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GHL Systems Berhad
(293040-D)
Annual report 2015
GOING FORWARD (2016 Prospects)
The Group’s strategy of growing its TPA business is
well underway. Through e-pay, the Group now has
a consistent and high level of earnings from the
reload and bill collections which are component
of the TPA business. This core business continues to
perform strongly. The Card Payment Services business
is, however, still in the early stages of development.
The Malaysian business entered into a TPA agreement
with a large local Bank and effectively commenced
merchant acquisition activities for card payment
services in the second half of 2015 . In the 6 months
ended December 2015, there was a sizeable and
promising number of merchant acquisitions closed
under this TPA arrangement. Two other acquirers
in Malaysia under a similar TPA program we have
been delayed in their implementation due to system
integration issues. These are likely to commence only
in 2Q2016.
Aside from delays in systems integration, the domestic
market in Malaysia has been somewhat affected by
the bearish disposition and consumer sentiment arising
from macro economic factors such as the drop in oil
prices, the depreciating Ringgit and the introduction
of GST (Goods & Services Tax). These factors have
impacted consumer demand which has somewhat
affected our TPA business.
While the Philippines accounts for only 12% of group
revenue, it is the fastest growing business within
the Group. Our Philippine business has signed up
several acquirers including banks and Telcos and
is presently in the process of integrating its systems
with these acquirers. While delays have occurred
due to unavoidable systems upgrade issues caused
by changes in card payment security standards, we
are nevertheless encouraged by the traction in the
TPA business thus far. This Bank Card Payment Services
business is likely to commence only in the 2Q2016
and should provide a good platform to significantly
increase our market share in the Philippines. Peso has
also strengthened against the Ringgit and this has
helped the Group better balance its portfolio.
Despite the delays, together with the other
components of the card payments services TPA (see
Figure 5, Note 3 for a description of the components)
our total TPA gross revenue grew 32% in 2015 vs 2014.
This is highly encouraging given that there was only
one acquirer in Malaysia for TPA Bank Card Payment
Services in 2015. With the introduction of several new
acquirers in Malaysia and the Philippines in 2016, we
should see much faster growth in this component
of the TPA business. Malaysia is expected to be the
largest contributor to group earnings in the near future
particularly due to the strength of e-pay earnings.
However, we expect that Philippine’s share of Group
revenues will increase as we start to commence our
TPA business in that country in the coming year.
From a financial perspective, the Group has minimal
foreign currency borrowings. Nevertheless, the Group
had to provide for an unrealised forex translation loss of
RM1.32 million in 2015 due to a significant depreciation
of the Ringgit in 3Q2015. The small US$1.00 million loan
as at end December 2015 that caused the unrealised
loss is expected to be fully repaid in 2016.
We expect 2016 prospects to remain positive and
the recent TPA tie-ups will contribute strongly to the
Group’s results in the coming years. The Group is
well positioned within ASEAN and should benefit as
the region moves from its present low e-payments
penetration and adoption rate to a higher level.
KANAGARAJ LORENZ
Group Chief Executive Officer
ceo
Report