RNS Number:8994R
e-pay Asia Limited
27 February 2007
ASX/AIM: EPY
e-pay Asia Limited
("EPY" or the "Company")
e-pay Asia Limited is the leading provider of electronic payment
solutions and top up services for prepaid mobile users in South East Asia
Preliminary results for the year ended 31st December 2006
Highlights
* Strong growth achieved during the year in core market in Malaysia
(prepaid airtime) and in software sales and services.
* Net profit attributable to members of A$6.0m delivered despite reported
flooding in Malaysia in December.
* Net profit figure is 20% above expectations set at the Company's float
last year.
* Accounting policy changed to provide clearer financial information and
comparisons
* Revenues for the year were A$19.7m* (after taking into account the
change in accounting policy).
* Cash balance was A$7.1m and Net Debt was A$4.9m at year end (2005:
A$1.6m and A$5.0m respectively)*.
* Earnings per share of 3.06 cents (A$)*
* Proposed maiden final dividend of 1.36 cents (A$) per share* (44% payout
ratio).
* Directors confident of further progress in the year ahead.
*2005 comparables have not been used as this year reflects only two months
trading of the core business
Simon Loh, Managing Director of EPY, commented:
"We have made excellent progress during the period under review which has been
driven by strong organic growth in our core markets. During the year ahead, we
will continue to build on our leading position as South East Asia's largest
prepaid mobile reload and electronic payment solutions providers."
Enquiries
Tan Yap Seng Shane Dolan
Corporate Affairs Director
e-pay Asia Limited Biddicks
Tel: +6017 229 1616 London, United Kingdom
+603 5632 2488 Tel: +44 207 448 1000
investor@e-payasia.com shane.dolan@biddicks.co.uk
Chairman's Statement
The period under review has been a successful and eventful year for your company
which has become the leading provider of electronic payment solutions and top up
services for prepaid mobile users in South East Asia. Full year results reflect
strong trading in our core market including Malaysia (Prepaid airtime) and
software services. The results reflect the increasing importance of software
sales and services to the overall financial performance. All non core
businesses, inherited through the listing process, have been disposed of. The
Company has started the year positively and is optimistic for 2007.
Revenue for the year ended 31 December 2006 grew as a result to A$19.7m and
EBITDA rose to A$10.3m. EBITDA margin was over 50% for the full year.
As reported, flooding in four Malaysian states near the period end did have an
impact on net profits attributable to shareholders and we have been prudent in
accounting for this. I am pleased to report that despite this one-off event the
Company was able to improve its net profit attributable to members to A$6.0m as
compared to the A$5.0m as per the Admission Document in December 2005. The
profit before tax was A$7.7m and profit after tax for the period was A$7.6m.
The Company reported basic earnings per share of 3.06 cents. The Company enjoys
a strong financial position with cash balances of A$7.1m, (2005: A$1.6m) and net
debt of A$4.9m, (2005: A$5.0m). Shareholder's equity increased from A$1.6m to
A$14.8m.
Given this strong performance, the Board is pleased to propose a maiden full
year dividend of 1.36 cents per share payable on 10th April 2007 (44% payout
ratio).
Change of accounting policy
To more accurately reflect the Company's business and to provide clearer
financial information, these results show the change of accounting policy
regarding revenue recognition. Revenue is shown as the net commission earned
from the sale of prepaid airtime services as opposed to the gross value of the
prepaid airtime services sold to an end user. The business operates as a
distribution agent for prepaid airtime credits and top-up vouchers as opposed to
being a seller of the underlying 'airtime' product itself.
For fair comparison purposes, the comparative figures for financial year 2005
have been adjusted to reflect this new basis of revenue recognition. This change
has no impact on reported profit as it results in an equal and offsetting
reduction in the 'revenue' and 'cost of sales' amounts previously recognised.
Board strengthened
In order to underpin the growth of the Company we have strengthened the Board of
Directors. We are pleased to welcome Mr. Jack Tan to the Board as Non Executive
Director and Company Secretary with effect from 1 February 2007. Mr Jack Tan
has over 20 years as a Company Director and is a Member of the Australian
Institute of Company Directors. He has more than 10 years experience as an
Investment Advisor with leading stockbroking firms in Sydney.
In addition, we have appointed Dato' Hassan in December 2006 as Executive
Director. Dato' Hassan, co founder of the e-pay Malaysia group of companies,
successfully introduced electronic prepaid airtime top up services to the
Malaysian market in 1999.
We believe that these appointments have strengthened the Board and provide the
skills and experience necessary to grow the Company's business.
In addition, under the terms of the acquisition of the e-pay group of companies
by SkyNetGlobal, Tobikiri Capital Limited, whose ultimate beneficial owner is
Simon Loh is due deferred consideration of an additional 72,500,000 shares in
the Company to be issued at a price of A$0.20 per share for no consideration. It
is expected that these shares will be issued on 16th April 2007 and application
will be made for these shares to be admitted to trading on AIM and the ASX on
16th April 2007. As a result of this share issue, Tobikiri Capital Limited is to
hold 151,785,830 ordinary shares in the Company which representing about 54.6%
of the enlarged share capital of 277,799,952 ordinary shares in issue. These
deferred consideration shares do not qualify for the dividend payable for the
year ended 31st December 2006.
Finally, I would like to thank all of the Company employees, business partners
and associates for their significant contribution to the business during the
period under review.
Michael Lee
Chairman
27 February 2007
Managing Director's review
Financials
We are pleased to report that net profit attributable to shareholders was A$6.0m
despite the flooding in Malaysia experienced during the traditionally important
month of December.
The severity of the flooding and subsequent power cuts during this busy period
did impact on the Company's retail distribution network and reduced revenues.
This situation has now improved and we are now experiencing business returning
to more normalised levels.
We are continually developing both our product range and services to include the
likes of prepaid diesel. We have also developed corporate distribution channels
with the likes of Pos Malaysia, Malaysia ATM Network as well as having signed
more strategic alliances with mobile operators, such as Ufone in Pakistan, in
order to strengthen our leading market position. The year saw significant growth
in software services where the Company licenses its software in new markets.
Strategy
In Malaysia our strategy remains focused on servicing mobile phone users as they
shift from physical card top-ups to electronic top-up payments. e-payment
top-ups represent around 20% of the total prepaid top-up market. Therefore
significant conversion opportunities exist for the Company.
In addition, we are assessing the opportunity to capitalise on our extensive
point of sale network in Malaysia to act as payment collection intermediary for
pay TV subscriptions as mentioned, toll charges, airline tickets, credit card
and debit card transactions, etc.
In Indonesia, we have emerged as one of the leading physical card distributors
in addition to its role as an electronic distributor for prepaid mobile airtime.
This market is changing and like Malaysia there is a natural shift towards
electronic top up payment. This is providing an excellent opportunity for the
Company and its subsidiary, e-pay Indonesia. We are shortly launching new
software systems which are capable of supporting multi products which can
deliver via wider distribution channels such as SMS, GPRS and web base reload
solutions. This strategy will ensure the Company maintains its role and profile
in the market and acts as an electronic airtime aggregator for multiple mobile
operators.
In Pakistan and Thailand, where the Company owns stakes in local operations, the
Company continues to consolidate its market position. We anticipate steady
progress in these markets as the need for electronic top up solutions continues
to grow.
New markets
Your Board is currently evaluating the opportunities that exist in China and
India. In order to enter these markets, we believe it to be prudent to do so via
a joint venture with existing mobile operators or by taking a strategic stake in
an existing electronic distributor. We believe that these territories will play
an increasingly important role within the group's longer term strategy.
Outlook
Overall, we are very pleased with the performance achieved during the period
under review. We have the strategies in place to deliver new products and
services, which should in turn produce steady growth in our core markets. In
addition, significant longer term opportunities exist via entry into new
markets, which the Company is currently considering. We are confident of our
prospects for the year ahead and I look forward to updating shareholders with
further progress in due course.
Simon Loh
Managing Director
27 February 2007
Preliminary final report (Appendix 4E)
1. Company details
Name of entity
E-PAY ASIA LIMITED
ABN No. 99 089 227 887
Financial year ended ('current period')
31 December 2006
Financial year ended ('previous period')
31 December 2005
2. Key Information on: Results for announcement to the market
$A'000's
--------
2.1 Revenue Up 751% to 19,735
2.2 Profit (loss) after tax
attributable to members Up 192% to 6,011
2.3 Net profit (loss) for the
period attributable to members Up 192% to 6,011
2.4 Dividends Amount per security Franked amount per security
------------------------ ----------------- -----------------
Final dividend declared
subsequent to 31 December 2006 1.36 c - c
Interim dividend - c - c
2.5 Record date for determining entitlements to the final dividend: 9th March 2007
Date dividend is declared: 27th February 2007
2.6 % increase in revenue and profit after tax attributable to members is based on
a full 12 months trading in the current year, compared to only 2 months of
trading for the primary operating activities in the previous year.
As at 31st December 2006
Total number of issued ordinary shares 204,430,568
Weighted average number of issued ordinary shares in 2006 196,558,665
Diluted weighted average number of issued ordinary shares 205,394,951
3. e-pay Asia Limited
Income Statement
Financial year ended 31 December 2006
Notes Consolidated Consolidated
1 January 26 April
2006 to 31 2005 to 31
December 2006 December 2005
$ $
Revenue 3(a) 19,734,623 2,318,042
Other Income 3(b) 106,586 1,444,260
Raw materials and
consumables used (282,009) -
Changes in inventories (105,273) -
Employee benefits (3,946,361) (1,355,730)
Advertising and marketing
promotions (563,464) (121,422)
Accommodation and
travelling expenses (794,748) (93,575)
Telephone and utility
charges (987,962) (224,394)
Professional and
consultancy fees (1,409,466) (46,672)
Operating lease rentals (287,263) (22,023)
Other operating expenses (1,199,250) (431,789)
------------- -------------
Profit (loss) before
finance costs, depreciation
& amortisation, impairment
losses and income tax 10,265,413 1,466,697
Finance costs (795,519) (152,716)
Impairment of goodwill - (7,528,689)
Depreciation & Amortisation (1,777,032) (175,278)
------------- -------------
Profit(loss) before income tax 7,692,862 (6,389,986)
Income tax (expense) income (80,194) 12,371
------------- -------------
Net profit (loss) after
income tax 7,612,668 (6,377,615)
Net loss (profit)
attributable to outside
equity interests (1,601,303) (156,695)
------------- -------------
Net profit (loss)
attributable to members of
e-pay Asia Limited 6,011,365 (6,534,310)
============= =============
Basic earnings per share
(cents) 3.06 (24.3)
Diluted earnings per share
(cents) 2.93 (24.1)
The accompanying notes form an integral part of this Income Statement.
Notes to Income Statement
Profit and Loss Items Consolidated Consolidated
1 January 2006 26 April 2005
to 31 December to 31 December
2006 2005
$ $
3(a) Revenue:
Sales revenue 7,209,023 -
Airtime commission revenue* 11,789,100 2,318,042
Interest income 160,560 -
Licensing fees income 129,582 -
Other revenue 446,358
------------- ---------------
Total revenues 19,734,623 2,318,042
------------- ---------------
* The consolidated entity has changed its policy of revenue recognition from the
sale of prepaid airtime top-up credits and vouchers. Previously the consolidated
entity recognised as revenue the gross value of the prepaid airtime value sold
to the end user customer. It now recognises only the net commission earned from
those transactions, as it considers that this treatment more appropriately
reflects the underlying substance of the transaction whereby the entity operates
as an agent distributing prepaid airtime value (in the form of top-up credits
and vouchers), as opposed to the sale of the underlying 'airtime' product
itself. This change has no impact on reported profits as it results in an equal
and offsetting reduction in the 'revenue' and 'cost of sales' amounts. The
comparative figures for the financial year ending 31 December 2005 have been
adjusted to reflect the new basis of the revenue recognition.
3(b) Other income:
Discount on acquisition of subsidiaries - 1,440,807
Gain on sale of plant equipment - 3,453
Foreign exchange gain 27,426 -
Profit on sale of W Home business assets 79,160 -
------------- ---------------
Total Other Income 106,586 1,444,260
------------- ---------------
3(c) Profit (Loss) before Income Tax includes
the following Net Gains and Expenses:
(i) Net Gains
Gain on disposal of plant and equipment - 3,453
Interest income 160,560 14,478
Foreign exchange gains 27,426 -
(ii) Expenses
Cost of sales 387,282 -
Depreciation and amortisation :
Depreciation of:
- Plant and equipment 1,559,497 141,418
------------- ---------------
Total depreciation 1,559,497 141,418
Amortisation of:
- Software 194,803 33,860
- Other intangible assets 22,732 -
------------- ---------------
Total amortisation 217,535 -
------------- ---------------
Total depreciation and amortisation 1,777,032 175,278
------------- ---------------
Doubtful debts - trade receivables 15,384 (42,303)
Impairment write down of goodwill to
recoverable amount - 7,528,689
Unrealised foreign exchange loss - 64,652
Loss on disposal of plant and equipment 13,223 -
Plant and equipment write off 4,544 -
Operating lease rentals-minimum lease
payments 287,263 22,023
Employee options expensed - 680,000
Finance facility fees 795,519 152,716
4. e-pay Asia Limited
Balance Sheet as at 31 December 2006
Consolidated Consolidated
31 December 31 December
2006 2005
$ $
Current Assets
Cash and cash equivalents 8,707,432 4,294,791
Receivables 11,568,347 2,768,501
Inventories - 105,273
Prepaid airtime top-up value 9,763,277 11,168,613
Other - deposits and prepayments 282,432 360,961
------------- -------------
Total Current Assets 30,321,488 18,698,139
------------- -------------
Non-Current Assets
Property, plant and equipment 4,479,523 3,339,641
Intangible assets- Goodwill 928,501 -
- Software 2,949,237 157,089
- Others 67,425 90,550
Investments - equity accounted - -
Available-for-sale financial assets 126,504 -
Other financial assets 1,888,273 1,902,120
Deferred tax assets 41,709 16,258
------------- -------------
Total Non-Current Assets 10,481,172 5,505,658
------------- -------------
Total Assets 40,802,660 24,203,797
------------- -------------
Current Liabilities
Payables 10,932,431 10,372,515
Borrowings 12,441,408 7,986,173
Current tax liabilities 61,444 51,545
Provisions 117,776 180,000
Others-deferred income 322,000 -
------------- -------------
Total Current Liabilities 23,875,059 18,590,233
------------- -------------
Non-Current Liabilities
Payables 586,702 2,390,520
Borrowings 1,211,408 1,348,485
Deferred tax liability 77,314 77,873
Provisions 205,209 220,000
------------- -------------
Total Non-Current Liabilities 2,080,633 4,036,878
------------- -------------
Total Liabilities 25,955,692 22,627,111
------------- -------------
Net Assets 14,846,968 1,576,686
============= =============
Equity
Contributed equity 10,597,877 6,080,066
Reserves 2,844,112 693,608
Accumulated losses (522,818) (6,534,310)
------------- -------------
Parent entity Interest 12,919,171 239,364
Minority Interest 1,927,797 1,337,322
------------- -------------
Total Equity 14,846,968 1,576,686
============= =============
5. e-pay Asia Limited
Statement of Changes in Equity for the financial year ended 31 December 2006
Consolidated Consolidated
1 January 2006 26 April 2005
to 31 December to 31 December
2006 2005
$ $
Balance at the beginning of the year 1,576,686 -
============= =============
Options expense credited to Share
Based Payments Reserve - 680,000
Exchange difference on translation
of foreign subsidiary (24,124) 13,608
------------- -------------
Available for sale financial assets, (48,496) -
net of tax
------------- -------------
Net income (loss) recognised directly in
equity (72,620) 693,608
Profit (loss) for the year 7,612,668 (6,377,615)
------------- -------------
Total recognised profit (loss) for the
period attributable to members of
e-pay Asia Limited 9,116,734 (5,684,007)
------------- -------------
"Cost of combination" in respect of
reverse acquisition of e-pay Asia - 6,080,064
Investment acquisitions settled by issue
of equity 2,523,960 -
Liabilities/expenses settled by the issue
of equity 1,148,695 -
Contributions of equity, net of
transaction costs 845,155 2
Outside equity interest in controlled
entities arising on reverse acquisition - 1,180,627
Option premium arising on issue of
convertible note 1,785,049 -
Purchase of minority interest in
subsidiary (419,866) -
Dividend declared to minority interest
in subsidiaries (603,759) -
Contribution by equity holder 451,000
------------- -------------
Total equity at year end 14,846,968 1,576,686
============= =============
6. e-pay Asia Limited
Cash Flow Statement for the financial year ended 31 December 2006
Notes Consolidated Consolidated
1 January 2006 26 April 2005
to 31 December to 31 December
2006 2005
$ $
Cash flows from operating activities
Receipts from customers 513,802,917 85,429,078
Payments to suppliers and employees (510,741,943) (84,880,014)
Interest paid (690,837) (111,678)
Tax paid (96,254) (92,165)
-------------- ---------------
Net operating cash flows 6(b) 2,273,883 345,221
-------------- ---------------
Cash flows from investing activities
Proceeds from disposal of
plant and equipment 131,485 10,974
Payments for plant and
equipment (3,421,133) (838,437)
Payments for intangibles - (90,550)
Payments for investments (1,381,418) -
Net cash acquired on acquisition
of controlled entities - 3,818,466
Repayment of advance from
related party - 198,784
Other - (23,016)
-------------- ---------------
Net investing cash flows (4,671,066) 3,076,221
-------------- ---------------
Cash flows from financing activities
Proceeds from issues of shares and
options 845,157 -
Borrowings 8,941,111 29,535
Loan repayments to related parties (1,354,222) (1,297,764)
Capital raising expenses (537,115) (491,732)
-------------- ---------------
Net financing cash flows 7,894,931 (1,759,961)
-------------- ---------------
Net increase in cash held 5,497,748 1,661,481
Cash at the beginning of
the financial period 1,658,223 -
Currency translation difference (71,531) (3,258)
-------------- ---------------
Cash at the end of the financial year 6(a) 7,084,440 1,658,223
-------------- ---------------
The accompanying notes form an integral part of this Cash Flow Statement.
6(a) Reconciliation of cash
Cash at the end of the end of financial year as shown in statement of cash flows
is reconciled to items in the Balance Sheet as follows:
Consolidated Consolidated
December 2006 December 2005
$ $
Cash and cash equivalents 8,707,432 4,292,791
Bank overdrafts (included in current-
borrowings) (1,622,992) (2,636,568)
------------- ---------------
Total cash in statement of cash flows 7,084,440 1,656,223
6(b) Reconciliation of net cash provided by operating activities to operating
profit after income tax
Consolidated Consolidated
December 2006 December 2005
$ $
Profit (loss) after income tax 7,612,668 (6,377,615)
Adjustments for non cash items:
- Depreciation & amortisation 1,777,032 175,278
- Expensing of employee options - 680,000
- Discount on acquisition of subsidiaries
- (1,440,807)
- Impairment write down of goodwill - 7,528,689
- Unrealised foreign exchange gain/(loss) (27,426) 64,652
- Doubtful debts-trade receivables 15,384 -
- Loss on disposal of plant and equipment 13,223 -
- Written off of plant and equipment 4,544 -
- Borrowing cost 104,683 -
- Non cash contribution by equity holder 451,000
- Other reconciling items 51,852 115,280
Increase (decrease) in liabilities:
- Payables (1,237,515) (1,489,544)
- Tax liabilities (15,552) (92,165)
- Provisions (77,015) -
(Increase) decrease in assets:
- Receivables (6,940,994) 113,531
- Prepaid airtime value 541,999 1,067,922
-------------- ---------------
Net operating cash inflows 2,273,883 345,221
7. Dividends
7.1 Individual dividends per security
Date dividend Amount Franked Amount per
is payable per amount per security of
security security at foreign source
30% tax dividend
--------- -------- -------- --------
Final dividend: Current year 10th April 2007 1.36 c - c - c
Previous year - - c - c - c
--------- -------- -------- --------
Interim dividend: Current year - - c - c - c
Previous year - - c - c - c
7.2 Total dividend per security (interim plus final)
Current year Previous year
------------- --------------
+Ordinary securities 1.36 c - c
------------- --------------
8. NTA backing
-------------- ---------------
Current period Previous corresponding
period
-------------- -----------------
Net tangible asset backing per +ordinary
security 5.3 cents 0.7 cents
9. Control gained
9.1 Control gained over entities
Name of entity (or group of entities) (i) Mobiepay DOO
(ii) Mobiepay Sdn Bhd
Date control gained (i) 5 July 2006
(ii) 30 October 2006
Contribution of such entities to the
reporting entity's profit/(loss) during
the period (where material). (i) A$ (556,600)
(ii) A$4,548,933
Profit/(loss) of the acquired entities for the
whole of the previous financial year was: (i) NIL
(ii) NIL
10. Details of associates and joint venture entities
Name of associate/ 1. Reporting entity's 2. Contribution to net profit
joint venture percentage holding /(loss) (where material)
------------- ------------------- -------------------
Current Previous Current Previous
Period corresponding Period corresponding
period period
------- ------- ------ ------
e-pay Pakistan
(Private) Limited 30% 30% - -
Electronic Payment
Network (Thailand) Co. Ltd 18% 18% - -
11. Foreign entities
Details of origin of accounting standards used in compiling the report
In compliance with the International Financial Reporting Standards
12.
This report is based on accounts which are in the process of being audited.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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