Chairman's Message

According to the International Data Corporation's (IDC) latest research, Malaysia's IT services market reached US$801.81 million, a year-on-year growth of 29% in 2004 compared with 2003. In 2004, the consulting and Systems Integration (SI) market had the highest share of the services pie at 42%, followed by support and training at 33% and outsourcing at 25%. Boosted by strong outsourcing requirements, the IT services market is forecasted to show a 16.3% compounded annual growth rate (CAGR) for 2004-2009.

In the SI market, demand for enterprise application, either packaged or customized, will continue to drive a double-digit growth rate in the market at a CAGR of 11.6%. This is driven by the advent of new technologies such as radio frequency identification (RFID) application, virtualization application, as well as changes in delivery models of the service providers, shifting from the traditional SI model to a service model. Network consulting and integration continue to spur growth in the market, especially when the concept of ubiquitous computing is embedded in the user community. The Group envisions that in the long term, the number of outsourcing projects will increase, as companies are likely to increase the use of outsourcing for IT investment rationalization. In the deployment and support segment, hardware and software maintenance will grow at a more moderate rate, seeing higher competitiveness from the value-added service providers in the market to provide a more dynamic service offering to take over the maintenance responsibilities using a managed service model, rather than the traditional annual maintenance service model. With a more focused strategy, the Group will stand to benefit from the latest market reality.

For financial year ended 31st March 2005, the Group recorded a revenue of RM71 million and net profit of RM2.4 million as compared to RM86 million revenue and RM39 million net loss in the previous financial year. At the Company level, Dataprep registered a revenue of RM2.4 million and net profit of RM1.3 million compared to RM5.7 million and RM3.6 million net loss in the previous financial year.

The decline in revenue for the Group was mainly attributed to deferment in some projects whereas the increase in the Group's net profit was due to increased profit margin, lower operating costs, recovery of bad debts and non-recurrence of exceptional charges. Overall, the Group's financial performance for the year has improved with earnings per share of 3.7 sen compared to a loss per share of 62.15 sen in the previous financial year.

During the year under review, efforts were made to strengthen the Group's core competencies vis-a-vis its ongoing initiatives for internal rationalization and cost control measures.

Sales effectiveness and delivery capabilities were enhanced with the aim to improve our "speed to market". The focus of attention was on client selection along industry lines, retention of key accounts and client penetration including intensifying channel sales and strengthening alliance relationship with major partners like Cisco, Computer Associates, 3Com, Novell, IBM, HP and Dell resulting in Solsis (M) Sdn. Bhd. being awarded with a Silver Partner status by Cisco Systems and Platinum Partner status by Novell Inc.

Delivery capabilities were realigned along market needs and PMO (Program/Project Management Office) practices leveraging on the Group's 25 service outlets nationwide including overseas associates and affiliates.A mark of our quality achievement is our certification to the internationally benchmarked ISO 9001:2000 certification for the "Delivery of IT related support services", the "design, development and implementation of engineering solutions based on IT related products" for Solsis (M) Sdn. Bhd. and the "Provision of business consulting services" for HRM Business Consulting Sdn. Bhd.

Internally, the Group implemented Oracle financials for its back-office and instituted a Knowledge Management System with the objective of promoting enterprise-wide knowledge sharing and creating a knowledge-based learning organization. On the business front, the Group embarked on identifying, exploring and developing opportunities in regional markets that can add or create better value towards building a portfolio of profitable business.

The IT market is expected to register a spending momentum of 16% growth over 2004 with hardware trading and system integration as the largest contributor.

In line with this, the Group expects to acquire the benefits of these growing trends to further improve its performance in the next financial year. Further with a more focused structure, the Group can deliver and support customers more effectively including building better relationships for long term sustainability.

Overall the Board looks to the year ahead with optimism and with confidence that the Management will be able to strengthen the Group's position and improve its competitive edge.

On behalf of the Board, I welcome Dato' Pian Bin Sukro who joined as an Independent Non-Executive Director on 27th August 2004.

I would like to take this opportunity to pay tribute to the Management and Staff for their hard work and dedication for the significant turnaround of the Group. The Group's positive performance would not have been possible without their relentless efforts and contributions. I would also like to thank the Management staff for their confidence and commitment as reflected by the exercising of their respective share options during the year despite a lower share price in the marketplace.

Finally, we are grateful for the resolute support and alliance from our shareholders, customers, suppliers, business associates, government agencies, financiers and all other stakeholders.