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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Mi-pay Group Plc | LSE:MPAY | London | Ordinary Share | GB00B0N59376 | ORD 10P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 1.20 | 1.00 | 1.40 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMMPAY
RNS Number : 5324N
Mi-Pay Group PLC
25 September 2019
25 September 2019
Mi-Pay Group plc
('Mi-Pay', the 'Group', or the 'Company')
Interim Results
Mi-Pay (AIM: MPAY), a leading provider of digital transformation, mobile payment and payment fraud management solutions to Tier 1 Mobile Network Operators, Mobile Virtual Network Operators and digital content providers, is pleased to present its unaudited interim results for the six months ended 30 June 2019.
Operational Highlights
-- Renewed contracts with 2 major Clients:
o 2-year extension to 31 March 2022 with our largest client (31% of annual revenue in 2018).
o 5-year extension from 1 January 2019 with our third largest client (12% of annual revenue in 2018).
-- Continued to deliver operational excellence with high payment success rates and low fraud levels.
-- Delivered an 85% reduction in payment fraud levels within our direct managed fraud service resulting in a 46% gross margin (H1 2018: 7%).
-- Significant investment in delivering Mi-Pay's full compliance to the new European wide payment regulation framework PSD2 (Payment Services Directive) ahead of the majority of the market and the implementation date, mitigating our clients' risks.
Financial Highlights
-- Delivered a 15% increase in fully managed payments to GBP58.1 million (H1 2018: GBP50.2 million).
-- Successfully managed and indemnified GBP29.2 million of payments for fraud versus GBP17.8 million for the first 6 months of 2018, driving an increase in revenue of GBP0.1 million.
-- Total revenue recognised in the period was GBP1.7 million (H1 2018: GBP1.6 million). -- Total gross margin remained strong at 63% (H1 2018: 62%). -- Total gross profit increased to GBP1.1 million (H1 2018: GBP1.0 million).
-- Administrative expenses flat at GBP1.1 million (H1 2018: GBP1.1 million) despite continuing volume growth.
-- Approximately breakeven at EBITDA level (H1 2018: GBP0.1 million loss).
-- Cash & cash equivalents as at 30 June 2019 remained at GBP3.1 million (30 June 2018: GBP3.1 million).
-- Operational cash outflow for the period of GBP0.2 million (H1 2018: GBP0.3 million outflow) which is expected to be offset post period end by the receipt of a GBP0.3 million annual research and development tax credit in October 2019.
-- Basic and diluted loss per share 0.2 pence (H1 2018: 0.3 pence loss per share).
Michael Dickerson, Chairman of Mi-Pay Group plc commented:
"In the six-month period to 30 June 2019, we delivered further growth as consumers transferred to our on-line digital payment services, building on our previous periods of growth to EBITDA profitability. We are pleased to have further supported this by extending two of our major contracts and expect these clients to increase their volumes over the longer term. Our growth has enabled us to maintain our EBITDA break-even position for the 12 months to 30 June 2019.
We have continued to invest in delivering new market compliance regulations and are well placed to take advantage of the ongoing uncertainty this is bringing. Short-term growth is impacted by this uncertainty and the previously announced Client consolidation. Over the longer term, we expect to continue to build on our long term, naturally growing transaction flows and proven ability to deliver our secure payment services into the expanding and increasingly complex e-commerce market, underpinned with our ongoing investment in our solutions and our free cash position."
For further information, please contact:
Mi-Pay Group plc Allenby Capital Limited Tel: +44 207 112 2129 Tel: +44 203 328 5656 Michael Dickerson, Chairman James Reeve John Beale, CEO Asha Chotai
Chief Executive Officer's review
H1 2019 Operational Review
Trading
We have continued to grow and have now delivered an approximately breakeven Earnings Before Interest, Tax and Depreciation (EBITDA) for the 12 months to June 2019 (GBP0.3 million loss for the 12 month period to June 2018).
Our processed payment transactions grew during the period to GBP58.1 million (H1 2018: GBP50.2 million) driven from existing clients. The period under review represents our tenth consecutive six-month period of growth in terms of payment values processed, and this growth was underpinned by the renewal and extension of two of our major clients' contracts. Our fully indemnified payment fraud management service delivered GBP0.2m million of revenue in the period (H1 2018: GBP0.1 million), from GBP29.2 million of payment transactions (H1 2018: GBP17.8 million). We achieved gross profit margins of 46% on our revenue of GBP0.2 million (H1 2018: 7%) as we continued to enhance the solution.
Our professional services revenue remained flat at GBP0.2 million for the period and continues to be supported by our secure card vault solution that collects and processes all the payment transactions for a major UK Mobile Network Operator, securely transferring over GBP292 million of payments in the period (H1 2018: GBP264 million).
Our total revenue therefore increased to GBP1.7 million (H1 2018: GBP1.6 million) against which we continued to deliver strong gross profit margins of 63% (H1 2018: 62%).
Whilst we have continued to grow over the period and secured over 43% of our 2018 revenues in longer contracts, it is disappointing that, due to an internal restructure, during September 2019 one of our larger clients (13% revenue in 2018) consolidated their payment transactions to another existing provider as they restructure and downsize their own operation. When combined with the slowing of new business growth due to the market challenges with new legislation, this will affect our full year performance growth expectations. Over the longer term, we will continue to build on our naturally growing client base and have taken positive action in relation to budgets and spending to mitigate such losses to seek to ensure that the Group remains EBITDA positive and continues to invest in and develop its solutions.
From an investment and market perspective, we have continued to invest and develop the key areas of the business, which we are able to do efficiently with our in-house teams:
Payment Compliance and Optimisation
From September 2019, the new Payment Services Directive (PSD2) comes into effect across Europe, which affects all e-commerce payment providers. The regulation has required significant internal development to ensure we protect our Clients and retain compliance. We are on track and expect to meet all requirements in full. However, it is clear that many areas of the payment market will not be compliant in the original targeted timeframe and, as such, we expect to see a challenging period of adoption in H2 2019 and into 2020. We have ensured Mi-Pay is in a strong position to take advantage of these new opportunities to support retailers and solution providers struggling to navigate the challenges. We will monitor this closely and adapt accordingly. Regulators have recently announced delays of up to 18 months on this directive and as such we expect short term impacts to be reduced.
Payment Fraud Management
Whilst the new payment directives "Strong Customer Authentication" mandates card issuers to adopt stronger consumer authentication practices to prevent payment fraud risk, this mandate excludes recurring, voice activated and low value transactions; which are the majority of our managed payments. Therefore, our current fraud management capability will remain highly relevant in our market and, as such, we will continue to invest and build on our market leading performance in the area of payment risk management. We will continue to introduce new additional capabilities to improve performance and enhance our proven capability in optimising and managing risk in lower value, high-risk transactions.
Business Intelligence
Given all the changes in the processing regime and its increasing complexity, our Clients will need enhanced intelligence on how their consumers use their service and the impact of the new regulations. Through our systems we are able to provide deeper analysis on consumer behaviour than more traditional payment institutions and will look to use this to help drive new revenues for the Company and help our Clients better understand their e-commerce solutions.
The growth of our solution in Asia remains slow, however we continue to work with our contracted client in the region to drive growth via new payment methods and wider country expansion.
Financial Review
Unaudited Unaudited Audited Six months Six months Year ended 30 June ended 30 ended 31 2019 June 2018 Dec 2018 GBP GBP GBP Payment Transaction Value Processed 58,066,174 50,216,383 105,968,398 Transaction Services Revenue 1,298,214 1,249,174 2,606,781 Fraud Services Revenue 203,833 134,486 329,602 Professional Services Revenue 176,267 180,379 400,642 Revenue 1,678,314 1,564,039 3,337,025 ----------------------------------------- --------------- ------------ ------------ Transaction Services Gross profit 815,133 815,726 1,629,602 Fraud Services Gross profit 98,377 10,081 129,092 Professional Services Gross profit 137,231 144,807 320,894 Gross profit 1,050,741 970,614 2,079,588
Gross profit % 63% 62% 62% ----------------------------------------- --------------- ------------ ------------ Administrative expenses excluding depreciation (1,083,874) (1,060,993) (2,181,144) Adjusted Operating profit / (loss) (33,133) (90,379) (101,556) ----------------------------------------- --------------- ------------ ------------ Depreciation (65,655) (55,571) (120,345) ----------------------------------------- --------------- ------------ ------------ Operating profit / (loss) (98,788) (145,950) (221,901) ----------------------------------------- --------------- ------------ ------------ Cash and cash equivalents at beginning of period 3,487,185 2,925,766 2,925,766 Cash (outflow) / inflow from management of client payments (29,258) 342,337 569,322 Adjusted Net cash flow from operating activities(1) (212,271) (315,584) (156,460) Capital Expenditure (43,647) (12,223) (84,785) Adjusted Cash flow from financing(2) (72,582) 205,446 233,342 Cash and cash equivalents at end of period 3,129,427 3,145,742 3,487,185 Total equity attributable to the equity shareholders of the parent 223,095 369,340 21,920 Basic and diluted loss per ordinary share (0.2)p (0.3)p (0.5)p ----------------------------------------- --------------- ------------ ------------
(1)Adjusted Net cash flow from operating activities excludes cash flows from the management of client payments, exceptional items and GBP273,750 payments made to Directors for settlement of deferred salaries, subsequently fully reinvested as Ordinary share capital on 1 March 2018
(2)Adjusted Cash flow from financing excludes GBP273,750 cash inflow from the settlement of deferred salaries, subsequently fully reinvested as Ordinary share capital on 1 March 2018
Our strong performance in transaction volume growth and improved fraud management performance drove revenues and gross profits up by GBP0.1 million for the period, enabling us to deliver a gross margin of 63% (H1 2018: 62%). Our overall margins remained strong.
Our administrative expenses remained stable at GBP1.1 million for the period (H1 2018: GBP1.1 million) as we continued to see the benefits of cost reductions delivered in 2018. We will target further efficiencies through better use of technology and align our costs appropriately with revenue as we adjust to changes in the market. The growth in gross profit led to an improvement in our operating loss excluding depreciation, reducing from a GBP0.1 million loss in H1 2018 to GBPnil for the period, in line with our expectations, following on from our H2 2018 breakeven EBITDA.
On our balance sheet, compared to as at 31 December 2018, our trade and other receivables increased by GBP0.4 million due to increases in amounts owed to us in relation to payment transactions processed. This was offset in trade and other payables which also increased by GBP0.4 million, reflecting the increased amounts due to our Clients. There were no other material movements.
The Group ended the period with GBP3.1 million in cash and cash equivalents (GBP3.5 million at 31 December 2018), noting that of this balance, GBP2.8 million related to the management of client payments (GBP2.9 million as at 31 December 2018). Excluding the client related cash movements, cash outflow was GBP0.3 million in the period, comprising:
-- GBP0.2 million outflow due to net operational expenditure -- GBP0.1 million related to capital investment and lease payments.
We expect this outflow to be offset by a receipt of GBP0.3 million for our 2018 research and development tax credits which is expected to be received in October 2019, based upon our experience in previous periods. The Company remains free of any long-term debt.
Brexit
We continue to review the risks associated with Brexit. 43% of our revenue during the period was related to clients based in Europe, primarily in Ireland for payment services (29%) and our fraud services in Holland (12%). We see these two regions as our largest risks in relation to Brexit. Our solutions are primarily local domestic payment solutions, delivered on behalf of local entities for their local customers and we believe this reduces our risk. For our Irish client, our services are directly supported by an Irish registered payment institution which will enable us to transact locally via a local entity should this be required, underpinned by a long-term contract. We process successfully using this methodology today in Asia pacific. Our fraud service is a software solution that does not involve the processing of cash and can be managed and processed locally if required. Whilst some incremental costs and administration effort would be involved, we do not believe this will be material. For our resources, where the majority of our support teams are based in Europe, this operates as a stand-alone trading entity, abiding by all local laws, taxes and compliance. We expect this to have minimal impact given the flexibility we have across the Group. Crucially, we are committed to continue to comply with the most rigorous data protection regulation and, as such, will retain full compliance with the European Union 'General Data Protection Regulation' regime and will retain our global PCI data security standard.
Employees
We recognise that the performance achieved in this period would not have been possible without the support and continued dedication of our staff. They continue to support our delivery model and enhance the solutions to our clients, support the strong transaction growth, develop, and deliver improved, secure technologies. In particular, their focus on adapting our technology to ensure we deliver payment compliance has been a critical investment, and our focus on driving improved fraud management solutions and a fully stable infrastructure delivers enhanced overall financial performance. They are our most valuable resource and we would like to thank them for their efforts and the stability they give to the Group. We encourage a strong, innovative culture and our resources in the United Kingdom and Romania offer a highly skilled, experienced and stable delivery structure with a proven capacity to scale efficiently as we grow. In H2 2019, we will look to invest further in our security, fraud and business intelligence solutions, product delivery and commercial resources with their support.
Outlook
We will continue to drive growth from our long-term clients and enhance our solutions and payments services to support their transition from retail to digital solutions. In addition, we have ensured our solutions are adapted to the new compliance environment, securing stability for the future. This will allow us to target potential new opportunities where Clients face challenges in adapting to change. As we look to grow outside of our traditional mobile operator market, we will focus on new verticals where payment risk and transaction optimisation is key to success, such as the fast growing digital content and gifting markets where we see similar experiences to that of the mobile pre-pay market.
Our challenges over the coming period relate to the economic uncertainties of Brexit and new compliance requirements creating uncertainty in the market, restricting Client investments and increasing the likelihood of internal consolidation. We will mitigate the impact by growing existing services to clients and manage our cost base accordingly.
The Board remains confident that our total market opportunity continues to increase as the digital payments market expands globally and our solutions become increasingly relevant to a wider set of customers, geographies and vertical markets. Our fully compliant risk management solutions retain our strong position, allowing us to take advantage of this consumer migration to digital e-commerce.
John Beale
CEO
Consolidated Statement of Comprehensive Income
For the period of six months ended 30 June 2019
Unaudited Unaudited Audited Six months Six months Year ended ended ended 30 June 2019 30 June 2018 31 Dec GBP GBP 2018 Note GBP ------------------------------------- ----- -------------- ---------------------------- ------------ Payment Transaction Value Processed 58,066,174 50,216,383 105,968,398 Transaction Services Revenue 1,298,214 1,3249,174 2,606,781 Fraud Services Revenue 203,833 134,486 329,602 Professional Services Revenue 176,267 180,379 400,642 ------------------------------------- ----- -------------- ---------------------------- ------------ Revenue 1,678,314 1,564,039 3,337,025 ------------------------------------- ----- -------------- ---------------------------- ------------
Cost of sales (627,573) (593,425) (1,257,437) ------------------------------------- ----- -------------- ---------------------------- ------------ Gross profit 2 1,050,741 970,614 2,079,588 Administrative expenses ------------------------------------- ----- -------------- ---------------------------- ------------ General and administration (785,742) (775,472) (1,495,603) Research and development (298,132) (285,521) (646,549) Depreciation (65,655) (55,571) (120,345) Share Based payments - - (38,992) ------------------------------------- ----- -------------- ---------------------------- ------------ Total administrative expenses (1,149,529) (1,116,564) (2,301,489) Operating loss 3 (98,788) (145,950) (221,901) Finance income 691 210 721 Finance expense (1) (24) (34) ------------------------------------- ----- -------------- ---------------------------- ------------ Loss before taxation (98,098) (145,764) (221,214) Taxation (73) (1,941) (14,122) ------------------------------------- ----- -------------- ---------------------------- ------------ Loss for the period/year (98,171) (147,705) (235,336) ------------------------------------- ----- -------------- ---------------------------- ------------ Other Comprehensive expense for the year Exchange differences on translation of foreign operations 1,150 4,152 3,567 Loss and total comprehensive expense for period attributable to the owners of the parent (97,021) (143,553) (231,769) ------------------------------------- ----- -------------- ---------------------------- ------------ Basic and diluted loss per ordinary share 5 (0.2)p (0.3)p (0.5)p ------------------------------------- ----- -------------- ---------------------------- ------------
Consolidated Statement of Financial Position
As at 30 June 2019
Unaudited Unaudited Six months Six months Audited ended ended Year 30 June 30 June ended 2019 2018 31 Dec 2018 Note GBP GBP GBP --------------------------------- ----- ------------- ------------- ------------- ASSETS Non-current assets Property, plant and equipment 349,692 44,363 371,699 Total non-current assets 349,692 44,363 371,699 Current assets Trade and other receivables 6 1,655,057 1,330,143 1,208,358 R&D tax credit receivable 386,074 364,477 200,000 Cash and cash equivalents 3,129,427 3,145,742 3,487,185 Total current assets 5,170,558 4,840,362 4,895,543 Total assets 5,520,250 4,884,725 5,267,242 --------------------------------- ----- ------------- ------------- ------------- LIABILITIES Current liabilities Trade and other payables 7 (5,020,455) (4,494,142) (4,597,844) Obligations under finance lease (95,548) (21,243) (137,938) --------------------------------- ----- ------------- ------------- ------------- Total current liabilities (5,116,003) (4,515,385) (4,735,782) Non-current liabilities Obligations under finance lease (181,152) - (211,344) --------------------------------- ----- ------------- ------------- ------------- Total non-current liabilities (181,152) - (211,344) Total liabilities (5,297,155) (4,515,385) (4,947,126) --------------------------------- ----- ------------- ------------- ------------- Net assets 223,095 369,340 320,116 --------------------------------- ----- ------------- ------------- ------------- Equity Share capital 8 4,573,429 4,573,429 4,573,429 Share premium 1,480,791 1,480,791 1,480,791 Share options reserve 9 38,992 - 38,992 Reverse acquisition reserve 6,920,115 6,920,115 6,920,115 Merger reserve 6,808,742 6,808,742 6,808,742 Retained deficit (19,598,974) (19,413,737) (19,501,953) --------------------------------- ----- ------------- ------------- ------------- Total equity attributable to the equity shareholders of the parent 223,095 369,340 320,116
John Nicholas Beale
Chief Executive Officer
Consolidated Statement of Cash Flows
For the period of six months ended 30 June 2019
Unaudited Unaudited Six months Six months Audited ended ended Year 30 June 30 June ended 2019 2018 31 Dec 2018 Note GBP GBP GBP -------------------------------------- ------ ------------ ------------ ------------- Cash flows from operating activities Loss before tax from continuing operations (98,098) (145,764) (221,214) ---------------------------------------------- ------------ ------------ ------------- Adjusted for: Depreciation 65,655 55,571 120,345 Exchange differences on translation of foreign operations 1,150 4,152 3,567 Finance income (691) (210) (721) Finance expense 1 24 34 Share based payment 0 0 38,992 R&D credits (186,074) (134,477) (254,081) (Increase) / decrease in trade and other receivables (446,699) (191,867) (70,081) Increase / (decrease) in trade and other payables 422,611 167,329 528,662 Adjusted profit/(loss) from operations after changes in working capital (242,145) (245,242) 145,503 Interest received 691 210 721 Interest paid (1) (24) (34) Income taxes paid (73) 0 (14,122) Corporation tax (paid)/received (inc R&D credits) 0 (1,941) 284,081 Net cash (outflow) / inflow from operating activities (241,528) (246,997) 416,149 Cash flows from investing activities Purchase of property, plant and equipment (43,648) (12,223) (35,501) Net cash outflows from investing activities (43,648) (12,223) (35,501) Cash flows from financing activities Proceeds from issue of share capital, net of issue costs 0 490,973 233,342 Finance lease payments (72,582) (11,777) (52,571) Net cash (outflow) / inflows from financing activities (72,582) 479,196 180,771 Net increase / (decrease) in cash and cash equivalents (357,758) 219,976 561,419 Cash and cash equivalents at beginning of period 3,487,185 2,925,766 2,925,766 ---------------------------------------------- ------------ ------------ ------------- Cash and cash equivalents at end of period 3,129,427 3,145,742 3,487,185 ---------------------------------------------- ------------ ------------ -------------
Consolidated Statement of Changes in Equity
For the period of six months ended 30 June 2019
Reverse For the period Share Share options acquisition Merger Retained ended 30 June 2019 capital Share premium reserve reserve reserve deficit Total GBP GBP GBP GBP GBP GBP GBP -------------------- ---------- -------------- -------------- ------------- ---------- ------------- ---------- At 1 January 2019 4,573,429 1,480,791 38,992 6,920,115 6,808,742 (19,501,953) 320,116 Loss for the period from continuing operations - - - - - (98,171) (98,171) -------------------- ---------- -------------- -------------- ------------- ---------- ------------- ---------- Other comprehensive expense for the period - - - - - 1,150 1,150 At 30 June 2019 4,573,429 1,480,791 38,992 6,920,115 6,808,742 (19,598,974) 223,095 ==================== ========== ============== ============== ============= ========== ============= ==========
Consolidated Statement of Changes in Equity
For the period of six months ended 30 June 2018
Reverse For the period Share Share options acquisition Merger Retained ended 30 June 2018 capital Share premium reserve reserve reserve deficit Total GBP GBP GBP GBP GBP GBP GBP -------------------- ---------- -------------- -------------- ------------- ---------- ------------- ---------- At 1 January 2018 4,159,324 1,403,923 624,729 6,920,115 6,808,742 (19,894,913) 21,920 New Issue of Shares 414,105 76,868 - - - - 490,973 Share Options Lapsed (624,729) 624,729 - Loss for the period from continuing operations - - - - - (147,705) (147,705) -------------------- ---------- -------------- -------------- ------------- ---------- ------------- ---------- Other comprehensive expense for the period - - - - 4,152 4,152 At 30 June 2018 4,573,429 1,480,791 - 6,920,115 6,808,742 (19,413,737) 369,340 ==================== ========== ============== ============== ============= ========== ============= ==========
Consolidated Statement of Changes in Equity
For the year ended 31 December 2018
For the year ended Reverse 31 December Share Share options acquisition Merger Retained 2018 capital Share premium reserve reserve reserve deficit Total GBP GBP GBP GBP GBP GBP GBP -------------------- ---------- -------------- -------------- ------------- ---------- ------------- ---------- At 1 January 2018 4,159,324 1,403,923 624,729 6,920,115 6,808,742 (19,894,913) 21,920 Loss for the period from continuing operations (235,336) (235,336) Other comprehensive income for the year - - - - - 3,567 3,567 -------------------- ---------- -------------- -------------- ------------- ---------- ------------- ---------- Total comprehensive income for the year - - - - - (231,769) (231,769) Shares issues in year 414,105 76,868 - - - - 490,973 Share options issued 38,992 - - - 38,992 Share options cancelled - - (624,729) - - 624,729 - -------------------- ---------- -------------- -------------- ------------- ---------- ------------- ---------- Total contribution by and distribution to owners 414,105 76,868 (585,737) - - 624,729 529,965 -------------------- ---------- -------------- -------------- ------------- ---------- ------------- ---------- At 31 December 2018 4,573,429 1,480,791 38,992 6,920,115 6,808,742 (19,501,953) 320,116 ==================== ========== ============== ============== ============= ========== ============= ==========
Notes to the Financial Information
1. Basis of preparation
The unaudited consolidated half-yearly financial information in this report has been prepared on the basis of the accounting policies expected to apply for the financial year to 31 December 2019 and in accordance with recognition and measurement principles of International Financial Reporting Standards (IFRSs) as endorsed by the European Union. The accounting policies applied in the preparation of this half-yearly financial information are consistent with those used in the financial statements for the year ended 31 December 2018. There has been no material impact from the application of IFRS16. This interim report has not been reviewed by the Group's auditors, and does not constitute statutory accounts within the meaning of the Companies Act 2006. The financial information for the six months ended 30 June 2018 and 30 June 2017 is not audited.
The financial information contained in this document does not include all of the information required for full annual financial statements and do not comply with all of the disclosures in IAS34 'Interim Financial Reporting'. Accordingly, whilst this financial information has been prepared in accordance with IFRS they cannot be construed as being in full compliance with IFRS.
The financial information for the year ended 31 December 2018 does not constitute the full statutory accounts for that period. The Annual Report and Accounts for 31 December 2018 have been filed with the Registrar of Companies. The Independent Auditors' Report on the Annual Report and Accounts for 2018 was unqualified and did not include references to any matters which the auditors drew attention to by way of emphasis without qualifying their report and did not contain statements under Section 498(2) or 498(3) of the Companies Act 2006.
2. Segmental analysis
The chief operating decision maker has been identified as the Chief Executive Officer (CEO) of the Group. The chief operating decision maker is responsible for regularly assessing the performance of the Group's operating segments and performing the function of allocating resources. To assist the chief operating decision maker in this process, internally generated reporting is prepared for each operating segment.
The Group has three operating segments that it reports on. These operating segments are:
-- Transaction Services Revenues: This segment generates revenue from the processing of transactions on behalf of clients and is Mi-Pay Group plc's core business.
-- Fraud Services Revenues: This segment generates revenue from the assessment of transactions as to the likelihood of being fraudulent and processes or rejects based on this assessment with the company taking a risk as to the potential fraud.
-- Professional Services Revenues: This segment generates revenue from the development, delivery and hosting of our platform and client solutions.
The CEO assesses the performance of the operating segments based on revenue and gross profit. The CEO uses these measures to assess performance because they are quick to analyse and directly relevant to evaluating the results of each segment. (1)
The segments are continuing operations and results are as follows:
Operating Segments
Unaudited Unaudited Audited Six months Six months Year ended 30 ended 30 ended 31 June 2019 June 2018 Dec 2018 GBP GBP GBP Payment Transaction Value Processed 58,066,174 50,216,383 105,968,398 Transaction Services Revenue 1,298,214 1,249,174 2,606,781 Fraud Services Revenue 203,833 134,486 329,602 Professional Services Revenue 176,267 180,379 400,642 ------------ ------------ ------------ Total revenue 1,678,314 1,564,039 3,337,025 Transaction Services cost of sales 483,081 433,448 977,179 Fraud Services cost of sales 105,456 124,405 200,510 Professional Services cost of sales 39,036 35,572 79,748 ------------ ------------ ------------
Total cost of sales 627,573 593,425 1,257,437 Transaction Services gross profit 815,133 815,726 1,629,602 Fraud Services gross profit 98,377 10,081 129,092 Professional Services gross profit 137,231 144,807 320,894 ------------ ------------ ------------ Total gross profit 1,050,741 970,614 2,079,588 ============ ============ ============ Transaction Services gross profit % 63% 65% 63% Fraud Services gross profit % 48% 7% 39% Professional Services gross profit % 78% 80% 80% ------------ ------------ ------------ Total gross profit % 63% 62% 62% ============ ============ ============
(1) There is no inter segment trading and assets and liabilities are not allocated to segments.
3. Operating Loss
This is arrived at after charging / (crediting)
Unaudited Unaudited Audited Six months Six months Year ended 30 ended 30 ended June 2019 June 2018 31 Dec GBP GBP 2018 GBP Expenses by nature Staff costs - operating and administration 461,910 269,370 790,828 Research and development (includes staff costs) 298,132 285,521 646,550 Depreciation of property, plant and equipment 65,655 55,571 120,345 Operating lease expense 13,731 15,978 36,376 Foreign exchange loss / (gain) 21,302 (19,926) (5,655) Share Based payments - - 38,992 Other administration expenses 288,799 510,050 674,053 ------------ ------------ ---------- Total administrative expenses 1,149,529 1,116,564 2,301,489 ============ ============ ========== 4. Staff costs Unaudited Unaudited Audited Six months Six months Year ended 30 ended 30 ended June 2019 June 2018 31 Dec GBP GBP 2018 GBP Staff costs (including Directors compromise): Wages and salaries 733,746 651,723 1,359,235 Defined contribution pension cost 11,798 13,157 20,500 Social security contributions and similar taxes 40.475 34,575 78,142 Total staff costs 786,019 699,455 1,457,877 ============ ============ ========== 5. Loss per share Unaudited Unaudited Audited Six months Six months Year ended 30 ended 30 ended 31 June 2019 June 2018 Dec 2018 GBP GBP GBP ----------------------------------- ------------ ------------ ----------- Loss for the year (98,098) (145,764) (221,214) Weight-average shares outstanding (number) 45,734,277 44,361,554 45,044,102 ----------------------------------- ------------ ------------ ----------- Basic EPS (0.2)p (0.3)p (0.5) Diluted EPS (0.2)p (0.3)p (0.5) =================================== ============ ============ ===========
The numerators shown above represent the total loss from continuing operations for the period or year.
Since the Group was in a loss making position for all three periods presented, there was no difference between the weighted average number of shares used to calculate basic and diluted net loss per share.
6. Trade and other receivables Unaudited Unaudited Audited Six months Six months Year ended 30 ended 30 ended June 2019 June 2018 31 Dec GBP GBP 2018 GBP Trade receivables 215,430 89,460 126,642 Less: provision for impairment - - - of trade receivables ------------ ------------ ---------- Trade receivables - net 215,430 89,460 126,642 Client receivables 1,324,037 981,041 969,098 Prepayments 102,937 114,120 74,019 Other receivables 12,653 145,522 38,599 ------------ ------------ ---------- Total trade and other receivables 1,655,057 1,330,143 1,208,358 ============ ============ ========== 7. Trade and other payables Unaudited Unaudited Audited Six months Six months Year ended 30 ended 30 ended 31 June 2019 June 2018 Dec 2018 GBP GBP GBP Trade payables 331,779 228,155 235,755 Client payables 4,175,133 3,640,333 3,848,251 Accruals 209,057 321,968 214,293 Deferred income 47,327 19,763 18,933 Other payables - tax and social security payments 47,810 65,949 59,135 Deferred directors' emoluments 149,469 149,269 149,267 Other Payables 59,880 68,705 72,210 ------------ ------------ ---------- Total trade and other payables 5,020,455 4,494,142 4,597,844 ============ ============ ========== 8. Share capital and premium Number of Share Capital Share premium shares GBP GBP At 30 June 2018 45,734,277 4,573,429 1,480,791 At 31 December 2018 45,734,277 4,573,429 1,480,791 At 30 June 2019 45,734,277 4,573,429 1,480,791
On 1 March 2018 Mi-Pay placed 4,141,048 new ordinary shares of 10p nominal value each ('Placing Shares') at a placing price of 12.5p per share (the "Placing Price") (the 'Placing').
9. Share Based Payment
The Group operates two equity-settled share-based remuneration (share options) schemes for employees: a United Kingdom tax authority approved EMI share options scheme and an unapproved share option scheme. The granting of options to employees in 2014 and 2018 was decided upon by the Group and no legal or constructive obligation exists to grant further options in future years.
On 28 February 2018, the Group issued options over a total of 3,750,000 Ordinary Shares (under the terms of the Group's existing share option scheme), with an exercise price of 13 pence per share. Existing share options over 3,763,425 Ordinary Shares with an exercise price of 41 pence have been cancelled, or forgone. As a result of cancellation of previously issued share options, the GBP624,729 of share option reserve as at 31 December 2017 was transferred to retained deficit during the six month period to 30 June 2018 with no impact on the Consolidated Statement of Comprehensive Income for the six month period to 30 June 2019. A charge of GBP38,992 was made to the Consolidated Statement of Comprehensive Income for the new issue during the period to 31 December 2018.
The vesting condition for employees awarded share options is to deliver 3 consecutive months of positive Earnings before Interest and Tax and that the individual remains an employee of the Group over the vesting period which was achieved in the year to 31 December 2018. The contractual life of the options is ten years and there are no cash settlement alternatives.
The movement in the number of share options in the 6 month period to 30 June 2019 is set out below.
Exercise price Number (GBP) 30/6/19 Period ended 30/6/19 Brought forward at 1 January 0.13 3,750,000 Lapsed/surrendered during - - the period Granted during the period - - Carried forward at 30 June 2019 0.13 3,750,000 Exercisable at 30 June 2019 0.13 3,750,000
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
IR USONRKKAKUAR
(END) Dow Jones Newswires
September 25, 2019 02:00 ET (06:00 GMT)
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