MyEG bags RM180m GST roll-out job

by **Cals** Fri 14 Feb 2014, 11:15

Business & Markets 2014

Written by Cynthia Blemin of theedgemalaysia.com

Friday, 14 February 2014 10:29

KUALA LUMPUR: MyEG Services Bhd yesterday announced that it has accepted a letter of award by the Royal Malaysian Customs Department to undertake the Customs online tax reporting or electronic monitoring system (EMS).

The EMS would be for the eventual roll-out of the goods and services tax (GST) effective April 2015.

In an announcement to Bursa Malaysia yesterday, MyEG said the value of the project is estimated to be RM180 million. The tenure for the project is six years and will commence from April 1, 2014, it said.

An executive familiar with the matter told The Edge Financial Daily the EMS system will eventually be used for the roll-out of the implementation of the goods and services tax (GST).

“MyEG will provide the device and software services that will link up to the point-of-sales terminals and cash registers for the system,” he said. He did not rule out the possibility that MyEG’s tenure for the project could be renewed after six years.

However, the executive declined to disclose the project’s profit margin.

Assuming a net profit margin of 30%, the project would earn MyEG a net profit of RM54 million. This translates into annual profit of RM9 million over six years. This is a handsome windfall for the company as the amount is about a quarter of its RM35 million net profit posted in the last financial year ended June 30, 2013.

In the Bursa announcement yesterday, MyEG said that the project would entail the linking of point-of-sales terminals and cash registers of businesses that are subject to Custom’s tax collection.

This will enable the Customs to effectively monitor tax collection for the government, it noted.

“The board of directors is of the opinion that the project will contribute positively to the earnings of MyEG for the financial year ending June 30, 2015 onwards,” it said.

MyEG said the funding for the project is expected to be obtained from internally-generated funds and bank borrowings.

MyEG’s share price has more than tripled after the general election in May last year. The stock has climbed from 84 sen on May 3 last year to a high of RM3.04 on Jan 21. It closed at RM2.89 yesterday.

This article first appeared in The Edge Financial Daily, on February 14, 2014.