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Company Background

The Company was incorporated in Malaysia under the Companies Act 1965 as a private limited company on 5 January 2017 and is deemed registered under the Act, under the name of Agmo Holdings Sdn. Bhd. The company subsequently converted to a public limited company on 30 December 2021 and assumed the present name of Agmo Holdings Berhad to facilitate the Listing. The company provides digital solutions and application development specialists.

​As at the LPD, the structure of the Group and Investee Companies are as follows:

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A summary of the business model is as follows:

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Use of proceeds

1. Investment in a dedicated R&D team - 15.6% (within 24 months)
2. Investment in a dedicated sales, marketing and business development team - 11.1% (within 36 months)
3. Investment in a dedicated technical support and maintenance services division - 16.1% (within 36 months)
4. Establishment of a training and development centre - 11.5% (within 36 months)
5. Regional expansion to Singapore - 3.1% (within 36 months)
6. Working capital and related capital expenditure
   1. Expansion of the mobile and web application development and digital platform-based services - 26.8% (within 30 months)
   2. Setting up of new office - 1.4% (within 12 months)
7. listing expenses - 14.4% (Immediately)

Investment in a dedicated R&D team - 15.6% (within 24 months)

The Group recognises the importance of having a dedicated R&D team for the development and enhancement of new and current products and services in order to remain competitive and relevant in the industry. Since the commencement of the business, the R&D has been carried out by the software development team that works on both project deliverables to customers as well as on the R&D of new products and/or services. As such, the companies intend to set up a dedicated R&D development team that will focus solely on R&D activities such as the development of new products, services and emerging technology development tools. Pursuant to the setup of its R&D team, the software developers shall be dedicated to delivering projects for the customers.

The company intends to allocate approximately RM3.45 million representing 15.6% of the gross proceeds from the Public Issue for setting up a dedicated R&D team within 24 months from the date of Listing, with details as follows:

​In the event the actual proceeds utilised for setting up a dedicated R&D team is lower than the allocation of RM3.45 million, the excess will be used for working capital purposes. Any excess amount required for setting up a dedicated R&D team will be funded from internally generated funds and/or bank borrowings.

Investment in a dedicated sales, marketing and business development team - 11.1% (within 36 months)

The Group intends to set up a dedicated sales, marketing and business development team. The sales, marketing and business development team will be responsible for planning and executing sales and marketing activities, attending inquiries from potential customers and preparation of proposals and demo systems, presenting to customers as well as preparation of the quotation.

The company intends to allocate approximately RM2.46 million representing 11.1% of the gross proceeds from the Public Issue for setting up a dedicated sales, marketing and business development team within 36 months from the date of Listing, with details as follows:

In the event the actual proceeds utilised for setting up a sales, marketing, and business development team is lower than the allocation of RM2.46 million, the excess will be used for working capital purposes. Any excess amount required for setting up a sales, marketing and business development team will be funded from internally generated funds and/or bank borrowings.

Investment in a dedicated technical support and maintenance services division - 16.1% (within 36 months)

The Group intends to set up a dedicated team that will focus on technical support and maintenance services. Pursuant to the setup of the technical support and maintenance services team, the software developers shall be dedicated to delivering projects for the customers.

The company intends to allocate approximately RM3.56 million representing 16.1% of the gross proceeds from the Public Issue for setting up a dedicated technical support and maintenance services division within 36 months from the date of Listing, with details as follows:

In the event the actual proceeds utilised for setting up a support and maintenance services division is lower than the allocation of RM3.56 million, the excess will be used for working capital purposes. Any excess amount required for setting up a support and maintenance services division will be funded from internally generated funds and/or bank borrowings.

Establishment of a training and development centre - 11.5% (within 36 months)

Since the commencement of the business, the Group has been conducting external training, seminars and workshops with third parties, such as private and public universities and professional associations pertaining to topics relevant to digital solutions such as mobile application development, XR development and blockchain.

The company intends to allocate approximately RM2.54 million representing 11.5% of the gross proceeds from the Public Issue for the establishment of a training and development centre within 36 months from the date of Listing, with details as follows:

In the event the actual proceeds utilised for the establishment of a training and development centre is lower than the allocation of RM2.54 million, the excess will be used for working capital purposes. Any excess amount required for the establishment of a training and development centre will be funded from internally generated funds and/or bank borrowings.

Regional expansion to Singapore - 3.1% (within 36 months)

For the Financial Years Under Review, 7 out of 14 overseas customers were from Singapore. The revenue derived from the customers in Singapore for the Financial Years Under Review are as follows:

The major contributor of the revenue from Singapore is the recurrent customer. Since the commencement of the business, all communications with and inquiries from overseas customers, including in Singapore, have been handled by the team in Malaysia.

Thus, the company intends to enlarge its footprint in South East Asia by expanding into Singapore. To facilitate the expansion into Singapore, the company intends to establish a Business Development and Customer Relations team to be based in Singapore, which will comprise 2 business development representatives. The company plans to rent a space in a co-working office in Singapore for this team.

They intend to allocate approximately RM0.69 million representing 3.1% of the gross proceeds from its Public Issue within 36 months from the date of Listing, with details as follows:

In the event the actual proceeds utilised for the regional expansion to Singapore is lower than the allocation of RM0.69 million, the excess will be used for working capital purposes. Any excess amount required for the regional expansion to Singapore will be funded from internally generated funds and/or bank borrowings.

Working capital and related capital expenditure

A. Expansion of the mobile and web application development and digital platform-based services - 26.8% (within 30 months)

According to the IMR report, the mobile and web application development industry size in Malaysia, measured in terms of sales revenue, increased from RM269.08 million in 2018 to RM397.30 million in 2020, at a CAGR of 21.5%. In the long term, the demand for mobile and web applications will continue to be driven by digitalised consumer behaviour and attachment to mobile devices by the general public, businesses’ need for digitalisation, and continuous technology advancement which drives businesses to continuously adopt new or upgrade existing mobile and applications, and the implementation of initiatives for digital transformation by the Government. Further, the Group has faced instances whereby certain scopes of development projects are outsourced to third parties due to resource limitations whereby the current workforce is at full job capacity and is unable to take on new projects.

In view of these long-term prospects as well as the manpower resource limitations, the company intends to continue expanding its mobile and web application development and digital platform-based services by recruiting an additional 24 personnel to enable the Group to secure and manage more projects.

The company intends to allocate approximately RM5.92 million representing 26.8% of the gross proceeds from the Public Issue for the expansion of its mobile and web application development and digital platform-based services within 30 months from the date of Listing, with details as follows:

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B. Setting up of new office - 1.4% (within 12 months)

As at the LPD, the existing offices (which are currently rented) have a total approximate floor area of 7,600 square feet. The Group intends to set up a new office by renting an office space with an estimated floor area of approximately 2,500 square feet in the Klang Valley as additional office space for the Group to accommodate the increase in the size of the team.

The company intends to allocate approximately RM0.30 million representing 1.4% of the gross proceeds from the Public Issue for setting up a new office within 12 months from the date of Listing. The total cost for setting up a new office is approximately RM0.30 million, comprising RM0.10 million for rental of new office and RM0.20 million for renovation works. The rental of the office is estimated to be RM0.10 million per annum, at the rate of approximately RM3.50 per square feet per month, and the renovation works are estimated to be RM80 per square feet, of which the entire amount shall be funded by the IPO proceeds. Subsequent to the initial 12 months of rental expense funded by the IPO proceeds, the rental expense of the office shall be funded through internally generated funds. As at the LPD, the new office has yet to be identified.

Business model

The company is a digital solution and application development specialist. The solutions involve digitalising their customers’ business operations through the development of mobile and web applications as well as the provision of digital platform-based services, as follows:

1. development of mobile and web applications;
2. provision of digital platform-based services;
3. provision of subscription, hosting, technical support, and maintenance services.

The business can be summarised in the business model below:

Development of mobile and web applications

The company is principally involved in the development of mobile applications for customers (i.e. businesses and companies) from various industries/sectors such as healthcare, logistics, oil and gas, automotive, financial services and government agencies. The mobile applications developed for businesses and companies comprise commercial applications that are made available to their customers, suppliers and/or business associates; as well as consumer mobile applications which are made available to the public whereby users can download these mobile applications from Google Play Store, Apple App Store and Huawei AppGallery. They also develop enterprise mobile applications which are for their customers’ internal use by the employees whereby users can download these mobile applications from the customers’ internal distribution platform (i.e. intranet) or online application stores (i.e. Google Play Store, Apple App Store and Huawei AppGallery).

Apart from the development of mobile applications, the company also develops web applications for businesses and companies. The web applications developed for our customers are generally extended/additional applications to complement the mobile applications developed for them as a complete digital solution, notwithstanding, they also provide web application development services on a standalone basis.

Digital platform-based services

The company’s provision of digital platform-based services is intended for its customers (i.e. businesses and companies) to perform different tasks such as hosting events and connecting to / interacting with customers as well as for e-commerce-related transactions, amongst others. These digital platform-based services are provided through mobile or web applications developed and owned by the Group, and its customers and authorised users can use these applications when given access by the Group. The company’s customers can also integrate some of these applications to their own mobile and/or web applications via API, whereby in such cases, the applications serve as a mini-application that allows the customers to carry out additional functions on their mobile and/or web applications. These digital platform-based services are provided to the customers on a subscription model and/or per-usage / per-event basis based on the pre-agreed rates with the Group.

Subscription, hosting, technical support, and maintenance services

The company provides subscription, hosting, technical support and maintenance services to businesses and companies for their mobile and web applications. These services are provided for a pre-agreed period typically ranging from 3 months to 12 months, thus generating recurring revenue for the Group.

1. Subscription and hosting

To enable mobile and web applications for deployment, commercialisation and continuous usage, mobile and web applications are required to run on a computing platform and hosted on cloud servers or on-premises servers at the customers’ designated sites. A computing platform allows mobile and web applications to be deployed and managed; a server is used as storage and backup of the applications’ coding and data. The Group provides subscription and hosting services to its customers under several third-party cloud computing platforms. The cloud computing platforms used by the Group for its subscription and hosting services comprise Microsoft Azure, AWS and Huawei Cloud.

As part of the application development projects, the company provides subscription and hosting services for the applications upon deployment if required by the customers by bundling the services to its application development services. The subscription and hosting services for mobile and web applications are on a quarterly or annual basis and are subject to renewal by its customers. The minimum period for the subscription and hosting services is 3 months, and as at the LPD, the company has an existing subscription and hosting engagements with 14 customers for up to 3 years. Among these 14 customers, 7 of them have engaged the subscription and hosting services for at least 2 years.

2. Technical support and maintenance services

As part of after-sales service following the completion of application development projects, the company generally provides complimentary technical support and maintenance services for a period of 2 months, after the applications go live. Subsequent to that, the customers have the option to continue to engage them for technical support and maintenance for their mobile and web applications on a quarterly/bi-annual/annual basis. Among the customers who have previously engaged the company for application development projects, 38 of these customers engaged the Group for technical support and maintenance services in the Financial Years Under Review, which represented 31.7% of the total number of application development customers which was 120 customers. However, 4 out of these 120 customers engaged them for application development prior to the Financial Years Under Review. The continuous engagements for the technical support and maintenance services are subject to renewal by the customers depending on the customers’ requirements. Apart from that, upon customers’ request, the company also provides technical support and maintenance services to businesses and companies that do not engage us for application development and digital solutions. The minimum period of the technical support and maintenance services is 3 months, and as at the LPD, the company has existing technical support and maintenance engagements with 28 customers for up to 3 years. Among these 28 customers, 13 of them have engaged the technical support and maintenance services for at least 2 years.

Click here to continue the IPO - Agmo Holdings Berhad (Part 2)

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