26th Aug 2015 07:06
LONDON (Alliance News) - Optimal Payments PLC on Wednesday said its integration of Skrill, the digital payments rival it acquired in a EUR1.1 billion reverse takeover, is going to plan as its earnings fell in the first half.
Optimal Payments made the update as it reported lower earnings in the first half of 2015 and said its underlying business - excluding acquisitions - has performed well since then, in line with full year expectations. Pretax profit fell to USD4.6 million in the six months ended June 30, from USD27.5 million in the corresponding half the prior year.
Revenue, largely derived from straight through processing fees, increased to USD223.0 million from USD159.1 million, bolstered by the integration of the Meritus and GMA, the US businesses acquired in 2014.
The fall in profit was a result of higher salaries and employee expenses, a doubling in depreciation and amortisation costs to USD14.8 million, a jump in acquisition costs to USD12.4 million from USD1.5 million, and USD4.1 million in restructuring costs. Earnings before interest, tax, depreciation and amortisation increased by 28% to USD49.9 million.
"Our first half results show continued strong performance with growth in NETELLER and NETBANX including a significant contribution from the integration of Meritus & GMA, the US centric businesses we acquired last year," Joel Leonoff, president and chief executive, said in a statement.
The deal for Skrill was given the green light by UK regulators earlier in August, slightly later than originally expected, clearing the way for completion of the acquisition, which Optimal hopes will thrust it into the FTSE 250 index if it is successful in moving to London's Main Market from AIM. Optimal reiterated that it expects to generate in the region of USD40 million of cost saving synergies from the deal by the end of 2016.
Skrill, which is one of the largest pre-paid online voucher providers in Europe with its paysafecard brand, was one of two acquisitions to be completed so far this year, following a USD13 million deal to buy Montreal-based mobile platform developer FANS that concluded in May.
"The acquisitions are set to significantly enhance the product offerings and the scale and market presence of the enlarged group in addition to the benefit of customer and geographic diversification. We continue to assess M&A (mergers and acquisitions) opportunities that provide a strategic fit at the right valuation to further accelerate earnings growth, diversify our business and, most importantly, deliver value to shareholders," Leonoff said.
Leonoff said work is "well underway" on developing a new name and "visual identity for the combined group.
Shares in Optimal Payments were up 3.0% to 271.7702 pence just after the open on Wednesday.
By Samuel Agini; [email protected]; @samuelagini
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