Interim results

SafeCharge International Group Limited

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

Interim results for the six months ended 30 June 2016

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

Financial highlights

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

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

3Cash flows from operations before working capital adjustments and tax

Current trading and outlook

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

H1 Operational highlights

David Avgi, CEO of SafeCharge, said:

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

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

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

- Ends -

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

Forward looking statements

This announcement includes statements that are, or may be deemed to be, "forward-looking statements". By their nature, forward-looking statements involve risk and uncertainty since they relate to future events and circumstances. Actual results may, and often do, differ materially from any forward-looking statements.

Any forward-looking statements in this announcement reflect SafeCharge's view with respect to future events as at the date of this announcement. Save as required by law or by the AIM Rules for Companies, SafeCharge undertakes no obligation to publicly revise any forward-looking statements in this announcement following any change in its expectations or to reflect events or circumstances after the date of this announcement.

For more information

About SafeCharge

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

www.safecharge.com 

Chairman's statement

This is another set of pleasing financial results. Revenue in the core processing business increased 10% to US$49.2 million, (2015: US$44.9 million) and Adjusted EBITDA increased by 10% to US$16.8 million. Once again growth has been driven through new customer wins and expanded relationships with existing customers and the Group remained highly operationally cash generative. We closed the period having paid the final dividend (US$11.3 million), with US$128.1 million of cash and cash equivalents and no debt.

Operational and corporate milestones

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

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

In July the Company purchased 500,000 of its own shares at an average price of 190 pence per share. These shares will be held in Treasury and used to satisfy the issue of shares in respect of the future exercise of share options.

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

Dividend

Recognising the Group's continued strong cash generation, the Board has recommended an interim dividend of 7US$ cents per share, an increase of 75% compared to H1 2015. This represents approximately 63% of Adjusted EBITDA for the first six months. The Board expects the full year dividend to total 75% of Adjusted EBITDA for the period. The dividend shall be paid in sterling and therefore it will be subject to a conversion exchange rate from US dollars based on a GBP/USD rate of 1.33, being the rate at 4.30 pm on 12th September. As a result, those shareholders entitled to the interim dividend will receive 5.26 pence per share. The interim dividend will become payable on 14th October 2016 to those shareholders on the Company's register as at the record date of 30th September 2016. The ex-dividend date is 29th September 2016.

Strong balance sheet

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

Board and governance

The Board remains committed to ensuring a robust governance structure is in place and, whilst recognising the size of the Company, is working to comply with best practice corporate governance.

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

Outlook

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

Roger Withers

Chairman

13 September 2016

Chief Executive's review

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

Core Payments Business

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

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

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

Partnerships

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

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

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

Product and Technology

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

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

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

Strategy and Corporate Development

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

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

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

Growth and performance

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

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

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

Performance of Acquisitions

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

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

Regulatory and Business Environment

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

Industry Awards

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

David Avgi

Chief Executive Officer

13 September 2016

Financial review

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

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

Revenues

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

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

Margins

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

Expenses

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

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

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

Tax

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

Cash flow

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

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

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

Balance sheet

The Group closed the period with total assets of US$179.3 million (H1 2015: US$173.5 million), including US$128.1million of cash and cash equivalents (H1 2015: US$115.7million). The majority of the Company's cash was held in current accounts and on-call deposit accounts, with US$40 million held on three-month deposit. The Directors believe that SafeCharge's strong balance sheet provides a high degree of operational flexibility as it implements its growth strategy.

The net book value of intangible assets held at 30 June 2016 was US$33.1 million (H1 2015: US$30.8 million) of which US$9.6 million (H1 2015:US$10.8million) related to Goodwill and US$10.3 million (H1 2015:US$11.0 million) related to IP technology, licenses and domains. During the period the Group capitalised US$2.8 million (H1 2015: US$2.5 million) in respect of technology development costs, including the development of the Group's PAY.com pre-paid platform.

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

In July the Company purchased 500,000 of its own shares at an average price of 190 pence per share. These shares will be held in treasury and used to satisfy the issue of shares in respect of future exercise of share options.

The Group closed the period with no debt and is well placed to secure further strategic investment opportunities as it seeks to grow its market-leading offer.

Dividend

The Board has recommended the payment of an interim dividend of 7US$ cents per share, (US$ 10.6 million) representing 63% of Adjusted EBITDA for the period and ahead the Company's existing policy of paying at least 50% of Adjusted EBITDA for the full year. Recognising the Group's continued strong cash generation the Board expects total dividend for the full year to be 75% of Adjusted EBITDA.

The dividend shall be paid in sterling and will therefore be subject to a conversion exchange rate from US dollars based on a GBP/USD rate of 1.33, being the rate at 4.30 pm on 12th September. As a result, those shareholders entitled to the interim dividend will receive 5.26 pence per share. The interim dividend will become payable on 13th October 2016 to those shareholders on the Company's register as at the record date of 30th September 2016. The ex-dividend date is 29th September 2016.

Tim Mickley

Chief Financial Officer

13 September 2016

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

The attached notes are an integral part of the condensed interim financial information.

The attached notes are an integral part of the condensed interim financial information.

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

(*) Represents amount less than one thousand US$

The attached notes are an integral part of the condensed interim financial information.

1. General information

SafeCharge International Group Limited (hereinafter - the 'Company') was incorporated in the British Virgin Islands on 4 May 2006 as a private company with limited liability. On 30 October 2015 the Company re-domiciled to Guernsey. Its registered office is at Dorey Court, Admiral Park, St Peter Port, Guernsey, GY1 2HT. The principal activities of the Company and its subsidiaries (hereinafter - the 'Group') are the provision of payments services, technology and risk management solutions for online and mobile businesses.

2. Significant accounting policies

Basis of preparation

The interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting. The same accounting policies, presentation and methods of computation have been followed in the preparation of these results as were applied in the Company's latest annual audited financial statements.

The financial information for the six month period ended 30 June 2016 does not constitute the full statutory accounts for that period. The Independent Auditors' Report on the Annual Report and Financial Statements for the year ended 31 December 2015 was unqualified, and did not draw attention to any matters by way of emphasis.

Going concern

Based on the Group's cash balances and normal business planning and control procedures, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. For this reason, the Directors continue to adopt the going concern basis in preparing the accounts.

Adoption of new and revised IFRSs

During the current year the Group adopted all the new and revised IFRSs that are relevant to its operations and are effective for accounting periods beginning on 1 January 2016.

(i) Standards and Interpretations adopted by the EU

The impact of these standards on the consolidated financial statements of the Group has not yet been fully assessed by the Board of Directors.

Basis of consolidation

The Group interim consolidated financial statements comprise the financial statements of the Parent company SafeCharge International Group Limited and the financial statements of the subsidiaries.

The interim financial statements of all the Group companies are prepared using uniform accounting policies. All inter‑company transactions and balances between Group companies have been eliminated during consolidation.

Business combinations

Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition‑date fair values of the assets transferred by the Group, liabilities incurred by the Group and the equity interests issued by the Group in exchange for control of the acquiree. Acquisition‑related costs are generally recognised in the statement of comprehensive income as incurred.

At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value at the acquisition date, except that:

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non‑controlling interests in the acquiree, and the fair value of the acquirer's previously held equity interest in the acquiree (if any) over the net of the acquisition‑date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition‑date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non‑controlling interests in the acquiree and the fair value of the acquirer's previously held interest in the acquiree (if any), the excess is recognised immediately in the statement of comprehensive income as a bargain purchase gain.

Non‑controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity's net assets in the event of liquidation may be initially measured either at fair value or at the non‑controlling interests' proportionate share of the recognised amounts of the acquiree's identifiable net assets. The choice of measurement basis is made on a transaction‑by‑transaction basis.

When the consideration transferred by the Group in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition‑date fair value and included as part of the consideration transferred in a business combination. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the 'measurement period' (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date.

The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or a liability is remeasured at subsequent reporting dates in accordance with IAS 39, or IAS 37 Provisions, Contingent Liabilities and Contingent Assets, as appropriate, with the corresponding gain or loss being recognised in the statement of comprehensive income.

When a business combination is achieved in stages, the Group's previously held equity interest in the acquiree is remeasured to fair value at the acquisition date (i.e. the date when the Group obtains control) and the resulting gain or loss, if any, is recognised in the statement of comprehensive income. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit and loss where such treatment would be appropriate if that interest were disposed of.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognised at that date.

Goodwill 

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's share of the net identifiable assets of the acquired undertaking at the date of acquisition. Goodwill on acquisition of subsidiaries is included in ''intangible assets''.

Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Gains and losses on the disposal of an undertaking include the carrying amount of goodwill relating to the undertaking sold. Goodwill is allocated to cash‑generating units for the purpose of impairment testing.

Clients' deposits

All money held on behalf of clients has been excluded from the balances of cash and cash equivalents and amounts due to clients, brokers and other counterparties. Clients' money is not held directly, but is placed on deposit in segregated bank accounts with a financial institution.

Tax

Income tax expense represents the sum of the tax currently payable.

Current tax liabilities and assets are measured at the amount expected to be paid to or recovered from the tax authorities. The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the reporting date and are expected to apply when the deferred tax liabilities/(assets) are settled/(recovered).

Deferred tax is provided in full on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Currently enacted tax rates are used in the determination of deferred tax.

Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred taxes relate to the same fiscal authority.

Intangible assets

Internally‑generated intangible assets ‑ research and development expenditure

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

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

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

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

Externally acquired intangible assets

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

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

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

Amortisation

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

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

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

Available-for-sale investments

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

Significant judgements and estimates

There have been no changes in the nature of the critical accounting estimates and judgements as set out in Note 4 to the Group's audited financial statements for the year ended 31 December 2015.

3. Segmental analysis 

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

Geographical analysis of revenue

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

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

Geographical analysis of non-current assets

4. Earnings per share

5. Finance income and expense

6. Intangible Assets

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

7. Shareholders' equity

Distribution of Dividend

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

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

Fair value hierarchy

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

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

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

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

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

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

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

Assets classified as held for sale include the Group's shares in Visa Europe and the valuation is based on assessment of the consideration entitled to the Group as part of the purchase of Visa Europe by Visa Inc in 2016. These are based on unobservable inputs due to a discount rate of 6% applied to market price of shares to be converted and estimated cash due to be received. In 2015 the unrealised increase in valuation of US$1,384,000 was recorded as an available-for-sale reserve. Sensitivity analysis has been performed on the key inputs of the valuation, being the discount rate and the future cash flows, but this did not result in material differences to fair values recognised or profit or loss. Accordingly, this analysis has not been presented.

In June 2016 the Group received payment of US$1,117,000 as part of the purchase of Visa Europe by Visa Inc. and therefore this realised gain was recycled to the profit or loss/income statement and included within finance income.

The remaining available-for-sale investments are held at fair value and measured based on Level 1 and Level 2 inputs:

In April 2015, the Group invested US$1,000,000 in 2C2P, an unquoted business based in South East Asia. This was in exchange for approximately 2% of issued share capital. 2C2P shares are unquoted. As of 30 June 2016 the shares value was adjusted based on the share price of recent transactions with the unrealised increase in valuation of US$895,000 recorded as an available-for-sale reserve.

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

9. Contingent consideration

Contingent consideration relates to acquisitions that took place during 2015.

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

Contingent consideration arrangements: