30th Mar 2010 07:00
30 March 2010
Earthport plc (the "Company" or the "Group")
Interim Results
Earthport plc, the global payments utility, announces its interim results for the six months ended 31 December 2009.
Revenue for the six months ended 31 December 2009 increased 30.2% to £971,000 compared with £745,000 for the prior year. The majority of this increase was due to increasing transactional volumes and the remainder was due to an increase in new client integrations. Transactions for the period rose by 28.2%.
Gross profit increased by 32.0% to £709,000 compared with £537,000 in 2008 and gross margin rose slightly to 73% compared with 72% for the prior year.
Operating loss rose to £3,341,000 from £2,183,000 for the prior year. This rise was entirely due to the inclusion of the non-cash share-based payment charge in the interim results. This item was not present in the prior year interim results, as the Company's historic practice was not to book this charge in the interim results and to book the entire charge in the full year results. Excluding the share-based payment charge, operating loss decreased by 6.0% to £2,052,000 from £2,183,000 in 2008.
Financing costs for the period under consideration were £269,000. This included a non-cash item of £208,000 related to warrant issuance, with the remainder due to costs associated with the debt financing secured in October 2009. For the prior period, the Company had financing income of £20,000.
Overall, net loss rose to £3,610,000 from £2,163,000 for the prior year. Excluding the share-based payment charge and the non-cash financing charge, net loss fell 2.3% to £2,113,000 from £2,163,000 for the prior year.
The revenue figure for the six month period ended 31 December 2008 has been restated to £745,000 from £1,193,000. This restatement reflects the adjustment that was made in the full year to 30 June 2009 financial statements presented in the preliminary results announced on 20 October 2009.
Review of the Period
The first half was one of strategic underperformance in the business combined with the non-delivery on announced deals. However, the Group did make progress on various business initiatives including the IBM GERS Solution, the expansion of the Middle East footprint, and significant enhancements to the technology platform. The overall results achieved, however, were below the levels of expectation within the Group and the capacity that the platform is capable of delivering.
Post Balance Sheet Events
On 26 January 2010 the Company raised £875,000 through a placing of 7,000,000 new Ordinary Shares at 12.5p per share.
On 18 February the Company raised £4.13m by the issue of equity and Convertible Loan Notes. The Loan Notes converted to 33,000,000 ordinary shares in the Company following passing of the all resolutions at the General Meeting held on 24 March 2010. Following the conversion the Company's share capital is 133,976,340 Ordinary shares.
Board Changes
On 20 October 2009 Mike Harrison moved from Executive Chairman to Non Executive Chairman and Lance Browne CBE became Non Executive Vice Chairman.
On 2 December 2009 Zafarullah (Zafar) Karim was appointed as an Executive Director.
James Bergman resigned from the Board on 20 January 2010 and is no longer involved with the Company in any capacity.
Hank Uberoi joined the Board on 18 February 2010 as an Executive Director.
Outlook
Following the successful fundraisings, changes to the management and to the Board, Earthport is completely focused on building the business. The opportunity for a global cross-border money transfer infrastructure player is significant and the combination of the technology platform, the banking network and the recently raised funding, positions Earthport well to take advantage of this opportunity.
We have made some progress since the end of 2009 and will take whatever steps are necessary to unlock Earthport's significant potential. Whilst there are many challenges and opportunities ahead, the management team is looking to the future with a sense of excitement and confidence.
For further information, please contact:
Earthport 020 7220 9700
Hank Uberoi/Zafar Karim
Financial Dynamics 020 7831 3113
Jonathon Brill / Alex Beagley
Panmure Gordon (Nominated Adviser) 020 7459 3600
Dominic Morley / Stuart Gledhill
CONSOLIDATED INCOME STATEMENT
for the period ended 31 December 2009
|
|
|
Unaudited 6 months ended 31 Dec 2009 |
Unaudited 6 months ended 31 Dec 2008 |
Audited 12 months ended 30 Jun 2009 |
|
Continuing operations: |
Notes |
£'000 |
£'000 |
£'000 |
|
|
|
|
As Restated |
|
|
|
|
|
|
|
|
Revenue |
|
971 |
745 |
1,568 |
|
|
|
|
|
|
|
Cost of sales |
|
(262) |
(208) |
(402) |
|
|
|
------ |
------- |
------- |
|
Gross profit |
|
709 |
537 |
1,166 |
|
|
|
|
|
|
|
Administrative expenses |
|
(2,761) |
(2,720) |
(5,534) |
|
Share-based payment |
|
(1,289) |
- |
(2,162) |
|
Impairment of available-for-sale investment |
|
- |
- |
(160) |
|
|
|
------- |
------- |
------- |
|
Operating loss |
|
(3,341) |
(2,183) |
(6,690) |
|
|
|
|
|
|
|
Finance (costs) / income |
4 |
(269) |
20 |
(325) |
|
|
|
------- |
------- |
------- |
| Loss before taxation |
|
(3,610) |
(2,163) |
(7,015) |
|
|
|
|
|
|
|
Taxation |
|
- |
- |
(280) |
|
|
|
------- |
------- |
------- |
|
Loss attributable to owners of the parent |
|
(3,610) |
(2,163) |
(7,295) |
|
|
|
--------------- |
--------------- |
-------------- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share - basic and diluted |
5 |
(4.20p) |
(2.83p) |
(8.92p) |
|
|
|
--------------- |
-------------- |
-------------- |
|
|
|
|
|
|
CONSOLIDATED BALANCE SHEET
at 31 December 2009
|
|
Unaudited 31 Dec 2009 |
Unaudited 31 Dec 2008 |
Audited 30 Jun 2009 |
|
|
|
Notes |
£'000 |
£'000 |
£'000 |
|
|
|
|
As Restated |
|
|
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
Property, plant and equipment |
|
64 |
95 |
90 |
|
Investments |
6 |
- |
160 |
- |
|
Deferred tax asset |
|
- |
280 |
- |
|
|
|
------- |
------- |
-------- |
|
|
|
64 |
535 |
90 |
|
|
|
------- |
------- |
-------- |
|
Current assets |
|
|
|
|
|
Trade and other receivables |
7 |
1,380 |
1,411 |
1,117 |
|
Cash at bank and in hand |
|
154 |
2,014 |
885 |
|
|
|
------- |
------- |
------- |
|
|
|
1,534 |
3,425 |
2,002 |
|
|
|
------- |
------- |
------- |
|
|
|
|
|
|
|
Total assets |
|
1,598 |
3,960
|
2,092 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Trade and other payables |
8 |
(1,469) |
(2,136) |
(1,250) |
|
Borrowings |
9 |
(1,685) |
(381) |
(407) |
|
|
|
------- |
------- |
------- |
|
|
|
(3,154) |
(2,517) |
(1,657) |
|
|
|
------- |
------- |
------- |
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
|
|
------- |
------- |
------- |
|
Borrowings |
9 |
(73) |
(502) |
(297) |
|
|
|
------- |
------- |
------- |
|
|
|
|
|
|
| Total liabilities |
|
(3,227) |
(3,019) |
(1,954) |
|
|
|
|
|
|
|
|
|
------- |
------- |
------- |
|
NEt (liABILITIES)/ ASSETS |
|
(1,629) |
941 |
138 |
|
|
|
-------------- |
-------------- |
-------------- |
|
|
|
|
|
|
|
Equity |
|
|
|
|
| Capital and reserves |
|
|
|
|
|
Ordinary shares |
10 |
31,955 |
31,210 |
31,810 |
|
Share premium |
11 |
46,975 |
45,279 |
46,774 |
|
Own shares held |
12 |
(101) |
- |
(101) |
|
Merger reserve |
13 |
9,200 |
9,200 |
9,200 |
|
Share-based payment reserve |
14 |
4,716 |
1,354 |
3,440 |
|
Warrant reserve |
15 |
234 |
816 |
233 |
|
Retained earnings |
16 |
(94,608) |
(86,918) |
(91,218) |
|
|
|
--------- |
--------- |
--------- |
|
EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT |
|
(1,629) |
941 |
138 |
|
|
|
--------------- |
--------------- |
--------------- |
CONSOLIDATED STATEMENT OF CASH FLOWS
for the period ended 31 December 2009
|
|
Unaudited 6 months ended 31 Dec 2009 |
Unaudited 6 months ended 31Dec 2008 |
Audited 12 months ended 30Jun 2009 |
|
|
|
Notes |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
NET CASH USED IN OPERATING ACTIVITIES |
17 |
(2,120) |
(2,203) |
(5,116) |
|
|
|
|
|
|
| INVESTING ACTIVITIES |
|
|
|
|
|
Purchase of property, plant and equipment |
|
(11) |
(9) |
(40) |
|
|
------ |
------ |
------ |
|
| NET CASH FLOWS USED IN INVESTING ACTIVITIES |
|
(11) |
(9) |
(40) |
|
|
|
|
|
|
| FINANCING ACTIVITIES |
|
|
|
|
|
Issue of ordinary share capital (net of costs paid) |
|
346 |
789 |
2,783 |
|
Repayment of term loans |
|
(196) |
(218) |
(397) |
|
Issue of new loan note |
|
1,250 |
- |
- |
|
|
------ |
------ |
------ |
|
| NET CASH FLOWS FROM FINANCING ACTIVITIES |
|
1,400 |
571 |
2,386 |
|
|
------ |
------ |
------ |
|
|
NET DECREASE IN CASH AND CASH EQUIVALENTS |
|
(731) |
(1,641) |
(2,770) |
|
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD |
|
885 |
3,655 |
3,655 |
|
|
------ |
------ |
------ |
|
|
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD |
|
154 |
2,014 |
885 |
|
|
|
---------- |
---------- |
---------- |
|
|
|
|
|
|
notes to the INTERIM results
for the period ended 31 December 2009
1. GENERAL INFORMATION
Earthport plc is a public limited company incorporated and domiciled in the England and Wales under the Companies Act 2006. The address of its principal place of business and registered office is 21 New Street, London EC2M 4TP.
2. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
The interim financial information has been prepared on the assumption that the Group is a going concern.
When assessing the foreseeable future the directors have looked at a period of twelve months from the date of approval of the financial statements. The forecast cash-flow requirement of the business is contingent upon the ability of the Group to generate future sales. The directors believe that the Group has demonstrated progress in achieving its objective of positioning the Group as an infrastructure supplier to the global payments industry, and therefore consider that it is appropriate to prepare the Group's financial statements on a going concern basis, which assumes that the Company is to continue in operational existence for the foreseeable future.
3. ACCOUNTING POLICIES
Basis of preparation
The interim financial information is prepared using accounting policies which are consistent with International Financial Reporting Standards ("IFRS'') as adopted by the European Union.
The financial statements have been prepared under the historical cost convention and the principal accounting policies are set out in the 30 June 2009 financial statements.
4. FINANCE COSTS / (INCOME)
|
|
6 months |
6 months |
12 months |
|
|
ended |
ended |
ended |
|
|
31 Dec 2009 |
31 Dec 2008 |
30 Jun 2009 |
|
|
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
Interest payable on unsecured loans |
61 |
(20) |
152 |
|
Other finance costs |
208 |
- |
173 |
|
|
|
|
|
|
|
269 |
(20) |
325 |
|
|
--------------- |
--------------- |
--------------- |
|
|
|
|
|
5. LOSS PER SHARE
|
|
6 months |
6 months |
12 months |
|
|
ended |
ended |
ended |
|
|
31 Dec 2009 |
31 Dec 2008 |
30 Jun 2009 |
|
|
£'000 |
£'000 |
£'000 |
|
|
|
As Restated |
|
|
Loss attributable to owners of the parent |
(3,610) |
(2,163) |
(7,295) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number |
Number |
Number |
|
|
|
|
|
|
Weighted average number of ordinary shares in issue (thousands) |
85,921 |
76,495 |
81,770 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and fully diluted loss per share (pence) |
(4.20p) |
(2.83p) |
(8.92p) |
|
|
|
|
|
|
|
|
|
|
Loss per share is calculated by dividing the loss attributable to equity holders of the company by the weighted average number of ordinary shares in issue during the period.
The loss attributable to ordinary shareholders and weighted average number of ordinary shares for the purposes of calculating the diluted loss per share are identical to those used for basic loss per ordinary share. This is because the exercise of share options and other benefits would have the effect of reducing loss per share and is therefore not dilutive under the terms of IAS33.
6. INVESTMENTS
|
|
|
|
|
|
|
31 Dec 2009 |
31 Dec 2008 |
30 Jun 2009 |
|
|
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
Available-for-sale investment |
- |
160 |
- |
|
|
|
|
|
|
|
|
|
|
7. TRADE AND OTHER RECEIVABLES
|
|
|
|
|
|
|
|
|
|
|
|
31 Dec 2009 |
31 Dec 2008 |
30 Jun 2009 |
|
|
£'000 |
£'000 |
£'000 |
|
|
|
As Restated |
|
|
|
|
|
|
|
Trade receivables |
207 |
861 |
159 |
|
Other receivables |
1,051 |
434 |
864 |
|
Prepayments |
122 |
116 |
94 |
|
|
|
|
|
|
|
1,380 |
1,411 |
1,117 |
|
|
|
|
|
|
|
|
|
|
8. TRADE AND OTHER PAYABLES
|
|
|
|
|
|
|
|
|
|
|
|
31 Dec 2009 |
31 Dec 2008 |
30 Jun 2009 |
|
|
£'000 |
£'000 |
£'000 |
|
|
|
As Restated |
|
|
|
|
|
|
|
Trade payables |
944 |
736 |
704 |
|
Other payables |
71 |
155 |
168 |
|
Other taxation and social security |
255 |
357 |
179 |
|
Accruals and deferred income |
199 |
888 |
199 |
|
|
|
|
|
|
|
1,469 |
2,136 |
1,250 |
|
|
|
|
|
|
|
|
|
|
Trade payables and accruals principally comprise amounts outstanding in respect of operating costs. The directors consider that the carrying amounts for trade and other payables approximate their fair value.
9. BORROWINGS
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
31 Dec 2009 |
31 Dec 2008 |
30 Jun 2009 |
|
|
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
Unsecured loans |
1,685 |
381 |
407 |
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
|
|
|
|
|
31 Dec 2009 |
31 Dec 2008 |
30 Jun 2009 |
|
|
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
Unsecured loans |
73 |
502 |
297 |
|
|
|
|
|
10. SHARE CAPITAL
|
|
|
|
|
|
|
31Dec 2009 |
31 Dec 2008 |
30 Jun 2009 |
|
|
£'000 |
£'000 |
£'000 |
|
Authorised |
|
|
|
|
|
|
|
|
|
169,412,642 ordinary shares of 10p each |
16,941 |
16,941 |
16,941 |
|
|
|
|
|
|
Deferred shares of 7.5p each: 307,449,810 |
23,059 |
23,059 |
23,059 |
|
|
|
|
|
|
Total |
40,000 |
40,000 |
40,000 |
|
|
|
|
|
|
|
|
|
|
|
Issued
|
6 months ended 31 Dec 2009 £'000 |
6 months ended 31 Dec 2008 £'000 |
12 months ended 30 Jun 2009 £'000 |
|
At start of period (87,511,340 ordinary shares of 10p each) |
8,751 |
7,909 |
7,909 |
|
Shares issued in the period |
145 |
242 |
842 |
|
|
|
|
|
|
At end of period (88,966,340 ordinary shares of 10p each) |
8,896 |
8,151 |
8,751 |
|
|
|
|
|
|
Deferred shares of 7.5p each: 307,449,792 |
23,059 |
23,059 |
23,059 |
|
|
|
|
|
|
Total |
31,955 |
31,210 |
31,810 |
|
|
|
|
|
Deferred shares carry no rights to receive any dividend nor other distribution. The holders of the deferred shares have no rights to receive notice, nor attend, speak or vote at any general meeting of the Company. On a return of capital on liquidation or otherwise, the holders of the deferred shares are entitled to receive the nominal amount paid up on the deferred shares after the repayment of £10,000,000 per ordinary share.
Following are the warrants which have been granted under the terms of the Company's fund-raising activities with exercise prices and dates shown in the table below.
11. SHARE PREMIUM
|
|
6 months ended 31 Dec 2009 £'000 |
6 months ended 31 Dec 2008 £'000 |
12 months ended 30 June 2009 £'000 |
|
|
|
|
|
|
At start of period |
46,774 |
44,732 |
44,732 |
|
Premium on shares issued |
201 |
547 |
2,042 |
|
|
|
|
|
|
At end of period |
46,975 |
45,279 |
46,774 |
|
|
|
|
|
12. OWN SHARES HELD
|
|
31 Dec 2009 |
31 Dec 2008 |
30 Jun 2009 |
|
|
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
At start and end of period |
101 |
- |
101 |
|
|
|
|
|
|
|
|
|
|
13. MERGER RESERVE
|
|
31 Dec 2009 |
31 Dec 2008 |
30 Jun 2009 |
|
|
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
At start and end of period |
9,200 |
9,200 |
9,200 |
|
|
|
|
|
The merger reserve represents the premium attributable to shares issued in consideration of the costs of acquisition of subsidiaries in prior years.
14. SHARE BASED PAYMENT RESERVE
|
|
6 months ended 31 Dec 2009 |
6 months ended 31 Dec 2008 |
12 months ended 30 June 2009 |
|
|
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
At start of period |
3,440 |
1,354 |
1,354 |
|
Equity settled share-based payments- employees |
1,289 |
- |
2,162 |
|
Options exercised during the period |
(13) |
- |
(76) |
|
|
|
|
|
|
At end of period |
4,716 |
1,354 |
3,440 |
|
|
|
|
|
|
|
|
|
|
The share-based payment reserve represents the cumulative charge to date in respect of unexercised share options at the balance sheet date.
15. WARRANT RESERVE
|
|
6 months ended 31 Dec 2009 |
6 months ended 31 Dec 2008 |
12 months ended 30 Jun 2009 |
|
|
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
At start of period |
233 |
816 |
816 |
|
Equity settled share-based payments-warrants |
208 |
- |
173 |
|
Warrants exercised during the period |
(207) |
- |
(756) |
|
|
|
|
|
|
At end of period |
234 |
816 |
233 |
|
|
|
|
|
|
|
|
|
|
The warrant reserve represents the cumulative charge to date in respect of unexercised share warrants at the balance sheet.
16. RETAINED EARNINGS
|
|
6 months ended 31 Dec 2009 £'000 |
6 months ended 31 Dec 2008 £'000 |
12 months ended 30 Jun 2009 £'000 |
|
|
|
As Restated |
|
|
|
|
|
|
|
At start of period |
(91,218) |
(84,755) |
(84,755) |
|
Loss for the period attributable to owners of the parent |
(3,610) |
(2,163) |
(7,295) |
|
Options exercised during the period |
13 |
- |
76 |
|
Warrants exercised during the period |
207 |
- |
756 |
|
|
|
|
|
|
At end of period |
(94,608) |
(86,918) |
(91,218) |
|
|
|
|
|
|
|
|
|
|
17. RECONCILIATION OF LOSS BEFORE TAX TO NET CASH OUTFLOW FROM
OPERATING ACTIVITIES
Group
|
|
6 months ended 31 Dec 2009 £'000 |
6 months ended 31 Dec 2008 £'000 As Restated
|
12 months ended 30 Jun 2009 £'000
|
|
Loss before tax |
(3,610) |
(2,163) |
(7,015) |
|
Depreciation of property, plant and equipment |
37 |
52 |
89 |
|
Share-based payment expense |
1,497 |
- |
2,162 |
|
Finance costs |
269 |
- |
325 |
|
Impairment of available- for- sale Investments |
- |
- |
160 |
|
|
|
|
|
|
Operating cash out flow before movements in working capital |
(1,807) |
(2,111) |
(4,279) |
|
|
|
|
|
|
(Increase)/decrease in receivables |
(263) |
1,026 |
1,319 |
|
Increase/(decrease) in payables |
219 |
(1,033) |
(2,004) |
|
|
|
|
|
|
Cash used by operations |
(1,851) |
(2,118) |
(4,964) |
|
Interest paid |
(269) |
(85) |
(152) |
|
|
|
|
|
|
Net cash used in operating activities |
(2,120) |
(2,203) |
(5,116) |
|
|
|
|
|
18. EVENTS SINCE THE BALANCE SHEET DATE
On 26 January 2010 the Company raised £875,000 through a placing of 7,000,000 new Ordinary Shares at 12.5p per share. Three directors, Mike Harrison (1,200,000 shares), Zafar Karim (400,000 shares) and Peter Chappell (280,000 shares) participated in the placing.
On 18 February 2010 the Company raised £4.13m by the issue of equity and Convertible Loan Notes. The Loan Notes converted to 33,000,000 ordinary shares in the Company following passing of the all resolutions at the General Meeting held on 24 March 2010.
19. PUBLICATION OF NON-STATUTORY FINANCIAL STATEMENTS
The results for the six months ended 31 December 2009 and 2008 are unaudited and unreviewed by the auditors. The results for the year ended 30 June 2009 do not constitute statutory financial statements as defined in section 434 of the Companies Act 2006, but have been derived from the full audited financial statements for the year ended 30 June 2009. The report of the auditors on the financial statements for the year ended 30 June 2009 was qualified.
Related Shares:
Earthport