GHL System Berhad Annual Report 2018

G H L S y s t e m S B e r h a d ( 2 9 3 0 4 0 - D ) 12 2. DISCUSSION AND ANALYSIS OF THE FINANCIAL RESULTS AND CONDITIONS (cont’d) 2.6 Liquidity and Capital Resources (cont’d) (iv) The Group increased its share capital by RM106.2 million (2017 – RM4.5 million) due to the issuance of 125,000 (2017 - 4.7 million) shares upon the exercise of Employee Share Scheme ("ESS"), a private placement of 65 million shares, special issue of 13.4 million shares pertaining to the Share Subscription Agreement (“SSA”) with Paysys Group Holdings Sdn. Bhd. and Rica Holdings (M) Sdn. Bhd. and the resale of 678,601 (2017 - 737,000) treasury shares. 2.7 Trends and Events The ASEAN region’s central banks and regulators have advocated the move towards greater adoption of e-payments as a means of payment for goods and services. The progress made in different countries have been encouraging given the increasing number of e-payment acceptance points in the key markets that GHL operates in, namely Malaysia, Thailand, Philippines, Indonesia and Cambodia. This push to greater use of non-cash methods to transact sync perfectly with GHL’s TPA business strategy in enabling greater proliferation of non-cash acceptance, especially amongst the small merchant and mobile merchant segments. As we acquire more merchant footprints in line with the regulatory environment’s push for a greater cashless society, the need for more coverage becomes obvious. The growing number of debit card/ATM card holders in ASEAN will benefit from the growing number of merchant acceptance points where the former will be able to use their cards. As for the remaining unbanked segment, the emergence of local e-wallets will serve as a temporary bridge to enable the unbanked to participate in the cashless trend, for both online as well as offline purchases. The need to grow acceptance points and payment infrastructure is critical in enabling financial cohesiveness for the fast growing ASEAN consumer market. ASEAN central bank initiatives and e-payment promotions are in sync with GHL’s objective and is expected to provide a cohesive environment for our sustainable growth, moving forward. 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 are as per below: - Annuity vs Non-Annuity Revenue 88.5% 11.5% 90.7% 9.3% Total RM253.7m 2017 (RM’mil) 23.6 230.1 Annuity Non-annuity 34.4 264.7 2018 (RM’mil) Total RM299.1m 90% 100% 80% 70% 60% 50% 40% 30% 20% 10% 0% Revenue By Business Segment 61.0% 34.2% 71.9% 21.9% 6.2% 4.8% Total RM253.7m 2017 (RM’mil) 15.7 182.3 TPA Solution Services 14.6 182.4 2018 (RM’mil) Total RM299.1m 250.0 300.0 200.0 150.0 100.0 50.0 0% 55.7 Shared Services 102.1 e-pay (All stated in RM'millions unless stated otherwise) YTD 2017 YTD 2018 % change MANAGEMENT D I SCUSS I ON AND ANA LYS I S C O N T ’ D