Regulatory Story
Go to market news section View chart   Print
RNS

Half-year Report

Released 07:00 12-Sep-2017

RNS Number : 4312Q
SafeCharge International Group Ltd
12 September 2017
 

 

 

SafeCharge International Group Limited

 

("SafeCharge", the "Company" and together with its subsidiaries, the "Group")

 

Interim results for the six months ended 30 June 2017

 

SafeCharge delivers strong underlying financial performance, platform development, global expansion and focus on high quality customers to set foundations for stronger future growth

 

SafeCharge (AIM: SCH), a leader in advanced payment technologies, is pleased to announce its interim results for the six months ended 30 June 2017.

 

Overview and current trading

 

The first half of 2017 was a period of solid performance and delivery for the Group. Transaction volumes continue to grow with very strong growth in the value of transactions processed through SafeCharge Acquiring. During the period, the Group successfully launched a fully serviced global payment solution to Tier 1 customers and it has a strong sales pipeline, although the revenue growth to maturity from these long-term Tier 1 clients is taking slightly longer than anticipated. The Company continues to generate significant free cash flow, which is being returned to shareholders through the Company's dividend.

 

The Group has enjoyed a strong start to the second half of 2017 benefiting from the launch of new clients, many of whom had started processing on the Company's global acquiring platform by the end of the first half of the year. The Board remains confident that the outcome for the year will be broadly in line with market expectations, and the Directors look forward with confidence to the rest of 2017 and beyond.

 

 

Financial highlights

 

 

H1 2017

H1 2016

Change

Number of Transactions (m)

75.6

58.0

+30%

Transaction Value (US$m)

4,218

3,954

+7%

Own Acquiring Transaction Value (US$m)

811

395

+105%

 

 

 

 

Revenues (US$m)

53.0

52.2

+2%

Gross Profit (US$m)

30.4

31.6

-4%

Adjusted EBITDA1 (US$m)

15.6

16.8

-7%

Cash flows from operations2 (US$m)

16.2

16.5

-2%

Reported profit after tax (US$m)

12.2

15.2

-20%

Cash conversion3

79%

86%

 

 

 

 

 

Cash balances at period end

            113.0

128.1

-12%

 

 

 

 

Diluted earnings per share (US$c)

              8.06

9.88

-18%

Recommended interim dividend per share (US$c)

 7.69

7.0

+10%

           

 

Financial highlights

 

§

Increase in transaction value by 7% to US$4.2 billion

§

Continued revenue growth after the reshaping of the existing customer base undertaken during 2016 to upgrade the quality of revenues which contributed US$4.6 million to the comparative period   

§

An impressive cash conversion, and strong balance sheet with US$113 million of cash balances and no debt

§

Increase of interim dividend by 10%

 

 

Operational highlights

 

§

Successful launch of a fully serviced global payment solution to Tier 1 customers, including 888 and Plus500

§

A strong pipeline of customers, including Bet365, Paddy Power, EuroBet and car rental company Share'ngo, will be launched during the second half of 2017 and 2018

§

Continued growth in the overall value of transactions processed through SafeCharge and very strong growth in value of transactions processed through SafeCharge Acquiring

§

Strong growth in number of card present transactions processed through SafeCharge Acquiring platform

§

Airline certification by card schemes completed

§

Global expansion continues with successful launch of WeChat Pay and integration to Chase in the United States, and opening of new offices in Singapore, United States and Netherlands

§

Rebranding of the Group completed

§

Continued investment in infrastructure & technologies to support future growth

 

 

 

 

David Avgi, CEO of SafeCharge, said:

 

"I am pleased to report a solid set of results. The Company has performed well and made positive progress with the implementation of its organic growth strategy and focus on delivering high quality revenue. We continue to invest in our payment and risk platform to drive future growth and are delighted that our customers recognise the benefits that SafeCharge's payments solutions bring to them.

 

Whilst we continue to advance in our core verticals, the Group has made exciting progress in entering our new target sectors and geographies. Over the coming months we will continue to focus and invest further to build our sales teams to accelerate a successful entry into these markets.

 

The Group has enjoyed a strong start to the second half of 2017 benefiting from the launch of new clients, many of whom had started processing on the Company's global acquiring platform by the end of the first half of the year. The Group is confident that its focus on higher quality earnings driven by its healthy pipeline will yield revenue growth in 2017 and build even stronger profitable momentum in 2018 and beyond."

 

A meeting for analysts will be held at 9.30am on 12 September 2017 at Central Court, 25 Southampton Buildings, London, WC2A 1AL. Please dial 020 3059 8125 to join the conference call at 9:30am.

 

 

- Ends -

 

1 Adjusted EBITDA is a non-GAAP, company-specific measure which is earnings excluding interest, taxes, depreciation, amortisation, acquisition costs and contingent remuneration, restructuring costs and share-based payments charge (See Consolidated Statement of Comprehensive Income)

2 Cash flows from operations before working capital adjustments and tax

3 Free cash conversion is an alternative performance measure the Group has adopted to demonstrate our ability to convert our profit from operations into cash that can be reinvested in the business through investment, returned to shareholders, or used to support our M&A strategy. The cash conversion rate is before payments working capital.

 

 

For more information

 

SafeCharge International Group Limited

David Avgi, Chief Executive Officer

Tsach Einav, Chief Financial Officer

c/o Bell Pottinger

 

+44 (0) 20 3772 2500

Jean Beaubois, Head of Investor Relations

 

+44 (0) 7826 936619

Shore Capital

Mark Percy

Toby Gibbs

 

+44 (0) 20 7408 4090

Bell Pottinger

David Rydell

Jonathan Hodgkinson

 

+44 (0) 20 3772 2500

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

 

Forward looking statements

 

This announcement includes statements that are, or may be deemed to be, "forward-looking statements". By their nature, forward-looking statements involve risk and uncertainty since they relate to future events and circumstances. Actual results may, and often do, differ materially from any forward-looking statements.

 

Any forward-looking statements in this announcement reflect SafeCharge's view with respect to future events as at the date of this announcement. Save as required by law or by the AIM Rules for Companies, SafeCharge undertakes no obligation to publicly revise any forward-looking statements in this announcement following any change in its expectations or to reflect events or circumstances after the date of this announcement.

 

About SafeCharge

 

SafeCharge International Group Limited (LSE: SCH) is the payment service partner for the world's most demanding businesses. SafeCharge provides global omnichannel payments services from card acquiring and issuance to payment processing and checkout, all underpinned by advanced risk management solutions. This fully featured proprietary payment platform connects directly to all major payment card schemes including Visa, MasterCard, American Express and Union Pay as well as over 150 local payment methods. With offices around the world, SafeCharge serves a diversified, blue chip client base and is a trusted payment partner for customers across a range of vertical markets. The Company has been listed on the London Stock Exchange AIM market since 2014.

 

www.safecharge.com 

 

 

Chairman's statement

 

Introduction

 

This is another set of pleasing financial results with revenues growing 2% to US$53.0 million after foregoing business of approximately US$4.6 million revenues and associated profits which contributed to the comparative period in 2016 as part of the strategy we announced in our 2016 accounts to reshape the Group's customer base in anticipation of evolving regulatory, commercial and customer requirements. This meant that our Underlying Revenues** growth on a comparable basis to the same period in 2016 was 11%. Once again revenue growth has been driven through new customer wins and expanded relationships with existing customers and the Group remained highly operationally cash generative.

 

We closed the period after payment of the final dividend (US$14.5 million) and purchase of Company shares to be held in treasury (US$5.4 million), with US$113.0 million of cash and cash equivalents and no debt.

 

During the first half we have achieved very successful growth in our acquiring business. I am delighted to report that this business performed ahead of expectations in the first half, with more than 20% of the Group's transaction volumes processed through its own acquiring platform in June.

 

In July 2017 the Company purchased 1,500,000 of its own shares at an average price of 270 pence per share. These shares will be held in Treasury and used to satisfy the issue of shares in respect of the future exercise of share options.

 

The Board continues to focus on making effective use of the Group's cash resources, investigating the potential for strategic and complementary acquisitions, whilst continuing to apply strict criteria when assessing such acquisition opportunities.

 

Board and governance

 

The Board remains committed to ensuring a robust governance structure is in place and, whilst recognising the size of the Company, is working to comply with best practice corporate governance.

 

Staff

 

On behalf of the Board, I would like to say a special thanks to our staff, all of whom who have made a substantial contribution to our ongoing achievements and to welcome the new colleagues who joined in 2017, who are already making a big contribution to the development of our business.

 

Dividend

 

Recognising the Group's continued strong cash generation, the Board has recommended an interim dividend of 7.69 US$ cents per share, an increase of 10% compared to H1 2016. This represents 75% of Adjusted EBITDA* for the first six months, according to the Company's existing policy of paying 75% of Adjusted EBITDA* for the full year (as long as there is no material M&A transaction). The Board expects the full year dividend to total 75% of Adjusted EBITDA* for the period.

 

The dividend shall be paid in sterling and therefore it will be subject to a conversion exchange rate from US dollars based on a GBP/USD rate of 1.318, being the rate at 4.30 pm on 11th September. As a result, those shareholders entitled to the interim dividend will receive 5.83 pence per share. The interim dividend will become payable on 13th October 2017 to those shareholders on the Company's register as at the record date of 29th September 2017. The ex-dividend date is 28th September 2017.

 

 

Roger Withers

Chairman

12 September 2017

 

* Adjusted EBITDA is a non-GAAP, company-specific measure which is earnings excluding interest, taxes, depreciation, amortisation, acquisition costs and contingent remuneration, restructuring costs and share-based payments charge (See Consolidated Statement of Comprehensive Income).

** Underlying Revenues is a non-GAAP, company-specific measure which excludes revenues of US$4.6 million in H1 2016 related to reshape of customer base undertaken in 2016.

 

 

Chief Executive's review

 

Introduction

 

The first half of 2017 was a period of further success and growth for the Group building on the reshaping of the existing customer base undertaken during 2016 to upgrade the quality of revenues. Revenues grew by 2% and Underlying Revenues** grew by 11%, compared to the same period in 2016, reaching US$53.0 million. We continued to make significant progress and achieve financial and operational success across the Group in the first half of 2017. Of particular note was the continued success and strong growth of SafeCharge Acquiring.

 

Strategy

 

The Group has a clear organic growth strategy designed to expand and diversify the value added products and services offered to our clients. SafeCharge seeks to grow revenues from existing customers and attract new clients from within target sectors and verticals, such as online retail, travel and marketplaces. We have continued to invest in our technology-based solution, which has been well received by our clients. Through continued investment, SafeCharge aims to maximise its value proposition to customers, improving the acceptance, conversion and 'stickiness' of our products.

 

In 2016 the Company implemented a programme to reduce its exposure to certain sectors and verticals. The changes were made in anticipation of evolving regulatory, commercial and customer requirements. As a result of our work, we have improved the mix of high quality, low risk customers across a diverse range of industries.

 

In the first half of 2017, the Group also made substantial progress in its strategy to enter new sectors and geographies. A notable achievement was the entry into the marketplace industry, through development of a new product Marketplace Manager. The product provides a solution that addresses marketplaces' major challenges head on, from operational control to regulatory compliance and bi-directional payments. Other achievements during the period included the completion of the rebranding of the Group as well as the opening of new offices in Singapore, the United States and the Netherlands. Establishing new offices in these regions demonstrates our commitment to these important markets. Our intention is to grow these offices as the Group wins new clients in these regions.

 

The Group continues to invest significant resources towards identifying and investigating potential acquisitions. These must have the potential to accelerate growth through identifiable synergies or add complementary products which would enhance SafeCharge's existing offering to its clients. Whilst a number of such opportunities were identified and reviewed over the period none met the Group's strict investment criteria.

 

Customers

 

We successfully launched a number of significant new Tier 1 customers, including 888 and Plus500, and new customers, including Bet365, Paddy Power, EuroBet and car rental company Share'ngo, will be launched during the second half of 2017 and 2018.

 

Partnerships

 

During the period SafeCharge further developed its strategic partnership with Banking Circle (formerly Saxo Payments), a global transactions services provider, to simplify cross border settlement accounts.

 

In addition, we initiated a new partnership with YelloCo, which has developed a new generation of payment terminals. YelloCo's product, YelloPad, has been designed to service a wide range of industries including retail, hospitality and healthcare.

 

Infrastructure and technology

 

The Group continued to invest in its infrastructure and further develop its processing technologies. Our highly scalable payments platform is capable of handling rapidly increasing transaction volumes and offers our customers a best-in-class technology with a comprehensive product suite.

 

Platform robustness is one of the key metrics evaluated by existing and potential new customers when deciding on which payments provider to use. It is therefore pleasing to report that our customers continued to benefit from our industry leading service uptime of above 99.99% maintained throughout the period. Another key measure in the eyes of our customers is transaction duration. The SafeCharge platform continues to perform well on this metric, with transaction times competitive with best in class operators.

 

People

 

Our staff are at the heart of the Group's success and we are proud of the expertise and professionalism of our teams. During the period the Group successfully recruited a number of talented senior managers from well-established businesses in the payments sector, including senior personnel in sales and marketing. These new team members are already helping the Group win and manage sustainable, high quality business in both existing and target verticals and geographies. The Group ended the period with 344 employees with approximately 50% in R&D and technology and 15% in risk and compliance.

 

Financial performance in H1 2017

 

The operational momentum built over recent years continued into the first half of 2017. This momentum enabled SafeCharge to deliver further growth and quality of revenue following the reshaping of the existing customer base undertaken during 2016. 

 

The number of processed transactions grew by 30%, reaching 75.6 million transactions for the period (H1 2016: 58.0 million), and the value of transactions grew by 7%, reaching US$4.2 billion (H1 2016: US$4.0 billion). This increase in volumes was driven by growth from existing clients and supplemented by the launch of new high volume customers.

 

Revenues for the period grew by 2% to US$53.0 million, and Underlying Revenues** grew by 11%, compared to the same period in 2016. Gross Profit decreased by 4% to US$30.4 million (H1 2016: US$31.6 million) with the Gross Profit Margin decreasing to 57% due to the higher quality and lower risk of the overall customer base. Accordingly, the Adjusted EBITDA* decreased to US$15.6 million (H1 2016: US$16.8 million). 

 

SafeCharge remained highly cash generative with US$16.2 million of free cash flow from operating activities before working capital changes and tax paid in the six month period, and free cash flow*** of US$9.5 million, representing cash conversion of 79%.

 

SafeCharge Acquiring

 

Another success during the first half was the continued strong growth in our own Acquiring services. SafeCharge Own Acquiring transaction value for the period totalled US$811 million (H1 2016: US$395 million) closing the period with a run-rate in excess of US$1.8 billion, with more than 20% of the Group's transaction volumes processed through its own acquiring platform in June. Importantly, the approval ratios achieved were high and competitive against those of more established competitors. Acquiring also enables SafeCharge to provide benefits such as rapid onboarding for new customers and remains a key focus for the Group.

 

Using our best in class smart routing technology, we can route transactions to our own acquiring or third-party acquirers with the highest acceptance levels. This benefits our clients as fewer transactions are rejected. Smart routing also protects clients as we are able to route transactions to multiple acquirers, thereby enabling our clients to keep trading if their preferred acquirer temporarily fails.

 

Looking to the future

 

The Group has a robust and scalable platform that can accommodate transaction volumes over 20 times greater than currently processed. Management remains committed to rolling-out its technology-based solutions to new markets and, as such, has a number of priorities for the second half of 2017 and beyond:

·     

Further investment in the platform to accommodate the needs of emerging businesses in new economies, such as peer-to-peer payments; e-marketplaces; SME payments; and crowd funding;

·     

Strengthening of the Group's service and sector expertise by adding local service and account teams with domain expertise in our target markets; and

·     

Additional functionality to the new website which will allow merchants to download Application Programming Interfaces (APIs), thereby reducing the time to market.

 

 

Regulation

 

Through its membership and active involvement with organisations such as the PCI Security Standards Council, the Electronic Money Association and the Merchant Risk Council, as well as on-going dialogue with all the major card schemes, SafeCharge is well-informed and well prepared to take advantage of many of the regulatory changes being introduced. The principal regulatory work currently undertaken by the Group includes:

·     

European Banking Authority rules on Strong Customer Authentication;

·     

Brexit: potential changes to the passporting rules;

·     

4th AML Directive: the proposed risk-based approach and changes to due diligence requirements;

·     

Introduction of PSD2: open access and the increasingly competitive environment; and

·     

EU General Data Protection Regulations: proposed changes.

 

In light of the continuously evolving regulatory environment SafeCharge is tirelessly improving its policies and procedures. As such, the Group is well placed to help its customers maximise the opportunities arising from regulatory change.

 

Outlook

 

The Group has enjoyed a strong start to the second half of 2017 benefiting from the launch of new clients, many of whom had started processing on the Company's global acquiring platform by the end of the first half of the year. The Group is confident that its focus on higher quality earnings from its healthy pipeline will yield revenue growth in 2017 and build even stronger profitable momentum in 2018 and beyond.

 

 

David Avgi

Chief Executive Officer

12 September 2017

 

* Adjusted EBITDA is a non-GAAP, company-specific measure which is earnings excluding interest, taxes, depreciation, amortisation, acquisition costs and contingent remuneration, restructuring costs and share-based payments charge (See Consolidated Statement of Comprehensive Income).

** Underlying Revenues is a non-GAAP, company-specific measure which excludes revenues of US$4.6 million in H1 2016 related to reshape of customer base undertaken in 2016.

*** Free cash flow is a non-GAAP figure defined as operating cash flow after working capital movements (excluding movements in payments working capital), interest, tax and capital expenditure.

 

 

Financial review

 

Highlights

 

Revenues for the period increased by 2% to US$53.0 million (H1 2016: US$52.2 million); this growth was achieved following the reshaping of the existing customer base undertaken during 2016 to upgrade the quality of revenues. Underlying Revenues** increasing 11% from US$47.6 million in the comparable period in 2016 to US$53.0 million.

 

Following the customer base reshape undertaken in 2016 and the improved quality of the customer base, Gross Profit decreased by 4%, reaching US$30.4 million (H1 2016: US$31.6 million) and Adjusted EBITDA* decreased by 7%, reaching US$15.6 million (H1 2016: US$16.8 million). 

 

The cash conversion remained strong, with cash flows from operations (before working capital adjustments and tax paid) of US$16.2 million (H1 2016: US$16.5 million) and free cash flow*** of US$9.5 million (H1 2016: US$11.4 million), reflecting cash conversion of 79% (H1 2016: 86%). Profit after tax for the period was US$12.2 million (H1 2016: US$15.2 million).  

 

During the period, the Group paid US$14.5 million in dividends, acquired US$5.4 million of its own shares which are held in treasury and invested US$2.9 million in capitalised development costs. The Group ended the period with US$113.0 million (H1 2016: US$128.1 million) of cash and cash equivalents and US$9.1 million in available-for-sale assets (H1 2016: US$1.9 million). The Group remained debt free during the period.

 

Revenues

 

Revenues increased during the period by 2% to US$53.0 million (H1 2016: US$52.2 million). This growth was achieved despite the steps taken in 2016 to reduce exposure to certain sectors and markets in anticipation of evolving regulatory, commercial and customer requirements. The Directors estimate that these certain sectors generated revenues and gross profit of US$4.6 million and US$2.9 million, respectively, in the first half of 2016. New clients who began processing payments through the Group's systems in the last 12 months generated revenues of US$3.8 million during the first half of 2017.

 

Foreign currency exposure and impact

 

In order to reduce foreign exchange exposure, the majority of the Group's assets are held in US dollars, its functional and reporting currency.

 

The Group generates revenues in multiple currencies, the most significant being the US dollar, euro and sterling, accounting for approximately 62% of income in the period with the balance of revenues generated in a wide range of other currencies.

 

SafeCharge has operations in several jurisdictions and incurs the majority of its operating costs in US dollars, euros, Israeli shekels and sterling.

 

The Group's financial results for the period incurred a minor negative impact due to a strengthening of the US dollar against certain currencies during the period. The Directors estimate that revenues and Adjusted EBITDA* were approximately US$0.4 million lower than would have been reported on a constant currency basis. Results stated on a constant currency basis, a non-IFRS measure, are calculated by applying the average exchange rate of the comparable period in the prior year to current period local currency results.

 

Margins

 

Gross Profit and Adjusted EBITDA* margins decreased to 57.3% (H1 2016: 60.6%) and 29.4% (H1 2016: 32.1%) respectively, primarily as a result of the customers base reshape undertaken in 2016 as well as the focus of the Company on high quality customers which upgraded the quality of revenues and customer base.

 

Expenses

 

Employee related costs, which account for the majority of SafeCharge's operating expenses and equate to approximately 19% of revenues, remained almost unchanged throughout the period, amounting to US$10.2 million (H1 2016: US$10.3 million).

 

The Group incurred share-based payment charges of US$0.5 million in the period (H1 2016: US$0.4 million). In order to reduce foreign exchange exposure, the majority of the Group's assets are held in US dollars, its functional and presentation currency. The Group's reported net finance income of US$1.4 million (H1 2016: US$2.8 million) primarily due to foreign exchange differences. In the comparable period in 2016, net finance income included US$1.1 million gain due to the purchase of VISA Europe by VISA Inc, US$0.7 million gain on the sale of the investment in FinTech Group AG and US$1.0 million foreign exchange differences.

 

Depreciation and amortisation of US$2.2 million was charged in the period (H1 2016: US$2.1 million), which included US$1.3 million in respect of intangible asset amortisation (H1 2016: US$1.2 million).

 

Tax

 

The Group's reported tax expense is US$1.4 million (H1 2016: US$0.7 million) in respect of its operations across multiple jurisdictions, representing a blended tax rate of 10% on reported profit before tax, which included US$0.6 million in respect of prior years' taxes recorded during the period.

 

Profit after tax

 

The Group's reported profit after tax was US$12.2 million (H1 2016: US$15.2 million). The decrease was mainly caused by the reduction in gross profit of US$1.2 million as a result of the customer base reshape impact of US$2.9 million undertaken in 2016 offset by growth in existing and new customers, and one-off finance income recorded in the comparable period in 2016 of US$1.8 million in respect of the purchase of VISA Europe by VISA Inc and realised gain on the sale of the investment in FinTech Group AG. Other factors were the tax expense of US$0.6 million in respect of prior years' taxes recorded during the period, which was partly offset by an operating costs decrease of US$0.1 million and finance income increase of US$0.5 million related to foreign exchange differences and interest income.

 

Payments working capital items 

 

During the period, the Company completed the share acquisition of GTS, an online payment processing service, now rebranded to SafeCharge Digital. In these operations, client money held on behalf of clients is included in the balances of cash and cash equivalents, settlement assets and merchant processing liabilities since no legal right exists to offset between this cash and the corresponding merchant processing liabilities. As at the reporting date, the related cash balances amounted US$8.1 million, settlement assets amounted to US$1.8 million, and merchant processing liabilities amounted to US$9.9 million.

 

Cash flow

 

SafeCharge continues to be highly cash generative. In the first half of the year the Group generated US$14.6 million net cash flows from operating activities before payments working capital (H1 2016: US$14.7 million). Net cash flows from operating activities after payments working capital amounted to US$22.7 million.

 

The Group's cash outflow in respect of investing activities was US$5.6 million (H1 2016: US$9.7 million inflow). This outflow included US$3.1 million of investment in intangible assets (H1 2016: US$2.8 million) with the majority being capitalised development expenses, US$2.2 million (H1 2016: US$0.6 million) in payments for the acquisition of property, plant and equipment (primarily computer equipment), and US$0.6 million related to the investment in YelloCo.

 

The Group's cash outflow in respect of financing activities was US$19.4 million (H1 2016: US$11.3 million) reflecting US$14.5 million of the final 2016 dividend payment and US$5.4 million in respect to the purchase of Company shares to be held in treasury, offset by US$0.5 million received from the exercise of share options.

 

Free cash flow*** was US$9.5 million (H1 2016: US$11.4 million), reflecting cash conversion of 79% (H1 2016: 86%). The change in cash conversion caused by increased investment in property, plant and equipment (mainly computer equipment).

 

Overall during the period there was a net decrease in cash and cash equivalents of US$2.3 million (H1 2016: US$13.2 million increase) and the Group closed the period with US$113.0 million (H1 2016: US$128.1 million) in cash and cash equivalents.

 

Financial position

 

The Group closed the period with total assets of US$178.0 million (H1 2016: US$179.3 million), including US$113.0 million (H1 2016: US$128.1 million) of cash and cash equivalents and US$9.1 million (H1 2016: US$1.9 million) of available-for-sale investments. The majority of the Company's cash was held in current accounts and on-call deposit accounts, with US$53 million held on call deposit. The Directors believe that SafeCharge's strong balance sheet provides a high degree of operational flexibility as it implements its growth strategy.

 

The net book value of intangible assets held at 30 June 2017 was US$37.2 million (H1 2016: US$33.1 million) of which US$10.2 million (H1 2016: US$9.6 million) related to Goodwill and US$9.7 million (H1 2016: US$10.3 million) related to IP technology, licenses and domains. During the period, the Group capitalised US$3.1 million (H1 2016: US$2.8 million) relating to technology development costs.

 

Total current assets decreased to US$124.7 million (H1 2016: US$ 138.8 million), with cash decreasing primarily as a result of the final dividend payment and the purchase of own shares. Current liabilities increased to US$21.0 million (H1 2016: US$ 13.1 million) mainly due to the merchant processing liabilities of US$9.9 million, offset by a US$1.9 million decrease in taxes payables due to prior years' taxes paid during the first half.

 

Total equity attributable to equity holders decreased to US$156.1 million (H1 2016: US$165.4 million) principally as a result of the dividends and the treasury shares purchased by the Company.

 

In July 2017 the Company purchased 1,500,000 of its own shares at an average price of 270 pence per share. These shares will be held in treasury and used to satisfy the issue of shares in respect of future exercise of share options.

 

The Group closed the period with no debt and is well placed to secure further strategic investment opportunities as it seeks to grow its market-leading offer.

 

Dividend

 

The Board has recommended the payment of an interim dividend of 7.69 US$ cents per share (H1 2016: 7.0 US$ cents), representing 75% of Adjusted EBITDA* for the period, in line with the Company's existing policy of paying 75% of Adjusted EBITDA* for the full year (as long as there is no material M&A transaction). Recognising the Group's continued strong cash generation the Board expects total dividend for the full year to be 75% of Adjusted EBITDA*.

 

 

The dividend shall be paid in sterling and will therefore be subject to a conversion exchange rate from US dollars based on a GBP/USD rate of 1.318, being the rate at 4.30 pm on 11th September. As a result, those shareholders entitled to the interim dividend will receive 5.83 pence per share. The interim dividend will become payable on 13th October 2017 to those shareholders on the Company's register as at the record date of 29th September 2017. The ex-dividend date is 28th September 2017.

 

 

Tsach Einav

Chief Financial Officer

12 September 2017

 

* Adjusted EBITDA is a non-GAAP, company-specific measure which is earnings excluding interest, taxes, depreciation, amortisation, acquisition costs and contingent remuneration, restructuring costs and share-based payments charge (See Consolidated Statement of Comprehensive Income).

** Underlying Revenues is a non-GAAP, company-specific measure which excludes revenues of US$4.6 million in H1 2016 related to reshape of customer base undertaken in 2016.

*** Free cash flow is a non-GAAP figure defined as operating cash flow after working capital movements (excluding movements in payments working capital), interest, tax and capital expenditure.

 

 

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2017

 

 

Six months ended  30 June 2017

 

Six months ended  30

June 2016

 

Year ended  31

December 2016

 

 

 

 

(Unaudited)

(Unaudited)

(Audited)

 

 

Note

US$000s

US$000s

US$000s

 

Revenue

3

52,994

52,183

104,139

 

Cost of sales

 

(22,626)

(20,557)

(43,473)

 

Gross profit

 

30,368

31,626

60,666

 

Salaries and employee expenses

 

(10,219)

(10,281)

(19,649)

 

Share-based payments charge

 

(513)

(400)

(672)

 

Depreciation and amortisation

 

(2,155)

(2,069)

(4,139)

 

Premises and other costs

 

(1,306)

(1,492)

(3,008)

 

Other expenses

 

(3,268)

(3,084)

(4,684)

 

Acquisition costs and contingent remuneration

10

(61)

(95)

(322)

 

Restructuring costs

 

(777)

(1,014)

(2,070)

 

Total operating costs

 

(18,299)

(18,435)

(34,544)

 

Adjusted EBITDA*

 

15,575

16,769

33,325

 

Depreciation and amortisation

 

(2,155)

(2,069)

(4,139)

 

Share-based payments charge

 

(513)

(400)

(672)

 

Acquisition costs and contingent remuneration

 

(61)

(95)

(322)

 

Restructuring costs

 

(777)

(1,014)

(2,070)

 

Profit from operations

 

12,069

13,191

26,122

 

Finance income

5

1,624

2,902

2,332

 

Finance expense

 5

(178)

(137)

(413)

 

Profit before tax

 

13,515

15,956

28,041

 

Tax expense

 

(1,353)

(741)

(1,487)

 

Profit after tax attributable to equity holders of the Parent

 

12,162

15,215

26,554

 

 

 

 

 

 

 

Other comprehensive income for the period

 

 

 

 

 

 

 

 

 

 

 

Items that will be reclassified subsequently to profit or loss when specific conditions are met:

 

 

 

 

Unrealised fair value movements on available-for-sale investments

9

320

(4,805)

(4,805)

 

Realised fair value movements on available-for-sale investments reclassified to profit or loss

5

-

(1,760)

(1,760)

 

Exchange difference arising on the translation and consolidation of foreign companies' financial statements

 

2,052

300

(618)

 

Total comprehensive income for the period 

 

14,534

8,950

19,371

 

Earnings per share for profit attributable to the owners of the Parent during the period

 

 

 

 

 

Basic (cents)

4

8.20

10.03

17.57

 

Diluted (cents)

4

8.06

9.88

17.32

 

 

* Adjusted EBITDA is a non-GAAP, company-specific measure which is earnings excluding interest, taxes, depreciation, amortisation, acquisition costs and contingent remuneration, restructuring costs, and share-based payments charge. Where not explicitly mentioned, Adjusted EBITDA refers to Adjusted EBIDTA from continuing operations.

 

The attached notes are an integral part of the condensed interim financial information.

 

 

 

                   

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2017

                         

 

 

 

30 June 2017

30 June 2016

31 December 2016

 

 

(Unaudited)

(Unaudited)

(Audited)

                                                                             

Note

US$000s

US$000s

US$000s

 

 

 

 

 

Assets

 

 

 

 

Non-current assets

 

 

 

 

Property, plant and equipment

6

3,657

2,581

2,346

Intangible assets

7

37,192

33,054

33,441

Available-for-sale investments

9

9,064

1,895

8,504

Other receivables

 

2,744

2,681

2,665

Total non-current assets

 

52,657

40,211

46,956

 

 

 

 

 

Current assets

 

 

 

 

Trade and other receivables

 

9,773

10,735

10,329

Settlement assets

12

1,776

-

-

Taxes receivable

 

180

-

-

Cash and cash equivalents

 

113,017

128,065

115,357

Total current assets

 

124,746

138,800

125,686

 

 

 

 

 

Assets classified as held for sale

9

587

267

267

 

 

 

 

 

Total assets

 

177,990

179,278

172,909

 

 

 

 

 

Equity

 

 

 

 

Share capital                                                            

 

15

15

15

Share premium

 

125,672

123,908

125,169

Capital reserve

 

622

622

622

Available-for-sale reserve

 

1,473

1,153

1,153

Translation reserve

 

628

(506)

(1,424)

Share options reserve

 

3,103

2,621

2,662

Treasury shares reserve

11

(11,679)

-

(6,281)

Retained earnings

 

36,272

37,615

38,577

Total equity attributable to equity holders of Parent

 

156,106

165,428

160,493

 

 

 

 

 

Non-current liabilities

 

 

 

 

Provisions

 

233

295

260

Deferred tax liability

 

612

387

479

Contingent consideration

10

-

102

-

Total non-current liabilities

 

845

784

739

 

 

 

 

 

Current liabilities

 

 

 

 

Trade and other payables

 

10,977

11,003

9,709

Merchant processing liabilities

12

9,882

-

-

Contingent consideration

10

180

153

343

Taxes payable

 

-

1,910

1,625

Total current liabilities

 

21,039

13,066

11,677

 

 

 

 

 

Total equity and liabilities

 

177,990

179,278

172,909

 

 

 

 

 

 

The attached notes are an integral part of the condensed interim financial information.

CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 30 June 2017

 

 

Six months ended

30 June 2017

Six months ended

30 June 2016

Year ended                       31 December 2016

 

 

(Unaudited)

(Unaudited)

(Audited)

 

 Note

US$000s

US$000s

US$000s

Cash flows from operating activities

 

 

 

 

Profit before tax

 

13,515

15,956

28,041

Adjustments for:

 

 

 

 

Depreciation of property, plant and equipment

6

890

892

1,739

Amortisation of intangible assets

7

1,265

1,177

2,400

Exchange difference arising on the translation of non-current assets in foreign currencies

 

219

(59)

(36)

Charge to statement of comprehensive income for provisions

 

(27)

52

17

Gain on sale of available-for-sale assets

5

-

(1,760)

(1,760)

Finance income

5

(215)

(157)

(244)

Share-based payments charge

 

513

400

672

Cash flows from operations before working capital

 

16,160

16,501

30,829

Decrease in trade and other receivables

 

477

3

425

Increase/(Decrease) in trade and other payables

 

1,192

(1,457)

(3,394)

Cash flows from operations before movements in payments working capital

 

17,829

15,047

27,860

Increase in merchant processing liabilities

12

9,882

-

-

Increase in settlement assets

12

(1,776)

-

-

 

 

25,935

15,047

27,860

Tax paid

 

(3,247)

(336)

(1,289)

Net cash flows from operating activities

  

22,688

14,711

26,571

Cash flows from investing activities

 

 

 

 

Payment for acquisition of intangible assets

7

(3,052)

(2,839)

(5,330)

Payment for acquisition of property, plant and equipment

6

(2,197)

(624)

(1,279)

Acquisition of available-for-sale investments

 

(560)

-

(6,609)

Interest received

 5

215

157

244

Proceeds from disposal of available-for-sale investments

9

-

13,036

13,036

Net cash flows (used in)/provided by investing activities

  

(5,594)

9,730

62

Cash flows from financing activities

  

 

 

 

Proceeds from exercise of stock options

 

503

80

1,341

Purchase of own shares to be held as treasury shares

11

(5,398)

-

(6,281)

Dividends paid

8

(14,539)

(11,340)

(21,220)

Net cash flows used in financing activities

 

(19,434)

(11,260)

(26,160)

(Decrease)/Increase in cash and cash equivalents for the period  

(2,340)

13,181

473

Cash and cash equivalents at the beginning of the period

  

115,357

114,884

114,884

Cash and cash equivalents at the end of the period

   

113,017

128,065

115,357

 

 

 

 

 

 

 

The attached notes are an integral part of the condensed interim financial information.

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2017

Unaudited consolidated statement of changes in equity for the six months ended 30 June 2017:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share Capital

Treasury shares reserve

Share Premium

Capital Reserve

Available-for-sale Reserve

Translation Reserve

Share Options Reserve

Retained Earnings

Total Equity Attributable to Equity Holders of Parent 

 

 Note

US$000s

US$000s

US$000s

US$000s

US$000s

US$000s

US$000s

US$000s

US$000s

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 31 December 2016

                 15

                 (6,281)

125,169

             622

 

1,153

(1,424)

2,662

 38,577

160,493

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive Income

 

 

 

 

 

 

 

 

 

 

Profit for the period

-

-

-

-

-

-

-

12,162

12,162

 

Exchange difference arising on the translation and consolidation of foreign companies' financial statements

-

-

-

-

320

2,052

-

-

2,372

 

Total comprehensive income for the period

-

-

-

-

320

2,052

-

12,162

14,534

 

 

 

 

 

 

 

 

 

 

 

 

Contributions by and distributions to owners

 

 

 

 

 

 

 

 

 

 

Dividends

-

-

-

-

-

-

-

(14,539)

(14,539)

 

Exercise of options

*

-

503

-

-

-

(72)

72

503

 

Purchase of own shares

(*)

(5,398)

-

-

-

-

-

-

(5,398)

 

Share-based payments                        11

-

-

-

-

-

-

513

-

513

 

Total contributions by and distributions to owners

-

(5,398)

503

-

-

-

441

(14,467)

(18,921)

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 30 June 2017

15

(11,679)

125,672

622

1,473

628

3,103

36,272

156,106

 

 

 

 

 

 

 

 

 

 

 

 

(*) Represents amount less than one thousand US$

 

Unaudited consolidated statement of changes in equity for the six months ended 30 June 2016:

 

 

 

 

 

 

Share Capital

Share Premium

Capital Reserve

Available-for-sale Reserve

Translation Reserve

Share Options Reserve

Retained Earnings

Total Equity Attributable to Equity Holders of Parent 

 

 

US$000s

US$000s

US$000s

US$000s

US$000s

US$000s

US$000s

US$000s

 

 

 

 

 

 

 

 

 

 

 

Balance at 31 December 2015

                 15

123,828

             622

 

7,718

(806)

2,221

 33,740

167,338

 

 

 

 

 

 

 

 

 

 

 

Comprehensive Income

 

 

 

 

 

 

 

 

 

Profit for the period

-

-

-

-

-

-

15,215

15,215

 

Unrealised fair value movements on available-for-sale investments

-

-

-

(4,805)

-

-

-

(4,805)

 

Realised fair value movements on available-for-sale investments reclassified to profit or loss

-

-

-

(1,760)

-

-

-

(1,760)

 

Exchange difference arising on the translation and consolidation of foreign companies' financial statements

-

-

-

-

300

-

-

300

 

Total comprehensive income for the period

-

-

-

(6,565)

300

-

15,215

8,950

 

 

 

 

 

 

 

 

 

 

 

Contributions by and distributions to owners

 

 

 

 

 

 

 

 

 

Dividends

-

-

-

-

-

-

(11,340)

(11,340)

 

Exercise of options

*

80

-

-

-

-

-

80

 

Share-based payments

-

-

-

-

-

400

-

400

 

Total contributions by and distributions to owners

*

80

-

-

-

400

(11,340)

(10,860)

 

 

 

 

 

 

 

 

 

 

 

Balance at 30 June 2016

15

123,908

622

1,153

(506)

2,621

37,615

165,428

 

 

 

 

 

 

 

 

 

 

 

                                   

 

(*) Represents amount less than one thousand US$

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2017

 

Audited consolidated statement of changes in equity for the year ended 31 December 2016:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share Capital

Treasury shares reserve

Share Premium

Capital Reserve

Available-for-sale Reserve

Translation Reserve

Share Options Reserve

Retained Earnings

Total Equity Attributable to Equity Holders of Parent 

 

 

US$000s

US$000s

US$000s

US$000s

US$000s

US$000s

US$000s

US$000s

US$000s

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 31 December 2015

               15

               -

123,828

             622

7,718

              (806)

2,221

  33,740

167,338

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive Income

 

 

 

 

 

 

 

 

 

 

Profit for the year

-

-

-

-

-

-

-

26,554

26,554

 

Unrealised fair value movements on available-for-sale investments

-

-

-

-

(4,805)

-

-

-

(4,805)

 

Realised fair value

movements on available-for-sale investments reclassified to profit or loss

-

-

-

-

(1,760)

-

-

-

(1,760)

 

Exchange difference arising on the translation and consolidation of foreign companies' financial statements

-

-

-

-

-

(618)

-

-

(618)

 

Total comprehensive income for the  year

-

-

-

-

(6,565)

(618)

-

26,554

19,371

 

 

 

 

 

 

 

 

 

 

 

 

Contributions by and distributions to owners

 

 

 

 

 

 

 

 

 

 

Dividends

-

-

-

-

-

-

-

(21,948)

(21,948)

 

Exercise of options

*

-

1,341

-

-

-

(231)

231

1,341

 

Purchase of own shares

(*)

(6,281)

-

-

-

-

-

-

(6,281)

 

Share-based payments

-

-

-

-

-

-

672

-

672

 

Total contributions by and distributions to owners

-

(6,281)

1,341

-

-

-

441

(21,717)

(26,216)

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 31 December 2016

            15

            (6,281)

125,169

             622

 

1,153

(1,424)

2,662

 38,577

160,493

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(*) Represents amount less than one thousand US$

 

 

 

 

 

 

 

 

 

                                       

 

The attached notes are an integral part of the condensed interim financial information.

 

 

 

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the six months ended 30 June 2017

 

1. General information

SafeCharge International Group Limited (hereinafter - the 'Company') was incorporated in the British Virgin Islands on 4 May 2006 as a private company with limited liability. On 30 October 2015 the Company re-domiciled to Guernsey. Its registered office is at Dorey Court, Admiral Park, St Peter Port, Guernsey, GY1 2HT. The principal activities of the Company and its subsidiaries (hereinafter - the 'Group') are the provision of payments services, technology and risk management solutions for omni‐channel businesses.

 

2. Significant accounting policies

 

Basis of preparation

The interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting. The same accounting policies, presentation and methods of computation have been followed in the preparation of these results as were applied in the Company's latest annual audited financial statements. The accounting policies are consistent with those used in the previous annual report. The financial information for the six month period ended 30 June 2017 does not constitute the full statutory accounts for that period. The Independent Auditors' Report on the Annual Report and Financial Statements for the year ended 31 December 2016 was unqualified, and did not draw attention to any matters by way of emphasis.

 

Going concern

 

Based on the Group's cash balances and normal business planning and control procedures, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. For this reason, the Directors continue to adopt the going concern basis in preparing the accounts.

Adoption of new and revised IFRSs

During the current year the Group adopted all the new and revised IFRSs that are relevant to its operations and are effective for accounting periods beginning on 1 January 2017.

(i) Standards and Interpretations adopted by the EU

 

A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 January 2017, and have not been applied in preparing these consolidated financial statements. Those which may be relevant to the Group are set out below. The Group does not plan to adopt these standards early.

 

(ii) Standards and Interpretations not adopted by the EU

 

New standards

·      IFRS 9 ''Financial Instruments'' (effective for annual periods beginning on or after 1 January 2018).

·      IFRS15 "Revenue from Contracts with Customers" (effective for annual periods beginning on or after 1 January 2018).

·      IFRS 16 "Leases" (effective for annual periods beginning on or after 1 January 2019).

 

IFRS 15 requires an assessment of all revenue streams and whilst the Group is finalising their impact assessment, the Directors do not anticipate that the adoption of IFRS 15 standards will have a material impact on the recognition of revenue.

 

The review of the impact of IFRS 16 and IFRS 9 will require an assessment of all leases and the classification and measurement of the Group's financial instrument respectively. The Group is still assessing the likely impact of adopting these standards.

 

Amendments

·     

·      Disclosure Initiative: Amendments to IAS 7 (1 January 2017).

·      Clarifications to IFRS 15 revenue from Contracts with Customers (1 January 2018).

·      Classification and Measurement of Share-based Payment Transactions (Amendments to IFRS 2) (1 January 2018).

 

 

The impact of these standards on the consolidated financial statements of the Group has not yet been fully assessed by the Board of Directors.

Basis of consolidation

 

The Group interim consolidated financial statements comprise the financial statements of the Parent company SafeCharge International Group Limited and the financial statements of the subsidiaries.

 

The interim financial statements of all the Group companies are prepared using uniform accounting policies. All inter‑company transactions and balances between Group companies have been eliminated during consolidation.

 

 

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the six months ended 30 June 2017

 

2. Significant accounting policies (continued)

Business combinations

 

Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition‑date fair values of the assets transferred by the Group, liabilities incurred by the Group and the equity interests issued by the Group in exchange for control of the acquiree. Acquisition‑related costs are generally recognised in the statement of comprehensive income as incurred.

 

At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value at the acquisition date, except that:

·     

Deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognised and measured in accordance with IAS 12 Income Taxes and IAS 19 Employee Benefits respectively;

·     

Liabilities or equity instruments related to share‑based payment arrangements of the acquiree or share‑based payment arrangements of the Group entered into to replace share‑based payment arrangements of the acquiree are measured in accordance with IFRS 2 Share‑based Payment at the acquisition date; and

·     

Assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non‑current Assets Held for Sale and Discontinued Operations are measured in accordance with that Standard.

 

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non‑controlling interests in the acquiree, and the fair value of the acquirer's previously held equity interest in the acquiree (if any) over the net of the acquisition‑date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition‑date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non‑controlling interests in the acquiree and the fair value of the acquirer's previously held interest in the acquiree (if any), the excess is recognised immediately in the statement of comprehensive income as a bargain purchase gain.

 

Non‑controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity's net assets in the event of liquidation may be initially measured either at fair value or at the non‑controlling interests' proportionate share of the recognised amounts of the acquiree's identifiable net assets. The choice of measurement basis is made on a transaction‑by‑transaction basis.

 

When the consideration transferred by the Group in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition‑date fair value and included as part of the consideration transferred in a business combination. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the 'measurement period' (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date.

 

The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or a liability is remeasured at subsequent reporting dates in accordance with IAS 39, or IAS 37 Provisions, Contingent Liabilities and Contingent Assets, as appropriate, with the corresponding gain or loss being recognised in the statement of comprehensive income.

 

When a business combination is achieved in stages, the Group's previously held equity interest in the acquiree is remeasured to fair value at the acquisition date (i.e. the date when the Group obtains control) and the resulting gain or loss, if any, is recognised in the statement of comprehensive income. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit and loss where such treatment would be appropriate if that interest were disposed of.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognised at that date.

 

Goodwill

 

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's share of the net identifiable assets of the acquired undertaking at the date of acquisition. Goodwill on acquisition of subsidiaries is included in ''intangible assets''.

 

Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Gains and losses on the disposal of an undertaking include the carrying amount of goodwill relating to the undertaking sold. Goodwill is allocated to cash‑generating units for the purpose of impairment testing.

 

 

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the six months ended 30 June 2017

 

2. Significant accounting policies (continued)

 

Revenue recognition

 

Revenue comprises the invoiced amount for the sale of services net of Value Added Tax, rebates and discounts. Revenues earned by the Group are recognised on the following bases:

 

Service revenues are generated from fees charged to merchants for payment processing and risk management services. Revenues are generated by transaction related charges billed as both a percentage based discount fee of the payment volumes processed and a fee per transaction. In addition to this volume-dependent sales revenue, service revenues are derived from a variety of services fees, such as fees for monthly minimum transaction fee requirements, set up fees, and fees for other miscellaneous services. Discount and other fees related to payment transactions are recognised at the time the merchant's transactions are processed. Revenues are recognised gross, with any commission expenses paid to acquiring banks recognised as cost of sales. Revenues derived from service fees are recognised at the time the service is performed.

 

Clients' deposits

 

All money held on behalf of clients has been excluded from the balances of cash and cash equivalents and amounts due to clients, brokers and other counterparties. Clients' money is not held directly, but is placed on deposit in segregated bank accounts with a financial institution (See Note 12).

 

Tax

 

Income tax expense represents the sum of the tax currently payable.

 

Current tax liabilities and assets are measured at the amount expected to be paid to or recovered from the tax authorities. The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the reporting date.

Deferred tax is provided in full on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Currently enacted tax rates are used in the determination of deferred tax.

 

Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

 

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred taxes relate to the same fiscal authority.

Property, plant and equipment

 

Property, plant and equipment are stated at historical cost less accumulated depreciation and any accumulated impairment losses.

 

Depreciation is calculated on the straight‑line method so as to write off the cost of each asset to its residual value over its estimated useful life. The annual depreciation rates used are as follows:

 

 

Useful

economic life

Furniture, fixtures and office equipment

10 years

Leasehold improvements

10 years

Motor Vehicles

5 years

Computer equipment

3 years

 

The assets residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.

 

Where the carrying amount of an asset is greater than its estimated recoverable amount, the asset is written down immediately to its recoverable amount.

 

Expenditure for repairs and maintenance of property, plant and equipment is charged to the statement of comprehensive income of the year in which it is incurred. The cost of major renovations and other subsequent expenditure are included in the carrying amount of the asset when it is probable that future economic benefits in excess of the originally assessed standard of performance of the existing asset will flow to the Group. Major renovations are depreciated over the remaining useful life of the related asset.

 

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the statement of comprehensive income.

 

 

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the six months ended 30 June 2017

 

2. Significant accounting policies (continued)

 

Intangible assets

 

Internally‑generated intangible assets ‑ research and development expenditure

 

Expenditure on research activities is recognised as an expense in the period in which it is incurred.

 

An internally‑generated intangible asset arising from the Group's e‑business development is recognised only if all of the following conditions are met:

·     

An asset is created that can be identified (such as software and new processes);

·     

It is probable that the asset created will generate future economic benefits; and

·     

The development cost of the asset can be measured reliably.

 

Internally‑generated intangible assets are amortised on a straight‑line basis over their estimated useful lives once the development is completed and the asset is in use. Where no internally‑generated intangible asset can be recognised, development expenditure is charged to the statement of comprehensive income in the period in which it is incurred.

 

An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of comprehensive income when the asset is derecognised.

 

Externally acquired intangible assets

Externally acquired intangible assets comprise of licences, internet domains names, IP technology, customer contracts and customer relationships which are stated at cost less accumulated amortisation. Where intangible assets are acquired as part of a business combination they are recorded initially at their fair value. Carrying amounts are reviewed on each reporting date for impairment. Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down to its recoverable amount.

Costs that are directly associated with identifiable and unique computer software products and internet domain names controlled by the Group and that will probably generate economic benefits exceeding costs beyond one year are recognised as intangible assets within IP technology. Subsequently computer software is carried at cost less any accumulated depreciation and any accumulated impairment losses. Expenditure which enhances or extends the performance of computer software programs beyond their original specifications is recognised as a capital improvement and added to the original cost of the computer software. Costs associated with maintenance of computer software programs are recognised as an expense when incurred. Computer software costs are amortised using the straight-line method over their useful lives, not exceeding a period of five years. Amortisation commences when the computer software is available for use and is included within administrative expenses.

An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of comprehensive income when the asset is derecognised.

Amortisation

 

Amortisation is calculated at annual rates estimated to write off the costs of the assets over their expected useful lives and is charged to operating expenses from the point the asset is brought into use.

 

The principal annual rates used for this purpose, which are consistent with those of the previous years, are as follows:

 

 

Useful

economic life

Domain names/Acquiring licences

Indefinite life

Internally generated capitalised development costs

5 years

Other licences

1 year

Customer contracts and customer relationships

5-15 years

IP technology

5-10 years

 

Management believes that the useful life of the domain names and acquiring license is indefinite. Domain names and acquiring license are reviewed for impairment annually.

 

 

Available-for-sale investments

 

Investments are recognised and de-recognised on trade date. The Group manages its investments with a view to profiting from the receipt of investment income and capital appreciation from changes in the fair value of equity investments. Quoted investments are designated as available-for-sale and subsequently carried in the statement of financial position at fair value with unrealised gain or loss being recognised in available-for-sale reserve within other comprehensive income. Fair value is measured using the closing bid price at the reporting date, where the investment is quoted on an active stock market. Unquoted investments are valued at the price of recent transaction if this is representative of fair value.

 

 

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the six months ended 30 June 2017

 

2. Significant accounting policies (continued)

 

Significant judgements and estimates

 

There have been no changes in the nature of the critical accounting estimates and judgements as set out in Note 4 to the Group's audited financial statements for the year ended 31 December 2016.

 

 

3. Segmental analysis 

 

Management considers that the Group's activity, as a single source supplier of online payments services, technologies and risk management solutions, constitutes one operating and reporting segment, as defined under IFRS 8.

 

Geographical analysis of revenue

Analysis of revenue by geographical region is made according to the jurisdiction of the Group's direct customers. This does not reflect the region of the end users of the Group's customers, whose locations are worldwide.

 

 

 

Six months ended 30 June 2017

Six months ended 30 June 2016

Year ended 31 December 2016

 

(Unaudited) US$000s

  

(Unaudited) US$000s  

(Audited)

US$000s

Europe

46,364

48,845

97,383

Rest of the World

6,630

3,338

6,756

 

52,994

52,183

104,139

 

Geographical analysis of non-current assets

 

Six months ended 30 June 2017

Six months ended 30 June 2016

Year ended 31 December 2016

 

(Unaudited) US$000s

 

 

(Unaudited) US$000s

 

(Audited)

US$000s

Guernsey

12,260

8,787

9,977

Europe

20,304

19,735

18,326

Asia

18,896

11,256

17,673

North America

1,197

433

980

 

52,657

40,211

46,956

 

4. Earnings per share

 

Six months ended 30 June 2017

Six months ended 30 June 2016

Year ended 31 December 2016

 

(Unaudited) US$

(Unaudited) US$

(Audited)

US$

 

 

 

 

 

Basic (cents)

8.20

10.03

17.57

Diluted (cents)

8.06

9.88

17.32

 

 

 

 

 

 

 

 

 

Six months ended 30 June 2017

Six months ended 30 June 2016

Year ended 31 December 2016

 

(Unaudited) US$000s

(Unaudited) US$000s

(Audited)

US$000s

Profit after tax for the period                                                                                      

12,162

15,215

26,554

 

 

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the six months ended 30 June 2017

 

4. Earnings per share (continued)

 

 

Six months ended 30 June 2017

Six months ended 30 June 2016

Year ended 31 December 2016

 

Number

Number

Number

Denominator - basic

 

 

 

 

    

 

 

 

Weighted average number of equity shares

148,259,681

151,619,053

151,156,990

 

 

 

 

Denominator - diluted

 

 

 

Weighted average number of equity shares

148,259,681

151,619,053

151,156,990

Weighted average number of share options

2,683,397

2,302,984

2,138,685

Weighted average number of shares

150,943,078

153,922,037

153,295,675

 

 

 

 

 

 

 

 

 

5. Finance income and expense

 

 

 

Six months ended 30 June 2017

Six months ended 30 June 2016

Year ended 31 December 2016

 

(Unaudited) US$000s

 

 

(Unaudited) US$000s

 

(Audited)

US$000s

Finance income

 

 

 

Interest received

215

157

244

Foreign exchange differences

1,409

985

328

Net gain on disposal of available-for-sale financial assets transferred from equity (See Note 9)

-

1,760

1,760

 

1,624

2,902

2,332

 

 

 

 

Finance expense

 

 

 

Bank fees

(178)

(137)

(413)

 

(178)

(137)

(413)

 

 

 

 

Net finance income

 

1,446

2,765

1,919

 

 

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the six months ended 30 June 2017

6. Property, plant and equipment

Unaudited Property, plant and equipment Note for the period ended 30 June 2017:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Leasehold improvements

 

 

Motor vehicles

 

Furniture, fixtures and office equipment

 

Computer equipment

 

 

Total

 

 

US$000s

US$000s

US$000s

US$000s

US$000s

 

Cost

 

 

 

 

 

 

Balance at 31 December 2016

697

214

655

6,665

8,231

 

Additions

432

32

238

1,495

2,197

 

Disposals

-

-

(46)

(6)

(52)

 

Foreign exchange rate movement

-

-

-

131

131

 

Balance at 30 June 2017

1,129

246

847

8,285

10,507

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation

 

 

 

 

 

 

 

Balance at 31 December 2016

451

202

373

4,859

5,885

 

Charge for the period

44

10

77

759

890

 

Disposals

-

-

(46)

(6)

(52)

 

Foreign exchange rate movement

-

-

-

127

127

 

Balance at 30 June 2017

495

212

404

5,739

6,850

 

 

 

 

 

 

 

 

Net book amount

 

 

 

 

 

 

Balance at 30 June 2017

634

34

443

2,546

3,657

 

                             

 

Unaudited Property, plant and equipment Note for the period ended 30 June 2016:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Leasehold improvements

 

 

Motor vehicles

 

Furniture, fixtures and office equipment

 

Computer equipment

 

 

Total

 

 

US$000s

US$000s

US$000s

US$000s

US$000s

 

Cost

 

 

 

 

 

 

Balance at 31 December 2015

576

236

638

5,615

7,065

 

Additions

60

-

31

533

624

 

Foreign exchange rate movement

-

-

5

32

37

 

Balance at 30 June 2016

636

236

674

6,180

7,726

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation

 

 

 

 

 

 

 

Balance at 31 December 2015

343

188

288

3,398

4,217

 

Charge for the period

75

11

62

744

892

 

Foreign exchange rate movement

-

-

3

33

36

 

Balance at 30 June 2016

418

199

353

4,175

5,145

 

 

 

 

 

 

 

 

Net book amount

 

 

 

 

 

 

Balance at 30 June 2016

218

37

321

2,005

2,581

 

                             

 

 

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the six months ended 30 June 2017               

6. Property, plant and equipment (continued)

Audited Property, plant and equipment Note for the year ended 31 December 2016:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Leasehold improvements

 

 

Motor vehicles

 

Furniture, fixtures and office equipment

 

Computer equipment

 

 

Total

 

 

US$000s

US$000s

US$000s

US$000s

US$000s

 

Cost

 

 

 

 

 

 

Balance at 31 December 2015

576

236

638

5,615

7,065

 

Additions

121

-

38

1,120

1,279

 

Foreign exchange rate movement

-

(22)

(21)

(70)

(113)

 

Balance at 31 December 2016

697

214

655

6,665

8,231

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation

 

 

 

 

 

 

 

Balance at 31 December 2015

343

188

288

3,398

4,217

 

Charge for the period

108

21

100

1,510

1,739

 

Foreign exchange rate movement

-

(7)

(15)

(49)

(71)

 

Balance at 31 December 2016

451

202

373

4,859

5,885

 

 

 

 

 

 

 

 

Net book amount

 

 

 

 

 

 

Balance at 31 December 2016

246

12

282

1,806

2,346

 

                             

 

7. Intangible Assets

Unaudited Intangible Assets Note for the period ended 30 June 2017:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

Customer contracts

IP technology

 

Domains and Licenses

 

Development

 

 

Total

 

 

US$000s

US$000s

US$000s

US$000s

US$000s

US$000s

 

Cost

 

 

 

 

 

 

 

Balance at 31 December 2016

9,324

5,009

10,196

2,122

11,992

38,643

 

Additions

-

-

147

-

2,905

3,052

 

Foreign exchange rate movement

857

319

769

-

46

1,991

 

Balance at 30 June 2017

10,181

5,328

11,112

2,122

14,943

43,686

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortisation

 

 

 

 

 

 

 

 

Balance at 31 December 2016

-

1,450

2,919

-

833

5,202

 

Amortisation for the period

-

300

567

-

398

1,265

 

Foreign exchange rate movement

-

-

27

-

-

27

 

Balance at 30 June 2017

-

1,750

3,513

-

1,231

6,494

 

 

 

 

 

 

 

 

 

Net book amount

 

 

 

 

 

 

 

10,181

3,578

7,599

2,122

13,712

37,192

 

                                   

 

 

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the six months ended 30 June 2017               

7. Intangible Assets (continued)

 

 

Unaudited Intangible Assets Note for the period ended 30 June 2016:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

Customer contracts

IP technology

 

Domains and Licenses

 

Development

 

 

Total

 

 

US$000s

US$000s

US$000s

US$000s

US$000s

US$000s

 

Cost

 

 

 

 

 

 

 

Balance at 31 December 2015

9,450

4,985

10,178

2,122

7,139

33,874

 

Additions

-

-

197

-

2,642

2,839

 

Foreign exchange rate movement

137

41

145

-

46

369

 

Balance at 30 June 2016

9,587

5,026

10,520

2,122

9,827

37,082

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortisation

 

 

 

 

 

 

 

Balance at 31 December 2015

-

868

1,775

-

208

2,851

 

Amortisation for the period

-

291

589

-

297

1,177

 

Balance at 30 June 2016

-

1,159

2,364

-

505

4,028

 

 

 

 

 

 

 

 

 

Net book amount

 

 

 

 

 

 

 

Balance at 30 June 2016

9,587

3,867

8,156

2,122

9,322

33,054

 

 

 

 Audited Intangible Assets Note for the year ended 31 December 2016:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

Customer contracts

IP technology

 

Domains and Licenses

 

Development

 

 

Total

 

 

 

US$000s

US$000s

US$000s

US$000s

US$000s

US$000s

 

 

Cost

 

 

 

 

 

 

 

 

Balance at 31 December 2015

9,450

4,985

10,178

2,122

7,139

33,874

 

 

Additions

-

-

340

-

4,990

5,330

 

 

Foreign exchange rate movement

(126)

24

(322)

-

(137)

(561)

 

 

Balance at 31 December 2016

9,324

5,009

10,196

2,122

11,992

38,643

 

 

 

 

 

 

 

 

 

 

 

Amortisation

 

 

 

 

 

 

 

 

Balance at 31 December 2015

-

868

1,775

-

208

2,851

 

 

Amortisation for the year

-

582

1,193

-

625

2,400

 

 

Foreign exchange rate movement

-

-

(49)

-

-

(49)

 

 

Balance at 31 December 2016

-

1,450

2,919

-

833

5,202

 

 

 

 

 

 

 

 

 

 

 

Net book amount

 

 

 

 

 

 

 

 

Balance at 31 December 2016

9,324

3,559

7,277

2,122

11,159

33,441

 

                                     

 

 

 

 

 

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the six months ended 30 June 2017

 

8. Shareholders' equity

 

Distribution of Dividend

 

In May 2017 the Group distributed US$14,539,000, 9.47 US$ cents per share (30 June 2016: US$11,340,000, 7.30 US$ cents per share), as a final dividend for the year ended 31 December 2016. In September 2016 the Board of Directors approved the payment of an interim dividend of US$10,608,000, 7.0 US$ cents per share as an interim dividend.

 

9. Available-for-sale investments including classified as held for sale

Fair value hierarchy

 

Available-for-sale assets are carried at fair value after initial recognition.

 

The Group uses the following hierarchy for determining and disclosing the fair value of financial assets by valuation technique:

 

Level 1: quoted (unadjusted) prices in active markets for identical assets,

Level 2: other techniques where all inputs, which have a significant effect on the recorded fair value, are observable either directly or indirectly; and

Level 3: techniques where inputs which have a significant effect on the recorded fair value that are not based on observable market data.

 

 

Total

Level 1

Level 2

Level 3

 

US$000s  

US$000s

US$000s

US$000s

Available-for-sale investments

 

 

 

 

At 30 June 2017

9,064

-

-

9,064

 

 

 

 

 

Available-for-sale investments classified as held for sale

 

 

 

 

At 30 June 2017

587

-

587

-

 

 

 

 

 

Total at 30 June 2017

9,651

-

587

9,064

 

 

 

 

 

Available-for-sale investments

 

 

 

 

At 30 June 2016

1,895

-

1,895

-

 

 

 

 

 

Available-for-sale investments classified as held for sale

 

 

 

 

At 30 June 2016

267

-

-

267

 

 

 

 

 

Total at 30 June 2016

2,162

-

1,895

267

 

 

 

 

 

Available-for-sale investments

 

 

 

 

At 31 December 2016

8,504

-

8,504

-

 

 

 

 

 

Available-for-sale investments classified as held for sale

 

 

 

 

At 31 December 2016

267

-

-

267

 

 

 

 

 

Total at 31 December 2016

8,771

-

8,504

267

 

 

 

 

 

There have been transfers of financial instruments between levels during the period.

 

The following is a reconciliation of the movement in the Group's financial assets classified at Level 3 during the period:

 

 

                                                                                                   

 

30 June 2017 (Unaudited)

30 June 2016        (Unaudited)

31 December 2016         (Audited)

 

 

US$000s

US$000s

US$000s

 

 

 

 

 

Balance brought forward

267

1,384

1,384

 

Realised gain for the period recognised in profit or loss

-

(1,117)

(1,117)

 

Acquired during the period

560

-

-

 

Reclassification from/to Level 2

8,237

-

-

 

Fair value at period end

9,064

267

267

 

 

 

 

 

 

 

             

 

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the six months ended 30 June 2017

 

9. Available-for-sale investments including classified as held for sale (continued)

Assets classified as held for sale include the Group's shares in Visa Europe and the valuation is based on assessment of the consideration entitled to the Group as part of the purchase of Visa Europe by Visa Inc in 2016. These are based on unobservable inputs due to a discount rate of 6% applied to market price of shares to be converted and estimated cash due to be received. In June 2016 the Group received payment of US$1,117,000 as part of the purchase of Visa Europe by Visa Inc. and therefore this realised gain was recycled to the 2016 profit or loss/income statement and included within finance income.

At 30 June 2017 the AFS investment was valued at US$587,000 and an unrealised gain of US$320,000 was recognised in other comprehensive income.

The remaining available-for-sale investments are held at fair value and measured based on Level 3 inputs:

 

In April 2015, the Group invested US$1,000,000 in 2C2P, an unquoted business based in South East Asia. This was in exchange for approximately 2% of issued share capital. 2C2P shares are unquoted. In August 2016, the Group invested an additional US$609,000. As of 31 December 2016 the shares value was adjusted based on the share price of recent transactions with the unrealised increase in valuation of US$895,000 recorded as an available-for-sale reserve. This investment is classified as Level 3 for the purpose of disclosure in the fair value hierarchy, as the valuation is based on cost basis, due to unreliable fair value measures.

 

In June 2015 the Group invested US$ 11,276,000 (€10,084,500) in FinTech Group AG, a business listed on the Frankfurt Stock exchange, for a 5% equity interest as part of a strategic partnership. At 31 December 2015, the investment was valued at $17,610,000 and an unrealised gain of $6,334,000 was recognised in other comprehensive income. In May 2016 the value of the available-for-sale asset fell to $11,919,000, and therefore an unrealised decrease in fair value of $5,691,000 was recognised in other comprehensive income. Subsequently, the Group sold all the investment in FinTech Group AG, with an overall realised gain of US$643,000, which has been recycled to the profit or loss and included within finance income of the six months ended 30 June 2016 period.In December 2016, the Group invested US$6,000,000 in Nayax Ltd & Dually Ltd, an unquoted business based in Israel. This was in exchange for approximately 4% of issued share capital. Nayax Ltd & Dually Ltd shares are unquoted. This investment is classified as Level 3 for the purpose of disclosure in the fair value hierarchy, as the valuation is based on cost basis, due to unreliable fair value measures.

In May 2017, the Group invested US$560,000 in Yello Company Limited, an unquoted business based in France. This was in exchange for approximately 6.25% of issued share capital. This investment is classified as Level 3 for the purpose of disclosure in the fair value hierarchy, as the valuation is based on cost basis, due to unreliable fair value measures

 

10. Contingent consideration

 

Contingent consideration relates to acquisitions that took place during 2015.

 

Details of the determination of Level 3 fair value measurements are set out below.

 

Contingent consideration arrangements:

 

Six months ended 30 June 2017 (Unaudited)

Six months ended 30 June 2016        (Unaudited)

Year ended 31 December 2016         (Audited)

 

US$000s

US$000s

US$000s

At 1 January

343

370

370

-

Contingent remuneration

38

95

170

Foreign exchange rate movement

4

-

13

Amounts paid

(205)

(210)

(210)

At period end

180

255

343

 

All amounts potentially payable are based on performance measures and contingent remuneration. In January 2015, the Group acquired CreditGuard Limited. The amounts due for the acquisition included contingent consideration and contingent remuneration. The contingent consideration was payable over one year if specified performance measures are achieved. The contingent remuneration is recognised over the period when services are provided.

 

The fair value is determined considering the expected payment, discounted to present value using a risk-adjusted discount rate of 5%. The expected payments are determined by considering the possible performance criteria, the amount to be paid under each scenario, and the probability of each scenario. The significant unobservable inputs are the forecast performance criteria and the risk-adjusted discount rate. The estimated fair value would increase if the forecast performance criteria rate was higher or the risk-adjusted discount rate was lower.

 

Sensitivity analysis was performed on the key inputs, being the discount rate and probabilities applied, but this did not result in material differences to fair values recognised or profit or loss. Accordingly, this analysis has not been presented.

Contingent remuneration of US$38,000 (US$95,000 during the six months ended 30 June 2016) has been charged to acquisition costs and contingent remuneration in the statement of comprehensive income.

 

 

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the six months ended 30 June 2017

11. Treasury shares

Unaudited Treasury shares Note for the period ended 30 June 2017:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Treasury shares

 

Treasury shares

 

 

Treasury shares reserve

 

 

Number

US$000s

US$000s

 

Balance at 1 January

1,887,510

*

6,281

 

Purchase of own shares

2,200,000

*

5,398

 

Exercise of options from treasury

(274,802)

(*)

-

 

Balance at period end

3,812,708

*

11,679

 

                         

 

(*) Represents amount less than one thousand US$

Audited Treasury shares Note for the year ended 31 December 2016:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Treasury shares

 

Treasury shares

 

 

Treasury shares reserve

 

 

Number

US$000s

US$000s

 

Balance at 1 January

-

-

-

 

Purchase of own shares

2,400,000

*

6,281

 

Exercise of options from treasury

(512,490)

(*)

-

 

Balance at period end

1,887,510

*

6,281

 

                         

 

 

(*) Represents amount less than one thousand US$

 

No movement was applicable for the period ended 30 June 2016.

 

In July 2017 the Company purchased for treasury 1,500,000 shares of the Company in total consideration of US$ 5.2 million.

 

12. Settlement assets and merchant processing liabilities

 

Following the acquisition of the assets and liabilities of GTS Online Solutions Limited ('GTS') (which later changed its name to Safecharge Digital Limited) on 10 March 2014, 100% of the shares of GTS were transferred to the Company, in January 2017, with no additional consideration. GTS operates an online payment processing service.

Settlement assets

 

The settlement assets arise from the operations of GTS which amounted to US$1.8 million (30 June 2016: nil). Settlement assets result from timing differences in the settlement process of GTS. These timing differences arise primarily as a result of settlement amounts due from financial institutions and other payment processors. These amounts are typically funded to the Group within days of the transaction processing date.

 

Merchant processing liabilities

 

The merchant processing liabilities arise from the operations of GTS which amounted to US$9.9 million (30 June 2016: nil). In addition, an equivalent transient amount relating to merchant transactions processed via GTS operations is included in cash and cash equivalents and settlement assets. In these operations no legal right exists to offset between this cash and the corresponding merchant processing liabilities.

 

 

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the six months ended 30 June 2017

 

13. Commitments

Strategic partnership and investment commitment

In June 2017 the Group has entered into a strategic partnership and commitment to invest up to Euro 3.3 million in a banking services company offering banking transaction services.

14. Events after the reporting period

 

There were no material events after the reporting period, which have a bearing on the understanding of the consolidated Financial Statements.

 

Independent review report

 

INTRODUCTION 

We have been engaged by the company to review the interim financial information in the interim report for the six months ended 30 June 2017 which comprises the Consolidated statement of comprehensive income, Consolidated statement of financial position, Consolidated statement of cash flows, Consolidated statement of changes in equity and related notes.

We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial information.

DIRECTORS' RESPONSIBILITIES 

The interim report, including the interim financial information contained therein, is the responsibility of and has been approved by the directors. The directors are responsible for preparing the interim report in accordance with the rules of the London Stock Exchange for companies trading securities on AIM which require that the half-yearly report be presented and prepared in a form consistent with that which will be adopted in the company's annual accounts having regard to the accounting standards applicable to such annual accounts.

OUR RESPONSIBILITY

Our responsibility is to express to the company a conclusion on the interim financial information in the interim report based on our review.

Our report has been prepared in accordance with the terms of our engagement to assist the company in meeting the requirements of the rules of the London Stock Exchange for companies trading securities on AIM and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.

SCOPE OF REVIEW 

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, ''Review of Interim Financial Information Performed by the Independent Auditor of the Entity'', issued by the Financial Reporting Council for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

CONCLUSION 

Based on our review, nothing has come to our attention that causes us to believe that the interim financial information in the interim report for the six months ended 30 June 2017 is not prepared, in all material respects, in accordance with the rules of the London Stock Exchange for companies trading securities on AIM.

 

 

 

BDO LLP

Chartered Accountants

London

United Kingdom

12 September 2017

 

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
IR LLFFTAFILLID
Close


London Stock Exchange plc is not responsible for and does not check content on this Website. Website users are responsible for checking content. Any news item (including any prospectus) which is addressed solely to the persons and countries specified therein should not be relied upon other than by such persons and/or outside the specified countries. Terms and conditions, including restrictions on use and distribution apply.

 


Half-year Report - RNS