GHL System Berhad Annual Report 2017

ANNUAL REPORT 2017 17 MANAGEMENT DISCUSSION AND ANALYSIS CONT’D 3. PERFORMANCE BY BUSINESS SEGMENT AND GEOGRAPHY 3.1 Performance By Business Segment As indicated earlier, the core business segments of the Group comprise of the following:- 1) Transaction Payment Acquisition (“TPA”), 2) Shared Services and 3) Solution Services. An analysis of the performance of all three business segments follows below:- 0% 20% 40% 60% 80% 100% 10% 30% 50% 70% 90% Revenue By Business Segment Total RM245.9m Total RM253.7m 2016 (RM’mil) 177.2 13.8 2017 (RM’mil) 182.3 15.7 72.1% 5.6% 71.9% 22.3% 21.9% 6.2% TPA Solution Services 54.9 55.7 Shared Services a) Transaction Payment Acquisition (“TPA”) Segment The TPA business has 2 distinct sub-segments, each in a different stage of development. These are; i) e-pay’s direct contractual relationships with merchants to provide Telco prepaid and other top-up facilities and, bill collection services for consumers (“reload and collection services”) and ii) GHL’s direct contractual relationships with merchants to provide international and domestic electronic payment services (“electronic payment services”). With both sub-segments combined, the TPA business grew 2.9% to RM182.3 million in 2017 (2016 – RM177.2 million), contributing 71.9% of total revenue in 2017 (2016 – 72.1%). Within this, the e-pay business contributed 76.5% of the total Group TPA revenue. The electronic payments business is smaller in absolute terms but is growing at a much faster rate, especially for Thailand and Philippines. The electronic payments TPA gross revenue grew strongly by +33.3% yoy to RM42.9 million (2016 (restated) – RM32.2 million) whereas the e-pay business declined -4.4% to RM139.4 million in 2017 from RM145.8 million in 2016 (restated). Given the considerable untapped opportunity within ASEAN, the TPA business remains the main driver of growth for the Group in the near term. Each of the 2 components within the TPA business is described in more detail as follows:- (i) e-pay (reload and collection services) e-pay is the largest provider of reload and collection services in Malaysia. It has approximately 36,350 acceptance points nationwide, encompassing all petrol chains, the largest convenience store chains and general retail stores. The e-pay brand is well known to consumers who regularly use the service. With over 18 years’ experience, e-pay is clearly the market leader in Malaysia within this industry segment. A full year’s comparison of key data between 2017 and 2016 relating to the e-pay business is found in Table 1 below. As can be seen, the transaction value processed by e-pay grew 3.6% in 2017. The Gross Revenue/Transaction Value declined by 30 bps in the year due to changes in the product mix as bill collections and non-mobile reloads (which have a lower merchant discount rate) outpaced growth in prepaid mobile reloads.