajam
_____….__.. _~tterwoJ!h, Pulau Pinang ..__.,—:
11. Pulau Pinang 618-1-06, University Heights 2006002042 9 June 2003 Jalan Sungai Dua 11700 Pulau Pinang __..__ _.._ __…

i2:—–sere~banT- .. -S:i5, JiiianDato’Slam,ing MPs(up)500/5961 27 June 2003 Gagap, Seremban Centre Point 70100 Seremban Ne eri Sembilan 13. Melaka No. 412, Jalan Permai Utama MDAG390/2002 17 July 2003 Taman PellDai 78000 Rembia ……………….._ __..__:N.2!.Q~i~,.M~!l!!.. ..<__—,=-==c=-:. .•. ..•__ _
14. Johor Bharu No. 27, Ground Floor MPJB(L)/NO/51/312853 1 August 2003 Jalan Anggerik ‘1J7 Taman Anggerik 81300 Johor Bharu JC!~()r P.l!rul…I~1!’ __ __… _. 15. Kuantan No. 19, Stadium Daml Makmur, 1.5041900932003 9 November 25200 Kuantan 2003 …._ Pahangparul Makmur 16. KotaBharu Lot 3066, S/44, PT 915 MPKBIU0406050818 11 November Taman Murni, Mukim Pancbor 2003 Pengkalan Cbepa ….. .!61.QO_Ko~.Aharu, Kelantan 4. INFORMATION ON OUR GROUP (Conl’d)
Local council licence Operational No. Branches Address number date .. _._..””.” . ·._.··…. _h. · . ._..•,…._…_._…._… ‘. 17. Temerloh No. 30, Jalan Industri 04-0000009255 17 February Taman Perindustrian Temerloh 2004 26400 Mentakab … . …!’~~D~~..’!L .__.._ … _ 18. Kuala Kubu PT887, Ampang Pecbab Not required 2 11 May 2004 Bharu 48000 Kuala Kubu Bharu Selangor Darul Ebsan
…_—_._-­19. Grik Lot 247, Tmgkat Dua l.OOOO847-0/67/1/2004 24 June 2004 Jalan Takong Datuk 33300 Grik Perak DaruJ Ridzuan :iO:-‘—~~b”” —-.–No:’3s:-iit’Floo’r; J~i’a;;’ r1ill’TIong’–a)”000iJ044225 (i~ ···–·–·-17-i~ly2004—· 27600 Raub signboard) Pabang Darul Makmur b) 0000046711 (for business .. ••.__.__ .. pre~.se) __ .. _..__ _. 21. Pasir Gudang No. 46, Jalan Siakap 10 9887/2006 23 November Taman Pasir Putib a) 08107 (for signboard) 2004 Pasir Gudang b) 06040 (for business Jl7!00.!.o.~~D~L·I’~ …. Jlrem!~L__ .. . _ ….._ 22. Danau Kola No.5, Jalan 1O/23E DBKUJPU213810612OO4 26 November Tmgkat Bawab, Taman Danau Kola 2004 53300 Selapak Kuala Lumpur ________.._._.__)yl’_,!y’~ Persekutl!~… 23. Lawas Lot 319, Jalan Trusan 98857Lawas Sarawak __• “””” ,w,o~., “.””_’~ ‘~·~”_’_·””·'”_~”‘~_~_’_,~”,’N··’··. 24. Miri Lot 602, Jalan Permaisuri 870275 29 November 98000 Miri 2004 Sarawak—_ .._.-. ——-_._—-~ .——–­….____._._”.——–“—–‘-_._—–,~-~-_.-­25. Kuching Lot 372, Tingkat2 364362 3 December Jalan Kulas 2004 93400 Kuching Sarawak,, ~~.__…_. _. ~
26. Tapab Batu 1\6, Jalan Bidor Lama Not required 9 June 2005

35000 Tapab _ P~_@k I>~!!’1.~dztJ!!!l .. _
27. Simpang No. 14, Jalan Bulcit Tambun 04106108307 4 July 2005 Ampat Taman Kasawari 14100 Simpang Ampat __ _ __,–__.. ~u1au Pin3!1g ._ _. _ __.___ _ ” .. __ __ _ 28. Binhllu No. 42, 1″ Floor 818251 1 August 2006 Medan Jaya Commercial centre Jalan Tun Hussein Onn 97000 Bintulu Sarawak-_…… _-­29. Kola :s~blotNo.6i~”-F1oor 839448 29 July 2006 Samaraban Desa llmu, Kola Samarahan 93400 Kuching Sarawak
Notes: 1. Inthemidst ofwritingintoinformthecouncilon thechangeinaddress.
2. TheE-ServiceCentreislocatedwithinthepremise ofadrivinginstitute.

62 4. INFORMATION ON OUR GROUP (Conl’d) 4.4.17 Competitive Advantages (i) Proven Track Record Having successfully implemented the first phase of the E-Services project, we have proven to the parties involved and the general public, of our ability and expertise in fulfilling all the terms and conditions listed in the Government concession. It will be a strong reference point in the future when we wish to tender for projects of a similar capacity. Furthermore, we have gone through the learning curve, and with a well established organisation structure and facilities, we will be able to enjoy cost advantage in tendering for future projects. (il) Geographical Network Expansion We are targeting to operate 34 E-5ervice Centres by FYE 2007 compared to the existing 29 E­Service Centres in operation as at the LPD. With more E-Service Centres, economies of scale may be accomplished, thus, reducing the cost of conducting each driving theory test. We will also be able to provide wider geographical coverage to the driving institutes/schools and their students which in tum will reduce their time and travelling costs to complete the driving theory test. These E-Service Centres will also form the physical distribution infrastructure that our Group uses as a leverage to quickly roll out other Government E-Services which require physical interaction. As a result, we expect these E-Service Centres to eventually conduct a wide range of Government as well as relevant commercial services. This aspect shall increase the viability of these E-Service Centres, which will in turn, spur the opening of more E-Service Centres. The compounded effect of more E-Service Centres and a wider range of services offered are expected to contribute positively to our financial performance. (iii) No Royalty or Licence Payment We believe that MESP is a highly competitive product, technically and economically. This enables us to offer competitive prices with advanced technical features to secure future contracts. This is possible as we do not need to pay any royalty or licensing fees to third parties since we are offering the services off our own proprietary platform. (iv) Ability to Rapidly Expand the Range oCE-Services We have the competitive advantage to constantly upgrade and add new services to our platform to achieve our aim to be a one-stop portal for E-Government services. At the same time, we also seek to expand our Government regulated commercial services, particularly in the motor vehicle sector due to the inherent bundling and cross marketing with our existing E­Government services. Our unique selling point in this area is that we are able to offer both commercial and privatised Government services, and these services are required by everyone who has a drivers’ licence and/or owns a motor vehicle. 4. INFORMATION ON OUR GROUP (Cont’d) 4.4.18 Barriers to Entry In the E-Government and E-Services industries, the barriers to entry are as follow: (i) Government Concession for E-Services Project One of the main barriers to entry for the E-Services project is the concession agreement signed between the consortia member companies and the Government. Potential entrants will not be able to get involved in the E-Government Initiative without such an agreement. In 2000, the Government had decided to appoint three Service Providers for the E-Services project. The agreement gives the Service Providers the rights to incorporate services (current or future) under the E-Services project. Our Group’s proven track record in implementing the E-Services project has also indicated to the Government and the general public, of our ability and expertise to fulfil all the terms and conditions in the concession agreement. This would strengthen our position in securing the extension of the contract when the concession expires. Our track record will also be a strong reference point in the future when we wish to tender for future projects in a similar capacity. (ii) Proprietary Knowledge and Physical Infrastructure We commenced operations in 2000 with the development of software application for the electronic delivery of driver and vehicle registration, licensing and summons services, utility bill payments and other online information system. Over the years, we have garnered ideas, knowledge in operational know-how, control system and operation system, and improved on technology that provide competitive advantages compared to potential new entrants. Potential new entrants may be discouraged by the time-consuming development of relevant and appropriate proprietary software to operate in the E-Services industry. In addition, our possession of physical infrastructure such as the E-Service Centres also indicates to the Government and the general public, our ability and expertise to fulfil the requirement of providing facilities for the E-Services project such as the electronic theory test taking. As such, the establishment of physical infrastructure such as E-Service Centres will deter most potential new entrants as such physical infrastructure takes time and is relatively high in cost to set up. (iii) Technology Know-how Our Group possesses technology know-how, namely, programming languages such as C, C++, JAVA Script, D languages, which are used to support the different types of software development and system architectures. Issues taken into consideration when developing a software programme are: • The solutions are easily adaptable into all the industry standard computer hardware
• The feasibility to have any amendment, changes, plug in of other value added applications, upgrading into different types of application servers and capacity

4. INFORMATION ON OUR GROUP (Cont’d) • User friendly and easy to customise into customer requirements The possession of the technology know-how also indicates our flexibility and adaptability to rapid technology changes, which are necessary for our Group to expand our range of services under the E-Services project. Potential new entrants will need to possess the technology know-how to develop, support, and operate the relevant software applications to penetrate the E-Services industry. (iv) MSC Status While MSC status is not a pre-requisite to participate in the E-Services project, MSC status companies are more inclined to be successful in tenders for Government projects. The potential new entrants without MSC status may not he able to compete with other MSC status companies, given the stringent qualifying criterias required to gain MSC status. Qualifying criterias to be a MSC status company: • Be a provider or heavy user of multimedia products and services
• Employ a substantial number of knowledge workers
• Provide technology transfer and/or contribute towards the development of the MSC or support Malaysia’s K-based economy initiatives
• Establish a separate legal entity for the MSC qualifying multimedia business and activities
• Located in a MSC designated cybercity
• Comply with environmental guidelines

(v) High Start-up Cost In order to commence the development of the software used in the E-Services project, we have invested heavily on software development work, computers and servers, not withstanding the high operational fixed costs such as rental, salary, electricity, Internet charges, telephone charges and training provided to our employees in our head office and all of our 29 E-Service Centres. Generally, the high start-up cost is attributable to the losses during the initial start-up period; especially when the business volume in the initial stage is relatively low. THE REST OF TillS PAGE IS INTENTIONALLY LEFT BLANK 4. INFORMATION ON OUR GROUP (Cont’d) 4.5 Subsidiaries 4.5.1 Information on GVSB (i) History and Business GVSB was incorporated as a private limited company in Malaysia under the Act on 28 October 2002. It commenced business on 1 January 2004. It is principally involved in the provision of software solutions and maintenance services. We acquired GVSB in June 2004 for a purchase consideration of RM2.6 million, representing a PE Multiple of approximately 6.0 times based on GVSB’s annualised net PBT for the financial period ended 30 June 2004. As defined in the acquisition agreement, the net PBT shall exclude the allocation of expenses by MYEG which reflects the usage of shared facilities and resources with GVSB. To the best of our Directors’ knowledge, the purchase consideration of GVSB is reasonable when compared to the consideration paid for a similar acquisition undertaken and completed on 9 July 2004, of which one of the subsidiaries of the acquiree company also operates within the E-Services industry. For illustrative purposes, based on the circular to shareholders of Paxelent Corporation Berhad dated 16 April 2004, 67.53% equity interest in Mass Media Interactive Sdn Bhd (“MMr’), which has two (2) other subsidiaries and a 60% interest in KOMMS, was acquired for RM41,426,000. The purchase consideration of RM41,426,000 implied a double digit PE Multiple based on the unaudited consolidated PAT and MI of MMI for the FYE 31 December 2003 of RM2,OOO,OOO. We acquired GVSB primarily because of its technology and domain knowledge, which has contributed to the ongoing development of the MESP. The synergies imparted by GVSB’s development/technical tearn have strengthened our Group’s core technical expertise in addition to the revenue and profit contribution by GVSB. GVSB has been profitable based on its audited financial statements for the eight (8) months financial period ended 30 June 2004 and the past two (2) FYEs 30 June 2005 and 30 June 2006. Detailed information on the historical financial performance of GVSB is set out in Section 11 of this Prospectus. Our Directors are satisfied that operations and financial performance of GVSB have met their expectations and they believe that the intrinsic value of GVSB is reflective of the consideration paid by MYEG for the said acquisition. (ii) Share Capital As at the LPD, the authorised and issued and paid-up share capital of GVSB are as follows: RM Authorised Ordinary shares of RMl.OO each 100,000 Issued and paid-up Ordinary shares of RMl.OO each 2 4. INFORMATION ON OUR GROUP (Com’d) (iii) CIJanges in Share Capital There are no changes in the issued and paid-up share capital of GVSB since its incorporation up to the LPD. (iv) Substantial Shareholder As at the LPD, GVSB is a wholly-{)woed subsidiary of MYEG.

(v) Subsidiary and Associated Company As at the LPD, GVSB does not have any subsidiary or associated company.

 

4.5.2 Informatiou on PNSB (i) History and Business PNSB was incorporated as a private limited company in Malaysia under the Act on 3 January 2000 as Optimum Merit Sdn Bhd. It changed to its present name on 26 March 2005. PNSB was dormant since its incorporation until 1 January 2005 when it commenced operations. PNSB is principally involved in the provision of E-Insurance solutions and other insurance­related services. PNSB has been appointed by PDX.com Sdn Bhd to provide electronic computer linkages, through its software applications and Internet technologies, between insurance companies and JPJ on the issuance ofE-Cover Notes. (Ii) Share Capital As at the LPD, the authorised and issued and paid-up share capital ofPNSB are as follows: RM Authorised Ordinary shares of RM1.00 each 100,000 Issued and paid-Up Ordinary shares of RMl.OO each 99 (iii) Changes in Share Capital The changes in the issued and paid-up share capital of PNSB since its incorporation up to the LPD are as follows: No. of ordinary Date of shares of
Cumulative issued allotment RMl.OO each Consideration & paid-up capital RM 03.01.2000 2 Subscribers’ shares -cash 2 17.08.2004 97 Cash 99 4. INFORMATION ON OUR GROUP (Cont’d) (iv) Substantial Shareholders As at the LPD, the substantial shareholders of PNSB are as follows: <···-·Direct——> <—–Indirect——> Place of No. of No. of incorporation! shares % shares % Nationality MYEG* 54 54.5 -Malaysia Global Billion Sdn Bhd 40 40.5 -Malaysia Lee Peng Seng 5 5.0 Malaysian Yong Sin Fong 40 40.51 Malaysian Tan Scow Kean 40 40.51 Malaysian Notes: • Information on the subStlllltial shareholders of MYEG is set out in Section 5.2 of this Prospectus. 1. Deemed interest by virtue oftheir substantial shareholdings in Global Billion Sdn Bhd. (v) Subsidiary and Associated Company As at the LPD, PNSB does not have any subsidiary or associated company. THE REST OF THIS PAGE IS INTENTIONALLY LEFI’ BLANK 4. INFORMATION ON OUR GROUP (Conl’d) 4.6 Industry Overview 4.6.1 E-Govemment in Malaysia Malaysia’s E-Government Initiative was launched in 1997 with the objective to reinvent itself and lead the country into the information age, in which computers are used by knowledge workers, whose work focuses on the use and management of digital data. E-Govemment is expected to play an essential role in catalysing the development of the MSC, which was established for the purpose of moving Malaysia towards a fully developed nation with a knowledge-rich society by 2020. The pilot application of the E-Government Project, which includes the electronic delivery of driver and vehicle registration, licensing and summons services and utility bill payments as outlined in the Concept Request for Proposal paper (‘CRFP No. MAMPU/EG/1/97′), was made publicly available by the Government on 26 July 1997. The E-Government Initiative improves both how the Government operates internally as well as how it delivers services to the people. It seeks to improve the convenience, accessibility and quality of interactions among Government, citizens and businesses. It will facilitate information flow and processes within the public sector to improve the speed and quality of policy development, coordination and enforcement. The vision of E-Government is of the Government, businesses and citizens collaborating for the benefit of the country. The vision focuses on effectively and efficiently delivering services to enable the Government to become more responsive to the needs of its citizens. In taking a citizen-centric approach, E-Government builds bridges between agencies in the same tier of Government and the different tiers of Government to ensure that the services are seamless to the user. The integration policies from different agencies involved in the specific service will be packaged around the citizen’s needs and not on the agency’s functions. The seven (7) pilot projects of the E-Government Flagship Application are as follows: (i) E-Services
(ii) PMS -Project Monitoring System

(iii) HRMIS -Human Resource Management Information System (iv) GOE -Generic Office Environment
(v) EP -Electronic Procurement
(vi) ELX -Electronic Labour Exchange

(vii) E-Syariah (Source: Independent Market Research Report) 4.6.2 E-Services in Malaysia The E-Services project, otherwise known as “the electronic delivery of driver and vehicle registration, licensing and summons services, and utility payments” project is one of the G2C applications. The rationale for developing the E-Services project is based on the belief that all Malaysian citizens shall use at least one of the services identified under E-Services on a monthly or annually basis. In 2001, there were more than 16 million transactions pertaining to driver licensing, vehicle registration and road transport summonses; over 4 million households pay electricity and telephone bills every month, totalling over 80 million transactions annually. Although the latest statistics are not available, the number of transactions is believed to have increased considering the followings: • Increase in the number of vehicles registered with JPJ (CAGR of 7.7% from 1993 to 2005); 4. INFORMATION ON OUR GROUP (Cont’d) • Increase in the number of drivers (CAGR of 12.5% from 1997 to 2004); and
• Increase in the number of household (CAGR of 3.3% from 1997 to 2004).

The E-Services project enables the public to transact more easily with Government agencies and utility companies via multiple delivery channels such as kiosks, integrated voice response system through telephone, Internet services through PCS and web television. Users are able to schedule driving tests, renew their respective driving licence and pay utility bills in one simple session. Through the convenient, fast and easy mode of payment, it is believed that E-Services project is able to aid collections such as police summons, traffic fines and utilities payments. In addition, it will also seek to improve information flow and processes within the Government to enhance the efficiency and quality of policy development, coordination and enforcement. The E-Services project adopted the business model of BUild-Operate-Own whereby the Service Providers will fund the requirements of the project privately and become the operator and owner of the E-8ervices project. This business model is designed to minimise the investment of public funds by the Government and to promote private participation and sponsorship of the infrastructure. The project adopts the Open Market Business model that allows the free market to drive improvements in service delivery to the public. The model will operate with three distinct roles for service delivery, namely Service Supplier, Service Provider and Gateway Provider. The Service Provider will provide multiple electronic channels to enable the public to transact with the Government. The Gateway Provider will in tum transmit the data and information required from the Service Provider to the Service Supplier and vice-versa. The users, including non-savvy PC users, can enjoy the flexibility of online services from a variety of platforms such as PC, kiosks, IVR and SMS, 24 hours a day, seven days a week. The data and information required for the services come from the Service Supplier, which to-date comprises the following Government agencies: Agencies Type of Services DBKL • Compound, licensing and assessment payments and online information services JIM • Bankruptcy or company liquidation status searches, including issuance of certified original copy of such status searches JPJ • Electronic driver licensing i.e. test booking, scheduling & electronic test taking (theory test), issuance and renewal of driving licence • Vehicle registration and licensing services
• Summons payment and online information services

PDRM • Summons payment and online information services TNB • Bill payment and online information services TELEKOM • Bill payment and online information services The Government bas appointed 3 consortiums as Service Providers. These Service Providers act as the interface between the public and the Gateway Provider. They are MYEG, SPEEDS and KOMMS. The sole Gateway Provider for this project is PDX.com Sdn Bhd. (Source: Independent Market Research Report) 70 4. INFORMATION ON OUR GROUP (Cont’d) 4.6.3 Industry Trends Governments across the world have created websites aimed at facilitating business investment, handling citizen complaints and tourism. Tourists for instance, can book hotels through the government websites of many Caribbean and Pacific Island countries. In Australia, citizens can register government complaints through agency websites. Nations such as Bulgaria, the Netherlands and the Czech Republic are attracting overseas investors through their websites. E-Government has also spread across to developing countries such as Malaysia, with the launch of its E-Government Initiative in 1997. From the supply side, the pace of the governments adopting E-Government approach is progressing. In 2005, analysis on 1,797 government websites in 198 different nations indicated steady progress on several dimensions. Among the significant findings are as follows: • 19% of Government websites offer services that are fully executable;
• 89% of Government websites provide access to publications and 53% have links to databases;
• 18% (up from 14% in 2004) show privacy policies, while 10% have security policies (up from 8% in 2004);
• 19% of Government websites have some form of disability access, meaning access for persons with disabilities (up from 18% in 2004);
• Countries vary enormously in their overall E-Government performance. The most highly ranked nations include Taiwan, Singapore, United States, Hong Kong, China, Canada, Germany, Australia and Ireland; and
• There are major differences in E-Government performance based on regions of the world. In general, countries in North America score the highest, followed by Asia, Western Europe, Pacific Ocean Islands, Middle East, Eastern Europe, Russia and Central Asia, South America, Central America and Africa.

The E-Government rating index from 2001 to 2004 indicated that the Governments are showing steady progress on several important dimensions. However, movement forward has not been more extensive in some areas because budget, bureaucratic, and institutional forces have limited the extent to which governments have incorporated technology adoption into their mission. (Source: Independent Market Research Report) 4.6.4 Key Demand Drivers (i) Computers and Internet Penetrations The total PC estimation in Malaysia increased from 1,360,000 in 1998 to 4,200,000 in 2003, an increase of over 200% over the stipulated period. PC penetration (pC per 100 inhabitants/persons) has also increased from merely 6.1% in 1998 to 16.6% in 2003. In terms of the Internet subscription, the estimated number of Internet users has increased from 1,215,000 in 1998 to 11,016,000 in 2005, an impressive increase of more than 800% over the stipulated period. Total Internet subscriptions (both dial-up and broadband) in Malaysia experienced at least double digit growth annually since 1999. With the penetration rate of 13.9% and 1.9% of dial­up and broadband respectively in 2005, the overall Internet penetration in this country is still relatively low. With PC penetration considered low and with the advent of higher speed Internet, it is expected that the Government will encourage more take up of Internet services and more market differentiation aspects of such services including the supply of PCS to cater to different user categories. 4. INFORMATION ON OUR GROUP (Cont’d) In terms of Malaysia’s position amongst other countries, Malaysia’s PC penetration rate was far below those of the developed and newly industrialised countries. However, the low PC penetration rate is somehow compensated by the significant increase in Internet access, an important means of assessing the services provided through the E-Services project. The significant increase in Internet access suggests demand potential for the E-Services project. (ii) Demographic Trend The services offered under E-Government and E-Services are targeted at citizens, therefore the determinant for the increasing demand of the industry is the population growth rate. Malaysia’s population has experienced a CAGR of 2.5% from 20.7 million in 1995 to 25.9 million in 2004. The key demand for the JPJ theory test services comes from the main addressable population between 15 and 24 years old (18.7% of the total population). The inclination to Internet usage has always been strongly correlated with age (i.e. the younger you are the more likely you are to use the Internet). Usage of E-Government services tends to peak among those aged under 25 years and remains strong among the 25 -34 years old before declining as the age increases. The household segment is also the main demand driver for the usage on TNB and TELEKOM payment transactions. As the society evolves and economy expands, the number of household increases and becomes more affluent. Based on the housing census conducted in 2000, there are a total of 4.9 million households in Malaysia. Total households have been growing at a CAGR of 3.3% (1970-2004). Such growth coupled with the increased in household members under 25 years (who are more incline to using the Internet) and the trend of increasing Internet usage will contribute favourably in driving the demand for E-Services. (iii) Increased in the Total Number of Motor Vehicles The E-Services are centred on the electronic delivery of driver and motor vehicle registration, licensing and summons services. The performance of the automotive industry and total number of motor vehicles registered with JPJ are key demand drivers for the future of E­Services project. The total number of motor vehicles registered has increased from 5.7 minion in 1993 to 14.8 million in 2005 (CAGR of 7.7% over the stipulated period). However, within the first half of 2006, there has been a series of events that besides dampening consumer sentiments has led to uncertainties in the automotive industry. Some of these events include rising interest rates, more stringent approvals on hire purchase loans, rising oil prices and also weak market for used cars. Nevertheless, the prevailing decline in motor vehicle registration in the first half of 2006 can be viewed as temporary in nature and the growth trend is expected to continue in the long term. At the moment, the services provided by the E-Services projects are mainly catered for Malaysian drivers. The total number of drivers has increased since 1997, from approximately 6.8 million to 15.4 million in 2004 with a CAGR of 12.5% between 1997 and 2004. In 2005, the total number of drivers is estimated to be 17.3 miUion. The increase in the number of cars and number of drivers coupled with the increase in the main addressable population age groups (15 -24 age group) is expected to drive the demand for services offered under the E-Services project. 4. INFORMATION ON OUR GROUP (Conl’d) (iv) Development Allocation for ICT-Related Programme and Projects The 9MP, which was unveiled on 31 March 2006, is expected to be a radical departure from the previous eight plans as different approaches are required to mect the new challenges of globalisation, growing competition and rapid technological advances. During the 9MP, the various computerization programmes will be driven by the relevant ministries and agencies, such as Ministry of Energy, Water and Communications, Malaysian Administrative Modernisation and Management Planning Unit, Ministry of Education, Ministry of Health, Ministry of Home Affairs, Ministry of Science, Technology and Innovation and Multimedia Development Corporation. A total of RM12.9 billion will be allocated for ICf-related programmes and projects under the 9MP as compared to RM7.9 billion under the 8MP. A major portion of this allocation will be used for computerisation of Government agencies as well as bridging the digital divide initiatives, largely for the supply and maintenance of computers and Internet access. In addition, specific funding will be made available to promote ICf content and entrepreneurship development. (Source: Independent Market Research Report) 4.6.5 Industry Players and Competition The following is the entire participant list for the E-Government Initiative in Malaysia. The E­Government contract assigned to the participants is exclusive and non-transferable. In addition, a participant such as MYEG, which has been assigned to the E-Services project, will not be able to undertake a project under other categories within the E-Govemment. Name Project involved MYEG E-Services SPEEDS E-Services KOMMS E-Services Commerce Dot Com Sdn Bhd E-procurement NTT Data Corporation E-procurement Puncak Semangat Sdn Bhd E-procurement Electronic Data System IT Services Sdn Bhd GOE Hewlett-Packet Sales (M) Sdn Bhd GOE Microsoft Knowledge Capital Centre Sdn Bhd GOE Sapura Advanced System Sdn Bhd GOE Malaysian Resources Corp Bhd HRMIS Accurate Networks & Systems Integration Sdn Bhd HRMIS Berita Information System Sdn Bhd HRMIS BSN Information Technology & Services Sdn Bhd HRMIS CS Technologies Sdn Bhd HRMIS DigiEra Sdn Bhd HRMIS Edaran Komputer Sdn Bhd HRMIS Irshad Consulting Sdn Bhd HRMIS Leapfrog Techologies Sdn Bhd HRMIS Orienasli Holdings Sdn Bhd HRMIS Origin Technology Sdn Bhd HRMIS Quantum Paralleh Sdn Bhd HRMIS Sepakat Computer Consultant Sdn Bhd HRMIS
4.
INFORMATION ON OUR GROUP (Cont’d) Name Project involved Sistem Televisyen Malaysia Berhad HRMIS FSBM Cfech SOO Bhd PMS Fujitsu Malaysia Sdn Bhd PMS AlT Workgroup Technology SOO Bhd PMS DapanNet Sdn Bhd PMS SOLSIS SOO Bhd Electronic Labour Exchange SAINS Sdn Bhd E-Syariah Under the E-Services project, the Government has to date, appointed 3 consortiums as Service Providers. These Service Providers act as the interface between the public and the Gateway Provider. They are MYEG, SPEEDS and KOMMS. (Source: Independent Market Research Report) Meanwhile, for Government regulated commercial E-Services which are not under the E-Government Initiative, such as our E-Cover Note project, there are two (2) other companies providing E-Cover Note services besides our Group, namely, Reward Link SOO Bhd and Financial Link Sdn Bhd. While various companies may be able to provide the commercial E-Services, our Directors believe that being the only company that is appointed or assigned as a Service Provider under the two (2) projects (E-Services project and E-Cover Note project) will afford our Group a competitive advantage over our competitors. Also, as an integrated Service Provider, our Group is able to maximise its operations by cross leveraging on systems, delivery channels, hardware and personnel. 4.6.6 Government Legislation, Policies and Incentives There are currently no specific regulations governing the E-Government services industry. However, the implementation of a comprehensive framework of cyberlaws under the MSC Bill of Guarantees shall facilitate and assist the development of the IT and multimedia information and content industries. The rationale for passing the cyberlaws is to provide a framework of societal and commerce-enabling laws to counter the abuses caused by the rapid proliferation and interconnection of computer networks in the World Wide Web. The cyberlaws will provide framework for the following issues: Integrity and security of information Legal status of online transactions Privacy and confidentiality of information Intellectual property rights and Government data In terms of protection of intellectual property rights on software, some of the key Malaysian legislations are the Trade Marks Act 1976, Patents Act 1983, Copyright Act 1987, Industrial Designs Act 1996, Digital Signature Act 1997, Communications and Multimedia Act 1998 and The Computer Crimes Act 1997. In addition, Malaysia is a member of the World Intellectual Property Organisation (WIPO), Paris Convention, Berne Convention and signatory to the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS). MSC status is one of the key initiatives of the Government to facilitate ICf growth in Malaysia and to spearhead Malaysia’S Vision 2020. To attract participants to the MSC, it has offered various incentives such as: 4. INFORMATION ON OUR GROUP (Con/’d) (i) Bill ofGuarantees
• Provide a world-class physical and information infrastructure.
• Allow unrestricted employment of local and foreign knowledge workers.
• Ensure freedom of ownership by exempting companies with MSC Status from local ownership requirements.
• Give the freedom to source capital globally for MSC infrastructure, and the right to borrow funds globally.
• Provide competitive financial incentives, including no income tax for up to ten (10) years or an investment tax allowance, and no duties on import of multimedia equipment.
• Become a regional leader in intellectual property protection and cyberlaws.
• Ensure no Internet censorship.
• Provide globally competitive telecommunications tariffs.
• Tender key MSC infrastructure contracts to leading companies willing to use the MSC as their regional hub.

 

(ii) Financial Incentives

Five-year exemption from Malaysian income tax (pioneer status), renewable to ten (10) years, or a 100% Investment Tax Allowance (ITA) for up to five (5) years on new investments made in MSC cybercities. These incentives are provided for under the Promotion of Investment (Amendment) Act 1997. MSC status companies are allowed to import muJtimedia equipment duty-free, provided that the equipment is used for business operations. The exemption applies to equipment used directly in facilitating the operational processes of MSC-status companies, but excludes imports for the purpose of direct sales and trading or use for as components in manufactured items. (iii) Non-financial Incentives (a) UnrestrictedEmploymen/ ofForeignKnowledgeWorkers MSC status companies may employ any number of foreign workers possessing any one of the following qualifications: • Five or more years’ professional experience in multimedia! information technology businesses or in a field that is a heavy user of muJtimedia.
• A university degree (any discipline) or a graduate diploma (in multimedia! IT) from a technical college, plus two or more years’ professional experience in multimedia! IT businesses or in a field that will be a heavy user of multimedia.
• A master’s degree or above in any discipline.

Malaysia will grant working visas for these foreign knowledge workers for initial periods of up to five years. 4. INFORMATION ON OUR GROUP (Cont’d) (b) Freedom ro Source Capitol/or MSC Infrastructure GlobaUy Companies that are engaged in developing infrastructure for the MSC are free to source funds globally for their investments. All MSC status companies will be given exemption by the Controller of Foreign Exchange from exchange control requirements through the MDEC. With these foreign currency exemptions, companies will be free to: • Execute transactions in any currency in Malaysia or elsewhere in the world.
• Borrow any amount from financial institutions, associate companies or non­residents.
• Hedge their foreign-exchange exposure.
• Remit globally for any purpose.
• Open foreign currency accounts in Malaysia or abroad with no limits on the balances, including accounts for the retention of export proceeds.

(c) Other MSC Benefits Other MSC benefits include: • Intellectual property protection and a world-first comprehensive framework of cyberlaws.
• World-class physical and IT infrastructure.
• Globally competitive telecommunication tariffs and service guarantees.
• No censorship of the Internet.
• High-quality, planned urban developments.
• Excellent educational facilities, including the region’s first Multimedia University.
• Green environment protected by strict zoning.

(iv) Incentives for leT Related Companies (a) Incentive for Software Development This incentive is given based on the following guidelines: • The computer software must be for a general purpose and not for a specific customer.
• For companies undertaking modifications of existing software packages, the cost of acquiring the existing packages must not exceed 25% of the modification expenditure, which includes software tools, labour and equipment costs.

(b) Accelerated Capitol Allowance
• Companies receive an initial allowance of 20% and an annual allowance of 40% for expenditure incurred in acquiring computers and information technology assets, including software. Thus, the expenditure can be written off within two years.
• The cost of developing websites is allowed at an annual deduction of 20% for a period of five years.

4. INFORMATION ON OUR GROUP (Cont’d)
(c) Other leTIncentives

76 Companies enjoy a single deduction on: • Operating expenditure including payments to consultants related to IT usage for improving management and production processes.
• Contnbutions in cash or kind for leT acculturation projects at local community levels. This is effective until the year of assessment of 2003.
• Computers given by employers to their employees until the year of assessment of 2003 are not deemed as income.

(d) Tax Exemption on the Value ofIncreased Exports Companies in the leT sector can apply for a tax exemption on their statutory income equivalent to 50% of the value of increased exports. (Source: Independent Market Research Report) 4.6.7 Demand and Supply Conditions The demand for E-Government services and specifically the E-Services pilot project, will predominantly be derived from the Government. The E-Government Initiative is one of the key initiatives of the Government to facilitate leT growth in Malaysia and to realise Malaysia’s Vision 2020. The key demand drivers for E-Services in Malaysia will include increasing computer and Internet penetration, rising population trend, increase in total number of motor vehicles and high development allocation for leT-related projects. See Section 4.6.4 of this Prospectus for further information on the key demand drivers for E-Services in Malaysia. Supply for the E-Government Initiative is mainly demand-driven, which in tum is determined by the Government. For the E-Services project, the Government has appointed 3 consortiums as Service Providers. The Service Providers other than MYEG, being SPEEDS and KOMMS, will provide E­Services delivery to the public via multiple access channels such as kiosks, integrated voice response system through telephone, Internet services through web TV and PC. (Source: Independent Market Research Report) 4.6.8 Substitute Products and Services The threat of product substitution for E-Government and E-Services is minimal. Instead of being substituted, the E-Government and E-Services project are in fact substituting the conventional way of assessing information and conducting payment transactions with agencies such as DBKL, JIM, JPJ, PDRM, TNB and TEIEKOM. The traditional means of access such as personal visits, phone cal1s and mail delivery to the respective Service Suppliers (such as JPJ) will be supplemented with the availability of the E-Government and E­Services projects. This is because E-Government and E-Services applications enable the public to transact more easily and flexibly with the Service Suppliers via muJtiple delivery channels such as Internet services through web TV and PC, kiosks and through telephone (via IVR system). The services offered with regards to electronic driver licensing, vehicle registration and licensing services under the E-Services project will most likely substitute the conventional means of conducting the services personally at the JPJ branches. 4. INFORMATION ON OUR GROUP (Cont’d) Nevertheless, substitutes may also come in the form of other Service Providers offering the same services as MYEG. For instance, banks or credit card companies offering utility payment facilities either over the counter or through electronic arrangement. These financial institutions may offer such services by giving away prizes and special gifts to selected customers who pay their bills through them. (Source: Independent Market Research Report) 4.6.9 Prospects and Outlook of the Industry A dynamic and democratic society, with a strong and productive economy, requires a service-oriented, reliable and innovative government at all levels, to improve the efficiency and effectiveness in the way the governments operate internally and the way it delivers services to the people. Governments across the world have today created websites aiming at facilitating business investment, citizen complaints and tourism. The E-Government spread across to developing countries such as Malaysia, with the launch of the E-Government Initiative in 1997. E-Government is expected to play an essential role in catalysing the development of the MSC as well as furthering political and economic development goals as per the objectives of Vision 2020. While the E-Government is still at its preliminary stage of implementation, E-Government is recognised as an important part of moving the country towards a knowledge-based economy. In Malaysia, the E-Government Initiative will improve the ways in which the Government operates as well as delivers its services to the general public. It seeks to improve the convenience, accessibility and quality of interactions with citizens and business; simultaneously, it will improve information flows and processes within the Government to improve the speed and quality of policy development, coordination and enforcement. The vision of E-Government is of the Government, businesses and citizens collaborating for the benefit of the country. The vision focuses on effectively and efficiently delivering services to enable the Government to become more responsive to the needs of its citizens. In taking the citizen-eentric approach, the E-Government programme builds bridges between agencies in the same tier of Government and the different tiers of Government to ensure that the service is seamless to the user. The integration of policies from different agencies involved in the specific service will be packaged around the citizen’s needs and not on the agency’s functions. In addition to the improved information flow and processes within the Government, the E-Services programme is believed to aid collections for the Government’s coffers while convenient, fast and easy payment at kiosks via the Internet would encourage offenders to pay police summons and traffic fines quickly. In addition, the programme will also enhance the efficiency and quality of policy development, coordination and enforcement. The services offered within the E-Services project will be targeted to the Malaysian citizens to facilitate I ease the transactions with the Government agencies (such as JPJ, PDRM, DBKL and JIM) and utility companies (such as TNB and TELEKOM). It was initiated with the belief that the citizens use at least one of the services identified under E-Services on a monthly or annually basis. With the increasing trend on its demand drivers such as number of drivers and number of household, the demand for such services will increase inevitably in the future. (Source: Independent Market Research Report) 4.7 MltiorCustnmers Our Group does not have any customer who individually accounted for 10% or more of our Group’s revenue for each of the last three (3) FYE 30 June 2004 to 30 June 2006. 4. INFORMATION ON OUR GROUP (Conl’d) 4.8 MlYor Suppliers Our Group’s major suppliers (i.e. those individually contributing 10% or more of the Group’s costs of revenue and subcontracting costs) for each of the last three (3) FYE 30 June 2004 to 30 June 2006 are as follows: Contribution to our Group’s total purchases Name ofsupplier Country FYE2004 FYE200S FYE2006 %% % JPJ Malaysia 50.16 67.31 39.04 PDX.com Sdn Bhd Malaysia 15.74 4.10 3.55 JIM Malaysia 26.41 PDRM Malaysia 8.68 6.00 19.83 JPJ is our Group’s major supplier in regards to the JPJ-related E-Services, such as the Driving Theory Test Booking, Test Taking, and Security Digital Imaging, under the concession agreement. JPJ is essentially the supplier of database information pertaining to the JPI drivers licencing application while the Gateway Provider, PDX.com Sdn Bhd transmits data between JPI and our Group. Our other major suppliers include PDRM (for the electronic delivery of summons and information services) and JIM (to carry out the delivery of its online transactional services). Our Directors believe that the risks arising from the dependency on anyone of the above Service Suppliers are reasonably mitigated as we have established long-standing relationship with most of them. In addition, the likelihood of the Government switching to another new Service Provider is unlikely, since we have proven to be a reliable Service Provider with the relevant capabilities, expertise and technology to implement the E-Services project smoothly. Thus, our Directors believe that the risk of any disruption is minimal. 4.9 Future Plans and Outlook The various key growth strategies of our Group for the FYE 2007 to FYE 2010, outlined in Section 10 of this Prospectus, have been formulated with the objective of keeping pace with technological changes, developing our competitive advantages, supporting our business expansion plans and the long term sustainable growth of our Group. The strategies to be adopted include optimising our current technological capabilities, retaining employees’ and stakeholders’ confidence, and increasing revenue growth through market expansion, product expansion and improvement in process and technology along the value chain. We intend to focus and endeavour to bring to fruition our product development plans set out below. In addition to organic growth, our business expansion plans may also include strategic acquisitions which are synergistic to our Group. 4. INFORMATION ON OUR GROUP (CoRt’d) (i) Product Development Plans Our proposed product development milestones for the FYE 2007 to FYE 2010 are as follows:
FYE  Future Milestones  2007  •  Commercialisation of Issuance of Probationary Driving Licence Service  •  Commercialisation of Application of Vehicle Registration Numbers and  Motor Vehicle Registration (Phase 1 and 2)  •  Commercialisation of Motor E-Insunince Intermediary Service  •  Commercialisation of Online Transactional Services for Jabatan Pendaftaran  Negara (“JPN”)  2008  •  Commercialisation of Road Tax Renewal Service  •  Commercialisation of Transfer of Motor Vehicle Ownership  •  To expand GES Services into the South East Asian Market  2009  •  Online Transactional Services for Department of Statistics  •  To expand GES Services into the Middle East Market  2010  •  Tax Monitoring System  •  To expand GES Services into the South Asian Market
FYE2007 IsslUlnce ofProbationary Driving Licence Upon passing both theory and practical test, JPJ will issue probationary driving licence to successful candidates. Probationary driving licence can be printed through a service kiosk. The issuance of probationary driving licence is in the final stage of testing and is expected to be commercialised in the FYE 2007. Electronic Application of Vehicle Registration Numbers and Motor Vehicle Registration (Phase 1 and 2) We are developing a system with JPJ for the electronic tender and application of vehicle registration numbers and electronic application for vehicle registration numbers. With the development of this system, citizens are able to tender for their preferred numbers online or apply for vehicle registration numbers at our kiosks located nationwide. The Government’s approved tariff is RM2.75 for every single transaction in the process. Under Phase 2, we are developing a system with JPJ for the registration of new motor vehicles. The Government’s approved tariff is RMlO.OO to complete the process. The target users for this service are mainly car dealers. Given that there are 14.8 million existing vehicles (Source: Independent Market Research Report) and 1,051,572 new registrations (Source: JPJ) in ZOO5, the potential income from this business is promising. 4. INFORMATION ON OUR GROUP (Cont’d) E-Insurance Intennediory E-Insurance Intermediary service is an extended service of the E-Cover Note service where we will earn income from selling motor vehicle insurance. Our role in this service is to act as an agent or intermediary between insurance companies and motor vehicle owners. This service is complementary to E-Cover Note, Road Tax Renewal and Electronic Application of Vehicle Registration Numbers and Motor Vehicle Registration services as the Group’s customers will be able to enjoy a one-stop service without going through various channels. Online Transactional Services for JPN We are working with JPN to develop an on-line interface which would allow comprehensive records of the Malaysian population to be transacted from lPN’s centralised database to the Malaysian public through our service kiosks located nationwide. With this system, citizens will be able to access and retrieve their personal information from a single repository. Citizens will also have the flexibility of being able to carry out transactions such as application for replacement of MyKad, loading driving license and/or passport information onto MyKad as well as printing out contents of MyKad via our kiosks. FYE2008 Transfer ofVehicle Ownership Similar to the registration of new motor vehicles, we will develop a system with JPJ for the transfer of motor vehicle ownership. The Govermnent’s approved tariff is RM2.75 for every transaction in the process. Given the increasing trend of the automotive industry in terms of number of new vehicles per year, potential income from this business is promising. With the development of this service, users will be able to transfer their vehicle ownership to respective owners without the hassle of queuing up at the JPJ office. This service can be carried out online via our Group’s service kiosks located nationwide. Users of this service will be car dealers, finance companies, banks, corporations and citizens. Renewal ofRoad Tax Renewal of road tax is complementary to our E-Cover Notes, electronic application of vehicle registration numbers and motor vehicle registration as well as E-Insurance Intermediary services. Therefore, citizens will be able to electronically purchase an E-Cover Note and then submit this information through a centralised database maintained by our Group. Upon verification that the vehicle status is not blacklisted for various reasons, the citizen will be able to renew his road tax from the comfort of his home. FYE2009 Online TransactionalServices forDepartmentofStatistics Citizens and businesses will soon be able to purchase customised statistical data from the Govermnent online. The advantage of using this delivery channel is that a broad menu of permutations can be offered by the Department of Statistics. Citizens and businesses will also benefit from the wider selection, as they will be able to obtain precise data relevant to their specific needs. 4. INFORMATION ON OUR GROUP (Cont’d) FYE2010 Tax Monitoring System Our tax monitoring system is an integrated system to monitor the activities of gaming machines in order to ensure accuracy and timely recording of gaming tax. Our Group intends to develop this system with the Ministry of Finance. Given that the current gaming tax declaration forms are manually filled up, an integrated automated system will bring about convenience, efficiency and accuracy. (ti) Business Expansion Plans We are constantly exploring opportunities to acquire businesses or products which are synergistic to our Group in line with our strategy to broaden our market, products and customer base. At present, we have identified a Malaysian-based company with related business activities for possible acquisition (“Proposed Acquisition”). Our Directors view the Proposed Acquisition as a strategic investment, which will serve to consolidate and enhance our Group’s market position in Malaysia through immediate increase in market share and expansion of customer base within the E-Services industry. We have recently commenced due diligence assessment on the Proposed Acquisition and our management is in the midst of gathering information and materials required to evaluate the viability of the Proposed Acquisition. As the process is in its preliminary stage, we are unable to quantify the effects of the Proposed Acquisition on the earnings and cashflow of our Group with accuracy at this juncture. However, we expect the Proposed Acquisition to contribute positively to the long term future earnings and cashtlow of our Group as a result of the following: (a) ability of management to run operations efficiently and effectively, hence ensuring low cost and comparable profit after tax margins;
(b) benefits from economies of scale as a merged entity as opposed to duplication of functions and in capital expenditures, ifboth companies operated individually; and
(c) immediate access to geographical markets that our Group currently does not have a significant presence in.

We currently expect to fund the Proposed Acquisition through internally generated funds subject to the finalisation of the payment schedule under a sale and purchase agreement to be entered into later. The Proposed Acquisition, despite the cash consideration, is not expected to have any material impact nor curtail our Group’s capital expenditure or expansion plans as detailed in this Prospectus. Upon completion, we do not expect the Proposed Acquisition to have any impact on the concession agreements awarded to our enlarged Group as we will continue to provide services under the concession agreements (such as the driving theory test taking and ancillary services, issuance and renewal of licences, online transactional services for PDRM and JIM, etc.), as well as commercial services which are not concession-based (such as the E-Cover Notes, the E-Fulfillment services and other technical services). 4. INFORMATION ON OUR GROUP (Con/’d) As with most acquisitions, there are associated risks which could have a material adverse effect on our Group’s future profitability and performance. We could encounter difficulties in the Proposed Acquisition, including unanticipated integration problems and business disruption which may result in unforeseen operating difficulties and expenditures. Nevertheless, our Board is confident that the common problems of integrating back end systems may be alleviated to a certain extent, as the target acquiree uses a similar solution platform as ours. Integration of the operations of an acquired company may also consume considerable management time and attention, which could otherwise be available for ongoing development of the business. Moreover, the expected benefits of the Proposed Acquisition may not be realised, to such extent that we may be required to write-off certain associated acquisition costs such as goodwill and other intangible assets, which could be significant. However, we believe that our management will be able to exercise due discernment on the suitability of the Proposed Acquisition based on their in-depth knowledge of the industry. Additionally, we have commissioned a due diligence on the Proposed Acquisition in consultation with the necessary professional advisers. The Proposed Acquisition may further be subjected to our shareholders’ approval, ifso required. Notwithstanding the above, since negotiations for the Proposed Acquisition are still in its preliminary phase, there can be no assurance that the Proposed Acquisition will materialise. In such an event, we do not expect the Proposed Acquisition to have any impact on the business operations of our Group. Additionally, our consolidated profit forecast as disclosed in Section 9.9 of this Prospectus will not be affected since the expected additional contribution in revenue from the Proposed Acquisition is not included therein. THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK

Comments are closed