Half-year Report

Paysafe Group plc

Unaudited Interim Results for the 6 months ended 30 June 2016

Exceptional first-half results, further upgrades to FY 2016 revenue and adjusted EBITDA guidance

LONDON (10 August 2016) - Paysafe Group plc (LSE:PAYS, "Paysafe" or the "Group"), a leading global provider of payment solutions, today reports strong growth in the six months ended 30 June 2016.

Financial highlights

Operational highlights

Current trading and outlook

Commenting on the results, Paysafe President and Chief Executive Officer Joel Leonoff said:

"I am delighted with the Group's first half results. We have again delivered very strong growth as our increasingly diversified payments business expands further across pay-before, pay-now and pay-later products and services.

I am particularly pleased with the level of cash generated during the first half. Additionally, by completing the integration of Skrill more rapidly than we initially expected, we have been able to start work on developing our next-generation data platform and global merchant onboarding capabilities earlier than anticipated.

With the exceptional performance delivered in the first half, as well as continued strong trading in the early part of the second half, management and the Board are confident in the Group's prospects for the full year."

* Company compiled consensus, including nine analysts as at 5 August 2016.

1 Pro-forma constant currency growth definition: in the full year 2015 financial results which included the material acquisition of Skrill Group, the Group included unaudited pro-forma constant currency revenue growth by half-year over 2013-2015 as if Skrill and other acquisitions in the period (Ukash, Meritus, GMA, and FANS) had all been owned over the period, and eliminating the impact of changing foreign exchange rates by applying prior period exchange rates to current period amounts. From 1 January 2016 the Group is reverting to the more usual definition of pro-forma organic constant currency growth by showing growth as if companies acquired on or after 1 January 2016 had been owned in the comparative period, and using the same foreign exchange adjustment. This means that all Group pre-2016 published pro-forma growth rates remain the same.

2 Adjusted EBITDA is defined as results of operating activities before depreciation and amortisation and adjusted for exceptional non-recurring items which are defined as items of income and expense of such size, nature or incidence that, in the view of management, should be disclosed to explain the performance of the Group. A reconciliation of Results from operating activities to Adjusted EBITDA can be found in the Group adjusted EBITDA section of the Financial review below.

3 Unaudited adjusted profit after tax and fully diluted earnings per share exclude the impact of foreign exchange losses and gains, acquisition, restructuring and other exceptional costs, share option expenses, fair value gains and losses on share consideration payable and amortisation of acquired intangibles.

4 Reported net debt includes short and long term debt (excluding deferred finance costs), finance leases, deferred cash consideration payable and contingent cash consideration payable offset by cash and cash equivalents. In accordance with IFRS, basic and diluted earnings per share for the comparative period have been re-presented to reflect the impact of the rights issue in May 2015. For the purposes of net debt/last twelve month pro-forma EBITDA calculations, MeritCard's contribution to last twelve month EBITDA has been included at 30 June 2016, following its acquisition on 16 February 2016.

5 Free cash generated before payments working capital. Free cash flow is a non IFRS figure defined as operating cash flow after operating working capital movements, interest, tax and capital expenditure. It excludes payments working capital, being cash flows that are not revenue or costs to the Group, constituted by movements in restricted cash balances, cash held as reserves, settlement assets and merchant processing liabilities. A reconciliation from profit after tax to free cash flow can be found in the cash flow and cash position section of the Financial review below.

Presentation to analysts and investors

President & Chief Executive Officer Joel Leonoff and Chief Financial Officer Brian McArthur-Muscroft will host an audiocast and conference call for analysts and investors at 2.00 pm BST today (9.00am EDT). Please dial in 5-10 minutes prior to the start time using the numbers and conference ID below. The presentation will be available at www.paysafe.com shortly after the release of this announcement.

A replay facility for the call will be available via the Investor Relations section of www.paysafe.com.

About Paysafe

Paysafe provides digital payments and transaction-related solutions to businesses and consumers around the world. Paysafe makes transactions easy by enabling fast, convenient and secure ways to pay-before, pay-now and pay-later through its digital wallets, prepaid solution, payment processing and card issuing & acquiring products and services. We believe that every point of every payment should be relevant, simple and secure. With nearly two decades of experience, Paysafe is trusted by merchants, and by consumers in more than 200 countries and territories, to move and manage money via more than 100 payment types and 40 currencies. Paysafe offers multi-platform products with an emphasis on emerging payment technologies including mobile. Paysafe's brand portfolio includes NETELLER® and Skrill®, MeritCard, paysafecard®, payolution® and FANS Entertainment. Paysafe Group plc shares trade on the London Stock Exchange under the symbol (PAYS.L). For more information, visit: www.paysafe.com

For further information, contact:

Paysafe Group plc

Michelle Singleton, VP Investor Relations

+44 (0) 20 3826 9800 / [email protected]

Gavin Haycock, SVP Corporate Communications

+44 (0) 20 3826 9767 / [email protected]

Tavistock (Financial PR)

Simon Hudson / Mike Bartlett / Andrew Dunn

+44 (0) 20 7920 3150 / [email protected]

Operational review

Group reported revenue and gross margin by division:

Group reported fee revenue - by geography:

Paysafe Group plc has reported strong growth during the first half of 2016 with reported revenue of $487m, up 20% year-on-year on a pro-forma constant currency basis. Adjusted EBITDA increased to $144m from $50m a year ago.

The Group's mission is to make every point of the payment experience relevant, simple and secure. To achieve this, Paysafe is using its evolving payments platform technology and broader capabilities to create further value for merchants and consumers, helping them better manage their money on the move as mobile and digital commerce become increasingly central to everyone's lives worldwide.

2015 was a transformational year for the business with the acquisition of Skrill, the move up to the main market from AIM and the launch of Paysafe's new brand identity in November 2015.

The H1 2016 results reflect the Group's ongoing positive momentum and success in leveraging an enlarged payment product and services offering. This has resulted in strong organic growth.

At an industry level, the regulatory environment continues to evolve and the situation with respect to the UK's decision to leave the European Union is expected to remain fluid for some considerable time. The Group does not expect the outcome of the recent UK referendum to have any material impact on revenue.

In terms of notable first-half business milestones, the Skrill business has been integrated into the Group more rapidly than initially anticipated. Over FY 2016, the Group expects to recognise in excess of the $40m synergies envisaged at the time of the transaction.

Building a platform for future growth

The Skrill integration has been largely completed ahead of schedule and given this the business was able to focus on further developing its technology platform earlier than previously planned. As part of this, the Group has begun development of its next-generation global data platform to deliver enhanced real-time insights and analytics and a global merchant onboarding service.

To support the data platform programme, in June 2016 Paysafe expanded its development hub capabilities, opening a new office in Hyderabad, India. With digital payment experts in open source and big data stack technology and in collaboration with the Group's existing technology development centres in Europe and the Americas, the team will support development of the integrated data platform, providing insights and analytics on consumer payments behaviour.

The data platform is designed to power real-time decision making for merchants to enhance the quality of payment-related services they provide for their end customers. The data capabilities will become part of a Paysafe development centre with integrations to not only payment gateways and the new global merchant onboarding capability but also services for developers to leverage unified APIs and SDKs. This will enable integrated payments through a single point of access into Paysafe's comprehensive and growing product suite.

Mobile payments technology

Ensuring Paysafe's product and service innovations are optimised for mobile is central to the Group's strategic priorities.

As an example of mobile innovation and drawing on the Group's FANS Entertainment mobile e-commerce platform developer and integrator team, Paysafe will shortly launch a new white-label mobile ordering technology for larger merchants and businesses as well as a new branded mobile ordering platform for small to medium-sized enterprises. A soft launch of the new ordering platforms is scheduled for H2 2016. The payment technology innovations are designed to provide a real-time channel for merchants, and particularly small to medium-sized businesses to secure higher revenues, increased operational efficiency, enhanced loyalty and customer retention as well as customised solutions and better insights into their customers' existing and future needs.

People, industry recognition and community engagement

The Group's H1 achievements reflect the drive, expertise and passion of Paysafe's senior management team and staff. This comprises over 30 nationalities across more than 20 locations including the Isle of Man where the Paysafe business is registered, as well as London, Cambridge, Vienna, Sofia, Gibraltar, Montreal, Calgary, Los Angeles, Irvine, Dallas, and Gatineau. During the half, the Group invested in its office infrastructure, including new offices in Hyderabad and Miami.

Paysafe was honoured during H1 2016 to receive further international recognition for its ongoing leadership in payment innovation. Industry accolades included:

Paysafe's values are centred on being open, focused, pioneering and courageous. The values speak to how employees work together within the company, active stakeholder management with the Group's partners and in the community. During the first half the Group's assistance for communities and people included support in North America for the Canadian Red Cross following the Alberta fires and the Montreal Children's Hospital Foundation, Help for Heroes in the UK, and Doctors Without Borders in Austria.

Divisional performance reviews

Paysafe has three divisions: Payment Processing, Digital Wallets and Prepaid.

Payment Processing

Financial review

The Payment Processing division reported revenue increasing 34% from $173.0m in H1 2015 to $231.2m in H1 2016. H1 2016 saw continued strong growth in volumes and revenue in the US business, alongside a small inorganic impact from the acquisition of MeritCard in February 2016.

On a pro-forma constant currency basis, revenue grew 28% year-on-year. Excluding major merchant Asia Gateway revenue, Payment Processing revenue grew 32% on a pro-forma constant currency basis. The major merchant Asia Gateway revenue included revenue of c. $2-3m related to the UEFA European Championship in June 2016.

US dollar volume for Payment Processing increased to $11.2bn (H1 15: $8.2bn pro-forma). Volume represents all transactions including fee generating credits and chargebacks processed by the division. It excludes volume processed for other Group divisions. Revenue represented 2.1% of volume (H1 15: 2.2% pro-forma), the decrease largely driven by the inclusion of MeritCard volumes with a lower risk profile.

Reported divisional gross margins were 38.4% in H1 2016 (H1 15: 37.1%). Reported bad debt as a percentage of revenue has increased from 1.0% in H1 2015 to 2.2% in H1 2016, largely due to a provision for bad debt relating to a merchant and the inclusion of the acquired payolution business which, as a credit business, runs at a higher bad debt percentage.

Operational review

Digital Wallets

Financial review

Reported Digital Wallets revenue increased 195% from $49.8m in H1 2015 to $146.7m in H1 2016, driven by the Skrill acquisition.

On a pro-forma constant currency basis, the Digital Wallets division saw 28% year-on-year revenue growth. There was strong growth in the core businesses alongside a c.$3.5m revenue upside due to the UEFA European Championship in June 2016. Revenues from remittance (person-to-person money transfer) increased year-on-year due to the introduction of fees for this product in the NETELLER wallet brand during H2 2015. Remittance revenue has grown strongly year-on-year, but remains small as a percentage of overall Digital Wallets revenue.

Digital Wallets US dollar volume rose to $11.3bn (H1 15: $9.7bn pro-forma). Wallets volume includes uploads and withdrawals to and from wallets, and member-merchant and member-member transactions. Revenue divided by volume increased to 1.3% (H1 15: 1.2% pro-forma).

Reported gross profit for Digital Wallets for H1 2016 was $112.8m. Reported gross margin was 76.9% in H1 2016 (H1 15: 73.1%8). On a pro-forma basis, gross margin increased from 72% in H1 2015, largely driven by reductions in bad debt.

Reported bad debt as a percentage of revenue has increased from 0.2% in H1 2015 to 1.9% in H1 2016 due to the addition of Skrill's results. However, on a pro-forma basis, bad debt as a percentage of revenue has reduced, reflecting actions taken in H1 2016 to reduce bad debt levels in the Skrill wallet.

Operational review

Prepaid

Financial review

The Prepaid division, comprising our paysafecard business which was acquired with Skrill, contributed $105.5m of reported revenue in H1 2016.

Ukash was acquired by Skrill in March 2015. As part of the valuation of this business, the Group took into account its expected withdrawal from certain territories and services that were previously provided by Ukash. The Ukash business was fully and successfully integrated in H2 2015, and the brand was retired.

Excluding the estimated effect of the discontinued Ukash territories and services, year-on-year constant currency growth for Prepaid was approximately 11%, compared to 10% in H2 2015. In Greece, paysafecard has continued to service merchants with local bank accounts, and as such has seen a recovery of volumes to approximately three quarters of pre-capital controls levels.

Prepaid volume was $1.4bn (H1 15: $1.4bn pro-forma). Volume represents merchant transactions paid for with a prepaid voucher provided by the division. The flat US dollar volume partly reflects the inclusion of discontinued Ukash volumes in the comparative figures.

Prepaid revenue in H1 2016 represented 7.6% of volume (H1 15: 7.7% pro-forma). This percentage is higher than the rest of the Group, and represents the division's position as a channel for online merchant clients to new consumers who might not otherwise wish to, or be able to, transact online.

Gross margin for the Prepaid division was 52.7%, compared to a pro-forma gross margin of 50% in H1 2015. Prepaid cost of sales primarily includes the costs of distribution of vouchers.

Operational review

Group review

The Group reported a statutory profit after tax of $64.5m (H1 15: $2.4m), basic earnings per share of $0.13 (H1 15: $0.016), and fully diluted earnings per share of $0.13 (H1 15: $0.01).

Group revenue and gross profit

During the half, reported revenues increased by 118% year-on-year to $486.7m (H1 15: $223.0m).

On a pro-forma constant currency basis, H1 2016 revenue increased 20% year-on-year (H1 15: 12%). This increase reflects strong growth in the Processing and Digital Wallets divisions, and in Prepaid includes the effect of discontinued Ukash volumes included in the comparative pro-forma figures.

H1 2016 reported fee revenue7 by geography shows revenue from Asia and the rest of the world (outside of Europe and North America) reducing to 26% in H1 2016 from 38% in H1 2015. This reflects the inclusion of Skrill's results in H1 2016. H1 2016 is unchanged from pro-forma H2 2015 fee revenue by geography (45% Europe, 29% North America and 26% Asia and the rest of the world).

The Group earned 45% of its H1 2016 fee revenue7 from online gambling verticals, and 7% from online gaming (H2 15 pro-forma: 44% and 10% respectively). The rest of the Group's fee revenue derives largely from other e-commerce verticals and consumer fees.

Investment income of $3.4m in H1 2016 (H1 15: $0.2m) was derived from interest earned on cash held by the Group on behalf of merchants and members. The increase year-on-year relates to the consolidation of investment income from the Skrill wallet in the current period.

The Group has one merchant representing more than 10% of revenue, which contributed 20% of revenue in H1 2016 (H1 15: 29%).

H1 16 reported gross profit was $260.6m (H1 15: $100.9m8), while gross margin rose to 53.5% from 45.2%8 in H1 2015. The year-on-year increase in reported gross margin reflects a combination of increasing gross margins in the Payment Processing and Digital Wallets divisions and the shift in revenue mix towards the higher margin Digital Wallets and Prepaid divisions on the acquisition of Skrill. On a pro-forma basis, Group gross margin has increased from 51% in H1 2015.

Group adjusted EBITDA

Adjusted EBITDA increased 189% to $144.2m (H1 15: $49.9m) reflecting the acquisition of Skrill and revenue and gross margin growth, with the adjusted EBITDA margin increasing to 29.6% (H1 15: 22.4%), partially reflecting the impact of synergies.

The Group has completed the integration of Skrill ahead of schedule, with the integration team having moved back into business-as-usual operations. Over FY 2016, the Group expects to recognise in excess of the $40m synergies envisaged at the time of the transaction.

A reconciliation of results from operating activities to adjusted EBITDA is shown below:

Adjusted EBITDA non-fee expenses

Excluding share option expenses and non-recurring items9, adjusted EBTIDA operating expenses were 24% of sales, up from 23% of sales in H1 2015.

Salaries and employee expenses as a percentage of revenue were 13%, up from 12% in H1 2015, driven by targeted investment and scaling up of the business partially offset by the realisation of synergy benefits relating to the acquisition of Skrill. In total, the business added c.250 net new heads during H1 2016 over operational and support functions, largely in Sofia.

There is a targeted investment programme in the business, in particular in relation to expansion into new territories and regulatory and security functions. During H1 2016, this programme continued to include investment in personnel in global compliance and risk functions, taking advantage of lower cost staffing locations such as Sofia where possible. Investment in the Prepaid division's expansion into new territories in FY 2016 is expected to be weighted towards H2 2016.

Share-based payments

Share option expense reduced 23% to $5.5m in H1 2016, 8% of total employee expenses (H1 15: 20%). This expense related to the Group's long-term incentive plan (LTIP) and share options allocated to employees and management, and was impacted in the comparative period by one-off new LTIP awards to support executive recruitment which fully vested during FY 2015.

Exceptional expenses

A foreign exchange loss of $6.4m was incurred (H1 15: $5.8m), largely relating to currency fluctuations on the cash balances held by the Group. Balances in a number of currencies are held on deposit for members and merchants. These balances fluctuate due to members and merchants not always choosing to deposit and withdraw funds in the same source currency, and unrealised foreign exchange gains and losses also arise on translation of these amounts at reporting dates in entities with different functional currencies.

Restructuring costs of $4.9m (H1 15: $4.1m) related largely to the continued integration of the Skrill business. Restructuring costs primarily relate to personnel and consultancy costs, including the remaining costs of delivering headcount reductions. Due to the acceleration of the synergies programme, H2 2016 restructuring costs are expected to be minimal, leading to a total restructuring cost significantly lower than the c.$26m originally outlined at the time of the acquisition.

Acquisition costs of $1.0m (H1 15: $12.4m) largely relate to continuing costs in relation to the acquisition of Skrill as well as costs relating to the acquisition of MeritCard and other related activity during the half.

An exceptional $4.5m non-cash net fair value gain was recognised on share consideration payable (H1 15: $1.6m gain). This amount relates to the share consideration payable to the former owners of Meritus. The next payment is due in September 2016.

Depreciation, amortisation, net finance costs and tax

Depreciation and amortisation was $40.6m (H1 15: $14.8m) which included amortisation of acquired intangible assets of $25.7m (H1 15: $8.2m). Amortisation of acquired intangible assets is excluded from our adjusted profit figures.

Net finance costs were $15.2m (H1 15: $2.7m). This included $9.8m of interest costs on long-term debt. The remainder of the net finance charge includes amortisation of financing fees, fees on unused facilities, recognition of unrealised changes in the fair value of the outstanding interest rate swap and $1.0m of proceeds relating to the sale of Visa Europe to Visa Inc..

The tax charge for H1 2016 was $10.0m (H1 15: $2.2m), comprising a current tax charge of $15.0m offset by the unwinding of deferred tax liabilities of $5.0m. On an adjusted basis10, the tax charge was $12.7m (H1 15: $3.3m), an adjusted tax rate of 11.1% (H1 15: 8.0%).

Statutory profit after tax and other comprehensive income

Reflecting the impact of restructuring and acquisition-related costs and foreign exchange, statutory profit after tax was $64.5m (H1 15: $2.4m). Adjusted profit after tax10, excluding the impact of one-off and acquisition-related items, was $101.4m (H1 15: $37.3m).

A gain of $7.5m (H1 15: loss of $0.1m) was recognised through other comprehensive income relating to translation differences on the results, assets and liabilities of non-US dollar denominated entities.

Earnings per share

Statutory basic earnings per share of $0.13 for H1 2016 (H1 15: $0.01) reflect the impact of acquisition, restructuring and exceptional charges. On a fully diluted basis, statutory earnings per share were $0.13 (H1 15: $0.01).

Due to the rights issue, recognised in May 2015, prior period basic and fully diluted earnings per share have been adjusted to take account of the bonus element of the rights issue.

Adjusted fully diluted earnings per share were $0.20, 91% higher than H1 2015. A reconciliation is shown in the table below.

Cash flow and cash position

Group cash and cash equivalents were $160.2m at 30 June 2016 (31 Dec 2015: $117.9m).

Free cash flow11 was $73.1m for H1 2016 (H1 15: $29.9m). Excluding payments working capital cash flows described more fully below, free cash flow was $78.5m (H1 15: $34.1m). Adjusted cash conversion before payments working capital as a percentage of adjusted EBIT was 78% in H1 2016. Increased capital spending as a percentage of revenue contributed to the reduction in cash conversion from 98% in H1 2015.

A reconciliation outlining the components of the cash conversion measure is as follows:

A reconciliation between profit after tax and free cash flow is as follows:

Long term debt

The Group's total long term debt position was $539.9m at 30 June 2016 (31 Dec 2015: $545.4m), excluding deferred financing fees of $19.3m (31 Dec 2015: $21.6m).

The long term debt position reduced from 31 December 2015, due to a repayment in February 2016 of $15.8m, partially offset by a $9.7m increase in the period end balance due to changes in the Euro to US dollar exchange rate and amortisation of deferred financing fees of $2.7m.

During Q2 2016, the margins on the Term A and Term B loans were reduced from 3.00% and 4.00%, respectively, to 2.75% and 3.75%, respectively, following a reduction in adjusted leverage to less than 3x as at 31 December 2015.

In early July 2016, the Group received a reaffirmation of its BB/BB+ company/instrument ratings from Standard & Poor's.

The Group also has a revolving credit facility available of $85m. Letters of guarantee to the value of $9m are secured against this facility.

Covenants on the long term debt include net debt/EBITDA ratio and fixed charge cover. The Group was in full compliance with its debt covenants at 30 June 2016.

Net debt

Reported net debt at 30 June 2016 was $385.9m. Net debt for the purposes of covenants is comparable to reported net debt. Reported net debt/last twelve month pro-forma EBITDA was 1.5 times at 30 June 2016 (2.1 times at 31 December 2015). For the purposes of net debt/last twelve month pro-forma EBITDA calculations, MeritCard's contribution to last twelve month EBITDA has been included at 30 June 2016, following its acquisition on 16 February 2016.

Goodwill

Goodwill was not recognised on the acquisition of MeritCard on 16 February 2016, with virtually the entire purchase price of $20m allocated to finite-life intangible assets. Movements in the goodwill balance of $1,196m at 30 June 2016 ($1,178m at 31 Dec 2015) relate to changes in the US dollar/Euro exchange rate during the period. No impairments were identified on the goodwill balances at 30 June 2016.

Intangible assets and property, plant and equipment

The net book value of intangible assets at 30 June 2016 was $382.4m (31 Dec 2015: $369.9m). During the period, $19.7m of additions related to customer relationships acquired with MeritCard. In addition, a multi-year non-compete asset was recognised in relation to changes in outsourcing arrangements with a strategic supplier. $3.8m of this asset was settled during the period, with $6.2m of deferred payments accrued as at 30 June 2016. Management considered that the carrying value of these and historic acquired assets did not need to be impaired.

During the period, the Group continued to incur development costs to add new functionality to the Group's platforms, and capitalised $13.0m of internal costs excluding the impact of acquisitions. Capitalisation as a percentage of sales increased to 2.7% (H1 2015: 1.5%), due to continued investment in the business. Capitalised development included initial spend in relation to the next generation data platform, global merchant onboarding capability and mobile platform innovation, as well as ongoing enhancement of the core products and platforms.

Property, plant and equipment spend was $7.9m or 1.6% of revenue (H1 15: 1.7%), and included the refurbishment and improvement of a number of the Group's office spaces as part of a continued focus on attracting and retaining the best talent.

Management has determined that no impairment is required in relation to intangible assets.

Current assets

Prepaid expenses and deposits increased to $15.0m at 30 June 2016 from $14.6m at 31 December 2015. Trade and other receivables were $46.1m (31 Dec 2015: $31.2m), the increase including balances acquired with MeritCard and an increase in receivables from a related party.

Acquisition-related liabilities

Share consideration payable in relation to the acquisition of Meritus decreased 8% to $51.5m as at 30 June 2016, due to the revaluation discussed above. In addition, the total period-end share consideration payable balance of $57.0m includes $5.5m payable in relation to the FANS acquisition.

Contingent consideration payable increased to $6.1m from $2.1m at 31 December 2015. The increase reflected the addition of a $4.1m cash-based contingent consideration liability relating to the acquisition of MeritCard in February 2016.

Deferred consideration of $2.1m (31 Dec 2015: $3.3m) relates to cash payable in relation to Skrill's acquisition of Ukash in March 2015 and decreased during H1 2016 due to a scheduled payment to the former owners of Ukash.

Payments working capital items

Cash held as reserves represents the cash the Group is required to deposit with counterparties, which includes acquiring partners and card schemes, in order to transact with these institutions.

Settlement assets represent gross transaction cash at third-party acquirers, banks and processors due to be paid to the Group en route to merchant clients or to fund digital wallets.

Restricted cash balances are the excess of funds held in segregated accounts and certain liquid assets which the Group is required to maintain in respect of the e-money issued to members and merchants over the respective balances payable.

Cash held as reserves, settlement assets and restricted cash balances have increased slightly to $98.1m from $95.4m at 31 December 2015.

The merchant processing liability represents gross transaction cash due to merchants. The liability increased slightly to $17.1m (31 Dec 2015: $16.8m).

Other liabilities

Trade and other payables increased to $96.6m from $88.2m at 31 December 2015. This increase included the addition of balances relating to MeritCard as well as a $6.2m accrued liability relating to the non-compete asset described above.

During H1 16, the income tax provision liability increased from $11.1m to $22.5m, largely due to the recognition of the current tax charge. Net deferred tax liabilities of $40.9m (31 Dec 2015: $42.9m) largely reflect deferred tax liabilities associated with intangible assets recognised on the acquisition of Skrill.

Equity

Ordinary shares were issued during the year in relation to deferred consideration paid on the FANS acquisition and the exercise of various share-based long-term employee incentive options, increasing share capital and share premium.

Off-balance sheet arrangements

Other than as disclosed above, as at 30 June 2016 the Group had no other off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on the consolidated financial condition, results of operations, liquidity, capital expenditures or capital resources.

Performance and currency measures

Pro-forma constant currency

To provide a more transparent analysis of the performance of the Group following the material acquisition of Skrill in FY 2015, revenue commentary was included on a "pro-forma constant currency" basis in the Annual Results for FY 2015. This measure was unaudited, and was stated on an adjusted basis as if the Group had owned all acquisitions throughout the comparative periods ("pro-forma"). It was also calculated by applying prior period foreign exchange rates to current period amounts ("constant currency").

From 1 January 2016 the commentary reverts to the more usual definition of pro-forma organic constant currency growth by showing growth as if companies acquired on or after 1 January 2016 had been owned in the comparative period, and using the same foreign exchange adjustment. This means that all pre-2016 published pro-forma growth rates remain the same. In relation to commentary for the Prepaid division, constant currency pro-forma growth rates are shown excluding the estimated impact of discontinued Ukash territories and services.

Absolute pro-forma revenue and volume dollar figures are only shown for 2013 to 2015 and include all acquisitions in that period.

Foreign exchange

The Group reports in US dollars. Approximately 30% of reported H1 2016 fee revenue7 is denominated in Euros, approximately 40% in US dollars and approximately 5% in British pounds (unchanged from H2 2015 pro-forma).

In addition, in the first five months of FY 2016, approximately 30% of reported total costs are denominated in Euros, approximately 35% in US dollars, approximately 15% in British pounds and approximately 10% in Canadian dollars.

Principal risks and uncertainties

The principal risks facing the Group are incorporated in the Enterprise Risk Management framework which prioritises the risks and assigns responsibility to an executive for monitoring and risk mitigation. The Group has a comprehensive system of controls in place to manage the risks comprising the Enterprise Risk Management framework through a combination of a "top down" approach (driven by the Audit Committee and the Board) and a "bottom up" process (originating from operations).

There are a number of potential risks and uncertainties that could have a material impact on the Group's financial performance and position. These include risks relating to cyber security, data privacy, outsourcing, loss of a major customer, security, fraud and money laundering, transaction processing, product innovation, relationships with financial institutions, acquisitions and partnerships, attracting and retaining the best talent, changes in online gambling and payment processing regulations, failure of a major customer, changes in the online gambling industry and competitive environment, and daily fantasy sports. These risks and our mitigating actions remain as set out on pages 24 to 29 of our 2015 Annual Report.

Directors' responsibility statements

We confirm that, to the best of our knowledge:

This Half Year Report was approved by the Board of Directors and authorised for issue on 9 August 2016.

Cautionary statement

This Half Year Report (the "Report") has been prepared in accordance with the Disclosure Rules and Transparency Rules of the UK Financial Conduct Authority and is not audited. No representation or warranty, express or implied, is or will be made in relation to the accuracy, fairness or completeness of the information or opinions contained in this Report. Statements in this Report reflect the knowledge and information available at the time of its preparation. Certain statements included or incorporated by reference within this Report may constitute "forward-looking statements" in respect of the Group's operations, performance, prospects and/or financial condition. By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions and actual results or events may differ materially from those expressed or implied by those statements. Accordingly, no assurance can be given that any particular expectation will be met and reliance should not be placed on any forward-looking statement. Additionally, forward-looking statements regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. The information contained in this Report is subject to change without notice and no responsibility or obligation is accepted to update or revise any forward-looking statement resulting from new information, future events or otherwise. Nothing in this Report should be construed as a profit forecast. This Report does not constitute or form part of any offer or invitation to sell, or any solicitation of any offer to purchase or subscribe for any shares in the Company, nor should it or any part of it or the fact of its distribution form the basis of, or be relied on in connection with, any contract or commitment or investment decisions relating thereto, nor does it constitute a recommendation regarding the shares of the Company or any invitation or inducement to engage in investment activity under section 21 of the Financial Services and Markets Act 2000. Past performance cannot be relied upon as a guide to future performance. To the extent permitted by law, neither the Company nor any of its affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this Report or its contents or otherwise arising in connection with this Report.

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6 In accordance with IFRS, basic and diluted earnings per share for the comparative period have been re-presented to reflect the impact of the rights issue in May 2015.

7 Interest income of $3.4m (30 Jun 2015: $0.2m) is not included in fee revenue.

8 Prior year cost of sales, gross profit and operating costs have been re-presented within the Digital Wallets division to align presentation of these costs following the acquisition of Skrill. There was no impact to adjusted EBITDA from this re-presentation. Cost of sales for the historic NETELLER business now includes various direct costs, including costs of loyalty, VIP and commission programmes.

9 Non-recurring acquisition and restructuring costs, gains and losses on share consideration payable and forex.

10 A reconciliation from reported profit after tax to adjusted profit after tax and related figures is shown in the Earnings per share section.

11 Free cash flow is a non IFRS figure defined as operating cash flow after working capital movements, interest, tax and capital expenditure. In the consolidated statement of cash flows, working capital cash flow disclosure has been segmented to show movements relating to member and merchant cash which we refer to as payments working capital. Payments working capital represents cash flows that are not revenue or costs to the Group, constituted by movements in restricted cash balances, cash held as reserves, settlement assets and merchant processing liabilities.

12 Adjustment to exclude restructuring cost accrual movements from statutory working capital movement.

13 Adjusted cash conversion is measured as percentage of adjusted EBIT. Adjusted free cash flow therefore excludes one off items, interest costs, and tax.

Accompanying notes form part of these interim condensed consolidated financial statements.

These financial statements were approved and authorised for issue by the Board of Directors and signed on its behalf by;

Accompanying notes form part of these interim condensed consolidated financial statements.

The Directors consider that all results derive from continuing operations.

Accompanying notes form part of these interim condensed consolidated financial statements.

Accompanying notes form part of these interim condensed consolidated financial statements.

Notes to the Interim Condensed Consolidated Financial Statements

for the six months ended 30 June 2016 and 2015

(tabular amounts only are in thousands of U.S. dollars, except per share data)

1. REPORTING ENTITIES

NETELLER plc was a private company incorporated under the laws of the Isle of Man ("IOM") on 31 October 2003 and was registered as a public company on 1 April 2004. NETELLER plc changed its name to NEOVIA Financial Plc on 17 November 2008. On 1 March 2011 NEOVIA Financial Plc changed its name to Optimal Payments Plc. On 10 November 2015, Optimal Payments Plc changed its name to Paysafe Group Plc (the "Company"). The principal activities of the Company and its subsidiaries (together referred to as "the Group") are described in Note 2. The Group includes the Company and its wholly owned subsidiaries as set out under "Basis of consolidation" in Note 4 and "Investment in subsidiaries" in Note 27 to the Group's consolidated financial statements for the year ended 31 December 2015.

At 30 June 2016, the Group had 1,828 employees (31 December 2015: 1,578 employees).

2. NATURE OF OPERATIONS

The Group provides services to businesses and individuals to allow the online processing of direct debit, credit card and alternative payments. Included within the Group's suite of products and services are digital wallets which act as a store of value for e-money, and prepaid vouchers. Paysafe Financial Services Limited (formerly Optimal Payments Limited) (FRN:900015), Skrill Limited (FRN:900001), and Prepaid Services Company Limited (FRN:900021), all wholly-owned subsidiaries of Paysafe Group plc, are authorised by the United Kingdom's Financial Conduct Authority under the Electronic Money Regulations 2011 for the issuing of electronic money and payment instruments. Skrill International Payments Limited (FRN:536371), a wholly-owned subsidiary, is regulated by the Financial Conduct Authority as a payment institution. Paysafe Merchant Services Limited (formerly Optimal Payments Merchant Services Limited), a wholly-owned subsidiary, is licensed by the Financial Services Authority of the Isle of Man (Ref. 1357) to carry on money transmission services, and Paysafecard.com Schweiz GmbH, a wholly-owned subsidiary, is licensed by the Swiss Financial Market Authority as a financial intermediary.

3. BASIS OF PREPARATION

Statement of compliance

The interim condensed consolidated financial statements have been prepared in accordance with applicable IOM law and International Accounting Standard 34 "Interim Financial Reporting" as adopted by the EU. In addition, the interim condensed consolidated financial statements have been prepared in accordance with the accounting policies set out in Note 4 'Significant Accounting Policies' included in the Group's consolidated financial statements for the year ended 31 December 2015.

These interim condensed consolidated financial statements should be read in conjunction with the annual consolidated financial statements of the Group for the year ended 31 December 2015.

The interim condensed consolidated financial statements were authorised for issue by the Board of Directors on 9 August 2016.

Statement of going concern

These interim condensed consolidated financial statements of the Group have been prepared on the going concern basis, as the Board of Directors have a reasonable expectation that the Group and parent have the resources to continue in business for the foreseeable future. In making this assessment, the Directors have considered a wide range of information relating to present and future conditions, including future projections of profitability, cash flows and capital resources.

Change in presentation

Presentation of certain items in the interim condensed consolidated financial statements has been changed in order to provide more reliable and relevant information, and the prior period presentation has been changed accordingly.

The share option expense previously presented as part of salaries and employee expenses is now separately disclosed in the statements of comprehensive income.

4. GOODWILL

The Group had the following balances by cash-generating unit (CGU):

5. INTANGIBLE ASSETS

The Group had the following balances:

6. TRADE AND OTHER RECEIVABLES

The Group had the following balances:

1 Other receivables are primarily composed of sales taxes receivable.

2 This balance relates to a receivable from a former U.S. subsidiary of Skrill Limited whose acquisition has not yet been concluded.

7. RESTRICTED CASH

The Group had the following balances:

8. CASH AND CASH EQUIVALENTS

The Group had the following balances:

9. SHARE CAPITAL

Holders of the ordinary shares are entitled to receive dividends and other distributions, to attend and vote at any general meeting, and to participate in all returns of capital on winding up or otherwise.

9. SHARE CAPITAL (continued)

Holders of the deferred shares are not entitled to vote at any annual general meeting of the Company and are only entitled to receive the amount paid up on the shares after the holders of the ordinary shares have received the sum of £1,000,000 for each ordinary share held by them and shall have no other right to participate in assets of the Company.

Issue of ordinary shares

During the six months ended 30 June 2016, 1,704,114 ordinary shares were issued as a result of the exercise of vested options under the ESOS and LTIP plans (see Note 17).

Additionally, during the six months ended 30 June 2016, 174,000 ordinary shares were issued as a result of the acquisition of FANS Entertainment Inc. (611,663, 3,210,400 and 37,493,053 ordinary shares issued as a result of the acquisition of FANS Entertainment Inc., Meritus Payment Solutions and Skrill Group, respectively, for the year ended 31 December 2015).

10. LONG-TERM DEBT

During the six months ended 30 June 2016, the Group made a repayment of $15,839,000 (14,000,000 Euro) on the Term A facility ($10,000,000 was repaid on the Term facility during the six months ended 30 June 2015).

11. SHARE CONSIDERATION PAYABLE

12. TRADE AND OTHER PAYABLES

The Group had the following balances:

13. OPERATING SEGMENTS

The Group has three operating segments as disclosed below which are based on the Group's main revenue generating activities. For each of the segments, the Group's CEO reviews internal management reports to a gross margin level on a monthly basis. The following summary describes the operations in each of the Group's reportable segments.

Payment Processing: fees are generated through the Paysafe and Paysafe Asia straight-through processing platforms where customers send money directly to merchants, as well as payolution's online payment services, and the FANS white label technology solutions and consulting services.

Digital Wallets: fees are generated on transactions between members and merchants using the NETELLER service and Net+ prepaid cards, and the Skrill Wallet and Skrill prepaid cards.

Prepaid: fees are generated from merchants accepting payments made using paysafecard prepaid vouchers.

Information regarding the results of each reportable segment is included below;

Segmented reporting for the six months ended 30 June 2016:

Segmented reporting for the six months ended 30 June 2015:

13. OPERATING SEGMENTS (continued)

Investment income of $3,366,000 (2015: $232,000) is excluded from the measure of segment revenue and non fee expenses of $170,916,000 (2015: $93,576,000) and finance costs of $15,151,000 (2015: $2,691,000) are excluded from the measure of segment profit as these are not considered by management when assessing the performance of the segments.

Processing costs and bad debts are the only two costs which vary directly with revenue, and accordingly have been shown separately. For the six months ended 30 June 2016, cost of sales for Payment Processing, Digital Wallets and Prepaid were 62% (2015: 63%), 23% (2015: 27%) and 47% (2015: nil) of revenue, respectively.

Major Merchants

The Group has one merchant who represented 20% of total fee revenue for the six months ended 30 June 2016 (2015: 29%) across all reportable segments and geographies. The majority of this revenue comes from Asia.

14. FINANCE INCOME AND COSTS

15. TAX

The Company is incorporated in the IOM and is subject to a tax rate of zero percent. No provision for IOM taxation is therefore required. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.

The Group charge for the period can be reconciled to the profit shown per the interim condensed consolidated statement of comprehensive income as follows:

16. EARNINGS PER SHARE

The calculation of the basic and diluted earnings per share is based on the following data:

The average market value of the Company's shares for purposes of calculating the dilutive effect of share options was based on quoted market prices for the period during which the options were outstanding.

17. SHARE BASED PAYMENTS

The Company adopted the unapproved equity-settled share option plan ("ESOS") pursuant to a resolution passed on 7 April 2004 and amended by the Board on 15 September 2008. The 2008 amendment included the addition of a new 'approved' plan for UK based employees. Under the 'approved' and 'unapproved' plans, the Board of Directors of the Company may grant share options to eligible employees including Directors of Group companies to subscribe for ordinary shares of the Company. The ESOS options granted vest on the third anniversary of the date of grant and lapse a further six months after vesting.

No consideration is payable on the grant of an option. Options may generally be exercised to the extent that they have vested. The exercise price is determined by the Board of Directors of the Company, and shall not be less than the average quoted market price of the Company shares on the three days prior to the date of grant. Subject to the discretion of the Board share options are forfeited if the employee leaves the Group before the options vest.

The Company also adopted the Long Term Incentive Plan ("LTIP") which took effect from 1 January 2010 to eligible employees including Directors of Group companies to subscribe for ordinary shares of the Company. These LTIP options vest in one tranche based on future performance related to EPS and Total Shareholder Return ("TSR") targets determined each year and subject to continued employment over the remaining vesting period. Vested options lapse on the tenth anniversary of the date of grant.

No consideration is payable on the grant of an option. Options may generally be exercised to the extent that they have vested. The exercise price is determined by the Board of Directors of the Company. Subject to the discretion of the Board share options are forfeited if the employee leaves the Group before the options vest.

During the period, the Company adopted the European and North American Save As You Earn ("Sharesave") plans pursuant to a resolution passed on 1 June 2016. Under the European Sharesave plan, the Board of Directors of the Company may grant share options to eligible employees including Directors of Group companies to subscribe for ordinary shares of the Company. The European Sharesave options normally vest on the third anniversary of the date of grant and lapse a further six months after vesting. Under the North American Sharesave plan, eligible employees including Directors of Group companies can subscribe for ordinary shares in the Company at their market value. For every four 'Partnership' shares an eligible employee buys, the Company will grant one free 'Matching' share. The Matching shares normally vest on the third anniversary of the date of grant.

No consideration is payable on the grant of an option or Matching share. The exercise price of the European Sharesave options is determined by the Board of Directors of the Company, and shall not be less than 80% of the average market price of the Company shares prior to the invitation date. Subject to certain good leaver circumstances, share options and Matching shares are forfeited if the employee leaves the Group before the options or Matching shares vest.

For the six months ended 30 June 2016, the Group recognised total expenses of $5,490,000 (2015: $7,095,000) related to share option transactions.

Changes in the number of ESOS, LTIP and Sharesave options outstanding are detailed in the tables below:

ESOS

The ESOS options outstanding at the end of the period had a weighted average exercise price of £2.83 (31 December 2015: £2.18) and a weighted average remaining contractual life of 1.63 years (31 December 2015: 1.63 years). The weighted average share price of ESOS options exercised in the period based on the date of exercise was £3.97 (31 December 2015: £3.81).

17. SHARE BASED PAYMENTS (continued)

LTIP

The LTIP options outstanding at the end of the period had an exercise price of £0.0001 and a weighted average remaining contractual life of 7.7 years (31 December 2015: 8.0 years). The weighted average share price of LTIP options exercised in the period based on the date of exercise was £4.03 (31 December 2015: £3.20).

Sharesave

The European Sharesave options outstanding at the end of the period had an exercise price of £3.00 and a weighted average remaining contractual life of 3.42 years. No European Sharesave options were exercised in the period.

Assumptions used in LTIP and Sharesave options pricing model

The fair value of the "special" options granted under the LTIP was determined using a bespoke Monte Carlo pricing model that takes into account the market-based performance conditions specific to this plan.

The following table shows the principal assumptions used in the valuation: