YuuZoo posts S$14.3m in Q2 earnings
Singapore
CITING strong growth in e-commence and franchise sales, YuuZoo on Wednesday reported a surge in second-quarter earnings.
The controversial social media, e-commerce and entertainment company posted a net profit of S$14.3 million for the three months ended June 30, up from S$1.3 million a year ago. .
Revenue more than tripled to S$35.8 million from S$10.7 million, said the mainboard-listed company. The growth was due in part to a jump in e-commerce revenue from S$4.6 million to S$18.7 million. This was complemented by strong franchise sales - mainly in Mexico, Hungary, Slovakia and Czech Republic - which registered S$17.1 million, up from S$6.2 million. YuuZoo's business involves franchisees buying a licence to operate YuuZoo's online platform in a particular market, and paying for the licence in cash, in shares, or both.
For Q2, non-cash revenue (S$17 million) - which was derived entirely from franchise sales - accounted for nearly half (47.5 per cent) of total revenue (S$35.8 million). YuuZoo's unique practice of recognising non-cash revenue in its financial statements has unsettled market players, many of whom question the legitimacy and the time that investors need to wait to receive dividends in terms of cash - to which YuuZoo executive chairman Thomas Zilliacus replied that the company would sell shares in its franchisees to investors "when the time is right".
No dividend was proposed. Earnings per share were 2.1 Singapore cents, up from 0.21 cent. Net asset value per share was 18.64 cents as at June 30. YuuZoo said that it is debt-free. Trade and other receivables under current assets decreased to S$19.4 million from S$34.7 million six months earlier. Over this same period, cash and cash equivalents rose to S$4.8 million from S$3.7 million. In Q2, the firm raised net cash of S$2.39 million from a share issuance.
Looking ahead, YuuZoo cited confidence in the global market for e-commerce, social media, games and payments, reportedly worth over US$2 trillion. It added: "In the long term, the group expects a steady stream of recurring revenue from SME arena." The latter, unveiled by YuuZoo in June, is an e-commerce platform for small and medium enterprises in Nigeria that it will jointly launch with Abu Dhabi-based telco Etisalat.
YuuZoo recently announced the appointment of a new chief financial officer, a day after it reported the cessation of CFO Michael Parker. In May, its former auditor Moore Stephens issued a disclaimer of opinion over the firm's audited FY15 financial statements and said that it did not plan to stand for re-election as auditor. YuuZoo said then that it had started the search for a new auditor with full knowledge of the modern digital business space. YuuZoo shares closed trading at S$0.148 on Wednesday.
