TIDMSCH
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 EBITDA(1) (US$m) 15.6 16.8 -7%
Cash flows from operations(2)
(US$m) 16.2 16.5 -2%
Reported profit after
tax (US$m) 12.2 15.2 -20%
Cash conversion(3) 79% 86%
Cash balances at
period end 113.0 128.1 -12%
Diluted earnings
per share (US$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 omni--channel 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 11(th)
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 13(th) October 2017 to those shareholders on
the Company's register as at the record date of 29(th) September
2017. The ex-dividend date is 28(th) 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;
-- 4(th) 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 11(th)
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 13(th) October 2017 to those shareholders on
the Company's register as at the record date of 29(th) September
2017. The ex-dividend date is 28(th) 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 Six months
ended 30 ended 30 Year ended 31
June 2017 June 2016 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 30 June 31 December
2017 2016 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 Six months
ended ended Year ended
30 June 30 June 31 December
2017 2016 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:
Total
Equity
Attributable
Treasury Share to Equity
Share shares Share Capital Available-for-sale Translation Options Retained Holders
Capital reserve Premium Reserve Reserve Reserve Reserve Earnings 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:
Total
Equity
Attributable
Share to Equity
Share Share Capital Available-for-sale Translation Options Retained Holders
Capital Premium Reserve Reserve Reserve Reserve Earnings 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:
Total
Equity
Attributable
Treasury Share to Equity
Share shares Share Capital Available-for-sale Translation Options Retained Holders
Capital reserve Premium Reserve Reserve Reserve Reserve Earnings 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
* Recognition of deferred tax assets for unrealised
losses (Amendments to IAS 12) (1 January 2017).
* 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 5 years
costs
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 Six months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
(Unaudited) (Unaudited) (Audited)
US$000s US$000s 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 Six months Year ended
ended ended 31 December
30 June 30 June 2016
2017 2016
(Unaudited) (Unaudited) (Audited)
US$000s US$000s US$000s
------------- ------------- ------------
Guernsey 12,260 8,787 9,977
Europe 20,304 19,735 18,326
Asia 18,896 11,256 17,673
North America 1,197 433 980
------------- ------------- ------------
52,657 40,211 46,956
============= ============= ============
4. Earnings per share
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
(Unaudited) (Unaudited) (Audited)
US$ US$ US$
------------- ------------- -------------
Basic (cents) 8.20 10.03 17.57
Diluted (cents) 8.06 9.88 17.32
------------- ------------- -------------
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
(Unaudited) (Unaudited) (Audited)
US$000s US$000s 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 Six months Year ended
ended ended 31 December
30 June 30 June 2016
2017 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 Six months Year ended
ended ended 31 December
30 June 30 June 2016
2017 2016
(Unaudited) (Unaudited) (Audited)
US$000s US$000s 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 Furniture, Computer
improvements Motor fixtures equipment Total
vehicles and office
equipment
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 Furniture, Computer
improvements Motor fixtures equipment Total
vehicles and office
equipment
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 Furniture, Computer
improvements Motor fixtures equipment Total
vehicles and office
equipment
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:
Domains
Customer IP and
Goodwill contracts technology 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
----------- ------------ ------------- ------------- ------------- --------
Balance at 30
June
2017 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:
Domains
Customer IP and
Goodwill contracts technology 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:
Domains
Customer IP and
Goodwill contracts technology 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 Level Level
1 2 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 30 June 31 December
2017 (Unaudited) 2016 2016 (Audited)
(Unaudited)
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 (EUR10,084,500)
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 Six months Year ended
ended ended 31 December
30 June 30 June 2016 (Audited)
2017 2016
(Unaudited) (Unaudited)
US$000s US$000s US$000s
------------ ------------ ---------------
370
At 1 January 343 370 -
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 Treasury Treasury
shares shares shares reserve
Number US$000s US$000s
----------- ----------- -----------------
Balance at 1 January 1,887,510 * 6,281
Purchase of own shares 2,200,000 * 5,398
Exercise of options (274,802) (*) -
from treasury
----------- ----------- -----------------
Balance at period
end 3,812,708 * 11,679
=========== =========== =================
(*) Represents amount less than one thousand US$
Audited Treasury shares Note for the year ended 31 December
2016:
Treasury Treasury Treasury
shares shares shares reserve
Number US$000s US$000s
----------- ----------- -----------------
Balance at 1 January - - -
Purchase of own shares 2,400,000 * 6,281
Exercise of options (512,490) (*) -
from treasury
----------- ----------- -----------------
Balance at period
end 1,887,510 * 6,281
=========== =========== =================
(*) Represents amount less than one thousand US$
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
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