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YuuZoo posts profit for Q2, announces changes in accounting policy
YUUZOO Corporation on Tuesday posted earnings before interest and taxes of S$8.4 million for its second quarter ended June 30, against a loss of S$1.4 million in the same period a year ago.
Its revenue went down 17 per cent to S$17.7 million, mainly due to a change in adoption of a more prudent means of revenue recognition as well as lower payment revenue.
It also announced changes in its accounting policy. It said that after consultations with various parties, including the Singapore Exchange and its auditors, the company will discontinue its accounting policy of booking as revenue the value of the shares it receives as payment for the franchises it sells.
Booking of the full value of the shares as revenue has been replaced by booking as revenue a one-time franchise fee based not on valuation but on YuuZoo's cost of developing the franchise packages it sells.
Compared to the previous method, the new policy "completely delinks the price of the franchise from expected future earnings", said YuuZoo.
Mohandas, COO of YuuZoo, said: "YuuZoo's significantly conservative and prudent accounting policy was decided in the best interest of YuuZoo's shareholders. Under this new policy, YuuZoo books significantly lower revenue and profit for each franchise package sold."
He added that growth is expected to be continuously strong in all key areas that YuuZoo operates in, which include tribal social networking, e-commerce, online and mobile payments, mobile games and streaming video services.
YuuZoo received criticism earlier in July on its corporate governance issues.