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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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RNS Number : 1976Z
Neovia Financial PLC
16 September 2009
NEOVIA Financial Plc
Interim Results for the half year ended 30 June 2009
First half in line in a difficult year
Thursday, 17 September 2009 - NEOVIA Financial Plc ("NEOVIA" or the "Company" or
the "Group"), (NEO.L), the independent online payments business, today
announces its results for the half year ended 30 June 2009.
Financial Results:
* Group revenue $32.6 million (H1 2008: $35.9 million)
* E-wallet revenue down 9%, vs H1 2008
* Gateway revenue up 12%, vs H1 2008
* Gross margin at 56.2% (H1 2008: 61.6%)
* Income from operations (1) down 23% to $5.4 million (H1 2008: $7.0 million)
* Group cash & cash equivalents decreased to $73.4 million (31 December 2008:
$76.2 million); available "free cash" of $30.2 million
1Income from operations defined as gross profit less general and administrative
costs
Business Highlights:
* Mark Mayhew appointed President & CEO on 1 September
* Active e-wallet users up 3% to 95,492 at Q2 2009 (Q1 2009: 92,757)
* Average daily deposit volume up 20% to $475,266 in Q2 2009 (Q1 2009: $396,413)
* Diversification continues with significant contract wins in MMOG space
* New product launches including Send Money remittance service were welcomed by
merchants
* Newteller platform in initial stage of deployment, running in parallel with the
existing platform - full migration will be completed in early 2010
* Notice of Dismissal received from US authorities draws conclusion to DPA
Dale Johnson, Chairman of NEOVIA, commented:
"The first half's trading results were in line with management's expectations
given the continuing difficult market conditions that prevailed throughout the
period. The Newteller platform will launch fully in early 2010 as anticipated,
creating much needed flexibility for developing functionality to meet evolving
market needs. During this period the Group faces both challenges and
opportunities, but remains focused on maximising revenues, controlling costs and
preserving cash to deliver value for shareholders. We expect trading conditions
to remain tough in the second half, with the Company delivering revenue similar
to the first half, with prospects for 2010 looking promising. We are pleased to
have recruited Mark Mayhew to lead NEOVIA as President & CEO, and the Board
remains confident about the Group's future prospects."
Mark Mayhew, President & CEO of NEOVIA, added:
"I am very pleased to have joined NEOVIA and am reassured by these results which
demonstrate the resilience of the Company's business model even in the toughest
of economic environments. I shall be concentrating on creating substantial
shareholder wealth in the future and the board is fully supportive of this aim.
Over the next few months, one of my prime objectives is to focus the Group's
efforts on re-energising our offering in order to grow revenues demonstrably. I
am confident that we can tune our strategy and execution to reflect evolving
market needs and to create renewed success, and I look forward to communicating
our efforts and results in this regard as we progress."
For further information contact:
+------------------------------------+-----------------------+---------------------------+
| NEOVIA Financial Plc | | |
+------------------------------------+-----------------------+---------------------------+
| Dale Johnson | Chairman | + 44 (0) 207 638 9571 |
+------------------------------------+-----------------------+---------------------------+
| Mark Mayhew | President & CEO | |
+------------------------------------+-----------------------+---------------------------+
| Doug Terry | CFO | |
+------------------------------------+-----------------------+---------------------------+
| | | |
+------------------------------------+-----------------------+---------------------------+
| Andrew Gilchrist | VP Communications | +44 (0) 1624 698 713 |
+------------------------------------+-----------------------+---------------------------+
| Email:investorrelations@neovia.com | | |
+------------------------------------+-----------------------+---------------------------+
| Twitter: | | |
| https://twitter.com/neovia | | |
+------------------------------------+-----------------------+---------------------------+
| | | |
+------------------------------------+-----------------------+---------------------------+
| Citigate Dewe Rogerson | | + 44 (0) 207 638 9571 |
+------------------------------------+-----------------------+---------------------------+
| Sarah Gestetner / George | | |
| Cazenove | | |
+------------------------------------+-----------------------+---------------------------+
| | | |
+------------------------------------+-----------------------+---------------------------+
| Daniel Stewart & Co Plc | | + 44 (0) 207 776 6550 |
+------------------------------------+-----------------------+---------------------------+
| Paul Shackleton | | |
+------------------------------------+-----------------------+---------------------------+
| | | |
+------------------------------------+-----------------------+---------------------------+
* * * * *
About NEOVIA Financial
Trusted by consumers and merchants in over 160 countries to move and manage
billions of dollars each year, NEOVIA Financial Plc operates the world's leading
independent online payments business. Through its Payment Suite, featuring
NETELLER , NETBANX , Net+(TM) and 1-PAY(TM) brands, NEOVIA specialises in
providing innovative and instant payment services where money transfer is
difficult or risky due to identity, trust, currency exchange, or distance. Being
independent has allowed NEOVIA to support thousands of retailers and merchants
in many geographies and across multiple industries.
NEOVIA Financial Plc is quoted on the London Stock Exchange's AIM market, with a
ticker symbol of NEO.Subsidiary company NETELLER (UK) Limited is authorised by
the Financial Services Authority (FSA) to operate as a regulated e-money issuer.
For more information about NEOVIA Financial visit www.neovia.com or subscribe at
www.neovia.com/feeds/.
* * * * *
The Group will host a meeting for invited UK-based analysts this morning to be
held at the offices of Citigate Dewe Rogerson at 9.00 a.m. A copy of the slide
presentation given at the meeting will be available on the Group's website later
today. In addition, there will be a conference call for international investors
and analysts on Thursday 17 September 2009 starting at 2.00 p.m. BST (9.00 a.m.
EST), details of which are set out below:
+-----------------------------+--------------------------+---------------------------+
| | | |
+-----------------------------+--------------------------+---------------------------+
| Participant Dial-in | UK Free Call: | 0808 109 0700 |
| numbers: | | |
+-----------------------------+--------------------------+---------------------------+
| | USA Free Call: | 1 866 966 5335 |
+-----------------------------+--------------------------+---------------------------+
| | Standard International: | +44 203 003 2666 |
+-----------------------------+--------------------------+---------------------------+
| | Password: | Neovia Financial |
+-----------------------------+--------------------------+---------------------------+
In order to ensure access to the call, attendees should please confirm their
attendance in advance by emailing NEOVIA Investor Relations at:
investorrelations@neovia.com. A recording of the conference call will be
available for 7 days following the call.
BUSINESS REVIEW
Introduction
The first six months of trading in 2009 have demonstrated the resilience of
NEOVIA's business model which brings together gateway, e-wallet and card
businesses under the NEOVIA Payment Suite offering to merchants and
consumers.The results also reflect the challenges the Group faces in increasing
its active customer base and revenue in the current difficult market.
Fee revenue was down 4% to $31.5 million from H1 2008. Revenues from the
NETELLER e-wallet declined 9% and gateway revenues from the NETBANX Europe and
Asia businesses were up 12%, each compared to the same period in 2008. Strong
growth in revenues from the Asian gateway business continued, growing 40% to
$6.9 million. Quarter-on-quarter, total revenues declined 2% from $16.4 million
in Q1 2009 to $16.2 million in Q2 2009. Low interest rates worldwide continued
to have an impact on interest income, which was $1.1 million in H1 2009 compared
to $3.1 million for the same period in 2008.
Factors that have resulted in the year-on-year revenue decline include the
difficult macro-economic environment which has affected the Group's gaming
merchant base, including regulatory difficulties experienced by some key
merchants. In addition, focus on the Group's Newteller platform project has
delayed several revenue uplift initiatives by a few months. Despite this, the
Group is well placed to take advantage of any improvements in the economy in the
second half of the year.
Increasing volumes in NETBANX Asia's business, which has a lower gross margin,
contributed to a margin of 56.2% for H1 2009 compared to 61.6% in H1 2008. Cost
management remains a core objective in the second half, with initiatives such as
migrating certain call centre operations to the Group's Asian locations expected
to generate further cost savings.
The Group achieved income from operations of $5.4 million in H1 2009, down
from $7.0 million in H1 2008. Focus on the Group's cost base, together with
foreign exchange benefits as the majority of the Group's operational costs are
in non US dollar currencies, meant that general and administrative expenses
decreased to $13.0 million from $15.1 million in H1 2008. The Group incurred
$5.5 million of impairment expense relating to fees and other costs incurred in
unsuccessful acquisitions and investments. As part of the Group's
restructuring, three senior executives left the Group in the period. Total
restructuring expenses, including severance payments, legal fees and other
supplier settlements, were $1.6 million.
The Group's financial position remains solid with cash and cash equivalents of
$73.4 million at 30 June 2009, resulting in "free cash" of approximately $30.2
million. Ongoing investment in the Newteller platform project represented the
main use of cash in the first half of 2009. The Group is committed to prudent
cash management and will therefore not be declaring a dividend for the first six
month period of 2009, taking into account the results to date and current
uncertain economic outlook.
Product innovation and development
The Group continued to invest in enhancing its offering to both consumers and
merchants in the first half of 2009, with additional payment options and new
countries added to the NETELLER e-wallet service. The Group added six further
countries to its full service offering (e-wallet, P2P and Money Transfer) in the
first half of 2009. Further payment options were added to the NETBANX Unified
Pay Page, launched in late 2008, which allows NETBANX merchants to offer
multiple payment options via a single integration.
Progress has been made in our key revenue generation initiatives, although some
of these are a few months behind schedule due to the intense focus on Newteller
and other factors. Successes include a focused active customer program and new
major contact wins with international merchants like SBOBET, a leading sports
betting operator, which will process payments using both the NETELLER e-wallet
and NETBANX gateway, and MindArk, operator of the virtual world Entropia
Universe. This latter contract also signals the Group's successful entry into
the multi-billion dollar Massive Multiplayer Online Gaming (MMOG) market, a key
vertical that will be well served by our Payment Suite.
Early in the first quarter, our Person-to-Person (P2P) service was extended to
NETELLER Express-level members, allowing instant transfer of funds between
NETELLER e-wallet members. Building on this, the NETELLER Money Transfer service
(www.sendmoney.neteller.com) went live in July 2009 and is already showing
promising trends for new sign ups and volumes of funds transferred. In late
August changes were made to the Net+ virtual MasterCard, making it available to
qualified NETELLER Express-level members.
The first half saw the Group's commitment to innovation recognised with a number
of industry awards. The Net+ Card, a virtual and physical prepaid card loaded
via the NETELLER e-wallet, won the Best New Prepaid Card Product Launch at the
Cards & Payments Europe 2009 Awards, and was recognised in the FinExtra
Innovation Showcase, which highlights the most innovative technologies and
products in financial services. The NETELLER e-wallet was chosen by the
affiliate industry as the Best Payment System for Affiliates for the second
consecutive year at the Casino Affiliate Programme Awards.
Newteller platform investment
Substantial progress was made in the Group's Newteller platform project during
the first half and deployment is scheduled to occur during Q3 and Q4 2009. The
Newteller platform is already running in production where it will shadow the
existing platform with a planned and sequential cut-across until the process is
complete in early 2010. The anticipated benefits of Newteller include cost
savings by automating numerous processes, greater operating efficiencies by
migrating multiple current systems on to a single platform and flexibility to
rapidly develop new functionalities to meet evolving market opportunities. In
addition, Newteller will provide enhanced capability in such key areas as
disaster recovery, service availability, risk management and significantly
reduced new product development and deployment lead times. A number of exciting
product initiatives are already being worked on to take advantage of the
availability of the Newteller platform in 2010.
Strategic investments
The first half saw the Group investigate and pursue a number of potential
strategic opportunities, including the unsuccessful acquisition of IDT Financial
Services Holding Limited. This resulted in acquisition-related costs of $0.9
million being incurred in the Group's results for the first half. The Group also
conducted a review of its strategic investment in Centricom Pty Limited and
determined that due to its performance over the past two years, the Group would
provide no further funding to the business. This resulted in the recognition of
an impairment loss in the period of $4.6 million in relation to the Group's
investment.
Directors and senior management
The appointment of Mark Mayhew as President & CEO with effect from 1 September
2009 was announced on 19 August 2009. Two additional non-executive directors,
John Bateson and Jonathan Comerford, were appointed to the Board on 20 January
2009. Ron Martin, former President & CEO, stepped down from his role and the
Board on 31 May 2009.
US update
The Group announced on 21 August 2009 that the Deferred Prosecution Agreement
("DPA") entered into effective 18 July 2007 with the US Attorney's Office for
the Southern District of New York has expired as scheduled. The Company also
received a copy of the Notice of Dismissal of the Complaint filed against it in
this matter in the United States District Court for the Southern District of New
York. The Company has complied with the DPA and will no longer be subject to
oversight by the Monitor appointed pursuant to the DPA.
Current trading and outlook
The Group's overall revenue in the first two months of the third quarter is
slightly below expectations. July's e-wallet revenue was flat compared to June.
Somewhat more encouraging was that August's e-wallet revenue increased by
approximately 6% from July due in part to a targeted VIP bonus promotion.
Sign-ups from 1 July to 13 September averaged 1,119 per day, compared to 1,022
in Q2 2009. The increase can be partly attributed to the new Money
Transfer service initiated in early Q3 2009.
Whilst acknowledging near term challenges, the Board continues to be optimistic
about the outlook for NEOVIA and remains confident about the Group's
prospects going forward.
FINANCIAL REVIEW
Key Performance Indicators
The Group's primary driver of fee revenue from its e-wallet is the active
e-wallet user base. An active e-wallet user is defined as a consumer whose
e-wallet account balance has changed during the past quarter. The change in
balance may be due to adding, removing, transferring or receiving funds. Active
e-wallet users increased 3% in Q2 2009 to 95,492 from 92,757 in Q1 2009. Several
Q2 marketing promotions and significant sporting events helped to improve
activity in the quarter. However, the year on year overall decline of 5% from Q2
2008 actives of 100,760 was reflective of adverse economic and regulatory
factors impacting the online gaming sector. The active e-wallet users by region
are shown in the table below:
+--------------------------+--------------+--------------+-----------+--------------+------------+
| Active e-wallet users | Q2 2009 | Q2 2008 | % change | Q1 2009 | % change |
| | | | Q2 2009 | | Q2 2009 |
| | | | vs. Q2 | | vs. Q1 |
| | | | 2008 | | 2009 |
+--------------------------+--------------+--------------+-----------+--------------+------------+
| Europe | 73,696 | 78,280 | -6% | 73,418 | 0% |
+--------------------------+--------------+--------------+-----------+--------------+------------+
| Asia Pacific | 14,627 | 17,490 | -16% | 13,097 | 12% |
+--------------------------+--------------+--------------+-----------+--------------+------------+
| Rest Of World | 7,169 | 4,990 | 44% | 6,242 | 15% |
+--------------------------+--------------+--------------+-----------+--------------+------------+
| Total | 95,492 | 100,760 | -5% | 92,757 | 3% |
+--------------------------+--------------+--------------+-----------+--------------+------------+
| | | | | | |
+--------------------------+--------------+--------------+-----------+--------------+------------+
| Total signed up e-wallet | 1,534,816 | 1,187,812 | 29% | 1,442,815 | 6% |
| users | | | | | |
+--------------------------+--------------+--------------+-----------+--------------+------------+
Total signed up e-wallet users (excluding North America) at 30 June 2009 were
1,534,816 compared to 1,187,812 at 30 June 2008.
Average daily deposits increased to $475,266 in Q2 2009 from $396,413 in Q1
2009. Increased deposit volume has allowed revenue to remain stable while
revenue per active e-wallet user has declined. E-wallet revenue per active
e-wallet user by region is shown in the table below:
+-------------------------+-----------+-----------+-----------+-----------+-----------+
| E-wallet revenue per | Q2 2009 | Q2 2008 | % change | Q1 2009 | % change |
| active e-wallet user | | | Q2 2009 | | Q2 2009 |
| ($) | | | vs. Q2 | | vs. Q1 |
| | | | 2008 | | 2009 |
+-------------------------+-----------+-----------+-----------+-----------+-----------+
| Europe | 112 | 133 | -16% | 121 | -7% |
+-------------------------+-----------+-----------+-----------+-----------+-----------+
| Asia Pacific | 132 | 122 | 8% | 129 | 2% |
+-------------------------+-----------+-----------+-----------+-----------+-----------+
| Rest Of World | 77 | 99 | -22% | 80 | -5% |
+-------------------------+-----------+-----------+-----------+-----------+-----------+
| Total | 112 | 130 | -14% | 119 | -6% |
+-------------------------+-----------+-----------+-----------+-----------+-----------+
In Europe, Q2 2009 fees per active user of $112 were down 7% from Q1 2009 and
16% from Q2 2008. In contrast, Asia Pacific fees per active user in Q2 2009 were
$132, up 2% over Q1 2009 and 8% over Q2 2008. The European fees per active user
decreased because of fee rebate programs run throughout H1 2009. The more
developed European market is more competitive, necessitating active marketing
programs.
+----------------+----------+----------+-----------+----------+------------+-------------+
| Average daily | Q2 2009 | Q1 2009 | % change | H1 2009 | H1 2008 | % change H1 |
| sign | | | Q2 2009 | | | 2009 vs. H1 |
| ups (excluding | | | vs. Q1 | | | 2008 |
| North America) | | | 2009 | | | |
+----------------+----------+----------+-----------+----------+------------+-------------+
| Europe | 675 | 721 | -6% | 698 | 756 | -8% |
+----------------+----------+----------+-----------+----------+------------+-------------+
| Asia Pacific | 164 | 148 | 11% | 156 | 183 | -15% |
+----------------+----------+----------+-----------+----------+------------+-------------+
| Rest Of World | 172 | 154 | 12% | 163 | 108 | 51% |
+----------------+----------+----------+-----------+----------+------------+-------------+
| Total | 1,011 | 1,023 | -1% | 1,017 | 1,047 | -3% |
+----------------+----------+----------+-----------+----------+------------+-------------+
Average daily sign ups of 1,017 in H1 2009 remained relatively consistent from
1,047 in H1 2008 (decrease of 3%) and 925 in H2 2008 (increase of 10%). On a
quarterly basis, average daily sign ups of 1,011 in Q2 2009 was up from 993 in
Q2 2008 (increase of 2%) and down 1% from 1,023 in Q1 2009.
Revenue
Fee revenue decreased in H1 2009 to $31.5 million from H1 2008 revenue of $32.8
million. The 4% decline was the result of adverse economic and other factors as
described earlier.
+-------------------+---------+----------+----------+----------+----------+-------------+
| Revenue ($ | H1 2009 | H1 2008 | % growth | Q2 2009 | Q1 2009 | % growth |
| millions) | | | | | | |
+-------------------+---------+----------+----------+----------+----------+-------------+
| Europe | 17.4 | 19.9 | -13% | 8.4 | 9.0 | -8% |
+-------------------+---------+----------+----------+----------+----------+-------------+
| Asia Pacific | 3.7 | 3.7 | 0% | 1.9 | 1.7 | 11% |
+-------------------+---------+----------+----------+----------+----------+-------------+
| Rest of World | 1.1 | 0.9 | 21% | 0.6 | 0.5 | 8% |
+-------------------+---------+----------+----------+----------+----------+-------------+
| North America | 0.2 | - | nm | 0.1 | 0.1 | 8% |
+-------------------+---------+----------+----------+----------+----------+-------------+
| E-wallet revenue | 22.3 | 24.5 | -9% | 11,0 | 11.3 | -4% |
+-------------------+---------+----------+----------+----------+----------+-------------+
| NETBANX Europe | 2.3 | 3.4 | -33% | 1.2 | 1.1 | 13% |
+-------------------+---------+----------+----------+----------+----------+-------------+
| NETBANX Asia | 6.9 | 4.9 | 40% | 3.5 | 3.4 | 5% |
+-------------------+---------+----------+----------+----------+----------+-------------+
| Fee Revenue | 31.5 | 32.8 | -4% | 15.7 | 15.8 | -1% |
+-------------------+---------+----------+----------+----------+----------+-------------+
| Interest | 1.1 | 3.1 | -64% | 0.5 | 0.6 | -19% |
+-------------------+---------+----------+----------+----------+----------+-------------+
| Total | 32.6 | 35.9 | -9% | 16.2 | 16.4 | -2% |
+-------------------+---------+----------+----------+----------+----------+-------------+
The European market has experienced the most pronounced recession-induced
impact, where e-wallet revenues declined 13% from H1 2008 to H1 2009. Fee
rebates were introduced in H2 2008 to incentivise VIP customers. Asia e-wallet
revenue stayed flat between H1 2009 and H1 2008 where less rebates are used in
marketing. Partially offsetting the decline in e-wallet revenue were fees
generated from the Net+ debit card, which has been well accepted by customers.
In early Q3 2009, the Group entered the remittance market with the launch of
NETELLER Money Transfer Service for instant online movement of funds, which will
contribute new revenue.
Gateway fees continued to improve due to NETBANX Asia. Fees in H1 2009 increased
40% to $6.9 million from $4.9 million in H1 2008. NETBANX Asia has a robust and
trusted solution for merchants seeking new market opportunities in Asia Pacific.
NETBANX Europe revenue declined 33% from $3.4 million in H1 2008 to $2.3
million in H1 2009. The 25% depreciation of the pound sterling from H1 2008 to
H1 2009 accounted for the majority of the decrease, as NETBANX Europe operates
mainly in the UK.
Interest revenue declined significantly from $3.1 million in H1 2008 to $1.1
million in H1 2009. The 64% decline was due to the dramatic reduction in
interest rates globally. Average investment returns of 2.6% in H1 2008 declined
to less than 1% on average in H1 2009. The Group expects continuing low interest
revenue as returns on cash investments remain below 1%.
Gross Margin
Gross margin decreased from 61.6% in H1 2008 to 56.2% in H1 2009. The decrease
is the result of both increased volume from NETBANX Asia which has a lower gross
margin, as well as additional server hosting costs for the Newteller platform.
This was partially offset by cost savings in customer support, marketing and
promotions. Q2 2009 gross margin of 54.4% was lower than anticipated (and lower
than that reported for Q1 2009 of 58.0%) primarily due to one-off and temporary
additional server hosting costs related to Newteller and lower than anticipated
returns on investment rollovers in the period.
Customer support costs decreased as a percentage of revenue from 15% in H1 2008
to 12% in H1 2009. The Canadian based call centre realised savings as a result
of the decline in value of the Canadian dollar (operating currency) relative to
the US dollar (reporting currency) of approximately 14%. Other savings resulted
from rationalising call centre roles and functions. The Group expects continued
savings as certain call centre operations are migrated to offices in Asia during
the second half of the year.
Website maintenance costs increased to 7% of revenue in H1 2009 from 5% in H2
2008. The increase was due to additional server hosting and related
infrastructure requirements for the Newteller platform and the new emergency
recovery data centre.
Marketing and Promotion costs decreased by 73% to $0.2 million in H1 2009 from
$0.8 million in H1 2008. The targeted bonus program in 2008 was not implemented
in H1 2009, accounting for the decline.
Deposit and withdrawal fees increased by 26% to $7.4 million in H1 2009 from
$5.9 million in H1 2008. The increase was due to two factors:firstly, the growth
of the NETBANX Asia gateway (as it is lower margin business, the growth in
revenue results in a higher proportionate growth in the cost of sales via higher
deposit and withdrawal costs); and secondly, the operation of the Net+ prepaid
card (where fees are paid to third party service providers).
Bad debt expense of $0.4 million in H1 2009 also increased from $nil in H1 2008.
H1 2008 expense was offset by one time recoveries of previously written off
accounts.
Operating Expenses and Other
General and administrative expenses decreased by 14% to $13.0 million in H1 2009
from $15.1 million in H1 2008. The depreciation of the Canadian dollar and
British pound from H1 2008 to H1 2009 was mostly responsible for the reduced
costs incurred by the Canadian and UK based operations.
Employee stock option expense was relatively consistent between H1 2009 and H1
2008 at $1.4 million.
The Group recognised that its investment in Centricom Pty Limited may not have
any recoverable value. An impairment loss of $4.6 million has been recorded as
at 30 June 2009.
Restructuring costs of $1.6 million in H1 2009 consisted of severance payments
made for further business rationalisation as a result of the continuing economic
downturn and additional costs related to the Group's withdrawal from the US
market.
Acquisition costs of $0.9 million relating to the unsuccessful acquisition of
IDT Financial Services Holdings Limited were recognised in the consolidated
statement of income for H1 2009 as an impairment loss.
Income Tax Expense
The tax model is based on the mark-up of services provided by various
subsidiaries to the Group's parent in the Isle of Man, where source revenues are
subject to a tax rate of zero per cent. The recovery of income taxes at 30 June
2009 of $0.3 million was due to a successful application for the refund of tax
payments made in 2008 to Canadian authorities.
Cash Position of the Group
The cash and cash equivalents balance at 30 June 2009 of $73.4 million
represented the unrestricted cash of the Group. Cash available to the Group of
$78.1 million was the total of "Cash and cash equivalents", "Restricted cash"
and the excess of "Qualifying liquid assets" over "Payable to European
customers".
The working capital position of the Group, defined as current assets less
current liabilities, was approximately $60.2 million. Required cash inventory
comprising amount held at processors, operating account balances to cover
payouts and the buffer on trust accounts was approximately $30.0 million,
resulting in available "free cash" of approximately $30.2 million.
Cash flow from operations remained positive in H1 2009. However, the development
of the Newteller platform was a major use of cash resulting in an overall net
decrease in cash of $5.4 million from 31 December 2008.
The Board has decided that it would not be appropriate to pay a dividend given
the first half results and the current uncertain economic outlook.
* * *
+----------------------------------------------------------------------------------------+
| NEOVIA Financial Plc |
| Consolidated Balance Sheet |
| (Unaudited) |
| As at 30 June 2009 |
+----------------------------------------------------------------------------------------+
+-----------------------------------------------------+------------------+------------------+
| | 30 June 2009 | 31 December 2008 |
+-----------------------------------------------------+------------------+------------------+
| | $ | $ |
+-----------------------------------------------------+------------------+------------------+
| | | |
+-----------------------------------------------------+------------------+------------------+
| ASSETS | | |
+-----------------------------------------------------+------------------+------------------+
| CURRENT ASSETS | | |
+-----------------------------------------------------+------------------+------------------+
| Cash and cash equivalents | 73,350,736 | 76,246,169 |
+-----------------------------------------------------+------------------+------------------+
| Restricted cash (Note 3) | 2,923,646 | 2,941,543 |
+-----------------------------------------------------+------------------+------------------+
| Qualifying Liquid Assets held for European | 68,929,913 | 63,444,278 |
| customers (Note 4) | | |
+-----------------------------------------------------+------------------+------------------+
| Receivable from customers | 1,115,000 | 702,000 |
+-----------------------------------------------------+------------------+------------------+
| Trade and other receivables | 1,408,879 | 1,253,586 |
+-----------------------------------------------------+------------------+------------------+
| Prepaid expenses and deposits | 2,455,815 | 3,309,125 |
+-----------------------------------------------------+------------------+------------------+
| | 150,183,989 | 147,896,701 |
+-----------------------------------------------------+------------------+------------------+
| NON-CURRENT ASSETS | | |
+-----------------------------------------------------+------------------+------------------+
| Mortgage receivable | 647,949 | 616,119 |
+-----------------------------------------------------+------------------+------------------+
| Property, plant & equipment (Note 5) | 6,886,720 | 8,759,068 |
+-----------------------------------------------------+------------------+------------------+
| Intangible assets (Note 6) | 26,950,538 | 17,872,820 |
+-----------------------------------------------------+------------------+------------------+
| Investment in associate (Note 7) | - | 5,085,074 |
+-----------------------------------------------------+------------------+------------------+
| | 184,669,196 | 180,229,782 |
+-----------------------------------------------------+------------------+------------------+
| | | |
+-----------------------------------------------------+------------------+------------------+
| LIABILITIES | | |
+-----------------------------------------------------+------------------+------------------+
| CURRENT LIABILITIES | | |
+-----------------------------------------------------+------------------+------------------+
| Trade and other payables (Note 8) | 21,477,753 | 18,318,683 |
+-----------------------------------------------------+------------------+------------------+
| Payable to European customers (Note 4) | 67,087,784 | 60,307,346 |
+-----------------------------------------------------+------------------+------------------+
| Income taxes payable | 1,453,366 | 1,904,472 |
+-----------------------------------------------------+------------------+------------------+
| | 90,018,903 | 80,530,501 |
+-----------------------------------------------------+------------------+------------------+
| | | |
+-----------------------------------------------------+------------------+------------------+
| | | |
+-----------------------------------------------------+------------------+------------------+
| SHAREHOLDERS' EQUITY | | |
+-----------------------------------------------------+------------------+------------------+
| Share capital (Note 10) | 39,725 | 39,725 |
+-----------------------------------------------------+------------------+------------------+
| Share premium | 50,554,492 | 50,554,492 |
+-----------------------------------------------------+------------------+------------------+
| Capital redemption reserve | 147 | 147 |
+-----------------------------------------------------+------------------+------------------+
| Equity reserve on share option issuance | 7,313,208 | 5,954,728 |
+-----------------------------------------------------+------------------+------------------+
| Translation reserve | (1,011,709) | (1,320,417) |
+-----------------------------------------------------+------------------+------------------+
| Retained earnings | 37,754,430 | 44,470,606 |
+-----------------------------------------------------+------------------+------------------+
| | 94,650,293 | 99,699,281 |
+-----------------------------------------------------+------------------+------------------+
| | 184,669,196 | 180,229,782 |
+-----------------------------------------------------+------------------+------------------+
| | | |
+-----------------------------------------------------+------------------+------------------+
| | | |
+-----------------------------------------------------+------------------+------------------+
| | | |
+-----------------------------------------------------+------------------+------------------+
| | | |
+-----------------------------------------------------+------------------+------------------+
See accompanying notes to the consolidated financial statements
+------------------------------------------------------------------------------------+
| NEOVIA Financial Plc |
| Consolidated Income Statement for the six month period ended 30 June 2009 |
| (Unaudited) |
+------------------------------------------------------------------------------------+
+-------------------------------------------+---------------------+--------------------+
| | Six month period | Six month period |
| | ended 30 June 2009 |ended 30 June 2008 |
| | $ | $ |
+-------------------------------------------+---------------------+--------------------+
| | | |
+-------------------------------------------+---------------------+--------------------+
| Revenue | | |
+-------------------------------------------+---------------------+--------------------+
| Transaction fees | 31,512,139 | 32,790,083 |
+-------------------------------------------+---------------------+--------------------+
| Investment income | 1,118,016 | 3,099,848 |
+-------------------------------------------+---------------------+--------------------+
| | 32,630,155 | 35,889,931 |
+-------------------------------------------+---------------------+--------------------+
| Cost of sales | | |
+-------------------------------------------+---------------------+--------------------+
| Customer support | 3,960,749 | 5,205,101 |
+-------------------------------------------+---------------------+--------------------+
| Website maintenance | 2,223,582 | 1,867,983 |
+-------------------------------------------+---------------------+--------------------+
| Marketing and promotions | 210,043 | 765,306 |
+-------------------------------------------+---------------------+--------------------+
| Deposit and withdrawal fees | 7,447,032 | 5,901,655 |
+-------------------------------------------+---------------------+--------------------+
| Bad debts and collections | 439,068 | 31,949 |
+-------------------------------------------+---------------------+--------------------+
| | 14,280,474 | 13,771,994 |
+-------------------------------------------+---------------------+--------------------+
| | | |
+-------------------------------------------+---------------------+--------------------+
| Gross profit | 18,349,681 | 22,117,937 |
+-------------------------------------------+---------------------+--------------------+
| | | |
+-------------------------------------------+---------------------+--------------------+
| Operating expenses | | |
+-------------------------------------------+---------------------+--------------------+
| General and administrative | 12,986,291 | 15,126,559 |
+-------------------------------------------+---------------------+--------------------+
| Share option expense (Note 13) | 1,358,479 | 1,442,235 |
+-------------------------------------------+---------------------+--------------------+
| Management bonus | 435,000 | 899,971 |
+-------------------------------------------+---------------------+--------------------+
| Foreign exchange loss/(gain) | 96,189 | (150,638) |
+-------------------------------------------+---------------------+--------------------+
| Depreciation and amortisation | 2,806,281 | 3,172,613 |
+-------------------------------------------+---------------------+--------------------+
| Investment loss | 533,116 | 382,520 |
+-------------------------------------------+---------------------+--------------------+
| | 18,215,356 | 20,873,260 |
+ +---------------------+--------------------+
| | | |
+-------------------------------------------+-------------------------------------------+---------------------+
| Profit before other items | 134,325 | 1,244,677 |
+-------------------------------------------+---------------------+--------------------+
| | | |
+-------------------------------------------+---------------------+--------------------+
| Other items | | |
| Impairment loss (Note 7) | | |
+ +---------------------+--------------------+
| | 4,568,511 | - |
+-------------------------------------------+-------------------------------------------+---------------------+
| Restructuring costs (Note 11) | 1,623,114 | 92,484 |
+-------------------------------------------+---------------------+--------------------+
| Loss on disposal of assets | 4,133 | - |
+-------------------------------------------+---------------------+--------------------+
| Acquisition costs impairment (Note | 928,527 | - |
| 14) | | |
+-------------------------------------------+---------------------+--------------------+
| (Loss)/profit before tax | (6,989,960) | 1,152,193 |
+-------------------------------------------+---------------------+--------------------+
| | | |
+-------------------------------------------+---------------------+--------------------+
| Income tax (recovery)/expense | (273,784) | 4,409 |
+-------------------------------------------+---------------------+--------------------+
| | | |
+-------------------------------------------+---------------------+--------------------+
| Net (loss)/profit for the period | (6,716,176) | 1,147,784 |
+-------------------------------------------+---------------------+--------------------+
| | | |
+-------------------------------------------+---------------------+--------------------+
| Basic (loss)/earnings per share (Note 12) | $(0.06) | $0.01 |
+-------------------------------------------+---------------------+--------------------+
| | | |
+-------------------------------------------+---------------------+--------------------+
| Fully diluted (loss)/earnings per share | $(0.06) | $0.01 |
| (Note 12) | | |
+-------------------------------------------+---------------------+--------------------+
| | |
+-------------------------------------------+---------------------+--------------------+
See accompanying notes to the consolidated financial statements.
+--------------------------------------------------------------------------------------+
| NEOVIA Financial Plc |
| Consolidated Statement of Changes in Equity |
| (Unaudited) |
| For the six month period ended 30 June 2009 |
+--------------------------------------------------------------------------------------+
+-------------------------+----------+----------+--------+---+---------+-------+---+---------+---+--------+---+---------+---+-------------+--+
| | Share | Share | Total | Share | Equity | Translation | Capital | Retained | Total |
| | capital | capital | share | premium | reserve | reserve on |redemption | earnings | $ |
| | - | - | capital | | on | foreign | reserve | | |
| | ordinary | deferred | | | share | operations | | | |
| | shares | shares | | | option | | | | |
| | | | | | issuance | | | | |
+-------------------------+----------+----------+------------+---------+-----------+-------------+------------+-------------+-------------+
| Balance as at | 21,725 | 18,000 | 39,725 | 50,554,492 | 3,219,506 | 9,412,813 | 147 | 52,557,227 | 115,783,910 |
| | | | | | | | | | |
| 1 January | | | | | | | | | |
| 2008 | | | | | | | | | |
+-------------------------+----------+----------+--------+-------------+-----------+-------------+------------+-------------+-------------+
| Equity | - | - | - | - | 1,442,234 | - | - | - | 1,442,234 |
| reserve | | | | | | | | | |
| on | | | | | | | | | |
| option | | | | | | | | | |
| issuance | | | | | | | | | |
+-------------------------+----------+----------+--------+-------------+-----------+-------------+------------+-------------+-------------+
| Translation | - | - | - | - | - | (838,734) | - | - | (838,734) |
| reserve on | | | | | | | | | |
| foreign | | | | | | | | | |
| operations | | | | | | | | | |
+-------------------------+----------+----------+--------+-------------+-----------+-------------+------------+-------------+-------------+
| Net profit | - | - | - | - | - | - | - | 1,147,784 | 1,147,784 |
| for the | | | | | | | | | |
| period | | | | | | | | | |
+-------------------------+----------+----------+--------+-------------+-----------+-------------+------------+-------------+-------------+
| | | | | | | | | | |
+-------------------------+----------+----------+--------+-------------+-----------+-------------+------------+-------------+-------------+
| Balance as at | 21,725 | 18,000 | 39,725 | 50,554,492 | 4,661,740 | 8,574,079 | 147 | 53,705,011 | 117,535,194 |
| 30 June 2008 | | | | | | | | | |
+-------------------------+----------+----------+--------+-------------+-----------+-------------+------------+-------------+-------------+
| | | | | | | | | | |
+-------------------------+----------+----------+--------+-------------+-----------+-------------+------------+-------------+-------------+
| Equity | - | - | - | - | 1,292,988 | - | - | - | 1,292,988 |
| reserve on | | | | | | | | | |
| option | | | | | | | | | |
| issuance | | | | | | | | | |
+-------------------------+----------+----------+--------+-------------+-----------+-------------+------------+-------------+-------------+
| Translation | - | - | - | - | - | (9,894,496) | - | - | (9,894,496) |
| reserve on | | | | | | | | | |
| foreign | | | | | | | | | |
| operations | | | | | | | | | |
+-------------------------+----------+----------+--------+-------------+-----------+-------------+------------+-------------+-------------+
| Net loss for | - | - | - | - | - | - | - | (9,234,405) | (9,234,405) |
| the period | | | | | | | | | |
+-------------------------+----------+----------+--------+-------------+-----------+-------------+------------+-------------+-------------+
| | | | | | | | | | |
+-------------------------+----------+----------+--------+-------------+-----------+-------------+------------+-------------+-------------+
| Balance as at | 21,725 | 18,000 | 39,725 | 50,554,492 | 5,954,728 | (1,320,417) | 147 | 44,470,606 | 99,699,281 |
| | | | | | | | | | |
| 1 January | | | | | | | | | |
| 2009 | | | | | | | | | |
+-------------------------+----------+----------+--------+-------------+-----------+-------------+------------+-------------+-------------+
| | | | | | | | | | |
+-------------------------+----------+----------+--------+-------------+-----------+-------------+------------+-------------+-------------+
| Equity | - | - | - | - | 1,358,480 | - | - | - | 1,358,480 |
| reserve on | | | | | | | | | |
| option | | | | | | | | | |
| issuance | | | | | | | | | |
+-------------------------+----------+----------+--------+-------------+-----------+-------------+------------+-------------+-------------+
| Translation | - | - | - | - | - | 308,708 | - | - | 308,708 |
| reserve on | | | | | | | | | |
| foreign | | | | | | | | | |
| operations | | | | | | | | | |
+-------------------------+----------+----------+--------+-------------+-----------+-------------+------------+-------------+-------------+
| Net loss for | - | - | - | - | - | - | - | (6,716,176) | (6,716,176) |
| the period | | | | | | | | | |
+-------------------------+----------+----------+--------+-------------+-----------+-------------+------------+-------------+-------------+
| | | | | | | | | | |
+-------------------------+----------+----------+--------+-------------+-----------+-------------+------------+-------------+-------------+
| Balance as at | 21,725 | 18,000 | 39,725 | 50,554,492 | 7,313,208 | (1,011,709) | 147 | 37,754,430 | 94,650,293 |
| 30 June 2009 | | | | | | | | | |
+-------------------------+----------+----------+--------+-------------+-----------+-------------+------------+-------------+-------------+
| | | | | | | | | | |
+-------------------------+----------+----------+--------+-------------+-----------+-------------+------------+-------------+-------------+
| | | | | | | | | | |
+-------------------------+----------+----------+--------+---+---------+-------+---+---------+---+--------+---+---------+---+-------------+--+
See accompanying notes to the consolidated financial statements
+---------------------------------------------------------------------------------------+
| NEOVIA Financial Plc |
| Consolidated Statement of Cash Flows |
| (Unaudited) |
| For the six month period ended 30 June 2009 |
+---------------------------------------------------------------------------------------+
+----------------------------------------------------------+---------------+----------------+
| | Six months | Six months |
| | ended 30 | ended 30 |
| | June 2009 | June 2008 |
+----------------------------------------------------------+---------------+----------------+
| | $ | $ |
+----------------------------------------------------------+---------------+----------------+
| OPERATING ACTIVITIES | | |
+----------------------------------------------------------+---------------+----------------+
| (Loss)/profit before tax | (6,989,960) | 1,152,193 |
+----------------------------------------------------------+---------------+----------------+
| | | |
+----------------------------------------------------------+---------------+----------------+
| Adjustments for: | | |
+----------------------------------------------------------+---------------+----------------+
| Depreciation and amortisation | 2,806,281 | 3,172,613 |
+----------------------------------------------------------+---------------+----------------+
| Unrealised foreign exchange (gain)/loss | (2,452,591) | 1,784,305 |
+----------------------------------------------------------+---------------+----------------+
| Share option expense | 1,358,479 | 1,442,235 |
+----------------------------------------------------------+---------------+----------------+
| Investment loss | 533,116 | 382,520 |
+----------------------------------------------------------+---------------+----------------+
| Impairment loss (Note 7) | 4,568,511 | - |
+----------------------------------------------------------+---------------+----------------+
| Asset disposal | 4,133 | - |
+----------------------------------------------------------+---------------+----------------+
| Operating cash flows before movements in working capital | (172,031) | 7,933,866 |
+----------------------------------------------------------+---------------+----------------+
| | | |
+----------------------------------------------------------+---------------+----------------+
| Increase in receivable from customers | (413,000) | (100,000) |
+----------------------------------------------------------+---------------+----------------+
| Increase in trade and other receivables | (155,294) | 364,375 |
+----------------------------------------------------------+---------------+----------------+
| Decrease in prepaid expenses and deposits | 853,310 | 226,759 |
+----------------------------------------------------------+---------------+----------------+
| Increase in trade and other payables | 2,889,278 | 1,917,981 |
+----------------------------------------------------------+---------------+----------------+
| Forfeiture payable (Note 9) | - | (38,250,415) |
+----------------------------------------------------------+---------------+----------------+
| Cash generated/(consumed) by operations | 3,002,263 | (27,907,434) |
+----------------------------------------------------------+---------------+----------------+
| | | |
+----------------------------------------------------------+---------------+----------------+
| Tax paid | (177,322) | (399,759) |
+----------------------------------------------------------+---------------+----------------+
| | | |
+----------------------------------------------------------+---------------+----------------+
| Net cash generated/(consumed) by operating | 2,824,941 | (28,307,193) |
| activities | | |
+----------------------------------------------------------+---------------+----------------+
| | | |
+----------------------------------------------------------+---------------+----------------+
| INVESTING ACTIVITIES | | |
+----------------------------------------------------------+---------------+----------------+
| Increase in payable to European customers | 6,780,438 | 7,766,440 |
+----------------------------------------------------------+---------------+----------------+
| Purchase of property, plant & equipment and intangible | (9,507,290) | (5,073,922) |
| assets | | |
+----------------------------------------------------------+---------------+----------------+
| Decrease in restricted cash accounts | 17,896 | 8,343,376 |
+----------------------------------------------------------+---------------+----------------+
| Increase in Qualifying Liquid Assets held for | (5,485,635) | (5,512,862) |
| European customers | | |
+----------------------------------------------------------+---------------+----------------+
| Investment in associate | (16,553) | - |
+----------------------------------------------------------+---------------+----------------+
| Investment in joint venture | - | (156,791) |
+----------------------------------------------------------+---------------+----------------+
| Net cash (consumed)/generated by investing activities | (8,211,144) | 5,366,241 |
+----------------------------------------------------------+---------------+----------------+
| | | |
+----------------------------------------------------------+---------------+----------------+
| FINANCING ACTIVITIES | | |
+----------------------------------------------------------+---------------+----------------+
| Mortgage receivable | (31,830) | 26,352 |
+----------------------------------------------------------+---------------+----------------+
| | | |
+----------------------------------------------------------+---------------+----------------+
| Net cash (consumed)/generated by financing activities | (31,830) | 26,352 |
+----------------------------------------------------------+---------------+----------------+
| | | |
+----------------------------------------------------------+---------------+----------------+
| DECREASE IN CASH AND CASH EQUIVALENTS | | |
+----------------------------------------------------------+---------------+----------------+
| DURING THE PERIOD | (5,418,033) | (22,914,600) |
+----------------------------------------------------------+---------------+----------------+
| | | |
+----------------------------------------------------------+---------------+----------------+
| NET EFFECT OF FOREIGN EXCHANGE ON | | |
+----------------------------------------------------------+---------------+----------------+
| CASH AND CASH EQUIVALENTS | 2,722,386 | (1,510,721) |
+----------------------------------------------------------+---------------+----------------+
| TRANSLATION OF FOREIGN OPERATIONS | (199,786) | 305,966 |
+----------------------------------------------------------+---------------+----------------+
| | | |
+----------------------------------------------------------+---------------+----------------+
| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 76,246,169 | 80,750,283 |
+----------------------------------------------------------+---------------+----------------+
| | | |
+----------------------------------------------------------+---------------+----------------+
| CASH AND CASH EQUIVALENTS, END OF PERIOD | 73,350,736 | 56,630,928 |
+----------------------------------------------------------+---------------+----------------+
See accompanying notes to the consolidated financial statements
+------------------------------------------------------------------------------------+
| NEOVIA Financial Plc |
| Notes to the Consolidated Financial Statements |
| For the six month period ended 30 June 2009 |
| (Unaudited) |
+------------------------------------------------------------------------------------+
1. Basis of presentation
The principal operating currency of the Group is US dollars and accordingly the
financial statements have been prepared in US dollars. The interim results for
the period ended 30 June 2009 are unaudited and do not constitute statutory
accounts within the meaning of the Companies Acts 1931 to 2004. The statutory
accounts of NEOVIA Financial Plc for the year ended 31 December 2008 contain an
unqualified audit report. Further copies can be obtained from the Registered
Office of the Company, Audax House, Finch Road, Douglas, Isle of Man, IM1 2PT
2. Significant accounting policies
The interim results for the period ended 30 June 2009 have been prepared in
accordance with the accounting policies adopted in the accounts for the year
ended 31 December 2008 and in accordance with IAS 34 "Interim Financial
Reporting".
3. Restricted cash
For merchants and non-European customers, the Group maintains bank accounts with
the Company's principal bankers which are segregated from operating funds and
which contain funds held on behalf of customers, representing pooled customer
funds. Balances in the segregated accounts are maintained at a sufficient level
to fully offset amounts owing to the Group's merchants and customers. A legal
right of offset exists between the balances owing to the merchants (excluding
NetBanx & Netbanx Asia merchant liabilities) and customers and the cash balances
segregated in the client accounts. As such, only the net balance of surplus cash
is disclosed on the balance sheet as Restricted Cash.
At 30 June 2009, the Group had the following balances:
+---------------------------------+--------------+--------------+--------------+
| | CLIENT | BALANCE | RESTRICTED |
| | ACCOUNT | OWING | CASH |
| | FUNDS | | |
+---------------------------------+--------------+--------------+--------------+
| | $ | $ | $ |
+---------------------------------+--------------+--------------+--------------+
| | | | |
+---------------------------------+--------------+--------------+--------------+
| Non-European Customers | 24,950,233 | 24,013,266 | 936,967 |
+---------------------------------+--------------+--------------+--------------+
| | | | |
+---------------------------------+--------------+--------------+--------------+
| Merchants | 56,944,725 | 54,958,046 | 1,986,679 |
+---------------------------------+--------------+--------------+--------------+
| | | | |
+---------------------------------+--------------+--------------+--------------+
| | 81,894,958 | 78,971,312 | 2,923,646 |
+---------------------------------+--------------+--------------+--------------+
At 31 December 2008, the Group had the following balances:
+---------------------------------+--------------+--------------+--------------+
| | CLIENT | BALANCE | RESTRICTED |
| | ACCOUNT | OWING | CASH |
| | FUNDS | | |
+---------------------------------+--------------+--------------+--------------+
| | $ | $ | $ |
+---------------------------------+--------------+--------------+--------------+
| | | | |
+---------------------------------+--------------+--------------+--------------+
| Non-European Customers | 24,062,805 | 23,489,751 | 573,054 |
+---------------------------------+--------------+--------------+--------------+
| | | | |
+---------------------------------+--------------+--------------+--------------+
| Merchants | 61,934,429 | 59,565,940 | 2,368,489 |
+---------------------------------+--------------+--------------+--------------+
| | | | |
+---------------------------------+--------------+--------------+--------------+
| | 85,997,234 | 83,055,691 | 2,941,543 |
+---------------------------------+--------------+--------------+--------------+
4. Qualifying Liquid Assets held for European customers
In compliance with the Financial Services Authority rules and regulations, the
Group holds Qualifying Liquid Assets at least equal to the amounts owing to
European customers. These amounts are maintained in accounts which are
segregated from operating funds.
The Group had the following balances:
+--------------------------------------------+----------------+----------------+
| | As at 30 | As at 31 |
| | June 2009 | December 2008 |
| | $ | $ |
+--------------------------------------------+----------------+----------------+
| Qualifying Liquid Assets held for European | 68,929,913 | 63,444,278 |
| customers | | |
+--------------------------------------------+----------------+----------------+
| Payable to European customers | (67,087,784) | (60,307,346) |
+--------------------------------------------+----------------+----------------+
| | 1,842,129 | 3,136,932 |
+--------------------------------------------+----------------+----------------+
| | | |
+--------------------------------------------+----------------+----------------+
5. Property, Plant & Equipment
The Group had the following balances:
+------------------+----------------+------------+-----------+-------------+---------------+--------+--------+--------------+
| | COMMUNICATION | FURNITURE | COMPUTER | COMPUTER | BUILDING | LAND | TOTAL |
| | EQUIPMENT | AND | EQUIPMENT | SOFTWARE | AND | $ | $ |
| | $ | EQUIPMENT | $ | $ | IMPROVEMENTS | | |
| | | $ | | | $ | | |
+------------------+----------------+------------+-----------+-------------+---------------+--------+-----------------------+
| Cost | | | | | | | |
+------------------+----------------+------------+-----------+-------------+---------------+-----------------+--------------+
| As at 31 | 4,173,212 | 2,562,164 | 4,182,918 | 7,954,073 | 29,580,155 | 6,626,100 | 55,078,622 |
| December 2007 | | | | | | | |
+------------------+----------------+------------+-----------+-------------+---------------+-----------------+--------------+
| Additions | 129,621 | 110,414 | 233,782 | 933,993 | 34,303 | - | 1,442,113 |
+------------------+----------------+------------+-----------+-------------+---------------+-----------------+--------------+
| Property held | - | - | - | - | (28,261,507) | (6,434,350) | (34,695,857) |
| for sale | | | | | | | |
+------------------+----------------+------------+-----------+-------------+---------------+-----------------+--------------+
| Exchange | (68,586) | (62,852) | (114,501) | (124,335) | (855,167) | (191,750) | (1,417,191) |
| differences | | | | | | | |
+------------------+----------------+------------+-----------+-------------+---------------+-----------------+--------------+
| As at 30 June | 4,234,247 | 2,609,726 | 4,302,199 | 8,763,731 | 497,784 | - | 20,407,687 |
| 2008 | | | | | | | |
+------------------+----------------+------------+-----------+-------------+---------------+-----------------+--------------+
| Additions | 21,085 | 22,783 | 82,103 | 987,063 | 8,523 | - | 1,121,557 |
+------------------+----------------+------------+-----------+-------------+---------------+-----------------+--------------+
| Disposals | - | (44,649) | (13,421) | (96,863) | - | - | (154,933) |
+------------------+----------------+------------+-----------+-------------+---------------+-----------------+--------------+
| Exchange | (1,049,117) | (408,794) | (682,951) | (816,278) | (74,543) | - | (3,031,683) |
| difference | | | | | | | |
+------------------+----------------+------------+-----------+-------------+---------------+-----------------+--------------+
| As at 31 | 3,206,215 | 2,179,066 | 3,687,930 | 8,837,653 | 431,764 | - | 18,342,628 |
| December 2008 | | | | | | | |
+------------------+----------------+------------+-----------+-------------+---------------+-----------------+--------------+
| Additions | 25,663 | 34,171 | 365,563 | 420,984 | - | - | 846,381 |
+------------------+----------------+------------+-----------+-------------+---------------+-----------------+--------------+
| Disposals | - | (608) | - | - | - | - | (608) |
+------------------+----------------+------------+-----------+-------------+---------------+-----------------+--------------+
| Reclassification | - | - | - | (1,658,622) | - | - | (1,658,622) |
| | 343,953 | 111,147 | 182,871 | 215,405 | 18,785 | - | 872,161 |
+------------------+ + + + + + + +
| Exchange | | | | | | | |
| difference | | | | | | | |
+------------------+----------------+------------+-----------+-------------+---------------+-----------------+--------------+
| As at 30 June | 3,575,831 | 2,323,776 | 4,236,364 | 7,815,420 | 450,549 | - | 18,401,940 |
| 2009 | | | | | | | |
+------------------+----------------+------------+-----------+-------------+---------------+-----------------+--------------+
| Accumulated | | | | | | | |
| depreciation | | | | | | | |
+------------------+----------------+------------+-----------+-------------+---------------+-----------------+--------------+
| As at 31 | 1,464,320 | 866,036 | 2,740,135 | 3,712,860 | 1,990,118 | - | 10,773,469 |
| December 2007 | | | | | | | |
+------------------+----------------+------------+-----------+-------------+---------------+-----------------+--------------+
| Charge for the | 394,611 | 207,818 | 308,908 | 597,100 | 14,127 | - | 1,522,564 |
| period | | | | | | | |
+------------------+----------------+------------+-----------+-------------+---------------+-----------------+--------------+
| Property held | - | - | - | - | (1,877,097) | - | (1,877,097) |
| for sale | | | | | | | |
+------------------+----------------+------------+-----------+-------------+---------------+-----------------+--------------+
| Exchange | (22,998) | (22,206) | (75,630) | (86,669) | (56,786) | - | (264,289) |
| difference | | | | | | | |
+------------------+----------------+------------+-----------+-------------+---------------+-----------------+--------------+
| As at 30 June | 1,835,933 | 1,051,648 | 2,973,413 | 4,223,291 | 70,362 | - | 10,154,647 |
| 2008 | | | | | | | |
+------------------+----------------+------------+-----------+-------------+---------------+-----------------+--------------+
| Charge for the | 264,459 | 135,922 | 108,776 | 917,272 | 7,536 | - | 1,433,965 |
| period | | | | | | | |
+------------------+----------------+------------+-----------+-------------+---------------+-----------------+--------------+
| Disposals | - | (13,217) | (9,905) | (96,863) | - | - | (119,985) |
+------------------+----------------+------------+-----------+-------------+---------------+-----------------+--------------+
| Exchange | (587,899) | (184,204) | (480,587) | (625,695) | (6,682) | - | (1,885,067) |
| difference | | | | | | | |
+------------------+----------------+------------+-----------+-------------+---------------+-----------------+--------------+
| As at 31 | 1,512,493 | 990,149 | 2,591,697 | 4,418,005 | 71,216 | - | 9,583,560 |
| December 2008 | | | | | | | |
+------------------+----------------+------------+-----------+-------------+---------------+-----------------+--------------+
| Charge for the | 267,419 | 135,334 | 196,184 | 731,187 | 8,442 | - | 1,338,566 |
| period | | | | | | | |
+------------------+----------------+------------+-----------+-------------+---------------+-----------------+--------------+
| Disposals | - | 159 | - | - | - | - | 159 |
+------------------+----------------+------------+-----------+-------------+---------------+-----------------+--------------+
| Exchange | 230,385 | 59,280 | 133,227 | 167,900 | 2,143 | - | 592,935 |
| difference | | | | | | | |
+------------------+----------------+------------+-----------+-------------+---------------+-----------------+--------------+
| As at 30 June | 2,010,297 | 1,184,922 | 2,921,108 | 5,317,092 | 81,801 | - | 11,515,220 |
| 2009 | | | | | | | |
+------------------+----------------+------------+-----------+-------------+---------------+-----------------+--------------+
| Net book value | | | | | | | |
+------------------+----------------+------------+-----------+-------------+---------------+-----------------+--------------+
| As at 30 June | 2,398,314 | 1,558,078 | 1,328,786 | 4,540,440 | 427,422 | - | 10,253,040 |
| 2008 | | | | | | | |
+------------------+----------------+------------+-----------+-------------+---------------+-----------------+--------------+
| Net book value | | | | | | | |
+------------------+----------------+------------+-----------+-------------+---------------+-----------------+--------------+
| As at 31 | 1,693,722 | 1,188,917 | 1,096,233 | 4,419,648 | 360,548 | - | 8,759,068 |
| December 2008 | | | | | | | |
+------------------+----------------+------------+-----------+-------------+---------------+-----------------+--------------+
| Net book value | | | | | | | |
+------------------+----------------+------------+-----------+-------------+---------------+-----------------+--------------+
| As at 30 June | 1,565,534 | 1,138,854 | 1,315,256 | 2,498,328 | 368,748 | - | 6,886,720 |
| 2009 | | | | | | | |
+------------------+----------------+------------+-----------+-------------+---------------+--------+--------+--------------+
6. Intangible Assets
The Group had the following balances:
+----------------------+------------------------+-----------------------+--------------+
| | INTELLECTUAL | WEBSITE | TOTAL |
| | PROPERTY | DEVELOPMENT | $ |
| | $ | $ | |
+----------------------+------------------------+-----------------------+--------------+
| Cost | | | |
+----------------------+------------------------+-----------------------+--------------+
| As at 31 December | 18,425,350 | 12,253,294 | 30,678,644 |
| 2007 | | | |
+----------------------+------------------------+-----------------------+--------------+
| Additions | 6,061 | 3,625,748 | 3,631,809 |
+----------------------+------------------------+-----------------------+--------------+
| Exchange difference | 15,286 | 11,360 | 26,646 |
+----------------------+------------------------+-----------------------+--------------+
| As at 30 June 2008 | 18,446,697 | 15,890,402 | 34,337,099 |
+----------------------+------------------------+-----------------------+--------------+
| Additions | 112,726 | 8,314,134 | 8,426,860 |
+----------------------+------------------------+-----------------------+--------------+
| Impairment loss | (8,638,039) | - | (8,638,039) |
+----------------------+------------------------+-----------------------+--------------+
| Exchange difference | (3,179,410) | (1,962,728) | (5,142,138) |
+----------------------+------------------------+-----------------------+--------------+
| As at 31 December | 6,741,974 | 22,241,808 | 28,983,782 |
| 2008 | | | |
+----------------------+------------------------+-----------------------+--------------+
| Additions | 24,884 | 8,632,661 | 8,657,545 |
+----------------------+------------------------+-----------------------+--------------+
| Reclassification | - | 1,658,622 | 1,658,622 |
+----------------------+------------------------+-----------------------+--------------+
| Exchange difference | - | 830,550 | 830,550 |
+----------------------+------------------------+-----------------------+--------------+
| As at 30 June 2009 | 6,766,858 | 33,363,641 | 40,130,499 |
+----------------------+------------------------+-----------------------+--------------+
| Accumulated amortization | | |
+-----------------------------------------------+-----------------------+--------------+
| As at 31 December | 9,130,885 | 3,662,031 | 12,792,916 |
| 2007 | | | |
+----------------------+------------------------+-----------------------+--------------+
| Charge for the | 599,418 | 1,050,631 | 1,650,049 |
| period | | | |
+----------------------+------------------------+-----------------------+--------------+
| Exchange difference | 8,530 | 9,913 | 18,443 |
+----------------------+------------------------+-----------------------+--------------+
| As at 30 June 2008 | 9,738,833 | 4,722,575 | 14,461,408 |
+----------------------+------------------------+-----------------------+--------------+
| Charge for the | 542,916 | 1,202,294 | 1,745,210 |
| period | | | |
+----------------------+------------------------+-----------------------+--------------+
| Impairment loss | (2,777,914) | - | (2,777,914) |
+----------------------+------------------------+-----------------------+--------------+
| Exchange difference | (955,098) | (1,362,644) | (2,317,742) |
+----------------------+------------------------+-----------------------+--------------+
| As at 31 December | 6,548,737 | 4,562,225 | 11,110,962 |
| 2008 | | | |
+----------------------+------------------------+-----------------------+--------------+
| Charge for the | 41,468 | 1,426,248 | 1,467,716 |
| period | | | |
+----------------------+------------------------+-----------------------+--------------+
| Exchange difference | - | 601,283 | 601,283 |
+----------------------+------------------------+-----------------------+--------------+
| As at 30 June 2009 | 6,590,205 | 6,589,756 | 13,179,961 |
+----------------------+------------------------+-----------------------+--------------+
| Net book value | | | |
+----------------------+------------------------+-----------------------+--------------+
| As at 30 June 2008 | 8,707,864 | 11,167,827 | 19,875,691 |
+----------------------+------------------------+-----------------------+--------------+
| Net book value | | | |
+----------------------+------------------------+-----------------------+--------------+
| As at 31 December | 193,237 | 17,679,583 | 17,872,820 |
| 2008 | | | |
+----------------------+------------------------+-----------------------+--------------+
| Net book value | | | |
+----------------------+------------------------+-----------------------+--------------+
| As at 30 June 2009 | 176,653 | 26,773,885 | 26,950,538 |
+----------------------+------------------------+-----------------------+--------------+
Intangible asset write down
The Group performs goodwill and intangible asset impairment tests at least
annually or whenever events or changes in circumstances indicate that the
goodwill and intangible asset carrying value for a business unit may not be
recoverable.
In the fourth quarter of fiscal 2008, the Group recorded goodwill and intangible
asset impairment of $8.6 million and $5.9 million respectively (net of any
related accumulated amortisation) representing complete impairment of goodwill
and intangible assets acquired on the purchase of NetBanx Limited in 2005. In
accordance with IAS 36, an impairment loss should be recognised when the
recoverable amount of an asset is less than its carrying amount. The recoverable
amount was deemed to be zero, based on an analysis of the unit's future cash
flow projections and management's best estimate of the set of economic
conditions that will exist over the remaining useful life of the assets.
The recoverable amount of NetBanx Limited ('the cash-generating unit') was based
on value-in-use calculations. Those calculations used cash flow projections
based on actual operating results. A pre-tax discount rate of 5.5% was used in
discounting the projected cash flows. The recoverable amount of the
cash-generating unit exceeds its carrying amount. The Board believes that any
reasonably possible change in the key assumptions on which the cash-generating
unit's recoverable amount is based would not cause the cash-generating unit's
carrying amount to exceed its recoverable amount.
7. Impairment of investment in associate
In the second quarter of fiscal 2009, the Group recorded an impairment loss of
$4.6 million, representing complete impairment of the investment in Centricom
Pty Ltd. In accordance with IAS 36, an impairment loss should be recognised
when the recoverable amount of an asset is less than its carrying amount. The
recoverable amount was deemed to be zero, based on an analysis of the unit's
future cash flow projections and management's best estimate of the set of
economic conditions that will exist over the remaining useful life of the
assets.
8. Trade and Other Payables
The Group had the following balances:
+---------------------------------------------+----------------+---------------+
| | As at | As at |
| | 30 June 2009 | 31 December |
| | $ | 2008 |
| | | $ |
+---------------------------------------------+----------------+---------------+
| Accounts payable | 15,268,378 | 11,741,354 |
+---------------------------------------------+----------------+---------------+
| Accrued accounts payable | 5,658,534 | 6,029,454 |
| Payroll liabilities | 550,841 | 547,875 |
+---------------------------------------------+----------------+---------------+
| | 21,477,753 | 18,318,683 |
+---------------------------------------------+----------------+---------------+
Included in Group accounts payable are merchant processing liabilities arising
from the gateway operations of NetBanx and Netbanx Asia (1-Pay Direct). In
addition, included in cash and cash equivalents is a transient cash balance that
relates to merchant transactions processed via the gateway operations. The
gateway operations do not fall within the EU definition of "e-money" nor does a
legal right of offset exist between this cash and the corresponding merchant
liabilities.
9. Forfeiture Payable
On 18 July 2007, the Company entered into a Deferred Prosecution Agreement
("DPA") with the United States Attorney's Office for the Southern District of
New York ("USAO"). Pursuant to the DPA, the Company forfeited $136 million to
the USAO as disgorgement of certain profits received by the Group from the
activities described in the Statement of Admitted Facts attached to the DPA.
This amount included approximately $57.7 million which the USAO previously
seized. The Company satisfied the remaining portion of its forfeiture obligation
with a payment of $40 million on 15 October 2007, and $38.25 million paid on 16
January 2008.
On 18 July 2009, the Group's Deferred Prosecution Agreement (DPA) formally
expired as scheduled. Since 18 July 2007, the Group has complied with the DPA
and will no longer be subject to oversight by the external audit monitor firm
appointed under the DPA. The Group received a copy of the Notice of Dismissal
of the Complaint filed against NETELLER on 19 August 2009.
The following details have been recorded:
+---------------------------------------------+----------------+---------------+
| | Six months | Year ended |
| | ended | 31 December |
| | 30 June 2009 | 2008 |
+---------------------------------------------+----------------+---------------+
| | | $ |
| | $ | |
+---------------------------------------------+----------------+---------------+
| | | |
+---------------------------------------------+----------------+---------------+
| Opening balance | - | (38,250,415) |
+---------------------------------------------+----------------+---------------+
| 16 January 2008 payment | - | 38,250,415 |
+---------------------------------------------+----------------+---------------+
| Forfeiture payable at the end of the period | - | - |
+---------------------------------------------+----------------+---------------+
| | | |
+---------------------------------------------+----------------+---------------+
10. Share capital
+------------------------------------------------+--------------+--------------+
| | As at | As at |
| | 30 June 2009 | 31 December |
| | | 2008 |
+------------------------------------------------+--------------+--------------+
| | GBP | GBP |
+------------------------------------------------+--------------+--------------+
| Authorised: | | |
+------------------------------------------------+--------------+--------------+
| 200,000,000 ordinary shares of GBP0.0001 per | 20,000 | 20,000 |
| share | | |
| | | |
+------------------------------------------------+--------------+--------------+
| | | |
+------------------------------------------------+--------------+--------------+
| 1,000,000 deferred shares of GBP0.01 per | 10,000 | 10,000 |
| share | | |
| | | |
+------------------------------------------------+--------------+--------------+
| | | |
+------------------------------------------------+--------------+--------------+
| Issued and fully paid | US$ | US$ |
+------------------------------------------------+--------------+--------------+
| 119,920,953 ordinary shares of GBP0.0001 | 21,725 | 21,725 |
| per share | | |
| (At 31 December 2008: 119,920,953 | | |
| ordinary shares of GBP0.0001 per share) | | |
+------------------------------------------------+--------------+--------------+
| | | |
+------------------------------------------------+--------------+--------------+
| 1,000,000 deferred shares of GBP0.01 per | 18,000 | 18,000 |
| share | | |
+------------------------------------------------+--------------+--------------+
| | | |
+------------------------------------------------+--------------+--------------+
| Total share capital | 39,725 | 39,725 |
+------------------------------------------------+--------------+--------------+
Holders of the ordinary shares are entitled to receive dividends and other
distributions, to attend and vote at any general meeting, and to participate in
all returns of capital on winding up or otherwise.
Holders of the deferred shares are not entitled to vote at any annual general
meeting of the Company, and are only entitled to receive the amount paid up on
the shares after the holders of the ordinary shares have received the sum of
GBP1,000,000 for each ordinary share held by them and shall have no other right
to participate in assets of the Company.
11. Restructuring costs
The Group has incurred the following costs:
+---------------------------------------------+----------------+---------------+
| | Six months | Six months |
| | ended 30 June | ended 30 June |
| | 2009 | 2008 |
| | $ | $ |
+---------------------------------------------+----------------+---------------+
| Severance payment related to departure of | 568,005 | - |
| CEO | | |
+---------------------------------------------+----------------+---------------+
| Severance payments to other senior | 960,907 | - |
| management under letters of employment | | |
+---------------------------------------------+----------------+---------------+
| Supplier contract renegotiation (recovery) | (92,209) | - |
+---------------------------------------------+----------------+---------------+
| Provision for supplier receivable | 54,765 | - |
+---------------------------------------------+----------------+---------------+
| US withdrawal legal costs | 128,915 | 82,784 |
+---------------------------------------------+----------------+---------------+
| Other restructuring costs | 2,731 | 9,700 |
+---------------------------------------------+----------------+---------------+
| | 1,623,114 | 92,484 |
+---------------------------------------------+----------------+---------------+
12. (Loss)/earnings per share
From continuing operations
The calculation of the basic and diluted earnings per share is based on the
following data:
+--------------------------------------------+----------------+---------------+
| | Six months | Six months |
| | ended 30 June | ended 30 June |
| | 2009 | 2008 |
+--------------------------------------------+----------------+---------------+
| | $ | $ |
+--------------------------------------------+----------------+---------------+
| (Loss)/earnings | | |
+--------------------------------------------+----------------+---------------+
| (Loss)/earnings for the purposes of basic | | |
| and diluted earnings per share being | | |
+--------------------------------------------+----------------+---------------+
| net profit attributable to equity | (6,716,176) | 1,147,784 |
| share holders of the parent | | |
+--------------------------------------------+----------------+---------------+
| Number of shares | | |
+--------------------------------------------+----------------+---------------+
| Weighted average number of ordinary shares | | |
| for the purpose | | |
+--------------------------------------------+----------------+---------------+
| of basic earnings per share | 119,920,953 | 119,920,953 |
+--------------------------------------------+----------------+---------------+
| Effect of dilutive potential ordinary | - | - |
| shares due to employee share options | | |
+--------------------------------------------+----------------+---------------+
| Weighted average number of ordinary shares | | |
| for the purpose | | |
+--------------------------------------------+----------------+---------------+
| of diluted earnings per share | 119,920,953 | 119,920,953 |
+--------------------------------------------+----------------+---------------+
| | | |
+--------------------------------------------+----------------+---------------+
| Basic (loss)/earnings per share | $(0.06) | $0.01 |
+--------------------------------------------+----------------+---------------+
| | | |
+--------------------------------------------+----------------+---------------+
| Fully diluted (loss)/earnings per share | $(0.06) | $0.01 |
+--------------------------------------------+----------------+---------------+
13. Share-based payments
The Company's share option plan was adopted pursuant to a resolution passed on 7
April 2004 and amended by the Board on 15 September 2008. The 2008 amendment
included the addition of a new 'approved' plan for UK based employees. Under
the 'approved' and 'unapproved' plans, the Board of Directors of the Company may
grant share options to eligible employees including Directors of Group companies
to subscribe for ordinary shares of the Company.
No consideration is payable on the grant of an option. Options may generally be
exercised to the extent that they have vested. Options vest according to the
relevant schedule over the grant period following the date of grant. Typically,
options have been granted for a three and a half year grant period and have
vested in equal thirds on or about the anniversary of the grant date. However,
the Directors are permitted under the Plan Rules to alter the vesting schedule
and the grant period. The exercise price is determined by the Board of Directors
of the Company, and shall not be less than the market value at the date of
grant. The option plan provides for a grant price to equal the average quoted
market price of the Company shares on the three days prior to the date of grant.
Share options are forfeited if the employee leaves the Group before the options
vest. A participant of the share option plan has 30 days following the date of
grant to surrender the option and if surrendered, the option will not be deemed
granted.
On 15 April, 2009, 78,809 options granted on 3 November 2005 with an exercise
price of GBP7.11 expired. Also on 15 April, 7,000 options granted on 15 December
2005 with an exercise price of GBP7.15 expired.
Equity-settled share option plan
+-----------------------+-------------+-------------+-------------+------------+
| | Six months | Six months | Year ended |Year ended |
| | ended 30 | ended 30 |31 December | 31 |
| | June 2009 | June 2009 | 2008 | December |
| | Weighted | | Weighted | 2008 |
+-----------------------+-------------+-------------+-------------+------------+
| | average | Options | average | Options |
| | exercise | | exercise | |
| | price | | price | |
+-----------------------+-------------+-------------+-------------+------------+
| | | | | |
+-----------------------+-------------+-------------+-------------+------------+
| Outstanding at the | GBP1.49 | | GBP1.50 | |
| beginning of period | | 8,216,215 | | 6,699,116 |
+-----------------------+-------------+-------------+-------------+------------+
| Granted during the | - | - | GBP0.53 | 2,789,100 |
| period | | | | |
+-----------------------+-------------+-------------+-------------+------------+
| Forfeited during the | GBP0.74 | (321,144) | GBP1.34 | (696,149) |
| period | | | | |
+-----------------------+-------------+-------------+-------------+------------+
| Exercised during the | - | - | - | - |
| period | | | | |
+-----------------------+-------------+-------------+-------------+------------+
| Expired during the | GBP7.11 | (85,809) | GBP5.09 | (575,852) |
| period | | | | |
+-----------------------+-------------+-------------+-------------+------------+
| | | | | |
+-----------------------+-------------+-------------+-------------+------------+
| Outstanding at the | GBP0.87 | 7,809,262 | GBP1.49 | 8,216,215 |
| end of period | | | | |
+-----------------------+-------------+-------------+-------------+------------+
| | | | | |
+-----------------------+-------------+-------------+-------------+------------+
| Exercisable at the | GBP1.20 | 3,025,640 | GBP1.36 | 2.799,126 |
| end of the period | | | | |
+-----------------------+-------------+-------------+-------------+------------+
The options outstanding at the end of the period had a weighted average
remaining contractual life of 2.23 years (31 December 2008: 2.71 years).
The options granted are priced using a trinomial lattice model to reflect
factors including employee exercise behaviour, option life and option
forfeitures. No options were granted in the six months ended 30 June 2009. The
inputs into the model are as follows:
+--------------------------------------------+--------------+---------------+
| | Six months |Year ended 31 |
| | ended 30 |December 2008 |
| | June 2009 | |
+--------------------------------------------+--------------+---------------+
| | | |
+--------------------------------------------+--------------+---------------+
| Weighted average exercise price | n/a | GBP0.53 |
+--------------------------------------------+--------------+---------------+
| Expected volatility | n/a | 56% |
+--------------------------------------------+--------------+---------------+
| Expected life | n/a | 4 years |
+--------------------------------------------+--------------+---------------+
| Risk free interest rate | n/a | 2% |
+--------------------------------------------+--------------+---------------+
| Expected dividends | n/a | - |
+--------------------------------------------+--------------+---------------+
| Employee exit rate | n/a | 6.2% |
+--------------------------------------------+--------------+---------------+
Expected volatility was determined by calculating the historical volatility of
the Group's share price from the time of issue to the date of grant. The
expected life used in the model has been adjusted, based on management's best
estimate, for the effects of non-transferability, exercise restrictions, and
behavioural considerations.
The Group recognised total expenses of US$1,358,479 (Six months ended June 30,
2008: US$1,442,235) related to the equity-settled share-based payments
transactions in the period.
14. Acquisition costs impairment
On 1 December 2008, the Group entered into an agreement to acquire IDT
Corporation's (NYSE: IDT; IDT.C) European Prepaid Payment Services Division, IDT
Financial Services Holdings Limited (IDTFSH). The proposed acquisition was
subject to the approval of the Gibraltar Financial Services Commission (FSC) and
MasterCard accepting the proposed change of control of IDTFSH. On 20 March 2009,
the Gibraltar FSC advised the Group that it was unable to consent to the
acquisition. A substantial underlying shareholder of the Company, who under
Gibraltar banking law was to become a controller of IDTFSH and about whom
information therefore needed to be provided to the FSC in connection with the
approval process, refused to provide the requisite notification to the FSC. The
FSC in these circumstances determined that it was unable to consent to the
change of control of IDTFSH from IDT Corporation to the Company.
Acquisition costs of $928,527 were expensed during the first six months of 2009
(Full Year 2008: $620,439). They are considered to have no future economic
benefit and have accordingly been expensed in the period.
***
+--------------------------------------------------------------------------------------+
| NEOVIA Financial Plc |
| Additional Financial Information |
| For the six month period ended 30 June 2009 |
+--------------------------------------------------------------------------------------+
+--------------------+--------------------+-----------+-------------+----------------+---------+--------+----------+------+---------------+
| The additional information presented below has been prepared for information purposes only. | | |
+------------------------------------------------------------------------------------------------------------------+------+---------------+
| Please note that this information is outside of the scope of the unaudited financial | | |
| statements. | | |
+------------------------------------------------------------------------------------------------------------------+------+---------------+
| | | | | | | | |
+--------------------+--------------------+-----------+------------------------------+---------+-------------------+------+---------------+
| | Q2 - 2009 | Q1 - 2009 | Q2 - 2008 | Q2 2009 vs | Q2 2009 vs Q2 |
| | | | | Q1 2009 | 2008 |
+ +--------------------+-------------------------+----------------+------------------+-----------------+
| | US$ | US$ | US$ | % change | % change |
+--------------------+--------------------+-------------------------+----------------+------------------+-----------------+
| | | | | | |
+--------------------+--------------------+-------------------------+----------------+------------------+-----------------+
| Revenue | 16,189,419 | 16,440,736 | 18,903,049 | -2% | -14% |
+--------------------+--------------------+-------------------------+----------------+------------------+-----------------+
| Direct Costs | (7,378,490) | (6,901,984) | (7,354,479) | 7% | 0% |
+--------------------+--------------------+-------------------------+----------------+------------------+-----------------+
| Gross profit | 8,810,929 | 9,538,752 | 11,548,570 | -8% | -24% |
+--------------------+--------------------+-------------------------+----------------+------------------+-----------------+
| General and | (6,543,328) | (6,442,963) | (6,943,207) | 2% | 6% |
| Admin | | | | | |
+--------------------+--------------------+-------------------------+----------------+------------------+-----------------+
| Operating income | 2,267,601 | 3,095,789 | 4,605,363 | -27% | -51% |
+--------------------+--------------------+-------------------------+----------------+------------------+-----------------+
| | | | | | |
+--------------------+--------------------+-------------------------+----------------+------------------+-----------------+
| Other income | | | | | |
| (expense) | | | | | |
+--------------------+--------------------+-------------------------+----------------+------------------+-----------------+
| Foreign exchange | (77,865) | (18,324) | 163,490 | nm | nm |
| gain (loss) | | | | | |
+--------------------+--------------------+-------------------------+----------------+------------------+-----------------+
| Management bonus | (180,000) | (255,000) | (448,455) | -29% | -60% |
+--------------------+--------------------+-------------------------+----------------+------------------+-----------------+
| Depreciation and | (1,413,112) | (1,393,169) | (1,603,809) | 1% | -12% |
| | | | | | |
| amortisation | | | | | |
+--------------------+--------------------+-------------------------+----------------+------------------+-----------------+
| Stock option | (681,064) | (677,416) | (691,688) | 1% | -2% |
| expense | | | | | |
+--------------------+--------------------+-------------------------+----------------+------------------+-----------------+
| Investment loss | (315,176) | (217,941) | (282,520) | 45% | 12% |
+--------------------+--------------------+-------------------------+----------------+------------------+-----------------+
| Impairment loss | (4,629,851) | (867,186) | - | nm | nm |
+--------------------+--------------------+-------------------------+----------------+------------------+-----------------+
| Restructuring | (1,623,114) | (4,133) | 803 | nm | nm |
| costs | | | | | |
+--------------------+--------------------+-------------------------+----------------+------------------+-----------------+
| | | | | | |
+--------------------+--------------------+-------------------------+----------------+------------------+-----------------+
| Income before tax | (6,652,580) | (337,379) | 1,743,184 | nm | nm |
| | | | | | |
+--------------------+--------------------+-------------------------+----------------+------------------+-----------------+
| | | | | | |
+--------------------+--------------------+-------------------------+----------------+------------------+-----------------+
| Income taxes | 417,744 | (143,960) | 493,225 | nm | nm |
+--------------------+--------------------+-------------------------+----------------+------------------+-----------------+
| Net income after | (6,234,837) | (481,339) | 2,236,409 | nm | nm |
| tax | | | | | |
+--------------------+--------------------+-------------------------+----------------+------------------+-----------------+
| | | | | | |
+--------------------+--------------------+-------------------------+----------------+------------------+-----------------+
| KEY PERFORMANCE INDICATORS | | | | |
| (excluding North America) | | | | |
+-----------------------------------------+-------------------------+----------------+------------------+-----------------+
| | Q2 - 2009 | Q1 - 2009 | Q2 - 2008 | Q2 2009 vs | Q2 2009 vs Q2 |
| | | | | Q1 2009 | 2008 |
+--------------------+--------------------+-------------------------+----------------+------------------+-----------------+
| Total active | 95,492 | 92,757 | 100,760 | 3% | -5% |
| e-wallet users in | | | | | |
| quarter (1) | | | | | |
+--------------------+--------------------+-------------------------+----------------+------------------+-----------------+
| E-wallet revenue | $ 112 | $ 119 | $ 130 | -6% | -14% |
| per active | | | | | |
| e-wallet user | | | | | |
+--------------------+--------------------+-------------------------+----------------+------------------+-----------------+
| Daily sign ups | 1,022 | 1,023 | 993 | 0% | 3% |
+--------------------+--------------------+-------------------------+----------------+------------------+-----------------+
| Total customers | 1,534,816 | 1,442,815 | 1,187,812 | 6% | 29% |
| (at period end) | | | | | |
+--------------------+--------------------+-------------------------+----------------+------------------+-----------------+
| Average daily | $ 475,266 | $ 396,413 | $ 418,047 | 20% | 14% |
| receipts from | | | | | |
| customers | | | | | |
+--------------------+--------------------+-------------------------+----------------+------------------+-----------------+
| Total customer | $ 43,249,166 | $35,677,694 | $ | 21% | 14% |
| receipts | | | 38,042,306 | | |
+--------------------+--------------------+-------------------------+----------------+------------------+-----------------+
| 1. Active e-wallet user is defined as a consumer whose e-wallet account balance has |
| changed during the quarter. The change in balance may be due to adding, removing, |
| transferring or receiving funds. |
| nm not meaningful |
+--------------------+--------------------+-----------+-------------+----------------+---------+--------+----------+------+---------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR DQLFFKKBBBBX
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