Source - RNS
RNS Number : 6260J
SafeCharge International Group Ltd
13 September 2016
 



SafeCharge International Group Limited

 

("SafeCharge," the "Group" or the "Company")

 

Interim results for the six months ended 30 June 2016

 

SafeCharge (AIM: SCH), a leader in advanced payment technologies, announces its interim results for the six months ended 30 June 2016.

 

Financial highlights

 


H1 2016

US$ m

H1 2015

US$ m

Change

%

Consolidated Revenues

52.2

49.5

5

Underlying core Processing Revenues1

49.2

44.9

10

Consolidated Gross Profit

31.6

28.5

11

Consolidated Adjusted EBITDA2

16.8

15.2

10

Cash flows from operations3

16.5

13.7

20

Reported profit after tax

15.2

12.4

23





Cash and cash equivalents

128.1

115.7

11

Earnings per share (diluted)

9.88 US$c

8.03 US$c

23

Recommended interim dividend

7.0 US$c

4.0 US$c

75

 

1 Underlying core Processing Revenues excludes XTCommerce, CreditGuard and SafeCharge Card Services

2Adjusted EBITDA is calculated after adding back certain non-cash charges and cash expenses relating to professional costs incurred in respect of acquisitions, restructuring costs, contingent remuneration and share-based payments charges (See Consolidated Statement of Comprehensive Income)

3Cash flows from operations before working capital adjustments and tax

 

Current trading and outlook

 

The first half of 2016 was another period of strong performance and delivery for the Group. Growth in the second half is expected to be more moderate than the first. Considering  the quality of clients both recently launched and within the current pipeline, and the success of SafeCharge Acquiring, the Directors are confident of growth prospects into 2017 and beyond.

 

 

H1 Operational highlights

 

§

Acquiring services performing ahead of expectations, with more than 10% of the Group's transaction volumes processed through its own acquiring platform in June

§

Significant new customer wins, PaddyPower Betfair, Sun Bingo and SBTech now live, with a strong pipeline

§

Progress in new focus sectors; airlines, retail and games

§

Processing volumes, core processing business, of US$4 billion (H1 2015: US$ 3.3 billion)

§

Successful divestment of FinTech AG holding

§

Recognition of technology leadership winning a number of prestigious awards including the 'Payments Company of Year' and Fraud and Compliance' categories of the eGaming Review awards, and "Payments Solution Provider Company of the Year" at the IGA awards

 

 

David Avgi, CEO of SafeCharge, said:

 

"The operational momentum built over the last two years has continued into the first half of 2016. This has enabled SafeCharge to deliver further growth, reporting revenues of US$52.2million (H1 2015 US$ 49.5 million) and Adjusted EBITDA of US$16.8 million (H1 2015: US$15.2 million).

 

The first half of 2016 was a period of further success and growth for the Group. I am proud to report that several of our latest innovations in technology based payment solutions have been successfully rolled out to serve our clients.

 

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

 

- Ends -

 

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.

 

For more information

 

SafeCharge International Group Limited

David Avgi, Chief Executive Officer

Tim Mickley, Chief Financial Officer

c/o Bell Pottinger

 

+44 (0) 20 3772 2500

Shore Capital

Mark Percy

Toby Gibbs

 

+44 (0) 20 7408 4090

Bell Pottinger

David Rydell

Olly Scott

James Newman

Anna Legge

 

+44 (0) 20 3772 2500

 

About SafeCharge

 

SafeCharge International Group Limited is a global provider of payments services, technologies and risk management solutions for online and mobile businesses. The SafeCharge group has a diversified, blue chip client base and is a trusted payment partner for customers from various e-commerce verticals. SafeCharge has been Payment Card Industry Data Security Standard ("PCI-DSS") Level 1 certified since 2007 and is listed on the London Stock Exchange AIM market (LSE: SCH). The Company's wholly owned subsidiary, SafeCharge Limited, is an authorized Electronic Money Institution regulated by the Central Bank of Cyprus and a principal member of MasterCard Europe and VISA Europe. The SafeCharge group has operations in the UK, Cyprus, Bulgaria, Israel, Germany, Austria and Ireland.

 

www.safecharge.com 

 

 

Chairman's statement

 

This is another set of pleasing financial results. Revenue in the core processing business increased 10% to US$49.2 million, (2015: US$44.9 million) and Adjusted EBITDA increased by 10% to US$16.8 million. Once again 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 having paid the final dividend (US$11.3 million), with US$128.1 million of cash and cash equivalents and no debt.

 

Operational and corporate milestones

 

During the first half we have achieved very successful growth in our acquiring business, which went fully live in September of last year. I am delighted to report that this business performed ahead of expectations in the first half, with more than 10% of the Group's transaction volumes processed through its own acquiring platform in June.

 

During the period the Group successfully launched a number of significant new clients from within its core and target sector verticals, including the Betfair brands, our first airline, El Al, and Nayax, an international business expert in unattended retail vending. I am also delighted to report the successful launch of both Sun Bingo and SuperBet, one of the first new customers introduced via our integration with the SB technology platform, in August.

 

In July the Company purchased 500,000 of its own shares at an average price of 190 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.

 

We continue to look for M&A opportunities that align with our strategic goals, improve our services and accelerate the Group's growth whilst focusing on strict financial criteria.

 

Dividend

 

Recognising the Group's continued strong cash generation, the Board has recommended an interim dividend of 7US$ cents per share, an increase of 75% compared to H1 2015. This represents approximately 63% of Adjusted EBITDA for the first six months. 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 1.33, being the rate at 4.30 pm on 12th September. As a result, those shareholders entitled to the interim dividend will receive 5.26 pence per share. The interim dividend will become payable on 14th October 2016 to those shareholders on the Company's register as at the record date of 30th September 2016. The ex-dividend date is 29th September 2016.

 

Strong balance sheet

 

The Group has continued to develop its technology platforms, focusing on improvements to the services that most benefit customers, investing US$2.8million in R&D during the period. Despite continued investment and having paid the final dividend of US$11.3 million the Group ended the period with significant cash and cash equivalent balances of US$128.1 million. The Group continues to have no debt.

 

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.

I am grateful to all of the Directors for their contributions throughout what has been another successful first six months of the year and once again thank the management team and all employees for their dedication and hard work.

 

Outlook

 

The Group enters the second half with a strong pipeline, benefiting from a number of significant new client launches and with our Acquiring Services performing ahead of expectations. Management are confident of growth prospects into 2017 and beyond.

 

Roger Withers

Chairman

13 September 2016

 

 

Chief Executive's review

 

The first half of 2016 was a period of further success and growth for the Group. I am proud to report that several of our latest innovations in technology based payment solutions have been successfully rolled out to serve our clients. Core Revenues and Adjusted EBITDA both grew by 10%, compared to the same period in 2015 with Consolidated Revenues reaching 52.2M US$

 

Core Payments Business

 

During the reporting period, we launched tailor made payment solutions to a number of enterprise customers from multiple sectors, including the worlds' largest internet sportsbetting exchange PaddyPower Betfair, Israel's national airline EL-AL, Romanian sports betting operators SuperBet and Maxbet as well as UK's giant online bingo brands Sun Bingo and Fabulous Bingo.

 

We also continued to expand our relationships with existing clients, such as UK Casinos and Bingo operator Rank Interactive which went live and is now using a significantly broader solution from SafeCharge, including a deposit and withdrawal cashier.

 

In-game payments continues to be a target market for SafeCharge and the period saw the Group  successfully launch its services to several large scale game developers such as Proficient City, Netmarble, GGCorp and others.

 

Partnerships

 

During the period SafeCharge further developed its collaborations with Saxo Payments, a global transactions services provider, to simplify cross border settlement accounts and Payletter, a leading Korean-based online games billing and payment solutions company, to provide a comprehensive billing and payments platform for global games developers.

 

In addition, we further developed our partnership with the leading gaming platforms PlayTech, Bede, Bit8 and SBTech and to benefit from these relationships with the launch of a number of new clients and with the expansion of services provided to existing customers.

 

The Group has further developed its partnership with Thailand based 2C2P to extend the reach of its payments solutions to south east Asia.

 

Product and Technology

 

During the first 6 months the Group achieved several significant product milestones including: Launch of a fully featured deposit and withdrawal cashier, expanded APM network with focus on new mobile payments such as Apple Pay, Android Pay and completed integration and certification of several Point of Sale terminals to become a multichannel payments platform.  I am glad to report that our ongoing investment in our core platform guarantees that it remains highly scalable and reliable with up-time in excess of 99.99% throughout the period. 

 

Another success during the first half was the growth in our Acquiring services business, which became fully operational in September 2015. I am delighted to report that our Acquiring activities performed ahead of expectations in the first half, with more than 10% of the Group's transaction volumes processed through its own platform in June. We ended the period with over 80 customers using the Acquiring services; and client feedback has been highly complimentary, such that the endorsements received should serve to help us win further business in the future.

 

The Group's proprietary prepaid card Pay.com is now fully integrated in its cashier and has a direct link between its issuing and acquiring allowing for cost effective acquiring transactions and simple and quick pay-out transactions.

 

Strategy and Corporate Development

 

The Company's management continues to implement its growth strategy for the business focusing on organic and M&A driven growth. 

 

Within our existing business the Group seeks to increase both processing and acquiring volumes from new and existing clients, to enter new market verticals and expand our geographic footprint either through our own efforts or through investment. The Group has made exciting progress in entering our new target market verticals and over the coming months we will focus and invest further to build our sales teams in order to further accelerate entry into these sectors.

 

The Group continues its ongoing efforts to identify value accretive M&A opportunities that either add new services, technologies, markets, clients or otherwise accelerate our corporate development strategy.  I am glad to report the pipeline of such opportunities is strong and we expect to announce closure of such in the near future.

 

Growth and performance

 

The operational momentum built over the last two years continued into the first half of 2016. This momentum enabled SafeCharge to deliver further growth, reporting revenues of US$52.2million (H1 2015 US$ 49.5 million) and Adjusted EBITDA of US$16.8 million (H1 2015: US$15.2 million).

 

Gross Profit increasing by 11% to US$31.6 million (H1 2015: US$28.5 million) with the Gross Profit Margins strengthened to 61% benefitting  from savings in costs, of approximately US$1m, in respect of volumes processed through SafeCharge Acquiring.

 

SafeCharge remained highly cash generative with US$16.5 million of free cash flow from operating activities before working capital changes and tax produced in the six month period.

 

Performance of Acquisitions

 

The acquisitions of CreditGuard and 3V Transaction Services (renamed SafeCharge Card Services) completed in January 2015.  During the period CreditGuard performed marginally ahead of expectations and delivered synergies, including assisting the core SafeCharge business in winning and launching EL AL, the international airline, as a customer.

 

The restructuring of Card Services will be completed by the end of the year and I am delighted to report that our proprietary PAY.com pre-paid card has launched. We are currently undertaking pilot tests with a number of smaller clients and are in discussions with leading sports operators regarding potential partnerships to offer the product to their customers.

 

Regulatory and Business Environment

 

The regulatory environments within which the Group's financial services and gaming / sports betting customers operate continues to change and develop. The Group actively monitors such developments, and takes actions where necessary to ensure compliance with changes. Whilst changes may have a negative impact on the Group's revenues, management believe that such are a catalyst for consolidation and thereby provide opportunities for the Group, which targets regulated "premier" operators, to win additional business.

 

Industry Awards

 

The Group's technologies and services are increasingly recognised within the industry with SafeCharge achieving a number of prestigious awards including the 'Payments Company of Year' and Fraud and Compliance' categories of the eGaming Review awards, and "Payments Solution Provider Company of the Year" at the IGA awards.

 

 

David Avgi

Chief Executive Officer

13 September 2016

 

 

Financial review

 

Group revenues for the period increased by 5% to US$52.2 million, (H1 2015: US$49.5 million) despite the restructuring of certain non-profitable activities of business acquired in January 2015.  Revenue in the core processing business increasing 10% to US$49.2 million, (2015: US$44.9 million).

Group Adjusted EBITDA increased by 10%, reaching US$16.8million (H1 2015: US$15.2 million). Cash flows from operations before working capital adjustments and tax paid increased by 20% to US$16.5 million (H1 2015: US$13.7 million).

 

Revenues

 

The diversification of the Group's revenues improved during the period with no customers individually accounting for more than 10% of Group revenues (H1 2015: one) and revenues from outside Europe growing by over 100% to US$3.3 million (H1 US$1.5 million).

 

Currency exchange rate movements had a minor impact on revenues, which were approximately 3.5% lower than if reported on a constant currency basis using the average rates for the comparable period in 2015.

 

Margins

 

Total consolidated Gross Profit and Adjusted EBITDA margins increased slightly to 60.6% (H1 2015: 57.7%) and 32.1% (H1 2015: 30.7%) respectively, primarily as a result of the benefit to Cost of Sales due to cost savings in relation to volumes processed through SafeCharge Acquiring and the closure of certain non-profitable activities.

 

Expenses

 

Employee related costs, which account for the majority of SafeCharge's operating expenses, increased throughout the period as a result of hiring new staff, rising to US$10.3 million (H1 2015: US$9.1 million).

 

The Group incurred share-based payment charges of US$400,000 in the period (H1 2015: US$746,000). In order to reduce foreign exchange exposure, the majority of the Group's assets are held in US dollars, its functional and presentation currency. Net finance income of US$2,765,000 (H1 2015: US$208,000) included US$1,117,000 as part of amounts due in respect of the purchase of VISA Europe by VISA Inc, US$643,000 realised gain on the sale of the investment in FinTech Group AG and US$985,000 foreign exchange differences.

 

Depreciation and amortisation of US$2.1 million was charged in the period (H1 2015: US$1.4 million), which included US$1,177,000 in respect of intangible asset amortisation (H1 2015: US$855,000).

 

Tax

 

The Group's reported tax expense is US$0.74 million (H1 2015: US$0.72 million income) in respect of its operations across multiple jurisdictions

 

Cash flow

 

SafeCharge continues to be highly cash generative. In the first half of the year the Group generated US$16.5 million from operating activities before working capital adjustments and tax (H1 2015: US$13.7 million), a conversion rate of 98% from Adjusted EBITDA.

 

The Group's cash outflow in respect of investment in intangible assets was US$2.8 million (H1 2015: US$2.6 million) the majority being capitalised development expenditure of US dollars related to the PAY.com project which is now largely complete.

 

During the period the Group paid the final 2015 dividend of US$11.3 million.

 

Balance sheet

 

The Group closed the period with total assets of US$179.3 million (H1 2015: US$173.5 million), including US$128.1million of cash and cash equivalents (H1 2015: US$115.7million). The majority of the Company's cash was held in current accounts and on-call deposit accounts, with US$40 million held on three-month 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 2016 was US$33.1 million (H1 2015: US$30.8 million) of which US$9.6 million (H1 2015:US$10.8million) related to Goodwill and US$10.3 million (H1 2015:US$11.0 million) related to IP technology, licenses and domains. During the period the Group capitalised US$2.8 million (H1 2015: US$2.5 million) in respect of technology development costs, including the development of the Group's PAY.com pre-paid platform.

 

Total current assets increased to US$138.8 million (30 June 2015: US$ 124.1 million), with available for sale assets reducing and cash increasing primarily as a result of the sale of the Group's stake in FinTech Group AG. Current liabilities decreased to US$13.1 million (30 June 2015: US$ 15.1 million), primarily due to an decrease in contingent consideration related to the acquisitions following early settlements made in the second half of 2015 .

 

In July the Company purchased 500,000 of its own shares at an average price of 190 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 7US$ cents per share, (US$  10.6 million) representing 63% of Adjusted EBITDA for the period and ahead the Company's existing policy of paying at least 50% of Adjusted EBITDA for the full year. 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 1.33, being the rate at 4.30 pm on 12th September. As a result, those shareholders entitled to the interim dividend will receive 5.26 pence per share. The interim dividend will become payable on 13th October 2016 to those shareholders on the Company's register as at the record date of 30th September 2016. The ex-dividend date is 29th September 2016.

 

Tim Mickley

Chief Financial Officer

13 September 2016

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2016



Six months ended

30 June 2016

Six months ended

30 June 2015

Year ended

31 December 2015

 



(Unaudited)

(Unaudited)

(Audited)

 


Note

US$000s

US$000s

US$000s

 

Revenue

3

52,183

49,473

99,818

 

Cost of sales


(20,557)

(20,924)

(42,168)

 

Gross profit


31,626

28,549

57,650

 

Salaries and employee expenses


(10,281)

(9,089)

(18,116)

 

Share-based payments charge


(400)

(746)

(1,373)

 

Depreciation and amortisation


(2,069)

(1,431)

(3,188)

 

Premises and other costs


(1,492)

(1,335)

(2,854)

 

Other expenses


(3,084)

(2,936)

(5,554)

 

Acquisition costs and contingent remuneration

9

(95)

(1,541)

(1,543)

 

Restructuring costs

10

(1,014)

-

(2,860)

 

Total operating costs


(18,435)

(17,078)

(35,488)

 

Adjusted EBITDA*


16,769

15,189

31,126

 

Depreciation and amortisation


(2,069)

(1,431)

(3,188)

 

Share-based payments charge


(400)

(746)

(1,373)

 

Acquisition costs  and  contingent remuneration


(95)

(1,541)

(1,543)

 

Restructuring costs


(1,014)

-

(2,860)

 

Profit from operations


13,191

11,471

                             22,162

 

Finance income

5

2,902

301

771

 

Finance expense

 5

(137)

(93)

(203)

 

Profit before tax


15,956

11,679

                              22,730

 

Tax (expense)/income


(741)

726

124

 

Profit after tax attributable to equity holders of the Parent


15,215

12,405

22,854

 






 

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

8

(4,805)

2,656

7,718

 

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

5

(1,760)

-

-

 

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


300

(1,439)

(1,901)

 

Total comprehensive income for the period 


8,950

13,622

28,671

 

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





 

Basic (cents)

4

10.03

8.20

15.10

 

Diluted (cents)

4

9.88

8.03

14.79

 

* Adjusted EBITDA is a non-GAAP, company-specific measure which is earnings excluding interest, taxes, depreciation, amortisation, acquisition costs and contingent remuneration, restructuring costs, 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 2016

 



30 June 2016

30 June 2015

31 December 2015



(Unaudited)

(Unaudited)

(Audited)

                                                                             

Note 

US$000s

US$000s

US$000s






Assets





Non-current assets





Property, plant and equipment


2,581

2,635

2,848

Intangible assets

6

33,054

30,793

31,023

Available-for-sale investments

8

1,895

14,932

18,610

Other receivables


2,681

1,039

1,036

Total non-current assets


40,211

49,399

53,517






Current assets





Trade and other receivables


10,735

8,436

12,383

Cash and cash equivalents


128,065

115,669

114,884

Total current assets


138,800

124,105

127,267






Assets classified as held for sale

8

267

-

1,384






Total assets


179,278

173,504

182,168






Equity





Share capital                                                            


15

15

15

Share premium


123,908

123,452

123,828

Capital reserve


622

622

622

Available-for-sale reserve


1,153

2,656

7,718

Translation reserve


(506)

(344)

(806)

Share options reserve


2,621

1,642

2,221

Retained earnings


37,615

29,275

33,740

Total equity attributable to equity holders of Parent


165,428

157,318

167,338






Non-current liabilities





Provisions


295

171

243

Deferred tax liability


387

374

290

Contingent consideration

9

102

529

168

Total non-current liabilities


784

1,074

701






Current liabilities





Trade and other payables


11,003

11,291

12,345

Contingent consideration

9

153

1,744

202

Taxes payable


1,910

2,077

1,582

Total current liabilities


13,066

15,112

14,129






Total equity and liabilities


179,278

173,504

182,168






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 2016



Six months ended

30 June 2016

Six months ended

30 June 2015

Year ended

31 December 2015



(Unaudited)

(Unaudited)

(Audited)


 Note

US$000s

US$000s

US$000s

Cash flows from operating activities





Profit before tax


15,956

11,679

22,730

Adjustments for:





Depreciation of property, plant and equipment


892

576

1,316

Amortisation of intangible assets

6

1,177

855

1,872

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


(59)

12

165

Charge to statement of comprehensive income for provisions


52

10

82

Gain on sale of available-for-sale assets

5

(1,760)

-

-

Finance income

5

(157)

(152)

(242)

Share-based payments charge


400

746

1,373

Cash flows from operations before working capital


16,501

13,726

27,296

Decrease in trade and other receivables


3

277

2,468

(Decrease)/Increase in trade and other payables


(1,457)

515

(491)

Cash flows from operations


15,047

14,518

29,273

Tax paid


(336)

(475)

(1,588)

Net cash flows from operating activities

  

14,711

14,043

27,685

Cash flows from investing activities




                  

Payment for acquisition of intangible assets

6

(2,839)

(2,553)

(5,359)

Payment for acquisition of property, plant and equipment


(624)

(689)

(1,774)

Acquisition of available-for-sale investments


-

(12,276)

(12,276)

Acquisition of subsidiaries, net of cash acquired


-

(21,271)

(21,271)

Loans granted


-

-

(5,000)

Interest received

 5

157

152

242

Proceeds from disposal of property, plant and equipment


-

-

30

Proceeds from disposal of available-for-sale investments

8

13,036

-

-

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

  

9,730

(36,637)

(45,408)

Cash flows from financing activities

  




Proceeds from exercise of stock options


80

270

646

Dividends paid

 7

(11,340)

(8,518)

(14,550)

Net cash flows used in financing activities


(11,260)

(8,248)

(13,904)

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

13,181

(30,842)

(31,627)

Cash and cash equivalents at the beginning of the period

  

114,884

146,511

146,511

Cash and cash equivalents at the end of the period

   

128,065

115,669

114,884






Acquisition of subsidiaries, net of cash acquired






Note

Six months ended

30 June 2016 (Unaudited)

 US$000s

Six months ended

30 June 2015 (Unaudited)

 US$000s

Year ended

31 December 2015 (Audited)

US$000s






Acquisition of SafeCharge Card Services Limited (formerly named: 3V Transaction Services Limited)

10A

-

13,780

13,780

Acquisition of CreditGuard Limited

10B

-

7,491

7,491



-

21,271

21,271

 

 

 

 

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 2016

 

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











Share Capital

Share Premium

Capital Reserve

Available-for-sale Reserve

Translation Reserve

Share Options Reserve

Retained Earnings

Total Equity Attributable to Equity Holders of Parent 


US$000s

US$000s

US$000s

US$000s

US$000s

US$000s

US$000s

US$000s










Balance at 31 December 2015

                 15

123,828

             622

 

7,718

(806)

2,221

 33,740

167,338










Comprehensive Income









Profit for the period

-

-

-

-

-

-

15,215

15,215

Unrealised fair value movements on available-for-sale investments

-

-

-

(4,805)

-

-

-

(4,805)

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

-

-

-

(1,760)

-

-

-

(1,760)

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

-

-

-

-

300

-

-

300

Total comprehensive income for the period

-

-

-

(6,565)

300

-

15,215

8,950










Contributions by and distributions to owners









Dividends

-

-

-

-

-

-

(11,340)

(11,340)

Exercise of options

*

80

-

-

-

-

-

80

Share-based payments

-

-

-

-

-

400

-

400

Total contributions by and distributions to owners

*

80

-

-

-

400

(11,340)

(10,860)










Balance at 30 June 2016

15

123,908

622

1,153

(506)

2,621

37,615

165,428










(*) Represents amount less than one thousand US$

 







Unaudited consolidated statement of changes in equity for the six months ended 30 June 2015:


Share Capital

Share Premium

Capital Reserve

Available-for-sale Reserve

Translation Reserve

Share Options Reserve

Retained Earnings

Total Equity Attributable to Equity Holders of Parent 


US$000s

US$000s

US$000s

US$000s

US$000s

US$000s

US$000s

US$000s










Balance at 31 December 2014

             15

                           123,182  

               622

               -

                  1,095

                        960

       25,324

                   151,198










Comprehensive Income









Profit for the period

-

-

-

-

-

-

12,405

12,405

Other comprehensive income for the period

-

-

-

2,656

(1,439)

-

-

1,217

Total comprehensive income for the period

-

-

-

2,656

(1,439)

-

12,405

13,622










Contributions by and distributions to owners









Dividends

-

-

-

-

-

-

(8,518)

(8,518)

Exercise of options

*

270

-

-

-

(64)

64

270

Share-based payments

-

-

-

-

-

746

-

746

Total contributions by and distributions to owners

*

270

-

-

-

682

(8,454)

(7,502)










Balance at 30 June 2015

15

123,452

622

2,656

(344)

1,642

29,275

157,318










(*) Represents amount less than one thousand US$

 







 

Audited consolidated statement of changes in equity for the year ended 31 December 2015:











Share Premium

Capital Reserve

Available-for-sale Reserve

Translation Reserve

Share Options Reserve

Retained Earnings

Total Equity Attributable to Equity Holders of Parent 


US$000s

US$000s

US$000s

US$000s

US$000s

US$000s

US$000s

US$000s










Balance at 31 December 2014

15

123,182

622

-

1,095

960

25,324

151,198










Comprehensive Income









Profit for the year

-

-

-

-

-

-

22,854

22,854

Other comprehensive loss for the year

-

-

-

7,718

(1,901)

-

-

5,817

Total comprehensive income for the  year

-

-

-

7,718

(1,901)

-

22,854

28,671










Contributions by and distributions to owners









Dividends

-

-

-

-

-

-

(14,550)

(14,550)

Exercise of options

*

646

-

-

-

(112)

112

646

Shared based payments

-

-

-

-

-

1,373

-

1,373

Total contributions by and distributions to owners

*

646

-

-

-

1,261

(14,438)

(12,531)










Balance at 31 December 2015

15

123,828

             622

 

7,718

(806)

2,221

 33,740

167,338










(*) 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 2016

 

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 online and mobile 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 financial information for the six month period ended 30 June 2016 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 2015 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 2016.

(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 2016, 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).

 

Amendments

·      Recognition of deferred tax assets for unrealised losses (Amendments to IAS 12) (1 January 17).

·      Disclosure Initiative: Amendments to IAS 7 (1 January 17).

·      Clarifications to IFRS 15 revenue from Contracts with Customers (1 January 18).

·      Classification and Measurement of Share-based Payment Transactions (Amendments to IFRS 2) (1 January 18).

 

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.

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.

 

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.

 

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 and are expected to apply when the deferred tax liabilities/(assets) are settled/(recovered).

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.

 

Intangible assets

 

Internally‑generated intangible assets ‑ research and development expenditure

 

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

 

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

·     

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

·     

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

·     

The development cost of the asset can be measured reliably.

 

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

 

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

 

Externally acquired intangible assets

 

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

 

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

 

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

 

Amortisation

 

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

 

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


Useful

economic life

Domain names/Acquiring licences

Indefinite life

Internally generated capitalised development costs

5 years

Other licences

1 year

Customer contracts and customer relationships

5-15 years

IP technology

5-10 years

 

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

 

Available-for-sale investments

 

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

 

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 2015.

 

 

3. Segmental analysis 

 

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

 

Geographical analysis of revenue

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

 

 


Six months ended 30 June 2016

Six months ended 30 June 2015

Year

ended 31 December 2015


(Unaudited) US$000s

Unaudited) US$000s

(Audited)

US$000s

Europe

48,845

47,951

96,452

Rest of the World

3,338

1,522

3,366


52,183

49,473

99,818

 

 

During the period ended 30 June 2016 there were no (30 June 2015: one) customers who individually accounted for more than 10 per cent of the total revenue of the Group.        

 

Geographical analysis of non-current assets

 


Six months ended 30 June 2016

(Unaudited) US$000s

Six months ended 30 June 2015

(Unaudited) US$000s

Year

ended 31 December

2015

(Audited)

US$000s




British Virgin Islands

-

6,194

-

Guernsey

8,787

-

7,561

Ireland

10,868

10,218

9,223

Europe

8,867

22,633

26,705

Asia

11,256

9,924

9,596

North America

433

430

432


40,211

49,399

53,517




 

 

 

 

4. Earnings per share


Six months ended 30 June 2016

Six months ended 30 June 2015

Year ended 31

December

2015


(Unaudited) US$

(Unaudited) US$

(Audited)

US$

 





Basic (cents)

10.03

8.20

15.10

Diluted (cents)

9.88

8.03

14.79










Six months ended 30 June 2016

Six months ended 30 June 2015

Year ended 31

December

2015


(Unaudited) US$000s

(Unaudited) US$000s

(Audited)

US$000s

Profit after tax for the period

15,215

12,405

22,854

 

 


Six months ended 30 June

2016

Six months ended 30 June 2015

Year ended 31

December

2015


Number

Number

Number

Denominator - basic

 

 

 

 

    

 

 

 

Weighted average number of equity shares

151,619,053

151,295,413

151,392,582





Denominator - diluted




Weighted average number of equity shares

151,619,053

151,295,413

151,392,582

Weighted average number of share options

2,302,984

3,250,768

3,122,231

Weighted average number of shares

153,922,037

154,546,181

154,514,813

 

 

 

 




 

 

5. Finance income and expense

 

 


Six months ended 30 June 2016

Six months ended 30 June

2015

Year ended 31

December

2015


(Unaudited) US$000s

 

 

(Unaudited) US$000s

 

(Audited)

US$000s

Finance income




Interest received

157

152

242

Foreign exchange differences

985

149

529

Net gain on disposal of available-for-sale financial assets transferred from equity (See Note 8)

1,760

-

-


2,902

301

771





Finance expense




Bank fees

(137)

(93)

(203)


(137)

(93)

(203)





Net finance income

 

2,765

208

568

 

 

6. Intangible Assets

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

















 

 

Goodwill

 

Customer contracts

IP technology

 

Domains and Licenses

 

Development

 

 

Total

 


US$000s

US$000s

US$000s

US$000s

US$000s

US$000s

 

Cost







 

Balance at 31 December 2015

9,450

4,985

10,178

2,122

7,139

33,874

 

-

-

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

 

 

 

 

Unaudited Intangible Assets Note for the period ended 30 June 2015:












 

 

Goodwill

 

Customer contracts

IP technology

 

Domains and Licenses

 

Development

 

 

Total


US$000s

US$000s

US$000s

US$000s

US$000s

US$000s

Cost







Balance at 31 December 2014

-

1,776

682

2,034

2,173

6,665

Assets acquired on business combinations

11,330

3,219

10,481

-

-

25,030

Additions

-

-

34

76

2,397

2,507

Foreign exchange rate movement

(580)

70

(1,065)

-

-

(1,575)

Balance at 30 June 2015

10,750

5,065

10,132

2,110

4,570

32,627















Amortisation







Balance at 31 December 2014

-

265

669

-

45

979

Amortisation for the period

-

297

534

-

24

855

Balance at 30 June 2015

-

562

1,203

-

69

1,834








Net book amount







Balance at 30 June 2015

10,750

4,503

8,929

2,110

4,501

30,793

 

 

 

 Audited Intangible Assets Note for the year ended 31 December 2015:





 








 

 


 

 

Goodwill

 

Customer contracts

IP technology

 

Domains and Licenses

 

Development

 

 

Total

 

 


US$000s

US$000s

US$000s

US$000s

US$000s

US$000s

 

 

Cost







 

 

Balance at 31 December 2014

-

1,776

682

2,034

2,173

6,665

 

 

Assets acquired on business combinations

10,237

3,219

10,481

-

-

23,937

 

 

Additions

-

-

224

88

5,003

5,315

 

 

Foreign exchange rate movement

(787)

(10)

(1,209)

-

(37)

(2,043)

 

 

Balance at 31 December 2015

9,450

4,985

10,178

2,122

7,139

33,874

 

 








 

 

Amortisation







 

 

Balance at 31 December 2014

-

265

669

-

45

979

 

 

Amortisation for the year

-

603

1,106

-

163

1,872

 

 

Balance at 31 December 2015

-

868

1,775

-

208

2,851

 

 








 

 

Net book amount







 

 

Balance at 31 December 2015

9,450

4,117

8,403

2,122

6,931

31,023

 

 

 

7. Shareholders' equity

 

Distribution of Dividend

 

In May 2016 the Group distributed US$11,340,000, 7.30 US$ cents per share (30 June 2015: US$8,518,000, 5.28 US$ cents per share), as a final dividend for the year ended 31 December 2015. In October 2015 the Group distributed US$6,032,000, 4.00 US$ cents per share, as an interim dividend. 

 

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

 

Fair value hierarchy

 

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

 

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

 

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

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

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

 

 


Total

Level 1

Level 2

Level 3


US$000s

US$000s

US$000s

US$000s

Available-for-sale investments





At 30 June 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 30 June 2015

14,932

13,932

1,000

-






Available-for-sale investments classified as held for sale





At 30 June 2015

-

-

-

-






Total at 30 June 2015

14,932

13,932

1,000

-






Available-for-sale investments





At 31 December 2015

18,610

17,610

1,000

-






Available-for-sale investments classified as held for sale





At 31 December 2015

1,384

-

-

1,384






Total at 31 December 2015

19,994

17,610

1,000

1,384












                                                                 

There have been no transfers of financial instruments between levels during the period.

 

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

 


30 June 2016

(Unaudited)

US$000s

30 June 2015

(Unaudited)

US$000s

31 December 2015

(Audited)

US$000s

Balance brought forward

1,384

-

-

Realised gain for the period recognised in profit or loss

(1,117)

-

-

Unrealised Fair value movement recognised in other comprehensive income

-

-

1,384

Fair value at period end

267

-

1,384





 

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 2015 the unrealised increase in valuation of US$1,384,000 was recorded as an available-for-sale reserve. Sensitivity analysis has been performed on the key inputs of the valuation, being the discount rate and the future cash flows, but this did not result in material differences to fair values recognised or profit or loss.  Accordingly, this analysis has not been presented.

 

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 profit or loss/income statement and included within finance income.

 

The remaining available-for-sale investments are held at fair value and measured based on Level 1 and Level 2 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. As of 30 June 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.

 

In June 2015 the Group invested US$ 11,276,000 (€10,084,500) in FinTech Group AG, a business listed on the Frankfurt Stock exchange, for a 5% equity interest as part of a strategic partnership. At 31 December 2015, the investment was valued at $17,610,000 and an unrealised gain of $6,334,000 was recognised in other comprehensive income. In May 2016 the value of the available-for-sale asset fell to $11,919,000, and therefore an unrealised decrease in fair value of $5,691,000 was recognised in other comprehensive income. Subsequently, the Group sold all the investment in FinTech Group AG, with an overall realised gain of US$643,000, which has been recycled to the profit or loss and included within finance income.

 

9. Contingent consideration

 

Contingent consideration relates to acquisitions that took place during 2015.

 

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

 

Contingent consideration arrangements:

 


Six months ended 30 June 2016 (Unaudited)

Six months ended 30 June 2015 (Unaudited)

Year ended 31 December 2015 (Audited)


US$000s

US$000s

US$000s

At 1 January

370

-

-

Arising from business combination

-

1,246

1,246

Contingent remuneration

95

1,164

1,344

Foreign exchange rate movement

-

(137)

(153)

Amounts paid

(210)

-

(2,067)

At period end

 

255

2,273

370

 

All amounts potentially payable are based on performance measures and contingent remuneration. In January 2015, the Group acquired SafeCharge Card Services Limited and 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$95,000 (US$1,164,000 during the six months ended 30 June 2015) has been charged to acquisition costs and contingent remuneration in the statement of comprehensive income. In the second half of 2015 the Group made a payment of €2 million in full settlement of the contingent remuneration and contingent consideration.

10. Acquisitions during previous period

 

A. Acquisition of 3V Transaction Services Limited

On 8 January 2015, the Group acquired 100% of the share capital of 3V Transaction Services Limited (which later changed its name to SafeCharge Card Services Limited) for a consideration of US$15.7 million (€14.5 million), of which US$13.8 million (€11.6 million) was paid on completion. In 2016 the Group finalised the agreement of net assets at completion and will receive a refund of €1 million as a working capital adjustment. Accordingly consideration and goodwill have been reduced by US$1.1 million as at 31 December 2015. SafeCharge Card Services Limited is a technology provider which specialises in tools for issuing, processing and management of pre-paid card programmes. In the second half of 2015 the Group started to implement a restructuring plan in SafeCharge Card Services Limited and incurred restructuring costs of US$1 million (year 2015: US$2.9 million) recognised in the statement of comprehensive income.

 

B. Acquisition of CreditGuard Limited

On 9 January 2015, the Group acquired 100% of the share capital of CreditGuard Limited for an initial cash consideration of US$8 million and contingent consideration capped at US$0.4 million (not recognised during the reporting period). CreditGuard Limited is a payment service provider for a wide range of businesses.

11. Events after the reporting period

 

In July 2016 the Company purchased for treasury 500,000 shares of the Company, in total consideration of US$1.25 million.


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