5 march 2019 earthport plc unaudited interim results€¦ · on 25 january 2019, mastercard uk...

5 March 2019

Earthport plc ("Earthport", the "Company" or the "Group")

Unaudited Interim Results

Earthport (AIM: EPO.L), the leading payment network for cross-border transactions, is pleased to announce its unaudited interim results for the six-month period ended 31 December 2018 (H1 FY 2019). In line with expectations, Earthport has successfully grown the core payments business whilst at the same time restructuring and repositioning the Company and building the capability to increase scale. Financial Highlights

Core payment business revenues, comprising payment transaction revenues and specifically attached foreign exchange revenues, were 18.8% higher at £11.9 million (H1 FY18: £10.0 million), reflecting higher transaction volumes and changes in both pricing and mix of business

Total revenues grew by 4.5% to £16.1 million (H1 FY18: £15.4 million) with FX business revenues and professional services revenues down on prior year

Group gross margins in the period were 63%, compared to 61% in H1 FY18

Adjusted operating loss for the period of £7.3 million (H1 FY18: £4.8 million) before share based payment charges and unrealised fair value loss. Within this total is £3.0 million of one-off, transformation and business restructuring costs included in administrative expenses – the underlying adjusted operating loss with these costs removed would be £4.3 million (H1 FY18: £4.8 million)

Cash and cash equivalents at 31 December 2018 of £23.1 million (30 June 2018: £28.3 million)

Operational Highlights

Appointment of new CEO, CFO and executive management team

Executed an enterprise wide re-organisation, streamlining and focusing the Group to support the delivery of the Board approved strategy

Further extended Earthport payment network with 2 new routes increasing the total to 88 and providing the capability to make payments in 200+ countries

Significant steps in IT transformation to enable efficient scaling up in the core payment business

Redesigned commercial proposition to tackle platform and marketplace client opportunities

Selectively increased core payment business customer base with targeted new signings whilst increasing average payment transaction volume and average revenue per payment client

Cost per transaction in the core payment business fell to £0.71 in H1 FY19 from £0.96 in H1 FY18

Payment volumes totalled 6.5 million in the period (H1 FY18: 5.0 million), representing growth of 30%, with December volumes setting a new monthly record

Value of payments processed by Earthport increased 12% to £5.8 billion (H1 FY18: £5.2 billion) Amanda Mesler, CEO of Earthport, commented: “I am delighted with the progress of the Company, which is in line with our expectations and the revised strategy we set out to achieve. The team have worked incredibly hard and it is great to report growth in payment volumes and improving efficiency in the first six months of the financial year. Furthermore, Q3 trading has started extremely well with a new record volume of payments for January.”

For further information, please contact:

Earthport Plc 020 7220 9700 Amanda Mesler, Chief Executive Officer Alexander Filshie, Chief Financial Officer

Newgate 020 7653 9840 Bob Huxford / Ian Silvera / Imogen Humphreys

N+1 Singer (Nomad & Joint Broker) 020 7496 3000 Mark Taylor / James White

Shore Capital (Joint Broker) 020 7408 4090 Toby Gibbs / Stephane Auton

About Earthport Earthport provides cross-border payment services to banks and businesses. Through a single relationship with Earthport, clients can seamlessly manage payments to almost any bank account in the world, reducing costs and complexity to meet their customers' evolving expectations of price, speed and transparency. Earthport offers clients access to global payment capability in 200+ countries and territories, with local Automated Clearing House (“ACH”) options in 88 countries and an evolving suite of currencies and settlement options. Earthport continues to invest in the establishment of in-country bank partnerships across the world, bringing together its deep market and regulatory expertise in order to maintain compliant and commercially competitive services. The result is a global payments network accessed via a single relationship, delivering significant cost and operating efficiencies for banks and businesses servicing high volumes of lower value payments. Headquartered in London with regional offices in New York, Miami, San Francisco and Singapore. Earthport is a public company, traded on AIM, the London Stock Exchange’s international market for smaller, growing companies (AIM: EPO). Please visit www.earthport.com for more information.

CHIEF EXECUTIVE OFFICER’S REPORT Overview The first half of FY19 saw significant change take place at Earthport, with the appointment of a new management team, a new strategy and significant transformation of the business to focus on specific segments and opportunities. The core payments business, which had experienced challenges in FY18, demonstrated accelerated growth and improved margins. The FX business continued to trade well despite higher competitive pressures and lower margins. Professional services revenues reduced significantly following changes in this segment of the business. Offer from Visa On 27 December 2018, Visa International Service Association ("Visa") announced a recommended all cash offer for the entire issued and to be issued ordinary share capital of Earthport at a price of 30 pence per share (the "Original Visa Offer"). On 25 January 2019, Mastercard UK Holdco Limited ("Mastercard") announced its all cash offer for the entire issued and to be issued ordinary share capital of Earthport at a price of 33 pence per share (the "Mastercard Offer"). The board of Earthport withdrew its recommendation of the Original Visa Offer and recommended the Mastercard Offer. On 8 February 2019, Visa increased its all cash offer to a price of 37 pence per share (the "Increased Visa Offer"). Earthport withdrew its recommendation of the Mastercard Offer and is now recommending the Increased Visa Offer. Board Changes I joined the Board as CEO on 1 July 2018 and Alexander Filshie joined as CFO on 23 July 2018. On 22 October 2018, Phil Hickman, the Chairman, and Hank Uberoi, a Non-Executive Director and former CEO, both stepped down as Directors. Sunil Sabharwal was appointed as Interim Chairman on the same date for six months with a mandate to seek a new permanent Chairman. Following these changes the membership of standing Board Committees was updated to include only independent Non-Executive Directors, as recommended by the QCA corporate governance code. The activity of the Nominations Committee in seeking a permanent Chairman was suspended when the Company became the subject of a takeover offer in December 2018. Strategic Progress During the period under review, Earthport set out a strategy to build a scalable international payment business. This involves focusing on clearly defined customer segments and investing in a technology roadmap to increase capacity and efficiency, whilst creating an organisation capable of significantly higher volumes of business.

Financial and operating performance Revenues from the core payment business, comprising payment transaction revenues and specifically attached foreign exchange revenues, were 18.8% higher at £11.9 million (H1 FY18: £10.0 million), reflecting higher transaction volumes and changes in both pricing and mix of business. This was achieved through deeper relationships with customers, increasing the average monthly payment volume per customer by 36% to 15,000. The normalised average revenue per payment was £1.91 in H1 FY19 versus £1.93 in H1 FY18 (see note 4). FX revenues attached to the payments business were £3.2 million (H1 FY18: £2.8 million), which represented 27% of the payments revenue (H1 FY18: 28%). The FX business reported £4.1 million revenues in the period, a 9% reduction when compared to H1 FY18 (£4.5 million), resulting from increased competition and general margin pressure. Professional services revenue of £0.1 million was materially lower (H1 FY18: £0.9 million) following the completion at the end of FY18 of a major multi-year agreement with a large customer. Total revenues grew by 4.5% to £16.1 million (H1 FY18: £15.4 million). Cost of sales remained flat at £5.9 million (H1 FY18: £5.9 million) with cost per transaction in the core payment business falling to £0.71 in H1 FY19 from £0.96 in H1 FY18. Gross margins in the period improved to 63% (H1 FY18: 61%). Administrative expenses were £17.5 million for the period, an increase of 22% (H1 FY18: £14.3 million). This included £3.0 million of one-off, transformation and business restructuring costs (see note 6). Business as usual expenses were £14.5 million, representing a 1% increase in underlying costs. The underlying ratio of administrative expenses to total revenue fell from 93% to 90%. In H1 FY19 a new organisational structure was implemented which resulted in 71 roles either being restructured or redefined, with some additional investment in roles to deliver the execution of the strategic vision. This resulted in a non-recurring cost of £0.7 million (see note 6). Staff costs overall increased 14% to £9.1 million (H1 FY18 £8.0 million), including these restructuring expenses. Average full time equivalent (FTE) staff numbers in H1 FY19 was 214 (H1 FY18: 224). Adjusted operating loss for the period was £7.3 million (H1 FY18: £4.8 million) before share based payment charges and unrealised fair value loss. Within this total is £3.0 million of one-off, transformation and business restructuring costs included in administrative expenses (see note 6) – the underlying adjusted operating loss with these costs removed would be £4.3 million (H1 FY18: £4.8 million). The reported operating loss for the period was £8.3 million (H1 FY18: £5.1 million). Cash at the end of December was £23.1 million (30 June 2018: £28.3 million) reflecting one-off non-recurring costs, operating losses and new investment into the operating platforms for the future in line with the IT roadmap. Customers By focusing on understanding and meeting customer needs, we have been able to expand and deepen the relationship between Earthport and some of our largest customers, increasing the average payment business revenue per customer significantly. Six new payment customers commenced activity during the period. There were no significant customer exits from the core payment business during the period.

Earthport network

The network of payment routes was increased with the addition of 2 new routes taking the total to 88 and maintaining Earthport’s position as the leading cross border payment network with direct connectivity via partner banks and institutions to local ACHs (automated clearing houses).

Payment transaction volumes totalled 6.5 million in the period (H1 FY18: 5.0 million), representing growth of 30%, with December volumes setting a new monthly record. The value of payments processed by Earthport increased 12% to £5.8 billion (H1 FY18: £5.2 billion). Investment and technology

Earthport invested £1.1 million in the period (H1 FY18: £0.7 million) as part of the IT roadmap.

Brexit response Whilst the final time and outcome from the UK’s negotiations with the European Union remains uncertain, Earthport has continued to make contingency plans which will enable the Company to serve its customers even in the event that passporting from the UK, under the Payment Regulations, is no longer permissible. Earthport has established new operating subsidiaries in the European Economic Area and continues to make preparations for the eventual outcome of the negotiation process. Accounting restatement and controls As reported fully in the FY18 Annual Report and Accounts, Earthport made restatements to financial results reported for prior periods. This followed a review of accounting for derivative financial assets and liabilities, which identified a number of errors which were corrected in the FY18 financial statements. Equivalent restatements have been made to H1 FY18 financial results in order to provide comparatives for the H1 FY19 period. Details are provided in note 14. As explained in the Annual Report and Accounts, the restatements made do not affect the cash position of the Group or the delivery of the strategy. Summary In line with expectations, Earthport has grown the core payments business whilst at the same time restructuring and repositioning the Company and building the capability to increase scale. Q3 trading has started extremely well with a new record volume of payments for January. The team has delivered a fantastic result in changing our organisation and demonstrating the energy, commitment and enthusiasm for our customer business that makes me very proud. Amanda Mesler Chief Executive Officer 5 March 2019

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the six months ended 31 December 2018

Unaudited Restated

Unaudited

Audited 6 months 6 months 12 months ended ended ended 31 Dec 2018 31 Dec 2017 30 Jun 2018 Continuing operations: Notes £’000 £’000 £’000 Revenue 4 16,109 15,409 31,857 Cost of sales 5 (5,939) (5,947) (11,607)

Gross profit 10,170 9,462 20,250 Administrative expenses 6 (17,454) (14,306) (28,691)

Adjusted operating loss (7,284) (4,844) (8,441) Share-based payment charge (721) (1,010) (1,367) Unrealised fair value (loss)/gain 14 (331) 728 757 Exceptional item – EarthportFX loss recovery - - 600

Operating loss (8,336) (5,126) (8,451) Finance income/(cost) 24 (3) 33

Loss before taxation (8,312) (5,129) (8,418) Income tax credit/(expense) 51 (85) 40

Loss for the period and total comprehensive income attributable to owners of the parent

(8,261) (5,214) (8,378)

Loss per share attributable to the owners of the parent – basic and diluted

7 (1.33p) (1.01p) (1.45p)

There were no items of other comprehensive income for the period.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION at 31 December 2018

Unaudited Restated

Unaudited

Audited as at as at as at 31 Dec 2018 31 Dec 2017 30 Jun 2018 Notes £’000 £’000 £’000 Non-current assets Goodwill 2,709 2,709 2,709 Intangible assets 4,489 4,336 4,521 Deferred tax asset 337 225 318 Property, plant and equipment 359 477 473

7,894 7,747 8,021

Current assets Trade and other receivables 8 6,549 5,627 6,224 Derivative financial assets 2,981 1,862 2,453 Cash and cash equivalents 23,111 30,634 28,279

32,641 38,123 36,956

Total assets 40,535 45,870 44,977 Current liabilities Trade and other payables 9 (6,071) (3,683) (4,128) Derivative financial liabilities (4,755) (2,986) (4,042)

(10,826) (6,669) (8,170)

Non-current liabilities Deferred tax liability (432) (496) (464)

(432) (496) (464)

Total liabilities (11,258) (7,165) (8,634)

NET ASSETS 29,277 38,705 36,343

Capital and reserves Share capital 10 85,409 84,378 85,409 Share premium 11 89,469 90,367 89,707 Interest in own shares 12 (530) (304) (768) Merger reserve 9,200 9,200 9,200 Share-based payment reserve 13,541 13,941 13,186 Warrant reserve 1,988 2,469 3,007 Retained earnings (169,800) (161,346) (163,398)

EQUITY ATTRIBUTABLE TO 29,277 38,705 36,343

OWNERS OF THE PARENT

CONSOLIDATED STATEMENT OF CASH FLOWS for the six months ended 31 December 2018 Unaudited Unaudited Audited 6 months 6 months 12 months ended ended ended 31 Dec 2018 31 Dec 2017 30 Jun 2018 Notes £’000 £’000 £’000 Net cash used in operating activities 13 (4,089) (4,868) (5,561) Investing activities Purchase of property, plant and equipment (82) (298) (507) Capitalised intangible fixed assets (997) (382) (1,661)

Net cash used in investing activities (1,079) (680) (2,168)

Financing activities Proceeds on issuance of ordinary shares (net of costs paid) - 24,291 24,117

Net cash generated from financing activities - 24,291 24,117

Net (decrease)/increase in cash and (5,168) 18,743 16,388 cash equivalents

Cash and cash equivalents at the beginning of the period 28,279 11,891 11,891

Cash and cash equivalents at the end of the period 23,111 30,634 28,279

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the six months ended 31 December 2018 (Unaudited)

Attributable to the owners of the Parent Interest Share-based

Share Share in own Merger Payment Warrant Retained Capital Premium Shares Reserve Reserve Reserve Earnings Total £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000

Balance at 1 July 2018

85,409 89,707 (768) 9,200 13,186 3,007 (163,398) 36,343

Loss for the period,

being total

comprehensive income for

the period - - - - - - (8,261) (8,261)

Transactions with owners

Share-based payments

- exercise of share options - (238) 238 - (366) - 366 - - employee share options

charge - - - - 721 - - 721

- warrants - - - - - 474 - 474 - warrants lapsed - - - - - (1,493) 1,493 -

Total transactions with owners of the Parent,

recognised directly in equity

- (238) 238 - 355 (1,019) (6,402) (7,066)

Balance at 31 December 2018

85,409 89,469 (530) 9,200 13,541 1,988 (169,800) 29,277

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the six months ended 31 December 2017 (Unaudited)

Attributable to the owners of the Parent Interest Share-based Restated



71,878 78,799 (527) 9,200 13,430 2,137 (156,631) 18,286

Loss for the period,

being total

comprehensive income for

the period - - - - - - (5,214) (5,214)

Transactions with owners


- exercise of share options - (223) 223 - (499) - 499 - - employee share options

charge - - - - 1,010 - - 1,010

- warrants - - - - - 332 - 332 Issue of ordinary shares 12,500 12,500 - - - - - 25,000

Cost of share issues - (709) - - - - - (709)

Total transactions with owners of the Parent, recognised

directly in equity

12,500 11,568 223 - 511 332 (4,715) 20,419

Balance at 31 December 2017

84,378 90,367 (304) 9,200 13,941 2,469 (161,346) 38,705

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Year ended 30 June 2018 (Audited)

Attributable to the owners of the Parent Interest Share-based Restated



71,878 78,799 (527) 9,200 13,430 2,137 (156,631) 18,286

Loss for the year,

being total

comprehensive income for the year - - - - - - (8,378) (8,378)

Transactions

with owners


- exercise of share options - (857) 857 - (1,611) - 1,611 - - employee share options

charge - - - - 1,367 - - 1,367 - warrant charge - - - - - 870 - 870

Issue of ordinary shares 13,531 12,648 (1,098) - - - - 25,081 Cost of share issues - (883) - - - - - (883)

Total transactions with owners of the Parent, recognised

directly in equity

13,531 10,908 (241) - (244) 870 (6,767) 18,057

Balance at 30 June 2018

85,409 89,707 (768) 9,200 13,186 3,007 (163,398) 36,343

NOTES TO THE UNAUDITED INTERIM RESULTS

for the six months ended 31 December 2018 1. GENERAL INFORMATION

Earthport plc is a public limited company quoted on the AIM Market of the London Stock Exchange and incorporated and domiciled in England and Wales under the Companies Act 2006. The address of its principal place of business and registered office is 140 Aldersgate Street, London EC1A 4HY.

2. GOING CONCERN

The Group had in excess of £23 million of cash and cash equivalents at the period end. Taking into account forecast trading performance and cash flows, the Directors consider that it is appropriate to prepare the interim financial statements on a going concern basis, which assumes that the Group is to continue in operational existence for the foreseeable future.

3. BASIS OF PREPARATION

The results presented in this report are unaudited and have been prepared in accordance with the recognition and measurement requirements of International Financial Reporting Standards (‘IFRS’) as adopted by the EU that are expected to be applicable to the financial statements for the year ending 30 June 2019 and on the basis of the accounting policies to be used in those financial statements. The half yearly report does not include all the information and disclosures required in financial statements prepared in accordance with IFRS and should be read in conjunction with the accounts for the year ended 30 June 2018. The financial information contained herein does not comprise statutory financial information within the meaning of section 434 of the Companies Act 2006. The information for the year ended 30 June 2018 has been extracted from the latest published accounts. Statutory accounts for the year ended 30 June 2018, on which the auditors gave an audit report which was unqualified and did not contain a statement under section 498(2) or (3) of the Companies Act 2006, have been filed with the Registrar of Companies. The interim financial information has been prepared under the historical cost convention, as modified by the revaluation of certain financial assets and liabilities at fair value as required by IFRS 9 and the principal accounting policies are set out in the 30 June 2018 financial statements. The group has adopted IFRS 15 – Revenue from Contracts with Customers and IFRS 9 – Financial Instruments in the half yearly report, the impact of which is set out below: (i) IFRS 15 ‘Revenue from Contracts with Customers’ IFRS 15 – Revenue from Contracts with Customers establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It has replaced existing revenue recognition guidance, including IAS 18 Revenue. IFRS 15 sets out the requirements for recognising revenue from contracts with customers. The standard requires entities to apportion revenue earned from contracts to individual promises, or performance obligations, on a stand-alone selling price basis, based on a five-step model (identification of contracts; performance obligations; transaction prices; allocation of price to performance obligations; and recognition of revenue). Revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. IFRS 15 is effective for annual periods beginning on or after 1 January 2018. (ii) IFRS 9 ‘Financial Instruments’ IFRS 9 ‘Financial Instruments’ determines the basis of the financial instrument and how a financial asset should be classified and measured. It also provides a forward-looking expected losses impairment model for financial assets, including trading receivables, and includes amendments to classification and measurement of financial instruments. It has replaced existing standard IAS 39 ‘Financial Instruments: Recognition and Measurement’. IFRS 9 is

effective for annual periods beginning on or after 1 January 2018. The Directors have assessed the impact of the adoption IFRS 15 and IFRS 9 and there has been no material impact on the financial statements of the Group as a result of these standards coming into effect.

4. REVENUE

Unaudited Restated

Unaudited Audited

6 months ended 31 Dec 2018


12 months ended 30 Jun 2018

£’000 £’000 £’000

Payment business

11,877 9,999 19,595

FX business

4,148

4,478

10,184

Professional services

84

932

2,078

16,109

15,409

31,857

The payment business is defined as the provision of payment services to customers including

any directly related foreign exchange earnings associated with the payment transactions.

FX business is defined as the provision of spot and forward foreign exchange products

separately from the payment business.

Professional services represents revenue earned from the provision of implementation services

to customers.

Revenue per payment transaction analysis




Reported revenue per payment transaction

£1.84 £2.03 £1.89

Normalised revenue per

payment transaction

£1.91 £1.93 £1.83

Reported figures for revenue per payment transaction reflect a legacy contractual minimum

revenue agreement associated with one client. Normalised revenue per payment transaction

provides the underlying movement in the metric excluding this one arrangement.

5. COST OF SALES

Unaudited Restated

Unaudited Audited




£’000 £’000 £’000

Cost of sales 5,465 5,615 10,737

Warrant charge 474 332 870

5,939 5,947

11,607 Cost of sales represents the direct cost of providing payment and FX services to customers, including money transmission fees and commissions. The costs of a warrant arrangement for a large customer are also included in the cost of sales.

Administrative expenses of £17.5 million include £3.0 million of one-off transformation and business restructure costs comprising professional services (£2.0 million), IT operational costs (£0.3 million) and staff and contractor costs (£0.7 million).

6. ADMINISTRATIVE EXPENSES

Unaudited Unaudited Audited 6 months

ended 31 Dec 2018

6 months ended 31 Dec

2017

12 months ended 30 Jun

2018

£’000 £’000 £’000

Staff and contractor costs

9,096

7,977

16,334

Professional services

2,933

1,066

1,759

IT operational costs

1,419

1,103

2,767

Travel & entertainment

595

555

993

Sales & marketing costs

312

414

821

Other operational costs

316

243

768

Other overheads

1,558

1,621

2,615 Depreciation of property, plant and equipment

196

192

405

Amortisation of intangible assets

1,029

1,135

2,229

17,454

14,306

28,691

7. LOSS PER SHARE

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 “Earnings per share”.

8. TRADE AND OTHER RECEIVABLES

Unaudited Unaudited Audited as at as at as at 31 Dec

2018 31 Dec

2017 30 Jun

2018

£’000 £’000 £’000

Trade receivables 3,957 2,282 3,399

Other receivables 1,496 2,144 1,543

Prepayments 1,096 1,201 1,282

Trade and other receivables 6,549 5,627 6,224

Trade receivables amounted to £4.0 million (H1 FY18: £2.3 million), net of a provision of £nil.

Unaudited

Restated Unaudited

Audited

6 months 6 months 12 months ended ended ended 31 Dec 2018 31 Dec 2017 30 Jun 2018 £’000 £’000 £’000 Loss attributable to owners of the parent (8,261) (5,214) (8,378)

Number Number Number Weighted average number of ordinary shares in issue (thousands)

623,500 518,327 582,771

Less: own shares held (thousands) (3,441) (1,384) (5,610)

620,059 516,943 577,161

Basic and fully diluted loss per share (pence) (1.33p) (1.01p) (1.45p)

9. TRADE AND OTHER PAYABLES Unaudited Unaudited Audited as at as at as at 31 Dec

2018 31 Dec

2017 30 Jun

2018 £’000 £’000 £’000 Trade payables 1,639 1,349 1,920 Other payables 45 57 21 Other taxation and social security 399 342 413 Accruals and deferred income 3,988 1,935 1,774

6,071 3,683 4,128

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 to their fair value.

10. SHARE CAPITAL

The Articles of Association were amended on 24 March 2010. The Company has no authorised share capital limit.

Unaudited Unaudited Audited

6 months 6 months 12 months

ended ended ended

31 Dec 2018 31 Dec 2017 30 Jun 2018

Issued £’000 £’000 £’000

At start of period 62,350 48,819 48,819

Shares issued in the period - 12,500 12,500

Shares issued to JSOP - - 1,000

Shares issued in lieu of consultancy fees - - 31

At end of period 62,350 61,319 62,350

Deferred shares 23,059 23,059 23,059

Total 85,409 84,378 85,409

During the period nil (H1 FY18: 125,000,000) ordinary shares of 10p were issued to existing investors and new institutional shareholders. 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.

11. SHARE PREMIUM Unaudited Unaudited Audited


Ended ended ended

31 Dec 2018

31 Dec 2017

30 June 2018

£’000 £’000 £’000

At start of period 89,707 78,799 78,799

New issue - 12,500 12,648

Exercise of share options (238) (223) (857)

Expense of share issues - (709) (883)

At end of period 89,469 90,367 89,707

12. INTEREST IN OWN SHARES

Unaudited Unaudited Audited


Ended ended ended

31 Dec 2018

31 Dec 2017

30 June 2018

£’000 £’000 £’000

At start of period (768) (527) (527)

Exercise of share options 238 223 857

Issue of new shares - - (1,098)

At end of period (530) (304) (768)

13. RECONCILIATION OF LOSS BEFORE TAX TO NET CASH OUTFLOW FROM

OPERATING ACTIVITIES

Restated Unaudited Unaudited Audited 6 months 6 months 12 months Ended ended ended 31 Dec

2018 31 Dec

2017 30 Jun

2018 £’000 £’000 £’000

Loss before tax (8,312) (5,129) (8,418) Amortisation of intangible assets 1,029 1,135 2,229 Depreciation of property, plant and equipment 196 192 405 Share-based payment and warrant charge 1,195 1,342 2,237 Shares issued in lieu of consultancy fees - - 81 Finance income/(cost) 24 3 (33)

Operating cash out flow before movements in (5,868) (2,457) (3,499) working capital (Increase)/decrease in receivables (853) 820 (368) Increase/(decrease) in payables 2,656 (3,228) (1,727)

Cash used by operations (4,065) (4,865) (5,594) Interest (received)/paid (24) (3) 33

Net cash used in operating activities (4,089) (4,868) (5,561)

14. UNREALISED FAIR VALUE ADJUSTMENT AND RESTATEMENT

In accordance with IFRS 9 and IAS 21, the Group fair valued all currency bank accounts, which include client segregated and company accounts, as well as forward foreign exchange contracts. The fair value revaluation of financial derivatives resulted in a net derivative unrealised loss of £0.3 million (H1 FY18: gain of £0.7 million).

Unaudited Restated

Unaudited

Audited 6 months 6 months 12 months

ended ended ended

31 Dec 2018 31 Dec 2017 30 June 2018

£’000 £’000 £’000

Unrealised fair value (loss)/gain on derivatives and currency bank accounts

(331) 728 757

Total (331) 728 757

The above mentioned unrealised gain and losses would only be realised in the unlikely event that any party to the transaction would default. As reported fully in the FY18 Annual Report and Accounts, Earthport made restatements to financial results reported for prior periods. This followed a review of accounting for derivative financial assets and liabilities, which identified a number of errors which were corrected in the FY18 financials statements. Equivalent restatements have been made to H1 FY18 financial results in order to provide comparatives for the H1 FY19 period which are summarised below.

The following line items in the Consolidated Statement of Comprehensive Income were impacted:

Fair value adjustment

H1 2018

£’000 Fair value movement as reported in H1 2018 interim financial statements

1,207

Prior period restatement: correction of accounting errors

(479)

Fair Value movement as restated in interim financial statements

728

Income tax credit

H1 2018

£’000

Income tax credit as reported in H1 2018 interim financial statements

(181)

Income tax credit arising from prior period restatement

96

Income tax movement as restated in interim financial statements

(85)

The following line items in the Consolidated Statement of Financial Position were impacted:

Derivative financial assets/(liabilities)

Financial Assets

Financial Liabilities

H1 2018 H1 2018

£’000 £’000

Balance as reported in H1 2018 interim financial statements

6,522

(1,358)


(4,660)

(1,628)

Balance as per restated interim financial statements

1,862

(2,986)

Deferred tax

Deferred Tax

Assets

Deferred Tax

Liabilities

H1 2018 H1 2018

£’000 £’000

Balance as reported in H1 2018 interim financial statements

-

(1,529)


225

1,033

Balance as per restated interim financial statements

225

(496)

15. POST BALANCE SHEET EVENTS Since 31 December 2018 and as at the date of these financial statements, the Company has issued 28.2 million new ordinary shares of 10p each to facilitate the exercise of share options held by current and past employees and past directors, and has received £5.2 million in cash in respect of the aggregate exercise price of these options.

16. AVAILABILITY OF FINANCIAL STATEMENTS

The interim results for the six months ended 31 December 2018 are available on the Company’s website: www.earthport.com

5 march 2019 earthport plc unaudited interim results€¦ · on 25 january 2019, mastercard uk...

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