TIDMEPO
RNS Number : 9841I
Earthport PLC
30 November 2018
30 November 2018
Earthport plc
("Earthport", "the Company" or "the Group")
Final Results
Earthport (AIM: EPO.L), the leading payment network for
cross-border transactions, is pleased to announce its final results
for the year ended 30 June 2018.
Financial highlights
-- Total revenues grew by 5.3% to GBP31.9 million (FY2017: GBP30.3 million)
-- Core payment business revenues, which comprise payment
transaction revenues and specifically attached foreign exchange
("FX") revenues, were 1.6% higher at GBP19.6 million (FY2017:
GBP19.3 million), reflecting the loss of a major payment partner
during the year, significantly offset by increased volumes
processed for other payment customers
-- FX business revenues, comprising spot and forward FX
transactions conducted for customers separately from the core
payment business, increased 6.3% to GBP10.2 million (FY2017: GBP9.6
million)
-- Professional services revenues, earned from the development
of payment routes for specific customers, grew by 50% in the year
to GBP2.1 million (FY2017: GBP1.4 million)
-- Gross profit was broadly flat year-on-year at GBP20.3 million
(FY2017: GBP20.2 million), with a resulting fall in gross margin
from 67% (FY2017) to 64%, due to increased cost of sales driven by
higher transaction related banking costs
-- Adjusted operating loss (before share-based payments,
exceptional items and fair value adjustments) increased by 33% to
GBP8.4 million (FY2017: GBP6.3 million), driven by an increase in
administrative expenses due to an increase in staff numbers and IT
operational costs as a result of technology upgrade projects and
investment spending to extend the Earthport payment network
-- Loss after tax decreased by 11% to GBP8.4 million (FY2017
(restated): GBP9.4 million), mainly due to the fair value gain of
GBP0.8 million (FY2017 (restated): fair value loss of GBP2.4
million)
-- Cash and cash equivalents at 30 June 2018 of GBP28.3 million
(FY2017: GBP11.9 million), following the capital raising in October
2017 of GBP24 million
Operational highlights
-- 4 new payment business customers added in the year
-- Payment business transaction volumes totalled 10.4 million
(FY2017: 10.8 million), due to the loss of a single very large
payment customer, offset by payment transaction growth in the rest
of the customer base
-- Value of payments processed by payment business reduced
slightly to GBP10.8 billion (FY2017: GBP11.3 billion)
-- Added new payment routes, including 18 countries in Africa
and five new countries in Latin America, growing the network by 35%
to 86 routes in total at period end
-- Obtained a New York transmitter licence, allowing the Company
to develop new commercial opportunities in the US - additional
State licence applications are in progress
Post period end highlights
-- Appointment of new CEO, CFO and executive management team
-- Signed contract with BNPI, went live with Indusind Bank and
expanded route usage for multiple key clients, recognising the
unique payment capabilities Earthport is able to deliver and adding
new transaction volume growth to the business
-- Monthly payment business transaction volumes now back above
the previous highest recorded levels
-- 2 new payment routes have been enabled to existing customers
with more to come in the current year as new routes become fully
activated
-- Investment has continued in upgrading technology and building
the organisational capabilities to allow Earthport to continue
building scale in its core payment business
Amanda Mesler, CEO of Earthport, commented: "Having been
appointed as Earthport's CEO in July this is my first report in
this role. Taking on this new role my focus is to address
Earthport's challenges head on in a clear and transparent way and
in doing so give Earthport the best opportunity to achieve the
underlying potential I firmly believe it has.
"Since joining I have established a new Executive team which
greatly improves our breadth and depth of experience. This team
will enable us to rapidly implement the transformational growth
strategy I have also put in place following a full strategic
review. This strategy involves a redefined "go to market",
investment in our technology platform, capability enhancement and a
new operating model for scale, all of which will strengthen our
position as a global payments business.
"The financial year ending 30 June 2018 presented significant
challenges for Earthport. Nevertheless, our core capabilities
remain strong and our Company ended the year with a strengthened
balance sheet, giving us the ability to invest in our redefined
strategy. I therefore believe we are well positioned to deliver the
potential Earthport has always possessed and look forward to the
coming year with confidence."
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 - 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, San
Francisco, Miami 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.
Chairman's Statement
The financial year under review marked a transitional period for
Earthport Plc. The Company entered the year with ambitions of
significant progress based on its strategy but was not able to
execute successfully against it. As the year progressed it became
clear that a changed set of circumstances required new thinking and
new responses.
In this report, as Interim Chairman, I have set out high level
reflections on the year and certain areas relating to the
governance of the Earthport group, whereas the Performance Report
provides a more detailed review of the business together with the
financial and operational commentary.
Board and Executive management changes
The combination of losing our largest payment customer and the
failure to conclude a particular major contract produced a
situation where results for the full year would not match market
expectations and so, on 18 December 2017, the Directors issued a
statement revising expected revenue numbers to a more conservative
outlook and took decisions at that time to make certain Board and
leadership changes.
Phil Hickman, who had previously served as non-executive
Chairman of the Group since 2011 became interim CEO on 1 January
2018, whilst Hank Uberoi, who had served as Chief Executive Officer
since 2012 became Executive Chairman. On 1 July 2018, Phil Hickman
returned to the role of non-executive Chairman and Hank Uberoi
became a non-executive director at that date. On 22 October 2018
both Phil and Hank stepped down from the Board. The Board is
grateful to Phil and to Hank for the work they have done over
several years to build the key strategic assets on which Earthport
can continue to operate. The Board has recognised and clearly acted
upon a different requirement for the next phase of growth of the
business.
I joined the Board on 4 September 2018 as a non-executive
Director and was appointed interim Chairman on 19 October 2018. On
behalf of the Board and the Nominations Committee, I have a
specific remit to conduct a process in line with best practice to
identify a permanent non-executive Chairman and new non-executive
Directors. This process is underway.
Amanda Mesler joined the Board on 1 July 2018 as Chief Executive
Officer, followed by Alexander Filshie who joined the Board on 25
July 2018 as Chief Financial Officer.
They have been joined on the executive team by Helen Smith
(Chief Operating Officer) and John Farrell (Chief Technology
Officer), expanding the breadth of business leadership experience
we now have in place. I welcome them all to the team and look
forward to the results they will achieve together.
Daniel Marovitz stepped down as Chief Operating Officer in
October 2017 and Simon Adamiyatt resigned from the Board and as
Chief Financial Officer in January 2018. In February 2018, John
McCoy, a non-executive Director, stepped down from the Board. Since
the end of the financial year, Mike Steinharter and Andrew Brown
have stepped down as Chief Commercial Officer and Chief Risk
Officer, respectively, to pursue other opportunities and I thank
them all for the contributions they have made to the Company.
Corporate governance and reporting
The Earthport Board recognises the need for robust and
consistent governance standards appropriate to the nature, scale
and complexity of the Earthport group. In September 2018, the Board
formally adopted the corporate governance standards of the Quoted
Companies Alliance ("QCA") Corporate Governance Code (the "QCA
Code") as being appropriate to our status and maturity as a
business. These standards will guide the governance of Earthport
going forward and the Corporate Governance Report in the Company's
2018 Annual Report and Accounts will set out a summary of progress
so far. There is further work to do in order to ensure Earthport
operates fully in line with the QCA Code and we will communicate
progress through future reporting and on the Company's website.
The Board has considered carefully the way Earthport reports its
performance and progress, in light of new standards and market
practice, and have introduced a number of additional disclosures
with the aim of increasing the level of transparency we present in
our reporting, including the restatement of prior period results
set out in more detail in note 3 to the financial statements and as
previously announced on 1 November 2018. A key priority for
management and the Board is to address internal controls, oversight
and risk management.
Strategy and outlook
Earthport closed the previous financial year with strong growth
in its core payment business and early in the financial year under
review the Board recognised that new investment was necessary to
develop the global business Earthport had built. In October 2017,
the Company raised GBP24 million of new capital net of expenses.
Whilst the justifications the Board made at the time for raising
capital were strong, it later became clear our positioning and
strategy were not delivering at the pace the Board had expected and
more fundamental change was required.
I am encouraged by the new strategic direction Amanda and her
team are setting out and I am pleased the Group has the resources
in place to make a transition to become a bigger and more
technologically enabled player in the global payments market.
I would like to thank our shareholders for their continued
support. I feel confident that our new experienced management team
will accelerate the Group's progression to deliver shareholder
value through driving forward the strategy agreed and supported by
the Board.
Finally, I want to recognise this has been a challenging year
for Earthport staff who faced a number of issues, challenges and
leadership transitions as we navigated some difficult waters. I
would like to thank them all for their commitment and
contributions, without which we would not be in the position we now
are to move forward and re-shape our business and the cross-border
payments industry.
Sunil Sabharwal
Interim Non-Executive Chairman
Chief Executive Officer's Statement
On 1 July 2018, I became Earthport's CEO and this is my first
report in that capacity. I chose to join and lead Earthport as I
could see that, despite the challenges the Company had faced, it
also possessed huge potential. My belief has only been reinforced
in my first few months with the business. Realising this potential
is not without its challenges and there is much to do to reposition
and scale our business quickly. My focus will be on addressing
these challenges head on in a clear and transparent way and in
doing so giving Earthport the best opportunity to achieve the
underlying potential I firmly believe it has.
During the year under review my predecessor Hank Uberoi stepped
down as CEO and was replaced by Phil Hickman as Interim CEO. Phil
led the Company for the second half of financial year 2018 in
addition to driving the process to recruit me as CEO. Phil has now
stepped down from the Board and I thank him for the support and
guidance he has given me.
The financial year ended 30 June 2018 presented significant
challenges for Earthport, as is laid out more fully in the
Performance Report. Nevertheless, our core capabilities remain
strong and our Company ended the year with a strengthened balance
sheet, giving us the ability to invest for the future in our
technology, people and partner network.
One of my first priorities was to augment the Executive team
with experienced individuals that could help bring the Company
forward quickly. I am pleased that I now have a newly hired Chief
Financial Officer (Alexander Filshie), Chief Operating Officer
(Helen Smith) and Chief Technology Officer (John Farrell) in place
who bring together expertise in payments, finance and strategy,
business transformation and organisational effectiveness,
technology and cloud solutions. Having this breadth and depth of
experience to draw upon will enable us to move at pace with our
transformational growth plans for the Company.
The first task set out for the new Executive team was a full
strategic review of every part of the business and our operations
from end to end, assessing the strengths and weaknesses of the
organisation, core and non-core activities, and the opportunities
and threats the Company faces. The results of this review underpin
a resetting of our strategy including a redefined "go to market",
investment into our technology platform, a new operating model for
scale, and capability enhancement. This transformation and the
future strategy of the Earthport group is fully supported by the
Board and will enable us to strengthen our position as a global
payments business.
Future strategy
Earthport is and will remain a payments company, specialising in
the settlement of payments across the globe through our unique and
extensive network of banking partners. The payment landscape
continues to evolve around the world embracing new technologies,
protocols and platforms for payments and Earthport will seek to be
at the heart of the industry, investing in our capabilities and
providing enhanced payment solutions to our customers and
clients.
Our network of partners and the payment solutions we can offer
is extensive, spanning 88 countries. Building this network has been
one of the most significant achievements of Earthport to date and
represents a formidable competitive advantage. In future I expect
we will selectively expand our existing network to meet the needs
of our customers and continue to invest in upgrading the speed and
capacity of our connections around the world.
Drawing on my prior experience in delivering transformational
change we will advance with pace towards a larger, sustainable and
profitable business. I recognise this will not happen overnight and
that quality, professionalism and governance are key to delivering
sustainable growth and real scale.
Communication with our stakeholders
I believe it is vital that Earthport continues to provide clear
and well-presented information to all of our stakeholders. We have
seen multiple recent examples of the need for transparency in
corporate reporting and messaging. The Board and I are pleased to
extend certain aspects of our reporting within this document with
the intent of allowing the reader to understand more clearly our
recent results, the drivers of our business and the way the
business is operated. We will spend time presenting our results and
future plans to shareholders through investor meetings and at the
Annual General Meeting.
This is no doubt a challenging chapter in Earthport's story, one
that carries both obstacles and opportunities. I am, however, with
the support of our new Executive team and the Board, confident that
now more than ever we are well positioned to deliver the potential
Earthport has always possessed.
Amanda Mesler
Chief Executive Officer
Performance Report
Operational and Financial Review
The Directors present their operational and financial review for
the year ended 30 June 2018.
This year was a transitional year for Earthport where the
underlying core payment business performed well despite the
material setback of losing the business of a single large customer
in Europe. The Board made significant changes to the leadership of
the Company reflecting a change in business priorities and
strategy, all of which continue into the early part of financial
year 2019 as Earthport transitions into a lean and more tightly
focused payment business, with a culture of strong execution and
appropriate emphasis on performance, whilst retaining the
compliance standards that have been established in the operation of
the business.
In preparing these results and the financial statements, the
Directors have taken steps to improve transparency to the
underlying business performance and progress, including additional
disclosures and explanations as appropriate to ensure our
stakeholders are able to understand the nature of our business and
the strategy we are pursuing. The Board recognises best practice is
continually changing and improving but remains committed to
strengthening these processes over time.
Prior year restatement
As we announced on 1 November 2018, Earthport has restated
previously reported figures for prior years. This is more fully
explained in note 3 to the financial statements. The commentary
that follows compares results for the year ended 30 June 2018 with
the restated prior year's financial results.
Financial review
The financial year 2018 began strongly and with high
expectations for the year ahead, following a period of business
growth in the previous year. In order to build on the expected
momentum, the Company raised new capital to finance investment
plans in capabilities and technology. However, it became apparent
during the year that revenue was under pressure due to the loss of
a major strategic payment customer and material delays occurred in
the implementation process for another strategic partner. The full
year negative impacts to revenue were GBP0.9 million and GBP0.5
million respectively.
Despite these challenges, Earthport delivered 5.3% overall
growth in revenue during the year. Total revenues were GBP31.9
million (FY2017: GBP30.3 million).
-- Core payment business revenues, which comprise payment
transaction revenues and specifically attached FX revenues, were
1.6% higher at GBP19.6 million (FY2017: GBP19.3 million),
reflecting the loss of a major payment partner during the year,
significantly offset by increased volumes processed for other
payment customers.
-- FX business revenues, comprising spot and forward FX
transactions conducted for customers separately from the core
payment business, increased 6.3% to GBP10.2 million (FY2017: GBP9.6
million).
The payment business and FX business were previously reported as
a single segment (transactional business) which together
represented 93% of total revenues (FY2017: 95%), contributing
revenue of GBP29.8 million (FY2017: GBP28.9 million), an increase
of 3.1%.
The two elements of transactional business are operated as
connected but separate businesses under the Earthport Payment
Network and Earthport FX brands and have been reported separately
to increase transparency to the underlying performance of these
businesses.
-- Professional services revenues, which were earned from the
development of payment routes for specific customers grew 50% in
the year to GBP2.1 million (FY2017: GBP1.4 million), the largest
component of the reported increase in revenue over the prior year.
A significant component of this revenue stream related to the
development work completed for one large financial services
customer and is not expected to be repeated.
Cost of sales increased 15% to GBP11.6 million (FY2017: GBP10.1
million) due to higher transaction related banking costs, offset
partly by lower money transmission charges, reflecting the addition
of new settlement routes and re-instatement of routes previously
suspended in 2017. Cost of sales includes warrant charges of GBP0.9
million (FY2017: GBP0.5 million) relating to revenues earned from
one financial institution customer under a multi-year commercial
agreement linked to payment business revenues.
Gross profit was broadly flat year-on-year at GBP20.3 million
(FY2017: GBP20.2 million), with a resulting fall in gross margin
from 67% (FY2017) to 64%.
Administrative expenses increased 8.7% to GBP28.7 million
(FY2017: GBP26.4 million), primarily due to increased staff costs
of GBP16.3 million (FY2017: GBP15.3 million) and IT operational
costs of GBP2.8 million (FY2017: GBP2.2 million). The ratio of
administrative expenses to revenue increased to 90% (FY2017:
87%).
The increase in staff costs was driven by an increase in overall
employee numbers and contractor resources deployed during the year.
IT operational costs increased as a result of technology upgrade
projects and investment spending to extend the Earthport payment
network.
Spending on professional services of GBP1.8 million (FY2017:
GBP1.3 million) included certain one-off costs associated with
strategic projects.
The resulting adjusted operating loss (before share-based
payments, exceptional items and fair value adjustments) increased
by 33% to GBP8.4 million (FY2017: GBP6.3 million), driven by the
increase in administrative expenses.
Fair value adjustments for the year resulted in a gain of GBP0.8
million (FY2017: loss of GBP2.4 million), as more fully explained
in note 14 to the financial statements.
Loss after tax decreased by 11% to GBP8.4 million (FY2017:
GBP9.4 million), mainly due to the fair value gain reported.
Net cash used in operating activities increased to GBP5.6
million (FY2017: GBP1.7 million) as a result of increased operating
losses and net cash used in investing activities increased to
GBP2.2 million (FY2017: GBP0.8 million) as a result of higher
spending on computer equipment deployed within the payment
business. During the year GBP24 million was received as net
proceeds on the issuance of ordinary shares. As a consequence the
cash balance as at 30 June 2018 amounted to GBP28.3 million,
compared to GBP11.9 million at 30 June 2017.
Consolidated net assets as at 30 June 2018 were GBP36.3 million
(FY2017: GBP18.3 million), primarily due to the GBP24 million net
capital raised in October 2017.
Operational review
In addition to financial indicators and ratios set out in the
financial review above, management also tracks a range of
operational performance measures including, principally, customer
numbers by type, transaction volumes, route usage and costing,
foreign exchange spreads and attachment rates to payment
transactions.
The events of the year ended 30 June 2018 saw significant change
during the year and post period end in the leadership and
operational focus of the organisation in response to delivered
performance and changes in the business environment, increasing the
emphasis on key performance indicators for the core payment
business and the capabilities being created and extended in support
of payment customers.
In the year 4 new payment customers were added to the
business.
Payment business transaction volumes for the year were 10.4
million (FY2017:10.8 million), due to the loss of a single very
large payment customer, offset by payment transaction growth in the
rest of the customer base. The value of payments processed by the
payment business reduced slightly to GBP10.8 billion (FY2017:
GBP11.3 billion).
Earthport added new payment routes to serve existing and
prospective future customers, including 18 countries in Africa, and
five new countries in Central and South America. By the end of the
financial year, the network had grown by 35% to 86 routes in total.
The Group continued to invest in its sales and relationship
management teams to support its expanding network and clients.
In March 2018, Earthport North America Inc. obtained a New York
transmitter licence which will allow Earthport to send and receive
money on behalf of clients from New York State to any location
globally across our Automated Clearing House (ACH) network, and
enable the Company to develop new commercial opportunities in the
US. Additional State licence applications are in progress.
Remediation of financial accounting and reporting controls
The Board acknowledges that management accounting control and
reporting errors took place in prior periods and changes to these
processes and other decisive actions are currently underway to
address the underlying issues. This includes increased monitoring
of the FX business, increased controls and checks, stronger review
processes and specific internal reporting changes.
The restatements the Group has been required to make do not
impact either the strength or current liquidity of the Group's
balance sheet, the trading position of the Group or the revised
strategy of the Group going forward.
Outlook
Despite the setback of losing a very significant payment
customer in the year ended 30 June 2018, reducing transaction
volumes materially, and the consequent distractions and management
changes, the payment business performed well, adding new volume
from other parts of the customer base. This trend has continued
into the current year with monthly payment business transaction
volumes now back above the previous highest recorded levels.
Since the end of June 2018, we have signed a contract with BNPI,
went live with Indusind Bank and expanded route usage for multiple
key clients, recognising the unique payment capabilities Earthport
is able to deliver and adding new transaction volume growth to the
business. In addition 2 new routes have been enabled to existing
customers with more to come in the current year as new routes
become fully activated.
The FX business continues to face strong competition from an
increasing number of providers. Our strategy of offering a broad
range of currencies and the potential to combine with international
settlement across our network, allow this business to compete
successfully and grow in a focused way.
As explained in the financial review, the professional services
business was important in the year ended 30 June 2018 and providing
implementation capabilities to our new and existing customers will
continue in the current year in support of the growth in the
payment business.
Investment has also continued in upgrading technology and
building the organisational capabilities that will allow Earthport
to continue building scale in its core payment business.
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2018
2018 Restated
GBP'000 2017
Notes GBP'000
Continuing operations:
------ ---------- ---------
Revenue 4 31,857 30,305
------ ---------- ---------
Cost of sales (11,607) (10,134)
------ ---------- ---------
Gross profit 20,250 20,171
------ ---------- ---------
Administrative expenses 5 (28,691) (26,439)
------ ---------- ---------
Adjusted operating loss (8,441) (6,268)
------ ---------- ---------
Share-based payment charge (1,367) (1,664)
------ ---------- ---------
Fair value adjustments 14 757 (2,383)
------ ---------- ---------
Exceptional item - EarthportFX 600
loss recovery -
------ ---------- ---------
Operating loss (8,451) (10,315)
------ ---------- ---------
Finance income 33 3
------ ---------- ---------
Reduction in contingent consideration
liability due to amendment as per
the CVR deed - 136
------ ---------- ---------
Loss before taxation 6 (8,418) (10,176)
------ ---------- ---------
Income tax credit 7 40 756
------ ---------- ---------
Loss for the year and total comprehensive
income attributable to owners of
the Parent (8,378) (9,420)
------ ---------- ---------
Loss per share - basic and fully
diluted 8 (1.45p) (1.96p)
------ ---------- ---------
There were no items of other comprehensive income for the
year.
Consolidated Statement of Financial Position
As at 30 June 2018
Company number 03428888
2018 Restated Restated
GBP'000 2017 2016
Notes GBP'000 GBP'000
Assets
------ ---------- ---------- ----------
Non-current assets
------ ---------- ---------- ----------
Goodwill 2,709 2,709 2,709
------ ---------- ---------- ----------
Intangible assets 4,521 5,089 6,249
------ ---------- ---------- ----------
Deferred tax asset 318 370 -
------ ---------- ---------- ----------
Property, plant and equipment 473 371 597
------ ---------- ---------- ----------
8,021 8,539 9,555
------ ---------- ---------- ----------
Current assets
------ ---------- ---------- ----------
Trade and other receivables 9 6,224 5,028 6,510
------ ---------- ---------- ----------
Derivative financial assets 15 2,453 3,281 9,111
------ ---------- ---------- ----------
Cash and cash equivalents 28,279 11,891 14,429
------ ---------- ---------- ----------
36,956 20,200 30,050
------ ---------- ---------- ----------
Total assets 44,977 28,739 39,605
------ ---------- ---------- ----------
Liabilities
------ ---------- ---------- ----------
Current liabilities
------ ---------- ---------- ----------
Trade and other payables 10 (4,128) (4,765) (4,794)
------ ---------- ---------- ----------
Derivative financial liabilities 15 (4,042) (5,132) (8,552)
------ ---------- ---------- ----------
Contingent consideration - - (2,295)
------ ---------- ---------- ----------
(8,170) (9,897) (15,641)
------ ---------- ---------- ----------
Non-current liabilities
------ ---------- ---------- ----------
Deferred tax liability 11 (464) (556) (737)
------ ---------- ---------- ----------
(464) (556) (737)
------ ---------- ---------- ----------
Total liabilities (8,634) (10,453) (16,378)
------ ---------- ---------- ----------
Net assets 36,343 18,286 23,227
------ ---------- ---------- ----------
Equity
------ ---------- ---------- ----------
Share capital 12 85,409 71,878 70,738
------ ---------- ---------- ----------
Share premium 89,707 78,799 78,064
------ ---------- ---------- ----------
Interest in own shares (768) (527) (953)
------ ---------- ---------- ----------
Merger reserve 9,200 9,200 9,200
------ ---------- ---------- ----------
Share-based payment reserve 13,186 13,430 12,164
------ ---------- ---------- ----------
Warrant reserve 3,007 2,137 1,623
------ ---------- ---------- ----------
Retained earnings (163,398) (156,631) (147,609)
------ ---------- ---------- ----------
Equity attributable to owners
of the Parent 36,343 18,286 23,227
------ ---------- ---------- ----------
Consolidated Statement of Cashflows
For the year ended 30 June 2018
2018 2017
Notes GBP'000 GBP'000
Net cash used in operating activities 13 (5,561) (1,720)
------ --------- ---------
Investing activities
------ --------- ---------
Purchase of property, plant
and equipment (507) (187)
------ --------- ---------
Capitalised intangible fixed
assets (1,661) (1,331)
------ --------- ---------
Part refund of contingent consideration - 700
------ --------- ---------
Net cash used in investing activities (2,168) (818)
------ --------- ---------
Financing activities
------ --------- ---------
Proceeds on issuance of ordinary 24,117
share capital (net of costs
paid) -
------ --------- ---------
Net cash from financing activities 24,117 -
------ --------- ---------
Net increase/(decrease) in cash
and cash equivalents 16,388 (2,538)
------ --------- ---------
Cash and cash equivalents at
the beginning of the year 11,891 14,429
------ --------- ---------
Cash and cash equivalents at
the end of the year 28,279 11,891
------ --------- ---------
Consolidated Statement of Changes in Equity
For the year ended 30 June 2018
Attributable to owners of the Parent
Share Share Interest Merger Share-based Warrant Restated Total
capital premium in own reserve payment reserve retained GBP'000
GBP'000 GBP'000 shares GBP'000 reserve GBP'000 earnings
GBP'000 GBP'000 GBP'000
---------- ---------- ---------- ---------- ------------ ---------- ----------- ----------
Balance at
30 June 2016 70,738 78,064 (953) 9,200 12,164 1,623 (147,609) 23,227
---------- ---------- ---------- ---------- ------------ ---------- ----------- ----------
Loss for
the year,
being total
comprehensive
income for
the year - - - - - - (9,420) (9,420)
---------- ---------- ---------- ---------- ------------ ---------- ----------- ----------
Transactions
with owners
---------- ---------- ---------- ---------- ------------ ---------- ----------- ----------
Share-based
payments
---------- ---------- ---------- ---------- ------------ ---------- ----------- ----------
- exercise
of share
options - (426) 426 - (398) - 398 -
---------- ---------- ---------- ---------- ------------ ---------- ----------- ----------
- employee
share options
charge - - - - 1,664 - - 1,664
---------- ---------- ---------- ---------- ------------ ---------- ----------- ----------
- warrant
charge - - - - - 514 - 514
---------- ---------- ---------- ---------- ------------ ---------- ----------- ----------
Issue of
ordinary
shares 1,140 1,161 - - - - - 2,301
---------- ---------- ---------- ---------- ------------ ---------- ----------- ----------
Total transactions
with owners
of the Parent,
recognised
directly
in equity 1,140 735 426 - 1,266 514 (9,022) (4,941)
---------- ---------- ---------- ---------- ------------ ---------- ----------- ----------
Balance at
30 June 2017 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
---------- ---------- ---------- ---------- ------------ ---------- ----------- ----------
Share-based
payments
---------- ---------- ---------- ---------- ------------ ---------- ----------- ----------
- 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
---------- ---------- ---------- ---------- ------------ ---------- ----------- ----------
Merger Reserve
The merger reserve represents the premium attributable to shares
issued in consolidation of the costs of acquisition of subsidiaries
in prior years.
Share-based Payment Reserve
The share-based payment reserve represents the cumulative charge
to date in respect of unexercised share options at the balance
sheet date.
Warrant Reserve
The warrant reserve represents the cumulative charge to date in
respect of unexercised share warrants at the balance sheet
date.
Retained Earnings
The retained earnings represent the cumulative profit and loss
net of distribution to owners. Retained earnings were restated for
FY2016 and FY2017 (see note 3).
Notes to the Financial Statements
For the year ended 30 June 2018
1. General Information
Earthport plc is a public limited company 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 and the Company's
registered number is 03428888. The principal activities of the
Group comprise the provision of cross-border payment services and
the provision of foreign currency exchange related products.
The preliminary financial information does not constitute full
accounts within the meaning of section 434 of the Companies Act
2006 but is derived from accounts for the years ended 30 June 2018
and 30 June 2017, both of which are audited. The preliminary
announcement is prepared on the same basis as set out in the
statutory accounts for the year ended 30 June 2018. While the
financial information included in this preliminary announcement has
been prepared in accordance with the recognition and measurement
criteria of International Financial Reporting Standards (IFRS), as
adopted by the European Union (EU), this announcement does not in
itself contain sufficient information to comply with IFRSs.
The statutory accounts for the year ended 30 June 2018 will be
delivered to the Registrar of Companies. Statutory accounts for the
year ended 30 June 2017 have been filed with the Registrar of
Companies. The auditor's reports for the years ended 30 June 2018
and June 2017 were unqualified, did not include a reference to any
matter to which the auditor drew attention by way of emphasis and
did not contain any statement under section 498(2) or (3) of the
Companies Act 2006.
2. Going Concern
The Directors believe that the Group has demonstrated further
progress in achieving its objective of positioning itself as an
infrastructure supplier to the global payments industry. During the
year, the Group has raised gross proceeds of GBP25 million (net
GBP24 million) through the placing and subscription of 125 million
ordinary shares, taking the cash balance as at 30 June 2018 in
excess of GBP28 million. The Directors have prepared a cash flow
forecast covering a period extending beyond 12 months from the date
of these financial statements after taking account of anticipated
overhead costs and revenue. Therefore, the Directors consider that
it is appropriate to prepare the Group's financial statements on a
going concern basis, which assumes that the Group is to continue in
operational existence for the foreseeable future.
3. Prior Period Adjustments
Accounting for Derivative Financial Assets and Liabilities
Further to a review of accounting for Derivative Financial
Assets and Liabilities, a number of errors were identified which
related to FY2017, FY2016 and earlier periods. These errors arose
mainly from a failure to reverse certain opening balances relating
to FX revaluation together with certain systematic accounting
errors, which were not previously detected due to inadequate
controls over the reconciliation of the related general ledger
balances to the source system. A remediation project is currently
underway to enhance the accounting procedures for FX transactions
and strengthen the related controls and reporting procedures.
IAS 8 sets out that a material misstatement in relation to a
prior period shall be corrected by retrospective restatement except
to the extent that it is impracticable to determine either the
period-specific effects or the cumulative effect of the errors.
After a detailed review of the Derivative Financial Assets' and
Liabilities' accounting, errors were quantified and allocated to
each of FY2017, FY2016 and earlier. In accordance with IAS 1, this
prior period adjustment requires the presentation of a third
Statement of Financial Position to present the restated 2016
position as well as the 2017 comparatives and shows the corrected
retained earnings as at 30 June 2016. Per IAS 8, no additional
Statement of Comprehensive Income is being presented.
As a result of the above based on IAS 8 requirements, Fair Value
Gains and Losses reported in FY2017 and prior periods were
restated. Derivative financial assets and liabilities, deferred tax
and liabilities, income tax credit, retained earnings and earnings
per share were also restated. The impact of the prior period
adjustments is detailed in the tables below:
The following line items in the Consolidated Statement of
Comprehensive Income were impacted:
Restated
2017
Fair Value Adjustment GBP'000
Fair value movement as reported in 2017
annual report (4,797)
---------
Prior period restatement: correction of
accounting errors 2,414
---------
Fair value movement as restated in financial
statements (2,383)
---------
Restated
2017
Income Tax Credit GBP'000
Income tax credit as reported in 2017 annual
report 532
---------
Income tax credit arising from prior period
restatement 224
---------
Income tax movement as restated in financial
statements 756
---------
The following line items in the Consolidated Statement of
Financial Position were impacted:
Financial Assets Financial Liabilities
2017 2016 2017 2016
Derivative financial assets/(liabilities) GBP'000 GBP'000 GBP'000 GBP'000
--------- --------- ----------- -----------
Balance as reported in 2017 annual
report 7,293 11,033 (3,335) (2,250)
--------- --------- ----------- -----------
Prior period restatement: correction
of accounting errors (4,012) (1,922) (1,797) (6,302)
--------- --------- ----------- -----------
Balance as per restated financial
statements 3,281 9,111 (5,132) (8,552)
--------- --------- ----------- -----------
Deferred Tax Assets Deferred Tax Liabilities
2017 2016 2017 2016
Deferred tax GBP'000 GBP'000 GBP'000 GBP'000
---------- ---------- ------------- ------------
Balance as reported in 2017 annual
report - - (1,348) (1,676)
---------- ---------- ------------- ------------
Prior period restatement: correction
of accounting errors 370 - 792 939
---------- ---------- ------------- ------------
Balance as per restated financial
statements 370 - (556) (737)
---------- ---------- ------------- ------------
2017 2016
Retained earnings GBP'000 GBP'000
Balance as reported in 2017 annual report (151,984) (140,324)
---------- ----------
Prior period restatement: correction of
accounting errors (4,647) (7,285)
---------- ----------
Balance as per restated financial statements (156,631) (147,609)
---------- ----------
Earnings per share - basic and fully diluted 2017
Earnings per share as reported in 2017 annual
report (2.51p)
--------
Earnings per share restated (1.96p)
--------
4. Segment Information
The Group operates in three business segments operating from its
headquarters in London, United Kingdom. Whilst revenue is
attributed to each segment for internal reporting purposes,
administrative expenses, operating profit and net assets are not
measured or allocated between the Payment and Professional services
segments. The administrative expenses and net assets of the
Professional services segment are not considered to be
significant.
The three reportable segments are as follows:
-- 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 revenues earned from the
provision of implementation services to customers. In 2018 and 2017
the largest portion of this revenue earned related to one
multi-year contract which was completed in June 2018 and is not
expected to recur.
Additional disclosure is provided for FY2018 and FY2017 to
further explain the business segments within the Group. This is
consistent with the information reviewed by the chief operating
decision maker. The chief operating decision maker, who is
responsible for allocating resources and assessing performance of
the business segments and making strategic decisions, has been
identified as the Board of Directors. Revenue categories and
segmental analysis by location of customers is as follows:
2018 2017
Total Revenue GBP'000 GBP'000
Payment business 19,595 19,301
--------- ---------
FX business 10,184 9,628
--------- ---------
Professional services 2,078 1,376
--------- ---------
31,857 30,305
--------- ---------
2018 2017
Revenue GBP'000 GBP'000
United Kingdom 14,457 14,181
--------- ---------
Europe 2,555 2,651
--------- ---------
North America 13,027 11,734
--------- ---------
Rest of the world 1,818 1,739
--------- ---------
31,857 30,305
--------- ---------
The Group had two (FY2017: one) customers who individually
accounted for more than 10% of the Group's external revenue during
the year.
The provision of all the Payment, FX and Professional services
stated above are provided from the United Kingdom and the regional
split in the table above is based on addresses stated in client
contracts. This is to illustrate the geographical location of the
clients.
2018 2017
Segmental Admin Expenses GBP'000 GBP'000
Payment business and Professional services 23,033 20,163
--------- ---------
FX business 5,193 5,526
--------- ---------
Less: Inter company elimination 465 750
--------- ---------
Total Admin Expenses 28,691 26,439
--------- ---------
Segmental Adjusted Operating (Loss)/Profit 2018 2017
by Segment GBP'000 GBP'000
Payment business and Professional services (10,950) (7,542)
--------- ---------
FX business 2,974 2,024
--------- ---------
Less: Inter company elimination (465) (750)
--------- ---------
Total (8,441) (6,268)
--------- ---------
2018 2017
Segmental Total Assets GBP'000 GBP'000
Payment business and Professional services 46,509 30,221
--------- ---------
FX business 10,768 11,900
--------- ---------
Less: Inter company elimination (12,300) (13,382)
--------- ---------
Total Assets 44,977 28,739
--------- ---------
2018 2017
Segmental Total Liabilities GBP'000 GBP'000
Payment business and Professional services (13,381) (11,254)
--------- ---------
FX business (5,694) (11,094)
--------- ---------
Less: Inter company elimination 10,441 11,895
--------- ---------
Total Liabilities (8,634) (10,453)
--------- ---------
Assets and liabilities of the Professional services segment have
been included with those of the Payment business segment as
Professional services relates to the implementation of payment
services for customers.
5. Administrative Expenses
2018 2017
GBP'000 GBP'000
Staff and contractor costs 16,334 15,284
--------- ---------
Travel and entertainment costs 993 1,148
--------- ---------
Professional services costs 1,759 1,345
--------- ---------
Sales and marketing costs 821 665
--------- ---------
IT operational costs 2,767 2,212
--------- ---------
Other operational costs 768 456
--------- ---------
Other overheads 2,615 2,425
--------- ---------
Depreciation of property, plant and equipment 405 413
--------- ---------
Amortisation of intangible assets 2,229 2,491
--------- ---------
28,691 26,439
--------- ---------
6. Loss Before Taxation
2018 2017
GBP'000 GBP'000
Loss before taxation is stated after charging/(crediting):
--------- ---------
Amortisation of intangible assets 2,229 2,491
--------- ---------
Depreciation of property, plant and equipment 405 413
--------- ---------
Loss recovery EarthportFX (600) -
--------- ---------
Development costs not capitalised 2,397 1,458
--------- ---------
Foreign exchange loss/(gain) 21 (242)
--------- ---------
Operating leases:
--------- ---------
- property 731 670
--------- ---------
Fees payable to the Company's Auditor:
--------- ---------
For the statutory audit of the:
--------- ---------
- parent and consolidated financial statements 52 52
--------- ---------
- subsidiary financial statements 33 30
--------- ---------
- interim agreed upon procedures 6 8
--------- ---------
- Other services
--------- ---------
As provided by RSM UK Audit LLP - 11
--------- ---------
Fees payable to associates of the Company's
Auditor:
--------- ---------
- for tax compliance 12 13
--------- ---------
- for other services - 15
--------- ---------
7. Income Tax Credit
2018 Restated
GBP'000 2017
GBP'000
Current tax credit - (204)
---------- ---------
Deferred tax credit (40) (552)
---------- ---------
Total tax credit (40) (756)
---------- ---------
Factors affecting the tax charge for the
year:
---------- ---------
Loss before taxation (8,418) (10,176)
---------- ---------
Loss before tax multiplied by effective
standard rate of corporation tax in the
UK of 19% (FY2017: 20%) (1,599) (2,035)
---------- ---------
Tax effect of:
---------- ---------
Expenses not deductible for tax purposes 4 3
---------- ---------
Temporary differences not recognised for
deferred tax purposes 12 10
---------- ---------
Share-based payment charge not recognised
for deferred tax purposes 344 274
---------- ---------
Losses not recognised for deferred tax purposes 1,199 992
---------- ---------
Tax credit for the year (40) (756)
---------- ---------
No deferred tax asset has been recognised in relation to trading
losses carried forward of GBP107 million (FY2017: GBP103 million)
due to uncertainty over the timing of their recovery.
8. Loss Per Share
The 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 year.
2018 Restated
GBP'000 2017
GBP'000
Loss attributable to equity shareholders
of the Company (8,378) (9,420)
---------- ---------
2018 2017
Number Number
Weighted average number of ordinary shares
in issue (thousands) 582,771 483,771
--------- --------
Less: own shares held (thousands) (5,610) (2,763)
--------- --------
577,161 481,008
--------- --------
2018 2017
Basic and fully diluted loss per share (pence) (1.45p) (1.96p)
-------- --------
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 IAS 33,
Earnings Per Share.
9. Trade and Other Receivables
Group Company
2018 2017 2018 2017
GBP'000 GBP'000 GBP'000 GBP'000
--------- --------- --------- ---------
Trade receivables 3,399 2,658 3,399 2,658
--------- --------- --------- ---------
Other receivables 1,543 1,243 1,331 1,061
--------- --------- --------- ---------
Amount due from subsidiary undertakings - - 3,333 12,449
--------- --------- --------- ---------
Prepayments 1,282 1,127 822 809
--------- --------- --------- ---------
At 30 June 6,224 5,028 8,885 16,977
--------- --------- --------- ---------
Trade receivables amounted to GBP3.4 million (FY2017: GBP2.7
million), net of a provision of GBPnil (FY2017: GBPnil) for
impairment. There were no provisions in the Company accounts.
Movement on the Group provisions for impairment were as
follows:
2018 2017
GBP'000 GBP'000
At 1 July - -
--------- ---------
Provision for impairment (245) (141)
--------- ---------
Receivables written off during the year 245 141
--------- ---------
At 30 June - -
--------- ---------
The average credit period taken on sales of services is 31 days
(2017: 30 days). No interest is charged on overdue balances. The
Directors consider that the carrying amount of trade receivables
approximates to their fair value. The age profile of receivables as
at the year-end is as follows:
2018 2017
GBP'000 GBP'000
Up to 6 months 3,054 2,276
--------- ---------
6 to 12 months 42 157
--------- ---------
Over 1 year 303 225
--------- ---------
3,399 2,658
--------- ---------
10. Trade and Other Payables
Group Company
2018 2017 2018 2017
GBP'000 GBP'000 GBP'000 GBP'000
--------- --------- --------- ---------
Trade payables 1,920 1,588 1,491 1,122
--------- --------- --------- ---------
Other payables 21 59 8 49
--------- --------- --------- ---------
Amount due to subsidiary
undertakings - - 3 1
--------- --------- --------- ---------
Other taxation and social
security 413 603 366 470
--------- --------- --------- ---------
Accruals and deferred income 1,774 2,515 1,410 2,231
--------- --------- --------- ---------
At 30 June 4,128 4,765 3,278 3,873
--------- --------- --------- ---------
Trade payables and accruals principally comprise of amounts
outstanding in respect of operating costs. The average credit
period taken for trade purchases is 35 days (FY2017: 33 days). The
Directors consider that the carrying amounts for trade and other
payables and accruals approximate to their fair value.
11. Deferred Tax
Restated
2018 2017
Deferred tax asset GBP'000 GBP'000
At 1 July 370 -
--------- ---------
Deferred tax (credit)/debit released
to income statement (52) 370
--------- ---------
At 30 June 318 370
--------- ---------
Restated
2018 2017
Deferred tax liability GBP'000 GBP'000
At 1 July (556) (737)
--------- ---------
Deferred tax debit released to income statement 92 181
--------- ---------
At 30 June (464) (556)
--------- ---------
Deferred tax liabilities (net) (146) (186)
--------- ---------
The gross movement on the deferred tax is as follows:
Restated
2018 2017
GBP'000 GBP'000
At 1 July (186) (737)
--------- ---------
Accelerated capital allowances - -
--------- ---------
Deferred tax debit released to the income
statement 92 149
--------- ---------
Tax (credit)/debit on derivative financial
assets and liabilities (52) 402
--------- ---------
At 30 June (146) (186)
--------- ---------
The deferred tax reconciliation on category basis of assets and
liabilities is as follows:
Net Derivative
Financial
Liabilities Total
Deferred tax assets GBP'000 GBP'000
At 1 July 2016 - restated - -
--------------- ---------
Credited to the income statement 370 370
--------------- ---------
At 30 June 2017 - restated 370 370
--------------- ---------
Charged to the income statement (52) (52)
--------------- ---------
At 30 June 2018 318 318
--------------- ---------
Intangible
Assets arising Net Derivative
on Acquisition Financial Total
Deferred tax liabilities GBP'000 Assets GBP'000 GBP'000
At 1 July 2016 - restated (706) (31) (737)
---------------- ---------------- ---------
Credited to the income statement 150 31 181
---------------- ---------------- ---------
At 30 June 2017 - restated (556) - (556)
---------------- ---------------- ---------
Credited to the income statement 92 - 92
---------------- ---------------- ---------
At 30 June 2018 (464) - (464)
---------------- ---------------- ---------
The potential deferred tax asset arising on the cumulative
losses carried forward of GBP21.4 million (FY2017: GBP20.5 million)
has not been recognised owning to uncertainty as to its
recoverability. No deferred tax asset has been recognised on share
based payments due to uncertainty over the timing of its
recovery.
12. Share Capital
2018 2017
Issued GBP'000 GBP'000
At start of year: 488,190,410 (FY2017: 476,796,903)
ordinary shares of 10p each 48,819 47,679
--------- ---------
Shares issued in the year: 125,000,000 (FY2017:
10,797,671) ordinary shares of 10p each 12,500 1,080
--------- ---------
Shares issued to JSOP: 10,000,000 (FY2017: Nil) 1,000
ordinary shares of 10p each -
--------- ---------
Shares issued in lieu of fee: 309,944 (FY2017:
595,836) ordinary shares of 10p each 31 60
--------- ---------
At end of year: 623,500,354 (FY2017: 488,190,410)
ordinary shares of 10p each 62,350 48,819
--------- ---------
307,449,792 deferred shares of 7.5p each 23,059 23,059
--------- ---------
At end of year 85,409 71,878
--------- ---------
During the year to 30 June 2018, a total of 125,000,000 (FY2017:
10,797,671) new ordinary shares of 10 pence each were issued to
investors. 10,000,000 new ordinary shares of 10 pence each were
issued to the Joint Share Ownership Plan (JSOP) (FY2017: Nil) in
relation to an employees share options scheme. A further 309,944
(FY2017: 595,836) shares of 10 pence each were issued in lieu of
fees amounting to GBP81,000 (FY2017: GBP141,000).
Ordinary shares in issue are fully paid up at par. The holders
of ordinary shares are entitled to dividends and one vote per share
at meetings of the Company. The Company has one class of ordinary
shares which carries no rights to fixed income.
Deferred shares carry no rights to receive any dividend or other
distribution. The holders of the deferred shares have no rights to
receive notice, 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
GBP10,000,000 per ordinary share.
13. Reconciliation of Loss Before Tax to Net Cash Used in
Operating Activities
Restated
2018 2017
Group GBP'000 GBP'000
Loss before tax (8,418) (10,716)
--------- ---------
Amortisation of intangible assets 2,229 2,492
--------- ---------
Depreciation of property, plant and equipment 405 413
--------- ---------
Share-based payment and warrants charge 2,237 2,178
--------- ---------
Shares issued in lieu of fee 81 141
--------- ---------
R&D tax credit received - 204
--------- ---------
Finance income (33) (3)
--------- ---------
Reduction of contingent consideration liability
due to amendment as per the CVR deed - (136)
--------- ---------
Operating cash outflow before movements
in working capital (3,499) (4,887)
--------- ---------
(Increase)/decrease in receivables (368) 6,612
--------- ---------
Decrease in payables (1,727) (3,448)
--------- ---------
Cash used in operations (5,594) (1,723)
--------- ---------
Finance income 33 3
--------- ---------
Net cash used in operating activities (5,561) (1,720)
--------- ---------
14. Fair Value Adjustment
In accordance with IAS 39, the Group retranslated 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 gain
of GBP0.8 million (FY2017 (restated): loss of GBP2.4 million).
Restated
2018 2017
GBP'000 GBP'000
Fair value gain/(loss) on derivatives 757 (2,383)
--------- ---------
Total 757 (2,383)
--------- ---------
15. Derivative Financial Instruments
Derivative financial instruments held for trading are classified
as current assets or liabilities. Derivative financial assets and
liabilities are amounts not yet due under forward foreign exchange
contracts executed with clients maturing between a period of 3 days
to 18 months. All derivative financial instruments are recognised
and measured at fair value through the income statement. Forward
foreign exchange contracts held for trading were as follows:
2018 2017 Restated
Assets Liabilities Assets Liabilities
GBP'000 GBP'000 GBP'000 GBP'000
--------- ------------ --------- ------------
Forward foreign exchange
contracts - held
for trading 2,453 (4,042) 3,281 (5,132)
--------- ------------ --------- ------------
Total 2,453 (4,042) 3,281 (5,132)
--------- ------------ --------- ------------
16. Events After the Reporting Period
Post year end capital contribution
On 20 September 2018, the Board authorised the conversion of
loan balances with Earthport North America Inc., a wholly owned
subsidiary of Earthport plc incorporated in the State of Delaware,
into equity by way of capital contribution up to the amount of
GBP7.6 million (US$10 million). This is to ensure that it maintains
a minimum net worth and any other amount that is set by the state
regulators as part of the licensing process in the USA.
17. Annual Report and Accounts
A copy of this preliminary statement will be available to
download on the Group's website www.earthport.com
Copies of the Annual Report and Accounts will be posted to
shareholders on 4 December 2018 at which time the Annual Report and
Accounts will be made available to download on the Group's website
www.earthport.com in accordance with AIM Rule 26, and will be
delivered to the Registrar of Companies in due course.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR DDBDBUGDBGIC
(END) Dow Jones Newswires
November 30, 2018 02:00 ET (07:00 GMT)
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