GHL System Berhad Annual Report 2019

G H L S Y S T E M S B E R H A D 1 9 9 4 0 1 0 0 7 3 6 1 ( 2 9 3 0 4 0 - D ) 14 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 11.8% to RM204.0 million in 2019 (2018 – RM182.4 million), contributing 58.7% of total revenue in 2019 (2018 – 61.0%). Within this, the e-pay business contributed 62.1% (2018 – 68.4%) 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 by +34.2% yoy to RM77.3 million (2018 (restated) – RM57.6 million) whereas the e-pay business grew at a lower rate of 1.5% to RM126.7 million in 2019 from RM124.8 million in 2018 (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 43,500 acceptance points nationwide, encompassing petrol chains, large convenience store chains and general retail stores. The e-pay brand is well known to consumers who use the service. With over 20 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 2019 and 2018 relating to the e-pay business is found in Table 1 below. The transaction payment value by e-pay grew 10.9% in 2019. The Gross Revenue/Transaction Value declined by 8.4% to 3.1% in the year due to changes in the product mix as bill collections and non-mobile reloads (which have a lower commission) growth outpaced that of prepaid mobile reloads. Table 1 e-pay (All stated in RM'millions unless stated otherwise) Transaction Payment Value 3,684.9 4,086.6 10.9% Gross Revenue 124.8 126.7 1.5% Gross Revenue / Transaction Value (Note 1) 3.4% 3.1% -8.4% Gross Profit 43.9 44.9 2.3% Gross Profit / Transaction Value (Note 1) 1.2% 1.1% -7.7% Merchant Footprint - e-pay Only (Thousands) 38.0 43.5 14.5% YTD 2018 YTD 2019 % change Note 1 – Gross Revenue or Gross Profit respectively divided by the Transaction Payment Value expressed as a % MANAGEMENT DISCUSSION AND ANALYSIS CONT’D