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ris.Rights Issue announcement-1

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									                           RIS GROUP LIMITED
                                     P O Box 189
                                   Shortland Street
                                       Auckland


3 August 2010


BY EMAIL: announce@nzx.com


NZX Limited
WELLINGTON

For: Market Information

PROSPECTIVE CAPITAL RAISING AND BUSINESS UPDATE

RIGHTS ISSUE

The Offer
RIS Group Limited advises that it intends to undertake a partially underwritten pro rata
renounceable right issue to raise new capital for the Company (“Offer”).

The Offer will provide all existing holders of shares and options in the Company with the
right to acquire new shares in the Company. The Offer will comprise the offer of one
new share for every three existing shares or three existing options held in the Company.
The issue price for each new share under the Offer will be NZD 1 cent per new share.

Holders of small parcels of existing shares will have the opportunity to subscribe for
additional new shares to bring their holding up to a minimum holding of 2,000 shares in
aggregate.

Timing
The Company is in the process of finalising the offer documentation in support of the
Offer and once that material has been finalised, the Company will announce the Record
Date for the Offer. The Company expects that the Record Date will be within the next
calendar month.

Use of Proceeds of the Offer
The Offer will raise up to NZD$2.02 million before costs. The funds raised will be used
to:

   •   Fund the commercialisation and implementation of the “Medicare Easyclaims’
       initiative, which the Company expects to “go live to market” in late fourth quarter
       of 2010;

   •   Fund the commercialisation and implementation of the USG solution in India. The
       Company contemplates that the first EFTPOS terminals will start to be deployed
       in India during the latter part of the fourth quarter of 2010, with a hard launch to
       be undertaken in the first quarter of 2011;
   •   Assist the Company with its on going working capital requirements.

Underwriting Arrangements
This Offer has been partially underwritten by:

    • USG Solutions PVT. Limited (“USG”) as to NZD$1.25 million; and

    • Gamaj Pty Limited (“Gamaj”) as to NZD$300,000.

Allotment to USG (“USG Allotment”)
The Company has entered into Underwriting, Loan and Subscription Agreements with
USG, pursuant to which the Company has agreed to issue to USG 50 million options to
acquire shares in the Company (“USG Options”). The exercise price for the USG
Options will be 6 cents. The USG Options will have a term of 48 months from the date of
their issue.

In consideration for the issue of the USG Options to USG, USG shall:

   •   Set up a software development centre in India, to facilitate and fast track the
       software customisation required to enable a global roll out of the RIS software
       solutions;

   •   Provide the underwriting services in respect of this Offer;

   •   Provide a loan facility of up to $1,250,000 to the Company;

   •   Enter into a commercial agreement with RIS, where RIS will be entitled to receive
       royalty revenue of 10% of all gross revenue derived by USG from its business
       operations undertaken in India which utilise the RIS software solutions.

Allotment to Gamaj Pty Limited (“Gamaj Allotment”)
In consideration for Gamaj:

   •   Providing the underwriting services in respect of this Offer; and

   •   Providing a loan facility of up to AUD$300,000 to the Company,

the Company has agreed to issue 20 million options to acquire shares in the Company
to Gamaj (“Gamaj Options”). The exercise price for the Gamaj Options will be 6 cents.
The Gamaj Options will have a term of 48 months from the date of their issue.
BUSINESS UPDATE

Medicare EasyClaim Solution

Background
The Australian Government is implementing a new service for medical patients to allow
them to claim and receive Medicare rebates at the time of their medical consultation with
their General Practitioner. This new service is called Medicare EasyClaim. RIS is
developing a Medicare EasyClaim system as part of its value added suite of applications
to run on the i-RIS EFTPOS terminal platform – called “I-Health”.

This new service will be available on both a stand-alone EFTPOS terminal as well as
integrated EFTPOS Terminal with major Practice Management Systems that operate
within the Australian market.

In March 2010, RIS signed an agreement with CUSCAL, the bank representing credit
unions in Australia), who is anticipating to enter into an agreement with Medicare in Q3
2010) to provide the EasyClaim service. From this point, it is expected that the
EasyClaim solution will go live in late 2010.

RIS has signed a Professional Services Agreement with I-Venture in December 2008. A
condition of this agreement is for I-Venture to contract with a Practice Management
Software Vendor who has a minimum of 1,000 healthcare practices with the view to sign
up and deploy an interfaced solution across their customer base over the first 12
months.

RIS has therefore assumed that a minimum of 1,000 healthcare practices will be
contracted in the first 12 months from the date of the Medicare contract execution with
Cuscal, and that a further 1,000 healthcare practices will be contracted in the second 12
months.

Status
RIS has now received preliminary I-RAP certification for its solution and infrastructure
(Medicare need to formally approve this after the Medicare Agreement is signed). This I-
RAP certification is to meet the Standards of the Australian Defence Signal Directorate
(DSD) for Information Security purposes.

RIS has completed its initial software development for the Medicare Easyclaim stand-
alone solution (Medicare need to also formally approve this after the Medicare
Agreement is signed).

RIS has completed the initial Medicare Accreditation documentation. (Medicare need to
formally approve this after the Medicare Agreement is signed).

Pending the above timings, RIS expects to complete its first live Medicare Easyclaim
transaction in the fourth quarter of 2010.

Summary
Medicare “EasyClaims” is a federally-funded initiative designed to simplify the Medicare
claims process for consumers and medical practices. Its objective is to install, in each
medical practice nationally, an EFTPOS system that enables consumers to have their
Medicare refund transferred immediately to their nominated bank account.
This initiative represents a far more cost and time efficient manner in which Medicare
rebates to patients can be processed as opposed to the traditional manual rebate
system which previously required Medicare staff to manually process and produce a
rebate cheque for a claimant.
Some banks have already started enabling their terminals to process “EasyClaims”
transactions, however (with the exception of one smaller organisation) no company has
adequately addressed the requirement to interface the new payment methodology
directly into multiple Practice Management Systems available in the marketplace today.
With this is mind, this is why RIS partnered with I-Venture Pty Ltd to target a consortium
of interested Practice Management System providers with an offer of a fully interfaced
“EasyClaims” solution for their collective installation base of approximately 4,500
medical practices.
RIS has selected CUSCAL (the bank of the Credit Unions in Australia) to acquire the
transactions and manage the interbank relationships. CUSCAL will contract directly with
Medicare for a period of 10 years (only a Bank or ADI is allowed to contract directly with
Medicare). This contract is the basis in which CUSCAL has entered a parallel back-to-
back agreement with RIS (also for 10 years) in relation to the RIS component of the
services.
Under RIS’ prospective contract with CUSCAL, RIS will provide its software solution to
process the acceptance of the payments by a patient to its general medical practitioner,
and to process the rebate of the Medicare rebate to the patient in real time. The RIS
Agreement with Cuscal and back-to-back Cuscal Agreement with Medicare is for ten
years.

Revenue Opportunity
In participating medical practices RIS earns:

   •   A transaction fee for every Payment transaction ;

   •   A transaction fee on every Medicare “EasyClaim” transaction or Bulk Bill and;

   •   A monthly terminal rental fee on every Eftpos terminal deployed.

Partnership with USG Solutions Pvt. Limited
Background
RIS has entered into a 10 year contract with a partner in India to license the I-RIS
operating system, payment application and suite of “value added” products. There is an
initial target of 75,000 terminals within 3 years of the ‘go live’ date.
The project will be in two phases. Phase 1: the strategic planning and setup of
appropriate systems for the partner’s terminals. Phase 2: RIS assisting with the
deployment of the partner’s terminals to contracted Indian financial institutions.
Status
RIS, over the next 4-5 months will, in conjunction with USG, implement the full RIS
licensing model, including all documentation, hardware, software and operations that will
support the growth and management of a large EFTPOS terminal fleet.
RIS will build and configure Production and Disaster Recovery Data Centres in Mumbai
to support the processing of Value Added Application transactions and the connection to
an Acquiring Bank for the processing of payment transactions.



RIS expects to complete its first live financial payment transaction in India during the
fourth quarter of 2010.

Revenue Opportunity
RIS has received Project Management and Setup Fees for the provision of its services
to USG.
The parties have agreed (after the wholesale Merchant Service Fee [MSF] rates have
been signed off in-country) that RIS will receive 10% of all Gross Revenues from all
applications deployed across terminals.


END

								
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