YuuZoo drops investment in American movie studio
Singapore
YUUZOO'S much-hyped, recently-announced investment of up to US$150 million in American movie studio Relativity Holdings Media has been called off.
The mainboard-listed social networking company announced on Tuesday the cancellation of its planned equity investment, saying "inter alia, conditions precedent to the investment had not been met".
In a filing to the Singapore Exchange, YuuZoo added that it "regrets the missed business opportunities" but looks forward to liaising with new partners who can contribute to its growth and development.
YuuZoo had in November said that the proposed investment in Relativity was in line with its business strategy to add high-quality media content for distribution through its social e-commerce platform. Under the agreement, Relativity will also market the YuuZoo platform in the United States as a new US master franchisee of YuuZoo, and introduce the company and its products and services to all its domestic and international partners.
On Tuesday, YuuZoo posted a net loss attributable to equity-holders of S$922,000 for its fourth quarter ended Dec 31, 2016, against a net profit of S$4.75 million a year earlier. Revenue came up to S$9.4 million for the quarter, which was less than a fifth of the previous year's S$49 million. YuuZoo attributed this mainly to a drop in the sale of franchise licences and payment revenue.
Notably, YuuZoo has revised its revenue recognition policy around the sale of franchise licences, which had earlier drawn much debate from investors and market observers.
YuuZoo said that while the company earlier recognised as revenue the value of the shares it had received in payment from its franchisees, it has now decided to adopt a "more conservative accounting policy" by instead recognising as revenue only the fee it charges its franchisees for the franchise licence it sells.
"This fee is calculated based on the addressable population in each market and the combined ARPU (average revenue per user) of e-commerce, advertising and games in each market."
YuuZoo said that in each case, this fee in 2016 was lower than the value of the shares, resulting in Ebitda (earnings before interest, tax, depreciation and amortisation) being lower.
For the fourth quarter, YuuZoo recorded loss per share of 0.13 Singapore cent, versus earnings per share of 0.75 cent a year ago. No dividends have been proposed by the company.
YuuZoo shares on Tuesday lost 2 per cent or 0.3 Singapore cent to close at S$0.147.
