GHL System Berhad Annual Report 2018

a n n u a l r e p o r t 2 0 1 8 13 3. PERFORMANCE BY BUSINESS SEGMENT AND GEOGRAPHY (cont’d) 3.1 Performance By Business Segment (cont’d) a) Transaction Payment Acquisition (“TPA”) Segment The TPA business has two (2) distinct sub-segments, each in a different stage of development. They are: i) e-pay’s direct contractual relationships with merchants to provide Telco prepaid reloads and other top-up facilities as well as, bill collection services for consumers (“reload and collection services”) and ii) GHL’s direct contractual relationships with merchants to provide international and domestic card payment and e-wallet services (“electronic payment services”). With both sub-segments combined, the TPA business grew marginally 0.1% to RM182.4 million in 2018 (2017 – RM182.3 million), contributing 61.0% of total revenue in 2018 (2017 – 71.8%). Within this, the e-pay business contributed 68.4% (2017-76.5%) 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 +29.2% yoy to RM57.9 million (2017 (restated) – RM44.8million) whereas the e-pay business declined -10.5% to RM124.8 million in 2018 from RM139.4 million in 2017 (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 two (2) components within the TPA business is described in more detail, as follow: - (i) e-pay (reload and collection services) e-pay is the largest provider of reload and collection services in Malaysia. It has approximately 38,000 acceptance points nationwide, encompassing all petrol chains, large convenience store chains and over 8,000 general retail stores. The e-pay brand is well known to consumers who use the service. With over 19 years of experience, e-pay is clearly the market leader in Malaysia within this industry segment. A full year’s comparison of key data between 2018 and 2017 relating to the e-pay business is found in Table 1 below. The transaction value processed by e-pay declined 2.1% in 2018. 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 commission) outpaced growth in prepaid mobile reloads. Table 1 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) Transaction Value Processed 3,763.3 3,684.9 -2.1% Gross Revenue 139.4 124.8 -10.5% Gross Revenue / Transaction Value (Note 1) 3.7% 3.4% -8.1% Gross Profit 45.6 43.9 -3.7% Gross Profit / Transaction Value (Note 1) 1.2% 1.2% - Merchant Footprint - e-pay Only (Thousands) 36.4 38.0 4.4% YTD 2017 YTD 2018 % change GHL Electronic payments TPA (All stated in RM'millions unless stated otherwise) Transaction Value Processed (Note 1) 4,334.2 6,279.9 44.9% Gross Revenue 44.8 57.9 29.2% % change YTD 2017 (Restated) YTD 2018 Note 1 – Gross Revenue or Gross Profit respectively divided by the Transaction Value Processed expressed as a %. MANAGEMENT D I SCUSS I ON AND ANA LYS I S C O N T ’ D