MANAGEMENT DISCUSSION AND ANALYSIS CONT’D 3.0 PERFORMANCE BY BUSINESS SEGMENT AND GEOGRAPHY 3.1 Performance by Business Segment As indicated earlier, the core business segments of the Group comprise the following: (a) Transaction Payment Acquisition (“TPA”); (b) Shared Services; and (c) Solution Services. An analysis of the performance of all three (3) business segments are as follows: (a) Transaction Payment Acquisition (“TPA”) segment The TPA business mainly comprises of two (2) distinct sub-segments, each in a different stage of development. They are: (i) GHL’s direct contractual relationships with merchants to provide in-store and online card payment and e-wallet payment acceptance (“Electronic Payment Services”); and (ii) e-pay’s direct contractual relationships with merchants to provide Telco prepaid reloads and other top-up facilities as well as bill collection services (“Reload and Collection Services”). Electronic Payment Services GHL Electronic Payment Services business leverages on our direct arrangement with international schemes, TPA arrangements with leading domestic banks in our respective markets, as well as agreements with cross border e-wallets and other local e-wallet providers in each of our respective markets. Revenue is generated through Merchant Discount Rate (“MDR”) and fees collected through the following activities: (a) Direct contracts with merchants. (b) Sharing arrangements under contracts with merchants and banks in Malaysia, Thailand, and the Philippines. (c) Domestic debit card processing. (d) E-commerce (“eGHL”) processing. (e) Cross-border and local e-wallet processing. 2023 Transaction Payment Value grew by 10.9% to RM22.9 billion resulting in a 29.6% growth in revenue from Electronic Payment Services. The blended gross revenue margin in 2023 was 0.73% compared to 0.63% a year ago. Gross profit was down 1.5%, however, to RM39.1 million due to changes in the merchant mix, payment type, and geographical mix in 2023. Electronic Payments Services (All stated in RM’millions unless stated otherwise) 2022 2023 Change Transaction Payment Value 20,677.4 22,922.9 10.9% Gross Revenue 129.5 167.8 29.6% Gross Revenue / Transaction Payment Value (Note 1) 0.63% 0.73% +0.10 pp Gross Profit (Note 2) 39.6 39.1 -1.5% Gross Profit / Transaction Payment Value (Note 1) 0.19% 0.17% -0.02 pp Merchant Footprint - TPA Only (Thousands) 121.9 138.1 13.3% Note 1 - Gross Revenue or Gross Profit respectively divided by the Transaction Payment Value expressed as a %. Note 2 - The gross profit of 2022 has been restated as a result of changes in indirect costs allocation basis due to required improvements to our internal business processes to include certain network upgrades, as well as expenses relating to the Direct Acquiring business that were previously included in the OPEX. This reclassification from OPEX to COS (Cost of Sales) is intended to more accurately reflect the gross margins of this TPA segment. 11 ANNUAL REPORT 2023
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