Friday, March 11, 2011

Century ... Mar11

The eventual implementation of a GST stands to benefit Century Software.

Market speculation has it that the financial management software solutions provider could be awarded a government contract worth Rm100 million in the near future. However, the company has already announced that it has submitted bids for several jobs worth about rm200 million.

It is likely that the government may spend more on information, communication and technology in 2011 as it has not done so for a while. So Century Software stands to benefit, especially with the proposed implementation of the GST.

Given that the Royal Malaysian Customs has already taken steps to introduce the idea of the GST to the people, it appears likely that it will be implemented sometime in the second half of 2012 or after the General Election.

One of the largest providers of accounting software to government agencies, it would benefit as every government agency would have to upgrade systems.

The implementation of the GST was indefinitely postponed in Oct 2010 to allow the Ministry of Finance to engage with all segments of society on the imposition of the broad based tax. However, industry observers say the rollout of software could take place very soon given that it may need 15 to 18 months to ensure full compliance.
However, while it is a dominant player in providing government accounting software platforms and maintenance, this also represented a single customer risk as it is highly dependent on the public sector.

The services provided by Century Software are not regarded as being in direct competition with other listed companies.

Following its listing on Jan 31, 2011, it saw the exit of substantial shareholder MAVCAP which disposed of seven million shares. The government established MAVCAP in 2001 to provide financial support of growing ICT companies.

Although the government has indicated that the imposition of the GST is imminent, the real concern lies in whether the rollout of the tax, and consequently the relevant accounting systems will be done across the board and in a timely manner. Only if this implemented, will it be all systems go foe Century Software.

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