OnCard aims high in China

OnCard's half year loss is attributable to a very conservative investment strategy, says the company's executive chairman, Peter Abotomey.

"We have $300 million sitting in a bank account in China earning about half a per cent. If we take that and invest it more aggressively we might have announced a profit result of three and a half million dollars.

"Our major shareholders said it is the way you deal with the GFC that will define the company, so we have taken a very conservative strategy and it has worked. Over the last year or so the Chinese stock market has plummeted, so our strategy is being vindicated."

That $300 million cash asset - which is also a liability - is the total funds held on behalf of card holders by OnCard's pre-paid card joint venture in southern China with Shanghai Smart Service Company.

 "We have 50/50 control of that, so we don't consolidate it on our balance sheet. It is a very fine accounting point."

The joint venture is believed to have issued in excess of thirty million pre-paid cards in China.

"We have stopped counting, we just count the cash now, it is too big an enterprise now.

"The bottom line is that we are one of three Australian companies doing well in China. The other two are BHP and Rio.

"We have aggressive expansion plans in China and increasingly we are becoming a China-centric, China-based company, listed on the ASX."

OnCard shares are currently trading on the ASX for 13.5 cents, down from more than twenty cents late last year.