YuuZoo sinks into the red in 4Q with $0.9 mil loss on lower revenue

Cost of services, which mainly relates to e-commerce transactions, decreased to $5.2 million in 4Q16 compared to $21.5 million in 4Q15, mainly due to lower payment transactions processed during the quarter in review.

Employee-related costs fell by $0.5 million due to decrease in staff numbers in Singapore and China and the cessation of business operations in Philippines.

For the full FY16, YuuZoo registered earnings of $34.6 million, which is more than double the group’s restated earnings of $15.9 million for FY15.

In reporting its FY16 numbers, YuuZoo no longer recognise revenue based on the valuation of the shares it has received in payment for its franchise licences.

Instead, the group says it will sets a price on each licence it sells based on the size of the addressable market and the combined Average Revenue Per User (ARPU) of ecommerce, advertising and games. The price set for all franchise licenses sold in 2016 are lower than the valuation of the shares YuuZoo has received.

“2016 was a year of good growth in all sectors of our business. What the management however failed to achieve was to become cashflow positive. Part of this was due to expenses growing faster than budgeted, which also resulted in a lower cash balance than what was healthy,” says Thomas Zilliacus, YuuZoo’s executive chairman.

Zilliacus has been serving as the group’s temporary CEO since Jan this year in place of James Sundram, who in Oct 2016 resigned for health reasons.

“The focus for 2017 will be on managing and improving the many products YuuZoo already has launched or has chosen to launch, and to support and manage huge YuuZoo’s network of franchisees and partners… Achieving a cashflow positive status is another top priority for 2017. We will operate with a lean and flexible organisation where costs are kept in check and allowed to grow only once we see revenues growing,” he adds.

Shares of YuuZoo closed flat at 15 cents on Tuesday.