TIDMEPO
RNS Number : 0263V
Earthport PLC
31 October 2017
31 October 2017
Earthport plc
("Earthport", the "Company" or the "Group")
Final Results
Earthport (AIM: EPO.L), the leading payment network for
cross-border payments, is pleased to announce its final results for
the year ended 30 June 2017.
Financial Highlights
-- Revenues increased by 33% to GBP30.3 million (FY2016: GBP22.8
million), in line with market expectations
-- Transactional revenues comprised approximately 95% (FY2016: 91%) of total revenue
-- Adjusted gross profit(1) increased by 30% to GBP20.7 million (FY2016: GBP15.9 million)
-- Adjusted gross margin(1) of 68% (FY2016: 70%)
-- Adjusted EBITDA(2) loss decreased by 58% to GBP2.9 million (FY2016: GBP6.9 million)
-- Adjusted operating loss (before share based payments charge,
exceptional items and unrealised fair value adjustments) decreased
by 39% to GBP6.3 million (FY2016: GBP10.4 million) mainly due to
increase in revenue and achievement of cost efficiency
objectives
-- Loss after tax increased by 47% to GBP12.1 million (FY2016:
GBP8.2 million), mainly due to unrealised fair value loss of GBP4.8
million, compared to a gain of GBP8.2 million in FY2016
-- Cash and cash equivalents at GBP11.9 million (FY2016: GBP14.4 million)
1. Adjusted gross profit and margin figures are before warrant
charge of GBP0.5m (FY2016: GBP0.6m), share based payment charge,
unrealised fair value adjustment and exceptional items
2. Adjusted EBITDA is before warrant charge of GBP0.5m (FY2016:
GBP0.6m), share based payment charge, unrealised fair value
adjustment and exceptional items
Operational and Transactional Highlights
-- Number of transactions processed reached 11.0 million (FY2016: 6.6 million), up by 67%
-- Payment volume was $17.5 billion(3) , an increase of 48% over prior year
-- Average revenue per transaction of GBP2.64
-- Gaining traction with European-based global Banks:
o Experiencing increasing transaction volumes and multiple
engagements with existing clients
o Extending relationships with current clients, and now have
some multiple-product relationships
-- US Markets:
o Increased our operations with Bank of America Merrill Lynch
("BAML"), launching Cashpro service in multiple currencies and
countries
-- Emerging Markets:
o Gained approval from the Reserve Bank of India to provide out
bound cross-border payment services
o Signed agreements with Axis Bank, Kotak Mahindra Bank and DBS
Bank in Singapore.
3. Figure shown in US dollars to conform with market practice
Post-Period Highlights
-- Successful equity placing raising gross proceeds of GBP25
million to capture growing pipeline in Asia and invest further in
operating efficiencies and product development as volumes continue
to grow.
Hank Uberoi, CEO of Earthport, commented: "FY2017 has been a
positive year for Earthport, with good progress made across the
business. We are committed to a long-term strategy of continuing to
develop the world's leading cross-border payment platform, enabling
global commerce through effortless money movement. Through our
services we can enable our clients and partners to accelerate the
growth of their cross-border payments businesses without taking on
additional business complexities. Above all, we place emphasis on
enhancing the customer experience by harmonising our suite of
products and services, further streamlining our internal processes,
and simplifying products for our customer base.
"We believe that the wider macro-economic environment is
favourable, and that opportunities for growth remain in both
established markets and developing economies. The progress made in
FY2017 has established a solid platform from which we can continue
to grow, and we look forward to FY2018 with confidence in both our
operational and financial performance.
"Lastly, I would like to take this opportunity to thank everyone
at Earthport for their continuing hard work. It is the people that
make this business, and our team is positioned for many more
successful years."
Enquiries: Earthport plc
Hank Uberoi, Chief Executive
Officer
Simon Adamiyatt, Chief +44 20 7220
Financial Officer 9700
N+1 Singer (Nominated Adviser
& Joint Broker)
Mark Taylor / Michael Taylor +44 20 7496
/ James White 3000
Shore Capital (Joint Broker) +44 20 7408
Toby Gibbs / Stephane Auton 4090
Newgate +44 20 7653
Bob Huxford / James Ash 9848
Notes to Editors
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 options in 65+
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).
Please visit www.earthport.com for more information.
Chairman's Statement
Our market positioning remains strong and we are increasing our
focus on key geographies, both in the developed world and emerging
markets.
I am delighted to report that Earthport has had another good
year delivering revenue growth of a further 33% with continued
investment to deliver our strategy. As flagged at the interim
results, we did not achieve cash flow break-even by the year-end,
as we continued to invest in the growth opportunities recognised by
the Group. Our use of cash resources has been well managed with the
overall cost of administration having increased marginally
year-on-year. During the year we processed over 11 million
transactions with a monetary value in excess of $17.5 billion,
representing an increase of 67% and 48% respectively from 2016.
Our market positioning remains strong and we are increasing our
focus on key geographies, both in the developed world and emerging
markets. We do live in politically uncertain times. The vote to
leave the European Union last summer created uncertainty across
many of our key markets, but the stronger than anticipated economic
performance within the UK has defied expectations. The Brexit vote,
followed by the hung parliament result following the general
election in May complicates the negotiating stance that the UK has
with the European Union (EU). We continuously monitor the progress
made at the EU negotiating table, to assess the lasting impact for
Earthport. We must plan for all eventualities in order to maintain
our ability to transact within the Single Euro Payments Area
(SEPA). If we were to lose our intra-country ability to passport
our regulatory status across all the countries within the European
Economic Area (EEA), Earthport and other cross-border payment
providers would need to have some form of physical licenced
operation in an EU member country in order to operate effectively.
These uncertainties will continue to play out over the coming
years, and we remain vigilant of any significant change.
Our network is one of our most prized asset and we now have
routes in over 65 countries. Developing the robustness and
resilience in the relationships with our banking network partners
across the globe is an on-going process and remains one of our key
area of focus. On the commercial side, we remain particularly
focused on India as a significant market opportunity, and our
partnerships with Axis Bank and Kotak Mahindra Bank emphasises
progress made here, as announced in August this year.
The core executive team remains strong and we are confident that
the resources we have provide the necessary skills, expertise and
experience to fulfil our ongoing business strategy.
The international regulatory environment for payments continues
to evolve. However, such changes are mostly predictable and
Earthport is able to avoid unnecessary disruption through its own
program of external legal and regulatory monitoring, a continued
commitment to best practice which pre-empts many supervisory
changes, and by embracing its values as a collaborative partner
with all the stakeholders in the end-to-end international payment
chain, from clients to regulators.
The scale of the opportunity for Earthport is significant and we
remain committed to our growth strategy. Delivering complex
services in a highly-regulated space has its challenges and costs,
and in the short term can put pressure on operating margins. This
same complexity and related expertise is creating competitive
barriers to entry and enhancing our platform and positioning, which
we expect will open up additional revenue streams. We must remain
fully committed to our fastidious approach to compliance and
regulatory requirements both in the UK as well as in all the other
jurisdictions in which we operate. This comes with increasing costs
but remains central to our operating model and uniquely
differentiates us from many of our major competitors. We will
continue to invest in this domain.
Many of our major banking customers are facing increasing
regulatory and operational complexities (amongst other factors),
and this is causing them to retrench from various regions in an
effort to focus on core markets. As this takes effect, there are
significant opportunities for independent payment companies to
supplement the banks' own networks around the world. We are having
more in-depth discussions with a number of our customers which are
showing encouraging signs, but we still need to see greater volumes
from these key customers. This is a key area of development for
Earthport and we have seen an increase in our percentage of
revenues generated from existing customers in FY2017.
The negotiations to recover the loss we sustained in our
Baydonhill (EarthportFX) subsidiary in February 2016 continue and
in July this year, the file was passed to the Crown Prosecution
Service by the Law Enforcement Agencies. We remain committed to the
belief that there was a deliberate act by our customer to defraud
us. This recent development will hopefully give more strength to
our case with our insurers, but there can be no certainty about the
likelihood, amount or timing of any recovery in connection with
this loss.
In January, the Board was pleased to welcome Dr. Caroline Brown
as a Non-Executive Director. Her accounting and financial skills
and experience are providing further strength in the area of
governance and with effect from June, Caroline has assumed the
Chair of the Audit, Risk and Compliance Committee. We are very
grateful for her contribution to the Group and are delighted to
have her on board.
We are pleased to welcome Mike Steinharter as our new Chief
Commercial Officer and were sorry to see four of our key Executive
members leave the firm this year. They have moved on for various
reasons and we wish them all the best in their future endeavours.
These departures illustrate the competitive nature of our market
and demonstrates that Earthport is seen as a place to find
exceptional talent. We now have a streamlined global commercial
organisation and overall the core executive team remains strong and
we are confident that the resources we have provide the necessary
skills, expertise and experience to fulfil our ongoing business
strategy.
I would like to thank our shareholders for their continued
support. Our cash position remained healthy throughout the year and
since the year-end, in October 2017, we announced the placement of
shares raising gross proceeds of GBP25 million. Net proceeds will
be used to drive expansion in current and new geographical
territories, product development and investment in the Group's
operational platform to ensure revenue growth, realise
efficiencies, and attract new clients to its payments platform in
the eCommerce and banking sectors which will accelerate the Group's
progression to profitability and deliver shareholder value.
Earthport's success is driven by the commitment of our people.
On behalf of the Board, I would like to thank Hank and his team for
their contribution to the performance of the Group and we look
forward to working with them in the coming year. The foundations we
have built and the progress we have made during FY2017 gives me
confidence for a successful year ahead.
Chief Executive's Statement
We are well positioned to build on our progress from this past
year. Our goal is to balance our short term targets with our long
term opportunity. Everything we do across the firm will be carried
out with a focus on achieving these goals by making prudent
investments and a continued focus on costs.
FY2017 has been a year of progress for Earthport, which has
resulted in an improved financial performance across the business.
We have confirmed some important partnerships in strategically
significant geographies which will begin to yield positive results
in the coming years. We have plans to seize further growth
opportunities to continue Earthport's strong position as a market
leader in the cross-border payments industry.
We are well positioned to build on our progress from this past
year. Our goal is to balance our short term targets with our long
term opportunity. Everything we do across the firm will be carried
out with a focus on achieving these goals by making prudent
investments and a continued focus on costs.
Throughout the year, we have focussed our efforts on not only
reinforcing our presence in established markets, but also breaking
into new markets. One of the consequences of this pursuit of
growth, is that we have not achieved our target to become cash flow
break-even. As a company that hasn't reached maturity yet and
operating in a rapidly growing market, we must constantly strive to
balance the utilisation of resources at hand against the
opportunity that is presented, and remain flexible without
constraining customer acquisition. We remain committed to achieving
this goal, and our growth progress in FY2017 and the opportunities
on the horizon provide the best positive momentum to lead us to
significant success.
A key tenet to our success in FY2018 will be building and
maintaining valuable relationships with our existing client base in
order to capitalise on the ongoing investments made with them, and
across our expanding banking partner network. Existing clients are
becoming stronger partners as they realise the long-term benefits
and the convenience of having a one-stop shop for all cross-border
payments. A result of this client loyalty is increased transaction
volume in FY2017, across 190+ destination countries in 49 different
currencies, which is more than ever before in the history of the
Company.
Our payment transactions have followed a strong upwards
trajectory. The number of transactions processed by our platform
reached 11.0 million (FY2016: 6.6 million), up 67%, whereas the
payment volume was over $17 billion presenting an increase of 48%
over the previous year. Our state of the art platform, offering
scale to manage millions of cross-border payment transactions is
complemented by versatile interface structures and formats that
ensures Straight Through Processing (STP) rates of greater than
99.5%.
The diversity of our client base is developing in line with our
long-term strategy, and the major banks remain a core target of the
business. These banks drive the majority of our new contract
opportunities and we see further room for expansion. As global
banks continue to reduce their global footprint, consolidating
their core operations, new opportunities arise for a partner that
can deliver a superior service whilst simultaneously reducing
operational complexities within the bank. This is an area where
Earthport sees capacity for long-term growth. In addition,
established and upcoming eCommerce companies and Money Transfer
Organisations continue to fuel our growth and present a segment
that will continue to increasingly drive our business and expansion
strategy in the near future. Finally, traditional players in other
industries such as gaming and retail SMEs continue to support our
business and, as they adjust to the demands of their respective
markets, they find our service to be indispensable to their
business operations.
New client growth has been slightly more muted in FY2017, yet
continues to expand despite being impacted by fluctuations in the
customer acquisition cycle, the often ad-hoc circumstances that
must satisfy the necessary on-boarding and integration
requirements, and the final go-live phase. We have made significant
improvements in streamlining the integration process for larger
institutional clients, and we expect to see the manifestation of
this effort in the customer acquisition rate in FY2018.
Furthermore, eCommerce platforms are more important than ever given
the shorter sales cycles, large customer base, and the ability of
these technology-focussed firms to adopt Earthport's
technology.
Earthport remains well positioned to act as a facilitator of
change in a market that is constantly moving. The increasing
regulatory and compliance burdens placed on financial
organisations, coupled with increasing competition are driving
margins down for the incumbents. It is therefore beneficial for
extant large businesses as well as growing challengers to adopt an
effective and appropriate platform to facilitate a seamless flow of
global payments.
Key Performance Indicators (KPIs)
To measure and control both financial and operational
performance, we consider that the appropriate key performance
indicators for the business are:
-- No. of transactions and payments volume
-- Average revenue per transaction
-- Gross revenue
-- Gross margin
-- Administrative expenses
-- Straight Through Processing (STP) ratio
Financial and Operational Highlights
FY2017 has been a period of significant growth for the Company.
Prudent financial management kept the cost base flat while
achieving a significant increase in revenues. Operating loss
increased by 57% to GBP12.7 million (FY2016: GBP8.1 million) and
our adjusted operating loss (loss before share based payments
charge, exceptional items and unrealised fair value adjustments)
decreased by 39% to GBP6.3 million (FY2016: GBP10.4 million).
As flagged at the interim results in March, we did not achieve
our targeted cash flow break-even this year which was a target
established at the beginning of the year. This is a reflection of
the direction of the business throughout the year: focussed on
growing our client base, and our transaction volumes and entering
into new markets.
In FY2017, our revenues were GBP30.3 million (FY2016: GBP22.7
million) with transactional revenues comprising approximately 95%
of the total. Despite a drop in average revenue per transaction to
GBP2.64 (FY2016: GBP3.12), the increasing contribution of
transactional revenues to overall revenues, compared to the prior
years, is a testament to the improving quality of our revenues. 90%
of the revenue growth was driven by the existing client base. This
demonstrates that our clients are seeing increasing value from the
service provided by Earthport. The rate at which we signed new
clients has slowed when compared with FY2016, but we are still
seeing good levels of growth.
Our adjusted gross margin decreased by 2% to 68%, compared to
70% in FY2016, with an adjusted gross profit (gross profit before
warrant charge) of GBP20.7 million (FY2016: GBP15.9 million), which
was impacted by elevated transaction costs. This is in line with
our expectations.
Gross margin was 67% (FY2016: 67%) after the impact of the
warrant charge, resulting in a gross profit of GBP20.2 million
(FY2016: GBP15.3 million).
Administrative expenses marginally increased by GBP0.6 million
to GBP26.4 million (FY2016: GBP25.8 million). Administrative
expenses as a percentage of revenue were 87%, compared to 113% for
the previous year, mainly due to increase in revenues and cost
efficiency.
Loss after tax increased by 47% to GBP12.1 million (FY2016:
GBP8.2 million). This was mainly driven by unrealised fair value
loss of GBP4.8 million (FY2016: Gain GBP8.2 million) caused
primarily due to lower derivative financial assets at the year
end.
Cash balance at 30 June 2017 amounted to GBP11.9 million,
compared to GBP14.4 million at 30 June 2016.
Net Assets in FY2017 were GBP22.9 million (FY2016: GBP30.5
million), a decrease of 25%, mainly driven by unrealised fair value
loss of GBP4.8 million (FY2016: Gain GBP8.2 million). The loss of
GBP4.8 million was mainly due to lower amount of open contracts
held with banks and clients compared to prior year, resulting in
lower Derivative Financial assets of GBP7.3 million (FY2016:
GBP11.0 million) and higher Derivative Financial liabilities of
GBP3.3 million (FY 2016: GBP2.3 million). The unrealised fair value
loss was also impacted by weaker sterling post Brexit. The
unrealised losses or gains would only be realised in the unlikely
event that any party to the transaction would default.
Research and Development expenditure was GBP2.8 million (FY2016:
GBP2.2 million), an increase of 30% year on year. This investment
will further enhance client experience and efficiency of our
payments platform.
Recovery activities related to the GBP5 million Baydonhill
(EarthportFX) loss continue, involving law enforcement agencies and
insurance companies. Despite all the efforts, there can be no
certainty about the likelihood, amount or timing of any recovery in
connection with this loss.
Business Development Highlight
European Markets
Throughout FY2017 we have continued to make significant progress
in Europe, and have multiple engagements with several European
banks, some of which have more than one product engagement with
Earthport, and we are continuing to see healthy growth in this
market. Ongoing discussions with various existing clients for
multiple product offerings, including Distributed Ledger (DL) and
Faster Payments, are progressing well and we expect our presence in
this market to continue to expand.
Europe is still Earthport's largest market, and represents 55.5%
of Group revenues. The political and economic challenges facing the
European markets are being carefully monitored and we always remain
abreast of the regulatory changes.
North American Markets
We have had a successful year in North America with highlights
including the broadening of our strategic partnership with Bank of
America Merrill Lynch (BAML), by expanding the service which adds
numerous new countries and currencies on the Bank's Cashpro(R)
service. BAML is now able to reach many more payment destinations
by partnering with Earthport, and we are particularly proud of this
high-profile relationship.
Emerging Markets
Earthport has made substantial progress in the emerging markets.
In FY2017, India has been a country where we have achieved many
important milestones. We have gained approval from the Reserve Bank
of India to provide out bound cross-border payment services for
banks.
During the year we signed agreements with Axis Bank and Kotak
Mahindra Bank and expect to add additional bank clients in the
coming year. We also signed an agreement with DBS Bank in
Singapore.
We have a healthy pipeline of prospects across various countries
in Asia. In particular, ongoing regulatory pressures and reduction
in risk appetite by global correspondent banks in the developed
countries are presenting new opportunities for Earthport to serve
emerging markets.
EarthportFX Launch
We continue to make progress aligning our FX capabilities with
our core model, being a principal goal of the relaunching of
EarthportFX. Our corporate clients now benefit from a fully
integrated FX service offering, and the improvement of Treasury
Management and pricing strategy has started to bear fruit, with
more Earthport clients additionally relying on us for the FX
portion of their transactions, thereby increasing the FX attachment
rate.
Partner Bank Network and Product Update
Our partner bank network around the world has been strengthened
with multiple new additions primarily in the Asia-Pacific region.
We are now reaching 65+ countries where we have local clearing
capabilities, and our overall network reaches 190+ countries and
territories, making us the leading provider in the cross-border
payments industry. In FY2017, we added new routes in Bangladesh,
Australia, Nigeria and The Dominican Republic. We aim to have local
clearing capabilities in more than 85 countries by the end of the
2017 calendar year, with the addition of new destinations in Africa
and the Middle East.
Our core product has been enhanced with a number of
improvements, mainly around easier and more simplified integration
of new clients to our platform, by offering a more flexible
Application Programming Interface (API) and streamlining a number
of on-boarding steps. In addition, our Distributed Ledger (DL)
product offering has seen increased adoption and successful
internal testing and launch by one of our largest banking clients,
thereby cementing our unique position in offering a DL service
which can deliver payments globally today. Furthermore, we are now
in a position to offer a receivables capability in a subset of the
countries we service, allowing our clients to receive payments
through our platform with the same agility and ease as when sending
payments. Finally, we have completed the first phase of upgrading
our Treasury Management service, which will further integrate our
FX capabilities to our core product offering.
Market Environment
Market Positioning
Earthport continues to gain recognition as a leading provider of
cross-border payment services, providing an alternative to the
traditional model of correspondent banking. This is evidenced by
our ongoing client wins and our growing pipeline across established
and new geographies.
The cross-border payments industry is a rapidly evolving market,
and Earthport strives to remain ahead of the curve with industry
developments. As the non-cash payment industry grows ever larger,
the scale of the opportunity for Earthport increases. Capgemini's
world payment report documented that the global non-cash
transactions in 2015 jumped to 433 billion. Earthport is well
positioned to act as a facilitator of change in the cross border
payment market. The payments world is fast altering, as trade and
business flows impacting global economic growth shift, there is an
imperative to construct an efficient and effective system that
facilitates the flow of global payments. This is where we have
gained an advantage over potential competitors, as our network is
truly global.
Our established partner bank network is a prized asset and has
given the Group a leading market position. The network is
inherently difficult to replicate and is a significant hurdle for
challengers. The operational experience we have is a product of
fully understanding the intricacies of each market in which we
operate and the regions we serve. This can only be gained with
time, and is a significant competitive barrier to entry.
Risk Management and Initiatives
In FY2017, internal promotions within the firm lead structural
changes allowing the Head of Compliance, Andrew Brown to take on
the newly created wider-reaching Chief Risk Officer (CRO) role. The
new CRO, with Board's active support, has determined to develop and
implement an Enterprise Risk Management (ERM) function, to embed
further the culture of effective risk ownership and management
across the organisation. The ERM model to be adopted will align
with ISO: 31000 (Risk Management). The standard does not require
certification, but referring to the standard in developing and
implementing the framework will allow the Group to prioritise
resources and check progress against externally validated
deliverables, on the road to the fully realised ERM control
framework.
Regulations and Compliance
The international regulatory environment for payments continues
to change. As a subject matter expert, Earthport is able to avoid
unnecessary disruption through its own program of external legal
and regulatory monitoring, a continued commitment to best practice
which pre-empts many supervisory changes, and by endorsing its
values as a collaborative partner with all the stakeholders in the
end-to-end international payment chain, from clients to regulators.
Earthport is ensuring we continue to monitor and satisfy regulatory
and legislative requirements, by proactively working to comply with
the requirements of regulations, directives, and standards such as
the Fourth Anti-Money Laundering Directive (4AMLD), Second Wire
Transfer Regulation (WTR2), Second Payments Services Directive
(PSD2), General Data Protection Regulation (GDPR), Senior Managers
Regime (SMCR, effective 2018), and other requirements such as
stronger user authentication standards.
Safeguarding of Client Funds
The Group's chosen method of safeguarding is 'segregation' of
client funds where possible in a separate 'trust' account with an
authorised credit institution.
Funds held in segregated accounts must be:
-- Client funds only and identified as such
-- Sufficiently distinguished from any account containing Earthport monies
Funds held in segregated accounts cannot:
-- Form any part of Earthport's assets or be recognised on Earthport's balance sheet
-- Be used by the credit institution to offset against Earthport's liabilities or obligations
-- Be attached in the event of the default or insolvency of
either the credit institution or Earthport
Client credit risk is therefore almost fully mitigated for the
Group.
Brexit Update
The UK leaving the EU exposes the business to a number of key
risks; mainly the loss of our intra-country ability to passport our
regulatory status across all the countries within the EEA (European
Economic Area), and the loss of the protections afforded to us and
passed on to our customers (core to our offering) as part of our
location within SEPA (Single European Payments Area).
We are committed to providing the necessary assurance on
continuity of business and same service level to our customers,
despite any adverse implications from Brexit. As such, we are
researching options to ensure we have a 'live' alternative
regulatory status (to our FCA status) should Brexit ultimately mean
the loss of either or both of the above abilities/protections. This
will require significant resource commitment, which we are prepared
to address. Finally, although EU regulators state that
"brass-plating" is not permissible, initial analysis shows that
alternative favourable options are available for passporting.
Management Changes
During the year we saw a number of changes to the structure and
composition of our senior management team. We now have a global
commercial organisation under the leadership of Mike Steinharter as
the new Chief Commercial Officer. This replaces the regional sales
structure that existed previously. Sajeev Vishwanathan, Peter
Klein, and Jon Lear left the firm during the year and Daniel
Marovitz left on 6 October 2017. We established an enterprise risk
function under Andrew Brown as the new Chief Risk Officer.
Awards and Recognitions
FY2017 has been a successful year for Earthport in winning and
being nominated for several awards. These awards demonstrate
industry's recognition and excellence of our solutions, and
include:
-- 'NACHA Best Innovation in ACH', won by Bank of America
Merrill Lynch powered by Earthport, March 2017
-- NACHA Excellence in Payments Award 2017, April 2017
-- Winner of 'Payment Innovation of the Year' 2017 FSTech Awards, March 2017
-- 'Silver' Award in Fintech Finance magazine's inaugural
prize-giving for blockchain offering, January 2017
-- Winner of 'Best International Money Transfer Solution' 2016 Payments Awards, October 2016
Post Year End Placing
On 4 October 2017, Earthport announced that it has successfully
raised gross proceeds of GBP25 million (net GBP24 million) by way
of a placing of 125 million new ordinary shares at a price of 20
pence per ordinary share. Earthport will use the net proceeds to
drive additional growth through expanding its market presence in
existing as well as new areas such as eCommerce, Asia and India
where we have a strong existing pipeline; further product
development and innovation to leverage commercial opportunities
with existing and new clients; and investment in the Group's
operational platform to ensure scalability and efficiency as well
as further strengthening the Group's balance sheet.
Outlook
FY2017 has been a positive year for Earthport, with good
progress made across the business. We are committed to a long-term
strategy of continuing to develop the world's leading cross-border
payment platform, enabling global commerce through effortless money
movement. Through our services we can enable our clients and
partners to accelerate the growth of their cross-border payments
businesses without taking on additional business complexities.
Above all, we place emphasis on enhancing the customer experience
by harmonising our suite of products and services, further
streamlining our internal processes, and simplifying products for
our customer base.
We believe that the wider macro-economic environment is
favourable, and that opportunities for growth remain in both
established markets and developing economies. Current trading,
including core operational metrics in the first quarter of FY 2018,
are broadly in-line with management's expectations and ahead of the
same period in FY 2017. The progress made in FY2017 has established
a solid platform from which we can continue to grow, and we look
forward to FY2018 with confidence in both our operational and
financial performance.
Lastly, I would like to take this opportunity to thank everyone
at Earthport for their continuing hard work. It is the people that
make this business, and our team is positioned for many more
successful years.
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2017
2017 2016
Notes GBP'000 GBP'000
-------------------------------- ------ --------- ---------
Continuing operations:
-------------------------------- ------ --------- ---------
Revenue 3 30,305 22,772
-------------------------------- ------ --------- ---------
Cost of sales - before
warrant charge (9,620) (6,849)
-------------------------------- ------ --------- ---------
Adjusted gross profit 20,685 15,923
-------------------------------- ------ --------- ---------
Cost of sales - warrant
charge (514) (578)
-------------------------------- ------ --------- ---------
Gross profit 20,171 15,345
-------------------------------- ------ --------- ---------
Administrative expenses 5 (26,439) (25,780)
-------------------------------- ------ --------- ---------
Adjusted operating loss (6,268) (10,435)
-------------------------------- ------ --------- ---------
Share-based payment charge (1,664) (620)
-------------------------------- ------ --------- ---------
Unrealised fair value
adjustment 12 (4,797) 8,224
-------------------------------- ------ --------- ---------
Exceptional item - EarthportFX
loss - (5,000)
-------------------------------- ------ --------- ---------
Exceptional item - Impairment
of available for sale
investment - (250)
-------------------------------- ------ --------- ---------
Operating loss (12,729) (8,081)
-------------------------------- ------ --------- ---------
Finance income 3 20
-------------------------------- ------ --------- ---------
Decrease in contingent
consideration liability
due to amendment as per
the CVR deed 136 842
-------------------------------- ------ --------- ---------
Loss before taxation 4 (12,590) (7,219)
-------------------------------- ------ --------- ---------
Income tax income/(expense) 6 532 (996)
-------------------------------- ------ --------- ---------
Loss for the year and
total comprehensive income
attributable to owners
of the Parent (12,058) (8,215)
-------------------------------- ------ --------- ---------
Loss per share attributable
to the owners of the
Parent - basic and fully
diluted 7 (2.51p) (1.74p)
-------------------------------- ------ --------- ---------
There were no items of other comprehensive income for the
year.
Consolidated Statement of Financial Position
As at 30 June 2017
Company number 03428888
2017 2016
Notes GBP'000 GBP'000
------------------------------- ------ ---------- ----------
Assets
------------------------------- ------ ---------- ----------
Non-current assets
------------------------------- ------ ---------- ----------
Goodwill 2,709 2,709
------------------------------- ------ ---------- ----------
Intangible assets 5,089 6,249
------------------------------- ------ ---------- ----------
Property, plant and equipment 371 597
------------------------------- ------ ---------- ----------
8,169 9,555
------------------------------- ------ ---------- ----------
Current assets
------------------------------- ------ ---------- ----------
Trade and other receivables 8 5,028 6,510
------------------------------- ------ ---------- ----------
Derivative financial
assets 13 7,293 11,033
------------------------------- ------ ---------- ----------
Cash and cash equivalents 11,891 14,429
------------------------------- ------ ---------- ----------
24,212 31,972
------------------------------- ------ ---------- ----------
Total assets 32,381 41,527
------------------------------- ------ ---------- ----------
Liabilities
------------------------------- ------ ---------- ----------
Current liabilities
------------------------------- ------ ---------- ----------
Trade and other payables 9 (4,765) (4,794)
------------------------------- ------ ---------- ----------
Derivative financial
liabilities 13 (3,335) (2,250)
------------------------------- ------ ---------- ----------
Contingent consideration - (2,295)
------------------------------- ------ ---------- ----------
(8,100) (9,339)
------------------------------- ------ ---------- ----------
Non-current liabilities
------------------------------- ------ ---------- ----------
Deferred tax liability 10 (1,348) (1,676)
------------------------------- ------ ---------- ----------
(1,348) (1,676)
------------------------------- ------ ---------- ----------
Total liabilities (9,448) (11,015)
------------------------------- ------ ---------- ----------
Net assets 22,933 30,512
------------------------------- ------ ---------- ----------
Equity
------------------------------- ------ ---------- ----------
Share capital 71,878 70,738
------------------------------- ------ ---------- ----------
Share premium 78,799 78,064
------------------------------- ------ ---------- ----------
Interest in own shares (527) (953)
------------------------------- ------ ---------- ----------
Merger reserve 9,200 9,200
------------------------------- ------ ---------- ----------
Share-based payment reserve 13,430 12,164
------------------------------- ------ ---------- ----------
Warrant reserve 2,137 1,623
------------------------------- ------ ---------- ----------
Retained earnings (151,984) (140,324)
------------------------------- ------ ---------- ----------
Equity attributable to
owners of the Parent 22,933 30,512
------------------------------- ------ ---------- ----------
Consolidated Statement of Cashflows
For the year ended 30 June 2017
Restated
2017 2016
Notes GBP'000 GBP'000
------------------------------ ------ --------- ---------
Net cash used in operating
activities 11 (1,720) (12,388)
------------------------------ ------ --------- ---------
Investing activities
------------------------------ ------ --------- ---------
Purchase of property,
plant and equipment (187) (392)
------------------------------ ------ --------- ---------
Capitalised intangible
fixed assets (1,331) (2,265)
------------------------------ ------ --------- ---------
Part refund/(payment)
of contingent consideration 700 (855)
------------------------------ ------ --------- ---------
Net cash used in investing
activities (818) (3,512)
------------------------------ ------ --------- ---------
Financing activities
------------------------------ ------ --------- ---------
Proceeds on exercise
of options - 134
------------------------------ ------ --------- ---------
Net cash from financing
activities - 134
------------------------------ ------ --------- ---------
Net (decrease) in cash
and cash equivalents (2,538) (15,766)
------------------------------ ------ --------- ---------
Cash and cash equivalents
at the beginning of the
year 14,429 30,195
------------------------------ ------ --------- ---------
Cash and cash equivalents
at the end of the year 11,891 14,429
------------------------------ ------ --------- ---------
Consolidated Statement of Changes in Equity
For the year ended 30 June 2017
Attributable to owners of the Parent
---------------- ---------------------------------------------------------------------------
Balance
at 30
June 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
---------------- ------- ------- -------- ------ -------- ------ ---------- ---------
- exercise
of share
options 43 (208) 299 - (1,013) - 1,013 134
---------------- ------- ------- -------- ------ -------- ------ ---------- ---------
- employee
share
options
charge - - - - 620 - - 620
---------------- ------- ------- -------- ------ -------- ------ ---------- ---------
- warrant
charge - - - - - 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
---------------- ------- ------- -------- ------ -------- ------ ---------- ---------
Loss for
the year,
being
total
comprehensive
income
for the
year - - - - - - (12,058) (12,058)
---------------- ------- ------- -------- ------ -------- ------ ---------- ---------
Transactions
with owners
---------------- ------- ------- -------- ------ -------- ------ ---------- ---------
Share-based
payments
---------------- ------- ------- -------- ------ -------- ------ ---------- ---------
- exercise
of share
options - (426) 426 - (398) - 398 -
---------------- ------- ------- -------- ------ -------- ------ ---------- ---------
- employee
share
options
charge - - - - 1,664 - - 1,664
---------------- ------- ------- -------- ------ -------- ------ ---------- ---------
- warrant
charge - - - - - 514 - 514
---------------- ------- ------- -------- ------ -------- ------ ---------- ---------
Issue
of ordinary
shares 1,140 1,161 - - - - - 2,301
---------------- ------- ------- -------- ------ -------- ------ ---------- ---------
Total
transactions
with owners
of the
Parent,
recognised
directly
in equity 1,140 735 426 - 1,266 514 (11,660) (7,579)
---------------- ------- ------- -------- ------ -------- ------ ---------- ---------
Balance
at 30
June 2017 71,878 78,799 (527) 9,200 13,430 2,137 (151,984) 22,933
---------------- ------- ------- -------- ------ -------- ------ ---------- ---------
Merger Reserve
The merger reserve represents the premium attributable to shares
issued in consolidation of the costs of acquisition of subsidiaries
in prior years.
Share-based Payment Reserve
The share-based payment reserve represents the cumulative charge
to date in respect of unexercised share options at the balance
sheet date.
Warrant Reserve
The warrant reserve represents the cumulative charge to date in
respect of unexercised share warrants at the balance sheet
date.
Retained Earnings
The retained earnings represent the cumulative profit and loss
net of distribution to owners.
Notes to the Preliminary Announcement
For the year ended 30 June 2017
1. General Information
Earthport plc is a public limited company incorporated and
domiciled in 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 and company's registered
number is 03428888.
The preliminary financial information does not constitute full
accounts within the meaning of section 434 of the Companies Act
2006 but is derived from accounts for the years ended 30 June 2017
and 30 June 2016, both of which are audited. The preliminary
announcement is prepared on the same basis as set out in the
statutory accounts for the year ended 30 June 2017. While the
financial information included in this preliminary announcement has
been prepared in accordance with the recognition and measurement
criteria of International Financial Reporting Standards (IFRS), as
adopted by the European Union (EU), this announcement does not in
itself contain sufficient information to comply with IFRSs.
The statutory accounts for the year ended 30 June 2017 will be
delivered to the Registrar of Companies following the Company's
Annual General Meeting. Statutory accounts for the year ended 30
June 2016 have been filed with the Registrar of Companies. The
auditor's report for the year ended 30 June 2017 was unqualified
and did not contain any statement under section 498(2) or (3) of
the Companies Act 2006.
2. Going Concern
The Directors believe that the Group has demonstrated further
progress in achieving its objective of positioning itself as an
infrastructure supplier to the global payments industry. Since the
year end, the Group has raised gross proceeds of GBP25 million (net
GBP24 million) through the placing and subscription of 125 million
ordinary shares, The Directors have prepared a cash flow forecast
covering a period extending beyond 12 months from the date of these
financial statements after taking account of anticipated overhead
costs and revenue. Therefore, the Directors consider that it is
appropriate to prepare the Group's financial statements on a going
concern basis, which assumes that the Group is to continue in
operational existence for the foreseeable future.
3. Segment Information
Revenue, loss and net assets/liabilities are all attributable to
two business segments operating from the Group's headquarters in
London, United Kingdom, but measure of profit or loss for each
reportable segment and allocation of assets and liabilities would
be an extremely time intensive task due to the limitation of the
management information system used and the evolving nature of the
business. This is consistent with the information reviewed by the
chief operating decision maker. Revenue categories and segmental
analysis by location of customers is as follows:
2017 2016
Revenue GBP'000 GBP'000
----------------------- --------- ---------
Transactional 28,929 20,689
----------------------- --------- ---------
Professional services 1,376 2,083
----------------------- --------- ---------
30,305 22,772
----------------------- --------- ---------
2017 2016
Revenue GBP'000 GBP'000
------------------- --------- ---------
United Kingdom 14,181 12,507
------------------- --------- ---------
Europe 2,651 1,496
------------------- --------- ---------
North America 11,734 7,284
------------------- --------- ---------
Rest of the world 1,739 1,485
------------------- --------- ---------
30,305 22,772
------------------- --------- ---------
The Group had one (FY2016: one) customer who individually
accounted for more than 10% of the Group's external revenue during
the year.
4. Loss Before Taxation
2017 2016
GBP'000 GBP'000
------------------------------------- --------- ---------
Loss before taxation is stated
after charging:
------------------------------------- --------- ---------
Amortisation of intangible assets 2,491 2,422
------------------------------------- --------- ---------
Depreciation of property, plant
and equipment 413 504
------------------------------------- --------- ---------
Development costs 1,458 233
------------------------------------- --------- ---------
Foreign exchange gain (242) (262)
------------------------------------- --------- ---------
Operating leases:
------------------------------------- --------- ---------
- property 670 480
------------------------------------- --------- ---------
Fees payable to the Company's
Auditor:
------------------------------------- --------- ---------
For the statutory audit of the:
------------------------------------- --------- ---------
- parent and consolidated financial
statements 52 52
------------------------------------- --------- ---------
- subsidiary financial statements 30 30
------------------------------------- --------- ---------
- interim agreed upon procedures 8 10
------------------------------------- --------- ---------
- Other services
------------------------------------- --------- ---------
As provided by RSM UK Audit LLP 11 -
------------------------------------- --------- ---------
Fees payable to associates of
the Company's Auditor:
------------------------------------- --------- ---------
- for tax compliance 13 12
------------------------------------- --------- ---------
- for other services 15 16
------------------------------------- --------- ---------
5. Administrative Expenses
2017 2016
GBP'000 GBP'000
----------------------------------- --------- ---------
Staff and contractor costs 15,284 14,569
----------------------------------- --------- ---------
Travel and entertainment costs 1,148 1,182
----------------------------------- --------- ---------
Professional services costs 1,345 1,294
----------------------------------- --------- ---------
Sales and marketing costs 665 693
----------------------------------- --------- ---------
IT operational costs 2,212 2,303
----------------------------------- --------- ---------
Other operational costs 456 622
----------------------------------- --------- ---------
Other overheads 2,425 2,191
----------------------------------- --------- ---------
Depreciation of property, plant
and equipment 413 504
----------------------------------- --------- ---------
Amortisation of intangible assets 2,491 2,422
----------------------------------- --------- ---------
26,439 25,780
----------------------------------- --------- ---------
6. Income Tax Expense
2017 2016
GBP'000 GBP'000
----------------------------------------- --------- ---------
Current tax (credit) (204) (270)
----------------------------------------- --------- ---------
Deferred tax (credit)/charge (328) 1,266
----------------------------------------- --------- ---------
Total tax (credit)/charge (532) 996
----------------------------------------- --------- ---------
Factors affecting the tax charge
for the year:
----------------------------------------- --------- ---------
Loss before taxation (12,590) (7,219)
----------------------------------------- --------- ---------
Loss before tax multiplied by
effective standard rate of corporation
tax in the UK of 20% (FY2016:
20%) (2,518) (1,444)
----------------------------------------- --------- ---------
Tax effect of:
----------------------------------------- --------- ---------
Expenses not deductible for tax
purposes 6 7
----------------------------------------- --------- ---------
Temporary differences not recognised
for deferred tax purposes 15 19
----------------------------------------- --------- ---------
Share-based payment charge not
recognised for deferred tax purposes 436 535
----------------------------------------- --------- ---------
Losses not recognised for deferred
tax purposes 1,529 1,879
----------------------------------------- --------- ---------
Tax (credit)/charge for the year (532) 996
----------------------------------------- --------- ---------
No deferred tax asset has been recognised in relation to trading
loss carried forward of GBP106 million (FY2016: GBP99.9 million)
due to uncertainty over the timing of its recovery.
7. Loss Per Share
The 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 year.
2017 2016
GBP'000 GBP'000
------------------------------------------ --------- ---------
Loss attributable to equity shareholders
of the Company (12,058) (8,215)
------------------------------------------ --------- ---------
2017 2016
Number Number
------------------------------------- -------- --------
Weighted average number of ordinary
shares in issue (thousands) 483,771 476,674
------------------------------------- -------- --------
Less: own shares held (thousands) (2,763) (5,369)
------------------------------------- -------- --------
481,008 471,305
------------------------------------- -------- --------
2017 2016
---------------------------------- -------- --------
Basic and fully diluted loss per
share (pence) (2.51p) (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 IAS 33,
Earnings Per Share.
8. Trade and Other Receivables
Restated
2017 2016
GBP'000 GBP'000
----------------------------------------- --------- ---------
Trade receivables 2,658 3,569
----------------------------------------- --------- ---------
Other receivables 1,243 2,246
----------------------------------------- --------- ---------
Amount due from subsidiary undertakings - -
----------------------------------------- --------- ---------
Prepayments 1,127 695
----------------------------------------- --------- ---------
At 30 June 5,028 6,510
----------------------------------------- --------- ---------
Trade receivables balance of GBP4.8 million as at 30 June 2016
relating to client forward foreign exchange contracts was restated
as Derivative financial Assets per IAS39 Trade receivables amounted
to GBP2.7 million (FY2016: GBP3.6 million), net of a provision of
GBPnil (FY 2016: GBPnil) for impairment. Movement on the Group
provisions for impairment were as follows:
2017 2016
GBP'000 GBP'000
-------------------------------- --------- ---------
At 1 July - 100
-------------------------------- --------- ---------
Provision for impairment 141 5,231
-------------------------------- --------- ---------
Receivables written off during
the year (141) (5,331)
-------------------------------- --------- ---------
At 30 June - -
-------------------------------- --------- ---------
The average credit period taken on sales of services is 30 days
(FY2016:30 days). No interest is charged on overdue balances. The
Directors consider that the carrying amount of trade receivables
approximates their fair value.
The ageing analysis of trade receivables is as follows:
2017 2016
GBP'000 GBP'000
---------------- --------- ---------
Up to 6 months 2,276 2,900
---------------- --------- ---------
6 to 12 months 157 345
---------------- --------- ---------
Over 1 year 225 324
---------------- --------- ---------
2,658 3,569
---------------- --------- ---------
9. Trade and Other Payables
Restated
2017 2016
GBP'000 GBP'000
--------------------------------------- --------- ---------
Trade payables 1,588 1,235
--------------------------------------- --------- ---------
Other payables 59 312
--------------------------------------- --------- ---------
Amount due to subsidiary undertakings - -
--------------------------------------- --------- ---------
Other taxation and social security 603 334
--------------------------------------- --------- ---------
Accruals and deferred income 2,515 2,913
--------------------------------------- --------- ---------
At 30 June 4,765 4,794
--------------------------------------- --------- ---------
Trade payables balance of GBP0.9 million as at 30 June 2016
relating to client forward foreign exchange contracts was restated
as Derivative Financial Liabilities per IAS39. Trade payables and
accruals principally comprise amounts outstanding in respect of
operating costs. The average credit period taken for trade
purchases is 33 days (FY2016: 35 days). The Directors consider that
the carrying amounts for trade and other payables and accruals
approximate their fair value.
10. Deferred Tax
2017 2016
Deferred tax asset GBP'000 GBP'000
--------------------------------- ---------- ---------
At 1 July - 327
--------------------------------- ---------- ---------
Deferred tax charge released to
income statement - (327)
--------------------------------- ---------- ---------
At 30 June - -
--------------------------------- ---------- ---------
2017 2016
Deferred tax liability GBP'000 GBP'000
--------------------------------- --------- ---------
At 1 July (1,676) (737)
--------------------------------- --------- ---------
Deferred tax credit released to
income statement 328 (939)
--------------------------------- --------- ---------
At 30 June (1,348) (1,676)
--------------------------------- --------- ---------
Deferred tax liabilities (net) (1,348) (1,676)
--------------------------------- --------- ---------
The gross movement on the deferred tax is as follows:
2017 2016
GBP'000 GBP'000
------------------------------------ --------- ---------
At 1 July (1,676) (410)
------------------------------------ --------- ---------
Accelerated capital allowances - (92)
------------------------------------ --------- ---------
Deferred tax credit released to
the income statement 150 150
------------------------------------ --------- ---------
Tax credit on derivative financial
assets and liabilities 178 (1,324)
------------------------------------ --------- ---------
At 30 June (1,348) (1,676)
------------------------------------ --------- ---------
The deferred tax reconciliation on category basis of assets and
liabilities is as follows:
Accelerated Net Derivative
Capital Financial
Deferred tax Allowances Tax Losses Liabilities Total
assets GBP'000 GBP'000 GBP'000 GBP'000
-------------------- ------------ ----------- --------------- ---------
At 1 July 2015 92 - 235 327
-------------------- ------------ ----------- --------------- ---------
Acquisition of
subsidiary (92) - (235) (327)
-------------------- ------------ ----------- --------------- ---------
(Charged)/credited
to the income
statement - - - -
-------------------- ------------ ----------- --------------- ---------
At 30 June 2016 - - - -
-------------------- ------------ ----------- --------------- ---------
Credited/(charged)
to the income
statement - - - -
-------------------- ------------ ----------- --------------- ---------
At 30 June 2017 - - - -
-------------------- ------------ ----------- --------------- ---------
Intangible
Assets Net Derivative
arising Financial
on Acquisition Assets Total
Deferred tax liabilities GBP'000 GBP'000 GBP'000
-------------------------- ---------------- --------------- ---------
At 1 July 2015 (737) - (737)
-------------------------- ---------------- --------------- ---------
Credited/(charged) to
the income statement 150 (1,089) (939)
-------------------------- ---------------- --------------- ---------
At 30 June 2016 (587) (1,089) (1,676)
-------------------------- ---------------- --------------- ---------
Credited/(charged) to
the income statement 150 178 328
-------------------------- ---------------- --------------- ---------
At 30 June 2017 (437) (911) (1,348)
-------------------------- ---------------- --------------- ---------
The potential deferred tax asset arising on the cumulative
losses carried forward is GBP 22.3 million (FY2016: GBP20.3
million) has not been recognised owning to uncertainty as to its
recoverability.
11. Reconciliation of Loss Before Tax to Net Cash Used in
Operating Activities
Restated
2017 2016
GBP'000 GBP'000
--------------------------------------- --------- ---------
Loss before tax (12,590) (7,219)
--------------------------------------- --------- ---------
Amortisation of intangible assets 2,491 2,422
--------------------------------------- --------- ---------
Depreciation of property, plant
and equipment 413 504
--------------------------------------- --------- ---------
Share-based payment and warrants
charge 2,178 1,198
--------------------------------------- --------- ---------
Shares issue in lieu of fee 141 -
--------------------------------------- --------- ---------
R&D tax credit received 205 270
--------------------------------------- --------- ---------
Finance income (3) (20)
--------------------------------------- --------- ---------
Decrease of contingent consideration
liability due to amendment as
per the CVR deed (136) (842)
--------------------------------------- --------- ---------
Impairment of available for sale
investment - 250
--------------------------------------- --------- ---------
Operating cash outflow before
movements in working capital (7,301) (3,437)
--------------------------------------- --------- ---------
Decrease/(increase) in receivables 4,522 (7,538)
--------------------------------------- --------- ---------
Increase/(decrease) in payables 1,056 (1,433)
--------------------------------------- --------- ---------
Cash used by operations (1,723) (12,408)
--------------------------------------- --------- ---------
Finance income 3 20
--------------------------------------- --------- ---------
Net cash used in operating activities (1,720) (12,388)
--------------------------------------- --------- ---------
Prior year adjustment - Initially GBP855,000 was paid during
FY2016 into the Escrow account and once the Company agreed to the
settlement after the year end, GBP700,000 was allocated to other
receivables and GBP155,000 was shown as part payment of the
contingent consideration. Directors confirm that, GBP700,000 was
not treated as cash inflow during the year and it has not distorted
the cash balances at the year end. There was no impact on income
statement and statement of financial position.
A correction has been made in relation to immaterial
presentational error in movement in operating cash flows and
investing cash flows.
12. Unrealised Fair Value Adjustment
In accordance with IAS 39, the Group fair valued all currency
bank accounts, which include client segregated and company
accounts, as well as forward foreign exchange contracts. The fair
value revaluation of financial derivatives resulted in a net
derivative unrealised loss of GBP4.8 million (FY2016: gain of
GBP8.2 million).
2017 2016
GBP'000 GBP'000
----------------------------------- --------- ---------
Unrealised fair value (loss)/gain
on derivatives (4,797) 8,224
----------------------------------- --------- ---------
Total (4,797) 8,224
----------------------------------- --------- ---------
The above mentioned unrealised gains and losses would only be
realised in the unlikely event that any party to the transaction
would default.
13. Derivative Financial instruments
Derivatives Financial Instruments held for trading are
classified as current Asset or Liability. Derivatives financial
assets and liabilities are amounts not yet due under forward
foreign exchange contracts payments executed with clients maturing
between a period of 3 days to 12 months. All Derivative financial
instruments are recognised and measured at fair value through
income statements. Forward foreign exchange contracts held for
trading were as follows:
2017 2016 Restated
--------------------- --------------------- ---------------------
Assets Liabilities Assets Liabilities
--------------------- ------- ------------ ------- ------------
Forward foreign
exchange contracts
- held for trading 7,293 (3,335) 11,033 (2,250)
--------------------- ------- ------------ ------- ------------
Total 7,293 (3,335) 11,033 (2,250)
--------------------- ------- ------------ ------- ------------
As at 30 June 2016, the fair value of client contracts was
classified as trade receivables or payables. The treatment of these
contracts was subsequently reviewed and it was concluded that these
contracts fall within the definition of Derivative Assets and
Liabilities per para 9 of IAS39. This resulted in restatement of
2016 Derivative Assets and liabilities.
14. Events after the Reporting Period
Post year end placing
On 4 October 2017, Earthport announced that it has successfully
raised gross proceeds of GBP25 million (net GBP24 million) by way
of a placing of 125 million new ordinary shares at a price of 20
pence per ordinary share. Earthport will use the net proceeds to
drive additional growth through expanding its market presence in
existing as well as new areas such as Ecommerce, Asia and India
where we have a strong pipeline; further product development and
innovation to leverage commercial opportunities with existing and
new clients; and investment in the Group's operational platform to
ensure scalability and efficiency as well as further strengthening
the Group's balance sheet.
15. Annual report and accounts
Copies of the Annual Report will be available as of 31 October
2017 on the Group's website, www.earthport.com and from the Group's
registered office.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR BCBDGDSXBGRG
(END) Dow Jones Newswires
October 31, 2017 03:00 ET (07:00 GMT)
Earthport (LSE:EPO)
Historical Stock Chart
From Aug 2024 to Sep 2024
Earthport (LSE:EPO)
Historical Stock Chart
From Sep 2023 to Sep 2024