Interim Results

Optimal Payments Plc

Interim Results for the six months ended 30 June 2011

Strong growth in first half - ahead of expectations

Tuesday, 20 September 2011 - Optimal Payments Plc (LSE: OPAY) ("Optimal Payments", the "Group" or the "Company"), a leading online payments provider, today announces its results for the six months ended 30 June 2011.

Operational Highlights

·; Integration and rationalisation substantially complete following transformational acquisition of Optimal Payments' straight through processing ("STP") business in February.

·; Significant organisational structure changes undertaken to improve focus and leverage existing leadership, expertise and experience in each discipline.

·; Synergies identified at time of deal already achieved and full benefits expected to be seen in 2012.

·; Substantial progress made on delivering three year strategic objectives, including growing STP business, extending verticals outside of gaming and establishing a North American presence.

Financial Highlights

·; EBITDA(1) of $6.4m (H1 2010: $6.1m), slightly ahead of Board expectations.

·; Strong growth from STP business (revenue of $36.9m up 418% on H1 2010) both organically and as a result of the acquisition.

·; Stored Value business in line with H1 2010 on an adjusted basis, reflecting change of Asian business model (revenue of $20.1m vs $19.4m(2) in H1 2010).

·; Balance sheet remains solid, with Group cash of $53.8m at 30 June 2011.

·; Well placed for growth in second half and on track to meet Board's full year expectations.

Financial summary (unaudited)

Six months ended 30 June 2011 2010

Revenue (2) 

Straight Through Processing (NETBANX bureau & gateway services) 36.9 11.0

Stored Value (NETELLER eWallet & Net+ cards) 20.1 19.4

Trading revenue 57.0   30.4

Investment income  0.4   0.4

(1) EBITDA is defined as results of operating activities before depreciation and amortisation and 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 their disclosure is relevant to explain the performance of the Group.

 (2) Revenue for H1 2010 adjusted to show impact of change of Asian business model with Asia Pacific revenues of $3.9 million recategorised to STP total revenues from Stored Value total revenues.

Commenting on today's results announcement, Joel Leonoff, President & CEO, said:

"The first six months have seen the Group make strong progress in integrating and rationalising the former NEOVIA and Optimal ('OP') businesses, following the acquisition of the OP business on 1 February 2011. Many of the inherent synergies identified at the time of the deal have been achieved and we expect the full benefits to be seen in our 2012 results. Our organisational structure has undergone significant change as part of the integration process and as a result the Group is well poised for future growth.

The Group ended the first half with EBITDA slightly ahead of Board expectations. The Board expects revenues and EBITDA to be materially higher in the second half. The strong performance of the STP business seen in the first half is expected to continue for the rest of the year, improving in line with typical anticipated seasonal upturns in the second half.

The integration of the two NETBANX platforms is substantially complete and the Company expects further cost savings in the second half from headcount reductions already made and other cost saving initiatives. We are continuing to develop and introduce new and improved functionality for both our NETBANX STP and NETELLER eWallet offerings, focused on innovation and differentiation.

The Board notes the continued consolidation within the alternative payments space and believes the Group is well placed as a major independent player to take advantage of the numerous opportunities as they arise.

The Board is confident about the Group's future and that it is on track to meet its expectations for the full year."

For further information contact:

Optimal Payments Plc + 44 (0) 207 638 9571 (20 Sept)

Joel Leonoff President & CEO

Keith Butcher CFO

Andrew Gilchrist EVP Corporate Affairs + 44 (0) 1624 698 713

Email:  [email protected]

Citigate Dewe Rogerson + 44 (0) 207 638 9571

Angharad Couch / Priscilla Garcia

Canaccord Genuity + 44 (0) 207 050 6500

Simon Bridges / Cameron Duncan

Analyst meeting and further information

Optimal Payments will hold a briefing for invited UK based analysts at the offices of Citigate Dewe Rogerson, 3 London Wall Buildings, London, EC2M 5SY, at 9.30 a.m. today. From this time, copies of the analyst presentation will be available on the Company's website, www.optimalpaymentsplc.com.

* * * * *

About Optimal Payments Plc

Trusted by businesses and consumers in over 180 countries to move and manage billions of dollars each year, Optimal Payments Plc is a leading independent payments company offering a true alternative to banks and card schemes. Merchants use the NETBANX® processing service to simplify how they accept and settle card, direct-from-bank, e-wallets and cash payments; and the NETELLER® payment account to increase margins, capture new customers and increase their lifetime value. Being independent has allowed the company to support tens of thousands of retailers and merchants in many geographies and across multiple industries.

Optimal Payments Plc is quoted on the London Stock Exchange's AIM market, with a ticker symbol of OPAY. Subsidiary company NETELLER (UK) Ltd is authorised and regulated as an e-money issuer by the UK's Financial Services Authority (FSA). For more information about Optimal Payments visit www.optimalpaymentsplc.com or subscribe at www. optimalpaymentsplc.com/feeds/

CEO'S REPORT

Introduction

The first half of 2011 was a significant period in the Company's recent history, including the transformational acquisition of the assets of Optimal Payments Inc. ("OP") for $50m, $20m of which was deferred, effective 1 February 2011 and the Company changing its name from NEOVIA Financial Plc to Optimal Payments Plc a month later.

The acquisition transformed the profile of the business from predominantly a gaming centric eWallet ("NETELLER") with a small STP focus, to a Company where STP represents over 60% of Group revenues (the STP division now rebranded as "NETBANX"). The majority of the Group's revenues are now generated from outside of gaming and the Group has a growing presence in the important North American market.

Group revenues for the six months to 30 June 2011 were up 86% to $57.4m from $30.8m in the first half of 2010 (these results include 5 months of the acquired OP business from 1 February 2011). NETBANX STP revenues represented $36.9m (64%) of that total with the Stored Value business contributing $20.1m, broadly in line with the same period in 2010 taking into account changes to the Group's Asian business model.

Financial summary

EBITDA for the first half of 2011 was up 4% at $6.4m when compared to H1 2010, and up 27% on EBITDA of $5.0m when compared to the second half of 2010, slightly ahead of Board expectations. The Group's EBITDA is typically seasonally weighted to the second half of the year. The Group achieved gross profit of $34.0m (excluding investment income), representing a blended gross margin of 60%. As in previous periods, the Stored Value business achieved a higher gross margin of 85% compared to 46% in the STP business.

Fixed costs were impacted by the strong Canadian dollar, a number of one-time costs associated with integrating the businesses including the rebranding of the websites and the considerable effort associated with integrating the two NETBANX platforms. The net loss for the period was $3.6m which compares with a loss of $0.2m in 2010. The difference is largely down to increased amortisation of intangible assets, including both the new NETELLER Stored Value software platform which went live at the end of 2010, prior to which all costs were capitalised and the acquired OP intangible assets from 1 February 2011.

The Group's Balance Sheet remains strong with $53.8m of cash (including restricted cash of $1.5m and a $4.1m surplus of qualifying liquid assets held for Members) as at 30 June 2011 (31 December 2010: $64.2m). Group cash net of merchant cash was $33.8m.

Integration and rationalisation

A significant amount of effort has gone into integrating and streamlining the two businesses since the acquisition, most notably the appointment of a single Group CEO and the integration of the original NETBANX gateway platform with the more technically advanced OP platform. The process is substantially complete and many of the inherent synergies identified at the time of the deal have been achieved, with the full benefits expected to be seen in the Group's 2012 results.

The Company now operates out of a number of locations including the Isle of Man, Cambridge (UK), Montreal and Calgary (Canada). The Company offers services predominantly to merchants based in Europe and North America, and also has a growing Asian business. Group headcount at 30 June 2011 was 415. Further steps were taken in the first two months of the second half to improve the operational effectiveness of the Group, including further headcount reductions.

As part of the continuing integration process, the Company is streamlining its operations by integrating all aspects of Stored Value and STP. Danny Chazonoff, recently appointed Chief Operating Officer (COO) of the Group, will have an expanded operational role with responsibility for both the Stored Value and STP businesses. As part of this organisational restructuring, the Group has combined the functional departments of Risk, Product Management, IT, Marketing and Sales under single department heads, to

support both STP and Stored Value businesses, improving the Group's ability to serve its customers effectively and leveraging existing leadership, expertise and experience in each area.

Operational summary

The first half of 2011 saw considerable progress for the newly enlarged business. The Group's two core business lines are:

Straight Through Processing (STP) NETBANX payment gateway and bureau service

Stored Value services NETELLER eWallet and Net+ cards

NETBANX: The STP business, NETBANX, which now represents the majority of Group revenues, performed strongly with growing revenues and continuing contract wins. The bureau STP model, which has been successful in North America, is now being more aggressively targeted at European merchants as the Group builds sales and marketing capability in Europe to leverage the proven model and scalable platform (the NETBANX platform is capable of taking considerable additional volume with minimal impact on fixed overheads).

STP revenues were up 418% on H1 2010, largely as a result of the OP acquisition, to $36.9m. Of this, the acquired OP business represented $23.0m (for the five months since acquisition). Excluding these revenues, first half revenues for the original STP business grew by $6.8m to $13.9m (2010: $7.1m). This was partially due to a change in the business model adopted for the Group's Asian-facing business, with the move from an eWallet to a STP solution. However, the Group also saw underlying growth as volumes processed improved and customer retention remained very good.

The integration of the original NETBANX UK platform with the OP Montreal platform has progressed well and since the end of the period the headcount in this division has reduced by 15 people as the Group benefits from improved operational effectiveness.

NETELLER: Stored Value revenues in the first half fell to $20.1m, down from $23.3m, in line with expectations, taking into account the change to the Group's Asian business model. In mid 2010, the Group reorganised the way in which it serves its merchants in Asia, switching from an eWallet solution to an STP model, and, as a result,Stored Value revenues for H1 2010 included $3.9m in revenues from this region. Excluding Asian revenues from H1 2010, Stored Value revenues grew 4% from $19.4m to $20.1m.

The Group expects to see the benefits of the continued investment in the NETELLER Stored Value platform, reflected in improving revenue in the second half of 2011 and into 2012.

The longer term prospects for the eWallet are encouraging. Within gaming, the Company continues to expand the product offering in the second half of 2011. Whilst there have been signs that the US is moving towards a regulated market for online gaming, the timeframe remains uncertain. The Company currently has no gaming facing business in the US. Outside of gaming, the Company is developing a unique 'white label' proposition to major retail merchants, bringing together the core elements of the NETELLER eWallet product in a retail-focused customer offering, enabling an online solution for traditional "bricks and mortar" businesses. We believe this 'white label' proposition represents a significant future opportunity for the Group and we will provide updates in due course.

Focusing on innovation and differentiation

Delivering innovative solutions tailored to merchants' requirements has been the core of the Optimal Payments offering since its foundation 15 years ago. Continued investment in the Group's products and services, incorporating leading edge technology solutions, is essential to maintaining its competitiveness.

Within the STP business, a key part of the integration of the two businesses was the launch of the new NETBANX 6 payment processing service, which went live in the second quarter of 2011. This launch marked a major milestone in the integration of the two STP platforms in Cambridge and Montreal, bringing a number of improvements to NETBANX's customers, including Reebok, Canada's Loto Quebec and the UK's Shop Direct Group. The most significant enhancements allow merchants to completely outsource the holding of private customer data to the PCI-DSS level 1 certified NETBANX service, reducing the risk to those merchants of a data or security breach. Other features include a "frictionless" single click checkout using enhanced tokenisation capabilities, new regional payment types, and the improved handling of multiple currencies, all of which are designed to increase merchant revenues or streamline costs through improved back-office functions.

The Group has also invested heavily in adding functionality to the new NETELLER eWallet platform following its launch at the end of 2010. Recent upgrades have focused on improving the public-facing website, revising sign up processes (including Facebook passporting), driving increased active member conversions and, most importantly, delivering an all-new user experience. With the addition of more countries, currencies, languages and local payment options, the NETELLER eWallet now offers an even more comprehensive solution, whether branded or white labelled, for alternative payments. The Group continues to target significant retail merchants for its future eWallet proposition and these discussions are progressing well.

These initiatives position the Group well for continued growth in the second half of 2011 and onwards into 2012.

Board changes

Mark Mayhew stepped down as President and co-CEO on 31 July 2011. We thank Mark for his considerable efforts during his tenure.

Dividend

The Board has determined that it is in our shareholders' best interests to continue to reinvest the Company's cash to generate growth opportunities. Accordingly, we have decided not to declare a dividend. This policy remains under regular review.

Current trading and outlook

The Group ended the first half with EBITDA slightly ahead of the Board's expectations. The Board expects revenues and EBITDA to be materially higher in the second half. The strong performance of the STP business seen in the first half is expected to continue for the rest of the year, improving in line with typical anticipated seasonal upturns in the second half.

The integration of the two NETBANX platforms is substantially complete and the Group expects to see further cost savings in the second half from headcount reductions already made and other cost saving initiatives. We are continuing to develop and introduce new and improved functionality for both the STP and eWallet offerings, focused on innovation and differentiation.

The Board notes the continued consolidation within the alternative payments space and believes the Group is well placed as a major independent player to take advantage of the numerous opportunities as they arise.

The Board is confident about the Group's future and that it is on track to meet its expectations for the full year.

Joel Leonoff

President and CEO

20 September 2011

Disclaimer

Certain statements made in this announcement are forward-looking statements. These forward-looking statements are not historical facts but rather are based on the Company's current expectations, estimates and projections about its industry, its beliefs and assumptions. Words such as 'anticipates,' 'expects,' 'intends,' 'plans,' 'believes,' 'seeks,' 'estimates,' and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors, some of which are beyond the Company's control, are difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. The Company cautions shareholders and prospective shareholders not to place undue reliance on these forward-looking statements, which reflect the view of the Company only as of the date of this announcement. The forward-looking statements made in this announcement relate only to events as of the date on which the statements are made. The Company will not undertake any obligation to release publicly any revisions or updates to these forward-looking statements to reflect events, circumstances or unanticipated events occurring after the date of this announcement except as required by law or by any appropriate regulatory authority.

See accompanying notes to the consolidated financial statements

See accompanying notes to the consolidated financial statements

See accompanying notes to the consolidated financial statements

See accompanying notes to the consolidated financial statements

1. Basis of presentation

The principal operating currency of the Group is US dollars and accordingly the financial statements have been prepared in US dollars. The interim results for the period ended 30 June 2011 are unaudited and do not constitute statutory accounts within the meaning of the Companies Acts 1931 to 2004. The statutory accounts of Optimal Payments Plc (formerly NEOVIA Financial Plc) for the year ended 31 December 2010 contain an unqualified audit report. Copies can be obtained from the Registered Office of the Company, Audax House, Finch Road, Douglas, Isle of Man, IM1 2PT.

2. Statement of compliance

The condensed consolidated interim financial statements have been prepared in accordance with applicable Isle of Man law and with IAS 34 "Interim Financial Reporting". They do not include all of the information required for the full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 31 December 2010. The accounting policies and methods of computation used in the interim financial statements are consistent with the most recent annual financial statements. These condensed consolidated interim financial statements were approved by the Board of Directors on 19 September 2011.

3. Restricted cash

For NETELLER and NETELLER Asia e-Wallet Merchants, the Group maintains bank accounts with the Company's principal bankers which are segregated from operating funds and which contain funds held on behalf of Merchants, representing pooled Merchant funds. Balances in the segregated accounts are maintained at a sufficient level to fully offset amounts owing to the Group's Merchants. A legal right of offset exists between the balances owing to the Merchants and the cash balances segregated in the client accounts. As such, only the net balance of surplus cash is disclosed on the Statement of Financial Position as Restricted Cash.

At 30 June 2011, the Group had the following balances:

At 31 December 2010, the Group had the following balances:

The Company holds client account funds and balances owing to Merchants on behalf of its wholly owned subsidiary NETELLER Operations Limited.

4. Qualifying Liquid Assets held for Members

In compliance with the Financial Services Authority (FSA) rules and regulations, the Group holds Qualifying Liquid Assets at least equal to the amounts owing to Members. These amounts are maintained in accounts which are segregated from operating funds.

All Qualifying Liquid Assets are held in Neteller (UK) Ltd, which is an FSA regulated entity. Effective 1 December 2010, all non-European Member balances were transferred to Neteller (UK) Ltd.

The Group had the following balances:

5. Receivable from Members and Merchants

Receivable from Members and Merchants consists of balances in the process of collection. The net receivable represents the amounts which are expected to be collected through the normal course of business.

The Group had the following balances:

6. Segmental Reporting

The Group has two segments as disclosed below. For each of the segments, the Group's CEO reviews internal management reports on a monthly basis. The following summary describes the operations in each of the Group's reportable segments.

Stored Value (SV): fees are generated on transactions between Members and Merchants using the NETELLER eWallet and Net+ prepaid cards.

Straight Through Processing (STP): Transaction fees are generated through the NETBANX and NETBANX Asia Gateway platforms where customers make payments directly to Merchants.

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

Variable costs for the period ended 30 June 2011:

Variable costs for the period ended 30 June 2010:

Processing costs and bad debts are the only two costs which vary directly with revenue, and accordingly have been shown separately as variable costs. For the period ended 30 June 2011, variable costs for stored value and straight through processing were 15% (2010: 11%) and 54% (2010: 44%) of revenue respectively.

Major customer

The Group has one Merchant who represented 21% of total fee revenue for the six months ended 30 June 2011 (2010: 14%) across all reportable segments and geographies.

7. Property, Plant & Equipment

During the period, physical assets worth $483,174 were acquired as part of the asset purchase of Optimal Payments. There were no significant disposals or write downs.

8. Intangible Assets

During the period, intangible assets with a value of $19,769,572 were acquired as part of the asset purchase from Optimal Payments (see note 14). The assets acquired are amortised over a period of 3 to 5 years. In addition, $1,898,766 was spent on the Group's Newteller project (the re-platforming of the core operating systems for the stored value business).

9. Goodwill

During the period, goodwill with a value of $30,492,121 was acquired as part of the asset purchase from Optimal Payments (see note 14). The Company performs goodwill and intangible impairment tests at least annually or whenever events or changes in circumstances indicate that the goodwill and intangible carrying value for a business unit may not be recoverable.

10. Restructuring costs

The Group incurred restructuring costs relating the reorganisation of its cost structure. Severance was paid to employees in response to redundancies as a result of the acquisition and the need to achieve operational efficiencies. Restructuring costs were incurred in 2010 and 2011 for specific persons hired to reorganise the business, lease impairment costs and various legal fees.

The Group incurred the following restructuring costs:

11. Share-based payments

The Company's share option plan was adopted 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. No further grants were made during the first six months of 2011 under either the approved or unapproved share option plans following the introduction of the Company's Long Term Incentive Plan ("LTIP") on 18 March 2010.

No consideration is payable on the grant of an option. Options may generally be exercised to the extent that they have vested. Options vest according to the relevant schedule over the grant period following the date of grant. Typically, options have been granted for a three and a half year grant period and have vested in equal thirds on or about the anniversary of the grant date. However, the Directors are permitted under the Plan Rules to alter the vesting schedule and the grant period. The exercise price is determined by the Board of Directors of the Company, and shall not be less than the market value at the date of grant. The option plan provides for a grant price to equal 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. A participant of the share option plan has 30 days following the date of grant to surrender the option and if surrendered, the option will not be deemed granted.

On 29 April 2011 a total of 687,417 options granted on 30 October 2007 with an exercise price of £0.73 expired and on 21 May 2011 a total of 65,692 options granted on 21 November 2007 with an exercise price of £0.72 expired. A total of 12,000 options granted on 30 October 2007 with an exercise price of £0.73 and 160,284 of options granted on 5 December 2008 with an exercise price of £0.53 were forfeited during the six month period ended 30 June 2011.

On 1 April 2011, certain executives of the Group were awarded 3,600,066 LTIP options to acquire ordinary shares in the capital of the Company for £0.0001 per share. These LTIP options vest in one tranche based on future performance related to EBITDA targets for the financial year ending on 31 December 2012.

For the six months ended 30 June 2011 a total of 387,146 options were exercised under the LTIP scheme and 43,333 options were exercised under the unapproved share option scheme. For the six months ended 30 June 2011 $362,978 of expenses related to the LTIP was recognised (2010: $0).

For the six month ended 30 June 2011, the Group recognised total expenses of $464,287 (2010: $384,541) related to the equity-settled share-based payments transactions.

Options recorded under share option expense may not agree to the total options granted in the period. The accounting for options coincides with the day following the last day for acceptance of the option, which is subsequent to their date of grant.

Equity-settled share option plan

The options outstanding at the end of the period had a weighted average remaining contractual life of 0.79 years (31 December 2010: 1.18 years).

The options granted under the 2008 and 2009 share-based payment plan are priced using a trinomial lattice model to reflect factors including employee exercise behaviour, option life and option forfeitures. No options were granted in the six months ended 30 June 2011.

The inputs into the model are as follows:

Expected volatility was determined by calculating the historical volatility of the Company's share price from the time of issue to the date of grant. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations.

12. EBITDA

EBITDA is defined as results of operating activities before depreciation and amortisation and 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 their disclosure is relevant to explain the performance of the Group for the period.

EBITDA is not a financial measure calculated in accordance with IFRS. The presentation on these financial measures may not be comparable to similarly titled measures reported by other companies due to the differences in the ways the measures are calculated.

13. 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.

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.

14. Asset Acquisition

On 1 February 2011, the Group purchased certain assets of Optimal Payments ("OP"), a world class international provider of cardholder-not-present Straight Through Processing ("STP") payment solutions. The assets purchased include computer equipment, furniture & fixtures, leasehold improvements, merchant relationships, intellectual property, non-compete agreements, brand name, and intermediaries relationships. Lease obligations were assumed with respect to certain assets acquired.

The purchase of OP represented a major transformational step for the Group and will enable the Group to enhance its end-to-end STP for Merchants, diversify the Group's business from Stored Value to STP, and to establish a meaningful presence in the North America market.

The purchase price allocation was as follows:

The consideration paid comprised:

Consideration ($)

Equity instruments issued

The fair value of the ordinary shares issued was based on the 31 January 2011 closing price of 64.25 pence.

Contingent consideration

An additional US$20.0 million in cash plus accrued interest will become payable to the selling shareholders ('Vendors') on or about April 2013 pursuant to a loan agreement entered into by the Company with the Vendors on completion, subject to any deductions for price adjustments or indemnity claims under the acquisition agreement. Such amount may also be reduced if certain performance conditions relating to the purchased business are not met in each of the calendar years 2011 and 2012. The Group has included the maximum amount payable as part of the consideration which represents the fair value at acquisition date. Management has assessed the factors used to determine the pay-out and concluded that the total amount payable is probable.

On completion, the Company also entered into a warrant agreement with the Vendors pursuant to which the Vendors will have the right after April 2012 to acquire ordinary shares in the Company at a premium of 6% to the issue price of the Consideration Shares up to a total subscription price of US$10.0 million plus interest, and after April 2013 a further number of ordinary shares at a premium of 12% to the issue price of the Consideration Shares up to a total subscription price of a further US$10.0 million plus interest. The rights under the warrant agreement may only be exercised, however, to the extent that the amount of the applicable subscription price is then owing under the loan agreement and has not been reduced due to failure to meet certain performance conditions or due to indemnity claims or other adjustments under the acquisition agreement. Both the Consideration Shares and any ordinary shares issued as a result of exercise of the warrants will be subject to orderly market provisions for a period of 12 months and 3 months respectively from the date of their issue to the Vendors.

Management bonus

The Group has implemented a Supplementary Bonus scheme, which is not part of the deal consideration, for the senior management of the acquired Optimal Payments (OP) to incentivise and reward them for delivering performance in excess of the Contingent Consideration thresholds above. This scheme is based on EBITDA performance of the business acquired and applies in 2011 and 2012.

Acquisition-related cost

The Group incurred acquisition related costs of $595,192 which were expensed in 2011 (30 June 2010: nil) relating to this transaction.

Shareholder loans

Two existing shareholders, including IIU Nominees Ltd, loaned the Company a total of $8,000,000 to help finance the purchase of assets from Optimal Payments. The loans have a 6% interest rate, are unsecured and due for repayment in January 2013. For the six months ended 30 June 2011 $200,000 of interest has been accrued. The loans are convertible, in part or in full, at a price £0.62699 per share during the first conversion period commencing 20 January 2012 for a period of ten business days, or at a price of £0.66248 during the second conversion period commencing 20 January 2013 for a period of 10 business days.

Taxes paid on acquisition

The Group paid $2,251,533 in taxes on the acquisition of the assets and expects to recover the amount in full.