Ann: Nexbis to Commence Malaysian Project , page-24

Hi Morley- agree that you raise good points. I honestly do not know the 100% answer to your questions but here are some comments.

1. Original comments suggested immigration contract would deliver $60 - $80 million per annum. I do not think it stated the tenure of the contract. My view is that these contracts would at least be 10 years up to 20 years. However, since this information is from an announcement 27 February 2009 it would be a fair rebuttal to question credibility of quantum.

2. Latest announcements state that it will be a broader and longer term scope. This is positive (if it is true).

3. NBS is effectively an IT implementation company. The inherent value of the company resides with its IP and its ability to exploit commercially its technology. It is not a manufacturing company where COGS (materials, labour, overhead) make up a large percentage of revenue. NBS margins should be high commensurate with similar companies. There is the initial implementation - software, hardware and technical implementation and integration (plenty of code cutting). The majority of the commercial value of implementation cost is the value of IP. Other than maintenance of system there are no significant costs in subsequent years. Margins can be as high - over 90%! How much does it cost Microsoft (excluding Sales and Marketing cost to supply Office product - cost of discs!). Government employees operate the system and I am sure NBS will get a set $ amount per transaction. Given size of Malaysian volumes of movement of people and a full Border Control system then given the structure of contract ($ per transaction), the value of revenue stream will be high although I simply do not know. If you believe the announcement from two years ago then $60 - $80 million per annum would be starting point. However be careful! I will happily take lower figures.

4. You mention Maldives - although I am not familiar with intracies of contract. The significant majority of the apparent cost ($39 million?) would relate to market value of NBS IP (no cost to NBS). To decrease upfront cost to Government it is structured as a BOOT contract and NBS gains a revenue annuity stream over period of contract. Actual cost of implementation (given number of sites in Maldives) would be relatively small. The implied value of Maldives contract would be much smaller than Malaysian contract.

I do not have all the answers but being involved in many acquisitions over the years you attach a much higher earnings multiple to high margin, low working capital businesses in comparison to lower margin, high working capital of manufacturing businesses. Hence why companies of NBS (not for NBS yet) will trade at high earnings multiple given its enterprise value (EV).

Hope this helps. I would appreciate if someone would enlighten us further.