YuuZoo responds to criticisms on disclosure

Mr Thomas Zilliacus, co-founder and executive chairman of YuuZoo.
Mr Thomas Zilliacus, co-founder and executive chairman of YuuZoo. PHOTO: THE BUSINESS TIMES

Mainboard-listed YuuZoo Corporation responded yesterday to queries and criticisms about its disclosure and accounting practices.

The company filed a detailed statement to the Singapore Exchange that addressed several points raised in a commentary on Thursday by Professor Mak Yuen Teen, associate professor of accounting at the National University of Singapore Business School.

CANCELLED ACQUISITION

One of Prof Mak's queries involved a YuuZoo deal to acquire Relativity Media that was cancelled in October last year. "Questions should be asked about why the deal was cancelled and the recoverability of the amount," he said.

YuuZoo said in its statement yesterday that it did so because "conditions precedent were not met, and the due diligence revealed that Relativity had misrepresented its business during the negotiations leading up to the agreement".

The firm added that it had already clarified this point in February this year.

ONE DEAL OR TWO?

Prof Mak also noted the agreement made between YuuZoo and Etisalat Nigeria in 2016 appeared to be similar to another deal that was made in November 2014. "When YuuZoo announced the Etisalat deal in November 2014, there was no mention of YuuZoo UK. YuuZoo should clarify if they are the same deals, and if so, why there was no mention of YuuZoo UK in its 2014 announcement," he noted in the commentary published in The Business Times on Thursday.

"If they are different deals, YuuZoo should explain why the two deals appear duplicative."

YuuZoo said the earlier agreement was inked by YuuZoo UK, a franchisee that discontinued operations in late 2015, so a new deal with Etisalat Nigeria was signed directly between YuuZoo and Etisalat in 2016.

YuuZoo also questioned Prof Mak's mention of YuuZoo UK owner Mark Cramer-Roberts' bankruptcy petition in 2005. "How this in any way is relevant to YuuZoo, which was only formed in May 2008, remains completely unclear," it said.

Prof Mak noted that it was widely reported in the Nigeria media in March that Etisalat has a US$1.2 billion (S$1.66 billion) bond default and that its parent was looking to sell it after debt restructuring.

"YuuZoo did not make any disclosure about the financial distress of this partner so it is unclear what impact this would have on YuuZoo's foray into Nigeria," he said.

YuuZoo said Etisalat is a client and not a partner. "In view of the announcement, there is therefore no reason to expect any negative consequences on YuuZoo's cooperation with Etisalat Nigeria. Any possible issue with Etisalat Nigeria also has little impact, if any, on YuuZoo's 'foray into Nigeria'," it noted.

YUUCOLLECT

In addition, YuuZoo clarified that YuuCollect was not its only source of e-commerce revenue. Prof Mak had said in his commentary that YuuZoo's e-commerce revenue is earned through its YuuCollect platform.

YuuZoo said that while YuuCollect was the dominant source of revenue for e-commerce last year, it was only one part of the e-commerce business.

REVENUE

The firm also refuted Prof Mak's claim that YuuZoo "recognises the entire amount of cash collected from the end-user as revenue because it said that its platform is unique, that it has created an ecosystem without which the transaction would not have been possible, and that it takes an element of credit risk for the fund transfer".

YuuZoo said it does not take "an element of credit risk", nor has it ever stated that it recognises revenue because "its platform is unique".

YuuZoo shares closed 1.3 per cent or 0.1 cent down at 7.6 cents yesterday.

The firm held an annual general meeting yesterday, where shareholders voted in favour of all resolutions, including granting share options at a discount to executive chairman Thomas Zilliacus.

A version of this article appeared in the print edition of The Straits Times on July 08, 2017, with the headline 'YuuZoo responds to criticisms on disclosure'. Print Edition | Subscribe