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Yuuzoo Q1 profit falls 13% on loss of client, new accounting policy
YUUZOO Corp's first-quarter net profit fell 13 per cent to S$11.2 million, or 1.45 Singapore cents per share, as the company lost a major client and adopted a more conservative accounting policy.
The social commerce company said revenue fell 58 per cent to S$18.9 million for the three months ended March 31. Yuuzoo said it lost a major client of wholly-owned subsidiary YuuPay, which hit e-commerce and payment revenue.
Yuuzoo, which may accept equity of its franchisees instead of cash as payment for franchise fees, said it no longer recognises its valuation of that equity as revenue, only a "one-time franchise fee based not on valuation but on Yuuzoo's cost of developing the franchise packages Yuuzoo sells".
During the quarter, Yuuzoo established a franchise in the Democratic Republic of Congo, while its India franchise launched a new platform to target the country's rural population.
Even with the new policy, S$14.4 million of revenue in the first quarter was non-cash. Yuuzoo also amortised S$2 million of intangible assets, which were valued at S$33.3 million as at end-March. The company incurred net outflow of S$654,000 in cash from operating activities during the quarter.
Cash and cash equivalents stood at S$9.8 million at the end of the quarter, largely from S$7.1 million of proceeds from a stock sale.
Yuuzoo's numbers from 2016 are still in the process of being audited by RT. The delay in the completion of the audit, which Yuuzoo said was a result of changing its accounting policy, has led Yuuzoo to seek an extension of time to conduct its annual shareholders' meeting.