Earthport PLC Unaudited Interim Results

Date : 03/21/2017 @ 3:01AM
Source : UK Regulatory (RNS & others)
Stock : Earthport (EPO)
Quote : 11.05  0.025 (0.23%) @ 10:14AM
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Earthport PLC Unaudited Interim Results

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RNS Number : 0106A

Earthport PLC

21 March 2017

21 March 2017

Earthport plc

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

Unaudited Interim Results

Earthport (AIM: EPO.L), the leading network for cross-border payments, is pleased to announce its unaudited interim results for the six month period ended 31 December 2016.

Financial Highlights

   --     Revenues grew by 34.9% to GBP14.3 million (H1 FY 2016: GBP10.6 million) 

o Transactional revenues comprised 95% of H1 FY 2017 total revenues

-- Gross profit increased by 33.8% to GBP9.9 million (H1 FY 2016: GBP7.4 million). Gross profit margin decreased by 0.6% to 69.2% (H1 FY 2016: 69.8%)

-- Adjusted Gross Margin(1) decreased by 3.1% to 70.4% (H1 FY 2016: 73.5%), due to increases in network costs but is in line with management expectations and those achieved in the financial year ended 30 June 2016

   --     Adjusted Gross Profit(1) increased by 29.5% to GBP10.1 million (H1 FY 2016: GBP7.8million) 

-- Administrative expenses decreased by 7.8% to GBP13.0 million (H1 FY 2016: GBP14.1 million) and represent 90.9% of revenues (H1 FY 2016: 133.0%)

-- Adjusted loss before taxation(2) decreased by 52.2 % to GBP3.2 million (H1 FY 2016: GBP6.7 million)

   --     Loss before taxation decreased by 41.1% to GBP3.3 million (H1 FY 2016: GBP5.6 million) 
   --     Loss per share of 0.61 pence (H1 FY 2016: 1.30 pence) 

-- Cash Balance at 31 December 2016 amounted to GBP11.4 million, compared to GBP14.4 million at 30 June 2016

   1.        Excludes warrant charge of GBP0.23 million (H1 FY2016: GBP0.38 million) 

2. Adjusted loss before taxation is stated before the unrealised fair value gain adjustment of GBP0.94 million (H1 FY 2016: 1.3 million) and share based payment charge of GBP1.1 million (H1 FY 2016: 0.3 million)

Operational Highlights

-- Transactions and payment volume grew significantly in the period with December 2016 setting a record month in the Company's history

o Number of transactions reached 5 million, a growth of approximately 85% over the prior year period (H1 FY 2016: 2.7 million)

o Payment volume increased by 97% to $7.80 billion (H1 FY 2016: $3.95 billion)

-- The variation in growth rates of number of transactions and revenues principally reflects the geographical mix of transactions and the associated variability in transaction price per corridor

o Revenue per transaction in the period was GBP2.70 (H1 FY 2016: GBP3.26)

-- Bank of America Merrill Lynch (BofAML) CashPro(R) offering using the Earthport network went live in February 2017 as part of the broader strategic relationship with Bank of America Merrill Lynch

-- In November 2016, Earthport announced the approval from the Reserve Bank of India to operate cross-border payment services for banks in India

o Axis Bank, India's third largest private sector bank is the first bank in the region to connect with Earthport

Hank Uberoi, CEO of Earthport plc, commented:

"We accomplished a number of important developments in the six months under review, including expanding our strategic relationship with BofAML and gaining approval to provide outbound payment services for the extensive Indian market. The performance of the business in the past six months has been encouraging with a substantial increase in the number of transactions and payment volumes resulting in strong revenue growth. This positive momentum, coupled with our unique market positioning, gives us confidence in our continued growth and prospects."

For further information, please contact:

Earthport plc 020 7220 9700

Hank Uberoi, Chief Executive Officer

Simon Adamiyatt, Chief Financial Officer

Newgate 020 7653 9848

Bob Huxford / James Ash

N+1 Singer (Nomad and Joint Broker) 020 7496 3000

Mark Taylor / James White

Shore Capital (Joint Broker) 020 7408 4090

Bidhi Bhoma/ Toby Gibbs

About Earthport:

Earthport provides cross-border payment services to banks and businesses. Through a single relationship with Earthport, clients can seamlessly manage payments to almost any bank account in the world, reducing costs and complexity to meet their customers' evolving expectations of price, speed and transparency.

Earthport offers clients access to global payment capability in 190+ countries and territories, with local ACH (Automated Clearing House) options in 60+ countries and an evolving suite of currencies and settlement options.

Earthport continues to invest in the establishment of in-country bank partnerships across the world, bringing together its deep market and regulatory expertise in order to maintain compliant and commercially competitive services.

The result - a global payments network accessed via a single relationship, delivering significant cost and operating efficiencies for banks and businesses servicing high volumes of lower value payments.

Headquartered in London with regional offices in New York, Dubai, Miami and Singapore, Earthport is a public company, traded on the London Stock Exchange (AIM: EPO.L) with an institutional investor base including World Bank IFC, Oppenheimer, Blackrock, Henderson.

Please visit www.earthport.com for more information.

Overview

In H1 FY 2017, we delivered strong revenue growth and continue to make consistent progress on our strategy, by further deepening our relationships with customers, extending our market reach, and developing our technology, unique product offerings, compliance processes and people capabilities. We are continuing to capitalise on our strong market position as the leading cross-border payment solutions provider.

Our strategy is focused on helping our customers to prosper, by using our payments expertise and insight to increase their sales, and reduce their costs and risk. It is designed to ensure the continued success of our business in a competitive and rapidly changing market, in order to deliver sustainable value to our customers, colleagues and shareholders.

During the period Earthport successfully extended its global network across different geographies and industries and is developing a strong pipeline of opportunities. We expect that realising the full potential of our business model and strategy will drive robust, visible and recurring organic revenue growth over the medium and long term.

Financial Review

During the period the number of transactions increased by approximately 85% to 5 million (H1 FY 2016: 2.7 million) and payment volumes grew by 97% to $7.80 billion (H1 FY 2016: $3.95 billion). Transactional and payment volumes were the highest in the Company's history in December 2016 and have continued to increase during the first two months of H2 FY 2017.

Revenues grew by 35% to GBP14.3 million (H1 FY 2016: GBP10.6 million) with 95% of H1 FY 2017 revenues being transactional revenues. The increase is predominantly from existing customers, as the service becomes more robust, as well as the continued expansion of our global network and a significant growth of ecommerce payments. The variation in growth rates of number of transactions and revenues principally reflects the geographical mix of transactions and the associated variability in transaction price per corridor. During the period, the Company saw a significant contribution from the European corridor which has a lower price per transaction. It is important to note that the company's gross margin has remained consistent at approximately 70%.

The Adjusted Gross Margin decreased by 3.1% to 70.4% (H1 FY 2016: 73.5%) due to increases in network costs, but is in-line with the management expectations and those achieved in the financial year ended 30 June 2016. Gross Profit for the period increased by 34% to GBP9.9 million (H1 FY 2016: GBP7.4 million).

Administrative expenses decreased by 7.8% to GBP13.0 million (H1 FY 2016: GBP14.1 million), mainly resulting from operational efficiency and the restructuring of certain parts of the business completed in the prior financial year.

Adjusted Loss before Taxation, excluding share based payment charges of GBP1.1 million (H1 FY 2016: GBP0.3 million) and unrealised fair gain value of GBP0.94 million (H1 FY 2016: GBP1.3 million) decreased by 52.2% to GBP3.2 million (H1 FY 2016: GBP6.7 million).The unrealised fair value adjustment of GBP0.9 million arises on the translation of unsettled transactions at 31 December 2016 and this gain would only crystallise in the event that any parties to the transactions defaulted.

The reported loss before taxation decreased by 41.1% to GBP3.3 million (H1 FY 2016: GBP5.6 million).

Loss per share decreased by 53.1% to 0.61 pence (H1 FY 2016: 1.30 pence).

Net cash used in operating activities decreased by 59.2% to GBP2.0 million (H1 FY 2016: GBP4.9 million), reflecting the Board's focus on cash used in operations versus revenue growth. The Cash Balance at 31 December 2016 amounted to GBP11.4 million, compared to GBP14.4 million at 30 June 2016 (H1 FY 2016: GBP24.1 million).

Recovery activities related to the GBP5m loss continue, involving law enforcement and insurance companies. There can be no certainty about the likelihood, amount or timing of any recovery in connection with this loss.

Operational and Network Review

Earthport continues to hold the premier position as one of the most versatile and trusted cross-border payments provider among banks, eCommerce companies, Money Transfer Organisations, and payments aggregators.

The Company launched client relationships with a number of new banks and business enterprises across the world in H1 FY17.

In November 2016, the Reserve Bank of India ("RBI") granted Earthport approval for operating outbound cross border payment services for banks in India. The subsequent agreement with Axis Bank, one of India's most prominent systemic financial institutions, was the first organisation in the region to entrust Earthport with their cross-border payments business.

Bank of America Merrill Lynch launched its CashPro(R) service, which utilises the Earthport network, in February 2017. This service will add new countries and currencies to the bank's online and file-based banking portal, CashPro(R), further expanding the bank's international ACH payment capabilities. BofAML clients can now access cross currency payments in more than 60 countries and nearly 25 currencies. This expanded access represents a significant development of the strategic relationship between Earthport and BofAML that was first announced in 2013.

The Company continues to execute upon its growth strategy to:

o Expand geographically including India and other Emerging Markets

o Improve internal processes and enhance technology infrastructure

o Augment our network resilience by establishing relationships with additional partner banks

o Enhance our service offerings with the development of new products such as an Enhanced FX Offering, Faster Payments, Global Receivables, Alias Payments, Global Treasury Netting, and further expanding the Distributed Ledger offering

Earthport continues to grow its network, providing its clients with additional routes and destinations. The Company executes payments across 181 countries and destinations in 51 currencies.

Board and Management changes

During the period, Sajeev Viswanathan stepped down from the board on 3(rd) November 2016 as an Executive Director to pursue other opportunities and Dr Caroline A. Brown joined Earthport's Board on 17 January 2017 as an Independent Non-Executive Director.

Dr Brown is an experienced finance executive and board member of listed companies. She currently chairs the audit committee of Luceco plc, an industrial technology business, which was admitted to trading on the Main Market of the London Stock Exchange in October 2016. Dr Brown is a qualified accountant and has also worked in corporate finance at Merrill Lynch, UBS and HSBC.

Michael R. Steinharter also joined Earthport on 3 November 2016 in the new position of Chief Commercial Officer. Mike brings a great range of experience to Earthport, building, managing and growing successful sales organisations at some of the largest and most respected technology service companies. Among his many roles, Mike spent over 20 years selling to the financial services sector at IBM with significant management responsibility in New York, London, and Sydney. Mike has also served as president of Reuters America and built a significant financial services practice at Computer Sciences Corporation (CSC).

Outlook

Earthport's performance in H1 FY 2017 reflects its continued progress as the leading cross-border payments company and the Company will continue to invest in its operational platform to ensure platform scalability and resilience as well as expanding its geographical presence and product capabilities.

The number of transactions processed and payments volumes have continued to increase month on month in January and February 2017 and the Board expects these core operational metrics to continue to improve in the second half of the fiscal year.

Given current business and operational trajectory, the Board remains confident that FY 2017 revenues and year end cash balance will be broadly in-line with market projections. In addition, the Board is focused on balancing its objective of becoming cash flow breakeven whilst addressing the significant demand emerging due to our strong market position. While cash usage is continuing to decrease, we will not achieve cash flow breakeven in Q4 FY 2017, as previously communicated in order to capitalise on these opportunities.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the six months ended 31 December 2016

 
                                           Unaudited   Unaudited     Audited 
                                            6 months    6 months   12 months 
                                               ended       ended       ended 
                                              31 Dec      31 Dec      30 Jun 
                                                2016        2015        2016 
 Continuing operations:            Notes     GBP'000     GBP'000     GBP'000 
 
 Revenue                                      14,335      10,612      22,772 
 
 Cost of sales                               (4,250)     (2,809)     (6,849) 
                                          ----------  ----------  ---------- 
 
 Adjusted gross profit                        10,085       7,803      15,923 
 
 Cost of sales - warrant 
  charge                                       (229)       (379)       (578) 
                                          ----------  ----------  ---------- 
 
 Gross profit                                  9,856       7,424      15,345 
 
 Administrative expenses                    (13,017)    (14,105)    (25,780) 
                                          ----------  ----------  ---------- 
 
 Adjusted operating loss                     (3,161)     (6,681)    (10,435) 
 
 Share-based payment charge                  (1,058)       (287)       (620) 
 
 Unrealised fair value 
  gain                                11         939       1,333       8,224 
 
 Exceptional item - EarthportFX 
  (Baydonhill) loss                                -           -     (5,000) 
 
 Exceptional item - impairment 
  of available for sale 
  investment                                       -           -       (250) 
 
 
 Operating loss                              (3,280)     (5,635)     (8,081) 
 
 Finance income                                    3          13          20 
 
 Decrease in contingent 
  consideration liability 
  due to amendment as per 
  the CVR deed                                     -           -         842 
                                          ----------  ----------  ---------- 
 
 Loss before taxation                        (3,277)     (5,622)     (7,219) 
 
 Income tax credit/(expense)                     393       (469)       (996) 
                                          ----------  ----------  ---------- 
 
 Loss for the period and 
  total comprehensive income 
  attributable to owners 
  of the parent                              (2,884)     (6,091)     (8,215) 
                                          ==========  ==========  ========== 
 
 
 Loss per share attributable 
  to the owners of the parent 
  - basic and diluted                4       (0.61p)     (1.30p)     (1.74p) 
                                          ==========  ==========  ========== 
 
 

There were no items of other comprehensive income for the year.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

at 31 December 2016

 
                                              Unaudited    Unaudited     Audited 
                                                  as at        as at       as at 
                                                 31 Dec       31 Dec      30 Jun 
                                                   2016         2015        2016 
                                     Notes      GBP'000      GBP'000     GBP'000 
 
 Non-current assets 
 Goodwill                                         2,709        2,709       2,709 
 Intangible assets                                5,917        6,312       6,249 
 Investment                                           -          273           - 
 Property, plant and equipment                      484          604         597 
 
                                                  9,110        9,898       9,555 
                                            -----------  -----------  ---------- 
 
 Current assets 
 Trade and other receivables           5         12,892        4,102      11,290 
 Derivative financial assets                      5,051        2,197       6,253 
 Cash and cash equivalents                       11,375       24,154      14,429 
                                            -----------  -----------  ---------- 
 
                                                 29,318       30,453      31,972 
                                            -----------  -----------  ---------- 
 
 Total assets                                    38,428       40,351      41,527 
 
 
 Current liabilities 
 Trade and other payables              6        (4,077)      (3,326)     (5,676) 
 Derivative financial liabilities               (1,796)        (750)     (1,368) 
 Earn-out consideration                           (135)            -     (2,295) 
 
                                                (6,008)      (4,076)     (9,339) 
                                            -----------  -----------  ---------- 
 
 Non-current liabilities 
 Earn-out consideration                               -      (3,292)           - 
 Deferred tax liability                         (1,283)        (879)     (1,676) 
                                            -----------  -----------  ---------- 
 
                                                (1,283)      (4,171)     (1,676) 
                                            -----------  -----------  ---------- 
 
 Total liabilities                              (7,291)      (8,247)    (11,015) 
 
 
 NET ASSETS                                      31,137       32,104      30,512 
                                            ===========  ===========  ========== 
 
 
 Equity 
 Capital and reserves 
 Ordinary shares                       7         71,834       70,738      70,738 
 Share premium                         8         79,120       78,331      78,064 
 Interest in own shares                9          (883)      (1,220)       (953) 
 Merger reserve                                   9,200        9,200       9,200 
 Share-based payment reserve                     13,085       12,647      12,164 
 Warrant reserve                                  1,852        1,424       1,623 
 Retained earnings                            (143,071)    (139,016)   (140,324) 
 
 EQUITY ATTRIBUTABLE TO                          31,137       32,104      30,512 
                                            ===========  ===========  ========== 
 OWNERS OF THE PARENT 
 

CONSOLIDATED STATEMENT OF CASH FLOWS

for the six months ended 31 December 2016

 
                                                                  Restated 
                                         Unaudited   Unaudited     Audited 
                                          6 months    6 months   12 months 
                                             ended       ended       ended 
                                            31 Dec      31 Dec      30 Jun 
                                              2016        2015        2016 
                                 Notes     GBP'000     GBP'000     GBP'000 
 
 Net cash used in operating 
  activities                      10       (2,031)     (4,946)    (12,388) 
 
 Investing activities 
 Purchase of property, 
  plant and equipment                         (99)       (129)       (392) 
 Capitalised intangible 
  fixed assets                               (924)     (1,077)     (2,265) 
 Purchase of trade investment                    -        (23)           - 
 Part payment of contingent 
  consideration                                  -           -       (855) 
 
 Net cash used in investing 
  activities                               (1,023)     (1,229)     (3,512) 
 
 
 Financing activities 
 Proceeds on exercise 
  of options                                     -         134         134 
 
 Net cash from financing 
  activities                                     -         134         134 
 
 
 Net decrease in cash 
  and                                      (3,054)     (6,041)    (15,766) 
 cash equivalents 
 
 Cash and cash equivalents 
  at the beginning of 
  the period                                14,429      30,195      30,195 
                                        ----------  ----------  ---------- 
 
 Cash and cash equivalents 
  at the end of the period                  11,375      24,154      14,429 
                                        ==========  ==========  ========== 
 
 
 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the six months ended 31 December 2015 (Unaudited)

Attributable to the owners of the Parent

 
                                                          Interest           Share-based 
                                          Share    Share    In own   Merger      Payment  Warrant   Retained 
                                        Capital  Premium    Shares  Reserve      Reserve  Reserve   Earnings     Total 
                                        GBP'000  GBP'000   GBP'000  GBP'000      GBP'000  GBP'000    GBP'000   GBP'000 
 
                          Balance at 1 
                             July 2015   70,695   78,272   (1,252)    9,200       12,557    1,045  (133,122)    37,395 
                                        -------  -------  --------  -------  -----------  -------  ---------  -------- 
 
                          Loss for the 
                         period, being 
                                 total 
                         comprehensive 
                            income for 
                            the period        -        -         -        -            -        -    (6,091)   (6,091) 
 
                          Transactions 
                           with owners 
                           Share-based 
                              payments 
                      - employee share 
                               options       43       59        32        -        (197)        -        197       134 
 
    *    employee share options charge        -        -         -        -          287        -          -       287 
                            - warrants        -        -         -        -            -      379          -       379 
                                 Total 
                          transactions 
                        with owners of 
                           the Parent, 
                            recognised 
                           directly in 
                                equity       43       59        32        -           90      379    (5,894)   (5,291) 
 
 
 
                         Balance at 31 
                         December 2015   70,738   78,331   (1,220)    9,200       12,647    1,424  (139,016)    32,104 
                                        -------  -------  --------  -------  -----------  -------  ---------  -------- 
 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the six months ended 31 December 2016 (Unaudited)

Attributable to the owners of the Parent

 
                                                          Interest           Share-based 
                                          Share    Share    In own   Merger      Payment  Warrant   Retained 
                                        Capital  Premium    Shares  Reserve      Reserve  Reserve   Earnings     Total 
                                        GBP'000  GBP'000   GBP'000  GBP'000      GBP'000  GBP'000    GBP'000   GBP'000 
 
                          Balance at 1 
                             July 2016   70,738   78,064     (953)    9,200       12,164    1,623  (140,324)    30,512 
                                        -------  -------  --------  -------  -----------  -------  ---------  -------- 
 
                          Loss for the 
                         period, being 
                                 total 
                         comprehensive 
                            income for 
                            the period        -        -         -        -            -        -    (2,884)   (2,884) 
 
                          Transactions 
                           with owners 
                           Share-based 
                              payments 
                      - employee share 
                               options        -     (70)        70        -        (137)        -        137         - 
 
    *    employee share options charge        -        -         -        -        1,058        -          -     1,058 
                            - warrants        -        -         -        -            -      229          -       229 
                     Issue of ordinary 
                                shares 
                         - CVR holders    1,080    1,080         -        -            -        -          -     2,160 
                     Issue of ordinary 
                                shares 
                          - in lieu of 
                                   fee       16       46         -        -            -        -          -        62 
                                 Total 
                          transactions 
                        with owners of 
                           the Parent, 
                            recognised 
                           directly in 
                                equity    1,096    1,056        70        -          921      229    (2,747)       625 
 
 
 
                               Balance 
                                    at 
                                    31 
                              December 
                                  2016   71,834   79,120     (883)    9,200       13,085    1,852  (143,071)    31,137 
                                        -------  -------  --------  -------  -----------  -------  ---------  -------- 
 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Year ended 30 June 2016 (Audited)

 
                                                          Interest           Share-based 
                                          Share    Share    In own   Merger      Payment  Warrant   Retained 
                                        Capital  Premium    Shares  Reserve      Reserve  Reserve   Earnings     Total 
                                        GBP'000  GBP'000   GBP'000  GBP'000      GBP'000  GBP'000    GBP'000   GBP'000 
 
                          Balance at 1 
                             July 2015   70,695   78,272   (1,252)    9,200       12,557    1,045  (133,122)    37,395 
                                        -------  -------  --------  -------  -----------  -------  ---------  -------- 
 
                          Loss for the 
                     year, being total 
                         comprehensive 
                        Income for the 
                                  year        -        -         -        -            -        -    (8,215)   (8,215) 
 
                          Transactions 
                           with owners 
                  Share-based payments 
                      - employee share 
                               options       43    (208)       299        -      (1,013)        -      1,013       134 
                      - employee share 
                        options charge        -        -         -        -          620        -          -       620 
                            - warrants        -        -         -        -            -      578          -       578 
                                 Total 
                          transactions 
                        with owners of 
                           the Parent, 
                            recognised 
                           directly in 
                                equity       43    (208)       299        -        (393)      578    (7,202)   (6,883) 
 
 
 
                            Balance at 
                          30 June 2016   70,738   78,064     (953)    9,200       12,164    1,623  (140,324)    30,512 
                                        -------  -------  --------  -------  -----------  -------  ---------  -------- 
 

notes to the UNAUDITED INTERIM results

for the six months ended 31 December 2016

   1.         GENERAL INFORMATION 

Earthport plc is a public limited company listed on the AIM Market of London Stock Exchange, incorporated and domiciled in the England and Wales under the Companies Act 2006. The address of its principal place of business and registered office is 140 Aldersgate Street, London EC1A 4HY.

   2.         GOING CONCERN 

The interim financial information has been prepared on the assumption that the Group is a going concern.

When assessing the foreseeable future the directors have looked at a period of twelve months from the date of approval of the interim financial information. The directors believe that the Group has demonstrated further progress in achieving its objective of positioning the Group as an infrastructure supplier to the global payments industry, and with net cash used in the operating activities having decreased significantly to GBP2.0 million in the six month period to 31 December 2016 compared with GBP4.9 million for the six month period to 31 December 2015 as well as revenue growth of 35%, the directors consider that it is appropriate to prepare the Group's interim financial information on a going concern basis, which assumes that the Company is to continue in operational existence for the foreseeable future.

   3.         ACCOUNTING POLICIES 

Basis of preparation

The interim financial information is prepared using accounting policies consistent with International Financial Reporting Standards ("IFRS") as adopted by the European Union.

The financial statements have been prepared under the historical cost convention and the principal accounting policies are set out in the 30 June 2016 financial statements.

notes to the UNAUDITED INTERIM results

for the six months ended 31 December 2016

   4.         LOSS PER SHARE 

Loss per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period.

 
                            Unaudited   Unaudited     Audited 
                             6 months    6 months   12 months 
                                ended       Ended       ended 
                               31 Dec      31 Dec      30 Jun 
                                 2016        2015        2016 
                              GBP'000     GBP'000     GBP'000 
 
  Loss attributable to 
   owners of the parent       (2,884)     (6,091)     (8,215) 
                           ==========  ==========  ========== 
 
 
                               Number      Number      Number 
 
 Weighted average number 
  of ordinary shares in 
  issue (thousands)           478,227     476,458     476,674 
 Less: own shares held 
  (thousands)                 (4,958)     (6,926)     (5,369) 
                           ----------  ----------  ---------- 
 
                              473,269     469,532     471,305 
                           ==========  ==========  ========== 
 
 
 Basic and fully diluted 
  loss per share (pence)      (0.61p)     (1.30p)     (1.74p) 
                           ==========  ==========  ========== 
 
 

The loss attributable to Ordinary shareholders and weighted average number of ordinary shares for the purposes of calculating the diluted loss per share are identical to those used for basic loss per ordinary share. This is because the exercise of share options and other benefits would have the effect of reducing loss per share and is therefore not dilutive under the terms of IAS33 "Earnings per share".

notes to the UNAUDITED INTERIM results

for the six months ended 31 December 2016

   5.         TRADE AND OTHER RECEIVABLES 
 
                                     Unaudited     Unaudited       Audited 
                                         as at         as at         as at 
                                   31 Dec 2016   31 Dec 2015   30 Jun 2016 
                                       GBP'000       GBP'000       GBP'000 
 
  Trade receivables                      9,443         2,610         8,349 
 Other receivables                       2,535           968         2,246 
 Prepayments                               914           628           695 
                                  ------------  ------------  ------------ 
 
                                        12,892         4,206        11,290 
 
 Less: Provision for impairment              -         (104)             - 
                                  ------------  ------------  ------------ 
 
 Trade and other receivables            12,892         4,102        11,290 
                                  ============  ============  ============ 
 

Trade receivables are comprised of two components; amounts receivable from clients in the normal course of business (GBP2.9 million), as well as amounts related to forward foreign exchange contract payments executed with clients with the notional (GBP6.5 million) amount. These forward foreign exchange contracts are fair valued in accordance with IAS 39 Financial Instruments: IAS 39 outlines the requirements for the recognition and measurement of financial assets, financial liabilities, and some contracts to buy or sell non-financial items. Financial instruments are initially recognised when an entity becomes a party to the contractual provisions of the instrument, and are classified into various categories depending upon the type of instrument, which then determines the subsequent measurement of the instrument.

   6.         TRADE AND OTHER PAYABLES 
 
                                         Unaudited     Unaudited       Audited 
                                             as at         as at         as at 
                                       31 Dec 2016   31 Dec 2015   30 Jun 2016 
                                           GBP'000       GBP'000       GBP'000 
 
 Trade payables                              1,270           668         2,117 
 Other payables                                  -             3           312 
 Other taxation and social security            312           290           334 
 Accruals and deferred income                2,495         2,365         2,913 
                                      ------------  ------------  ------------ 
 
                                             4,077         3,326         5,676 
                                      ============  ============  ============ 
 
 

Trade payables and accruals principally comprise amounts outstanding in respect of operating costs. The average credit period taken for trade purchases is 35 days (H1 FY 2016: 33 days). The directors consider that the carrying amounts for trade and other payables approximate their fair value.

notes to the UNAUDITED INTERIM results

for the six months ended 31 December 2016

   7.         SHARE CAPITAL 

Authorised

The Articles of Association were amended on 24 March 2010. The Company has no authorised share capital limit.

Issued

 
                                                Unaudited     Unaudited        Audited 
                                                 6 months      6 months      12 months 
                                                    ended         ended          ended 
                                              31 Dec 2016   31 Dec 2015    30 Jun 2016 
                                                  GBP'000       GBP'000        GBP'000 
 
 At start of period                                47,679        47,636         47,636 
 
 Shares issued in the period                        1,080            43             43 
 
 Shares issues in lieu of consultancy fees             16             -              - 
 
 
 At end of period                                  48,775        47,679         47,679 
 
 Deferred shares                                   23,059        23,059         23,059 
                                             ------------  ------------  ------------- 
 
  Total                                            71,834        70,738         70,738 
                                             ============  ============  ============= 
 

During the period on 15 November 2016: 10,797,671 (H1 FY 2016: 432,488) ordinary shares of 10p were issued to the holders of Contingent Value Rights from the 2013 acquisition of Baydonhill plc (On 1 July 2016, the name was changed to EarthportFX Limited), and 155,836 (H1 FY 2016: Nil) ordinary shares of 10p were issued in lieu of consultancy fees.

Deferred shares carry no rights to receive any dividend nor other distribution. The holders of the deferred shares have no rights to receive notice, nor attend, speak or vote at any general meeting of the Company. On a return of capital on liquidation or otherwise, the holders of the deferred shares are entitled to receive the nominal amount paid up on the deferred shares after the repayment of GBP10,000,000 per ordinary share.

notes to the UNAUDITED INTERIM results

for the six months ended 31 December 2016

   8.         SHARE PREMIUM 
 
                                              Unaudited     Unaudited        Audited 
                                               6 months      6 months      12 months 
                                                  ended         ended          ended 
                                            31 Dec 2016   31 Dec 2015   30 June 2016 
                                                GBP'000       GBP'000        GBP'000 
 
 At start of period                              78,064        78,272         78,272 
 New issue                                        1,080             -              - 
 Exercise of share options                            -            59             91 
 Transfer to interest in own shares                (70)             -          (299) 
 Share issue in lieu of consultancy fees             46             -              - 
                                           ------------  ------------  ------------- 
 
 At end of period                                79,120        78,331         78,064 
                                           ============  ============  ============= 
 
   9.         INTEREST IN OWN SHARES 
 
                                Unaudited     Unaudited        Audited 
                                 6 months      6 months      12 months 
                                    ended         ended          ended 
                              31 Dec 2016   31 Dec 2015   30 June 2016 
                                  GBP'000       GBP'000        GBP'000 
 
 At start of period                 (953)       (1,252)        (1,252) 
 Exercise of share options             70            32            299 
 
 At end of period                   (883)       (1,220)          (953) 
                             ============  ============  ============= 
 
 

notes to the UNAUDITED INTERIM results

for the six months ended 31 December 2016

   10.        RECONCILIATION OF LOSS BEFORE TAX TO NET CASH OUTFLOW FROM 

OPERATING ACTIVITIES

 
                                                                                 Restated 
                                                    Unaudited     Unaudited       Audited 
                                                     6 months      6 months     12 months 
                                                        ended         ended         ended 
                                                  31 Dec 2016   31 Dec 2015   30 Jun 2016 
                                                      GBP'000       GBP'000       GBP'000 
 
 Loss before tax                                      (3,277)       (5,622)       (7,219) 
 Amortisation of intangible assets                      1,256         1,171         2,422 
 Depreciation of property, plant and equipment            212           234           504 
 Share-based payment charge and warrant                 1,287           666         1,198 
 charge 
 Shares issued in lieu of consultancy fees                 62             -             - 
 R & D Tax Credit Received                                  -             -           270 
 Finance income                                           (3)          (13)          (20) 
 Contingent consideration                                   -             -         (842) 
 Impairment of available for sale investment                -             -           250 
                                                 ------------  ------------  ------------ 
 
 Operating cash out flow before movements in            (463)       (3,564)       (3,437) 
    working capital 
 (Increase)/Decrease in receivables                     (400)         3,006       (7,538) 
 Decrease in payables                                 (1,171)       (4,401)       (1,433) 
                                                 ------------  ------------  ------------ 
 
 Cash used by operations                              (2,034)       (4,959)      (12,408) 
 Interest received                                          3            13            20 
                                                 ------------  ------------  ------------ 
 
 Net cash used in operating activities                (2,031)       (4,946)      (12,388) 
                                                 ============  ============  ============ 
 

notes to the UNAUDITED INTERIM results

for the six months ended 31 December 2016

   11.     UNREALISED FAIR VALUE ADJUSTMENT 

In accordance with IAS 39, the Group fair valued all currency bank accounts (excluding client bank accounts) and forward foreign exchange contracts. The fair value revaluation of such receivables, payables and currency accounts gave rise to an unrealised gain of GBP2.6 million (H1 FY 2016: loss of GBP1.9 million). All forward foreign exchange contracts executed with clients are hedged with bank forward foreign exchange contracts and as a result, the fair value revaluation generated a net derivative unrealised loss of GBP1.6 million (H1 FY 2016: gain of GBP3.2 million).

Treasury hedge client forward transactions through mirror hedge bank trades on the amount, however the maturity date of these hedge trades can sometimes differ from date of the original client trade. This is industry practice to ensure the business manages the open drawdown schedule nature associated with these client forward transactions in combination with remaining within prescribed credit line limits provided by the bank liquidity providers. On settlement/maturity of the contract there is no P&L effect, however while the contracts are open and the hedge has a different maturity date, there is a mark to market which leads to an unrealised fair value gain or loss. These gains and losses would only crystallise in the event that any parties to the transaction default.

 
                                            Unaudited     Unaudited        Audited 
                                             6 months      6 months      12 months 
                                                ended         ended          ended 
                                          31 Dec 2016   31 Dec 2015   30 June 2016 
                                              GBP'000       GBP'000        GBP'000 
 
 Foreign exchange gain/(loss)                   2,569       (1,904)          1,549 
 Fair value (loss)/gain on derivatives        (1,630)         3,237          6,675 
 
 Total                                            939         1,333          8,224 
                                         ============  ============  ============= 
 

notes to the UNAUDITED INTERIM results

for the six months ended 31 December 2016

   12.        PUBLICATION OF NON-STATUTORY FINANCIAL STATEMENTS 

The results for the six months ended 31 December 2016 and 31 December 2015 are unaudited and have not been reviewed by the auditor. The results for the year ended 30 June 2016 included in this announcement do not constitute statutory financial statements as defined in section 434 of the Companies Act 2006, but have been derived from the full audited financial statements for the year ended 30 June 2016. Statutory accounts for the year ended 30 June 2016, on which the auditors gave an audit report which was unqualified and did not contain a statement under section 498(2) or (3) of the Companies Act 2006, have been filed with the Registrar of Companies.

The interim financial information has been prepared on the basis of the same accounting policies as published in the audited financial statements for the year ended 30 June 2016 and the accounting policies to be adopted in the financial statements for the year ended 30 June 2017. The annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards and International Financial Reporting Interpretations Committee ("IFRIC") pronouncements as adopted by the European Union. Comparative figures for the year ended 30 June 2016 have been extracted from the statutory financial statements for that period.

13. The interim results for the six months ended 31 December 2016 are available on the Company's website: www.earthport.com.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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March 21, 2017 03:01 ET (07:01 GMT)

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