MINOAN GROUP PLC — Earnings Release 2016

Sep 21, 2016

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RNS Number : 3764K

Mi-Pay Group PLC

21 September 2016

21 September 2016

This announcement contains inside information

Mi-Pay Group plc

('Mi-Pay', the 'Group', or the 'Company')

Interim Results

Mi-Pay (AIM: MPAY), the leading provider of outsourced and fully managed digital transformation and mobile payment solutions to Tier 1 Mobile Network Operators and Mobile Virtual Network Operators, is pleased to present its unaudited Interim Results for the six months ended 30 June 2016.  

Operational Highlights

·      During the period we were the first provider to deliver Amazon Payments as a Mobile Wallet payment solution to the Mobile Operator community enhancing our on-device digital payments capabilities and continue to see an increase in payments via mobile wallet solutions.

·      Increasing focus and use by consumers of on device payment solutions such as 'Mobile Optimised Web Pages' and 'Mobile Applications'.

·      We have continued to deliver high payment success rates and low fraud levels in line with internal targets during the period, enabling us to improve commercial terms with our partners as our volumes grow in the longer term and to realise the benefits of our internal fraud solution.

·      IBM global Beacon award winner for "Outstanding Solution Hosted on IBM Cloud" for our globally secure data centre platform.

·      Successfully delivered annual PCI DSS level 1 accreditation for 2016/2017.

Financial Highlights

·      Value of transactions processed in the period increased by 34% to £39.1 million versus H1 2015.

·      Total revenue increased to £1.6 million (H1 2015: £1.5 million). Transaction revenue growth of 9% was lower than our volume growth of 34%, as one customer, on contract renewal opted to pay the merchant acquiring fee directly rather than through the Mi-Pay contract which now covers our highest value services, having no overall impact on our gross profit.

·      Transaction growth and enhanced processing efficiency delivered a 33% improvement in Gross profit to £1.0 million (H1 2015 £0.7 million), underpinned by a 13 percentage point improvement in gross margin to 62% (H1 2015: 49%).

·      £0.5m reduction in total administrative expenses to £1.2 million (H1 2015: £1.7 million).

·      Operating loss reduced by £0.7 million to £0.3 million for the period (H1 2015: £1.0 million).

·      Cash & cash equivalents as at 30 June 2016 were £3.4 million (H1 2015: £3.8 million).

·      Net cash out flows, excluding movements in amounts due to clients, cash flow from financing and investing activities and one off exception expenditure reduced to £0.1 million for the period. (H1 2015: Net cash outflow £0.7 million).

·      Basic and diluted loss per share 0.6 pence (H1 2015: 3 pence loss per share).

Seamus Keating, Chairman of Mi-Pay Group plc commented:

"The Board is pleased with the progress made during the first half of 2016 and specifically the continued improvement in gross profits and lower operating costs, making further progress towards profitability.

We are seeing increasing opportunities with our clients as they start to embrace the need for a robust digital payment strategy and, in parallel, focus their attention on how they will deal with the increasing global risks of payment fraud and data security. Our proven capabilities in both of these areas means our solution is becoming increasingly relevant in our market.  This strengthening business environment together with a strong closing cash position allows us to continue to invest to evolve and future-proof our product and service offerings."

For further information, please contact:

Mi-Pay Group plc	IFC Advisory	Zeus Capital
Tel: +44 207 112 2129	Tel: +44 20 3053 8671	Tel: +44 161 831 1512
Seamus Keating, Chairman	Graham Herring	Nick Cowles
John Beale, CFO	Tim Metcalfe Heather Armstrong	Jamie Peel

Founded in 2003, Mi-Pay Group enables clients to transform their customers' payment journey and move them from paper to digital, improving the overall customer experience and delivering more choice and flexibility for pre-paid customers.  Our product offering provides the infrastructure to enable pre-paid mobile devices to be topped up via a variety of channels such as websites, mobile applications and social media applications.  Customers include Mobile Network Operators (MNOs) and Mobile Virtual Network Operators (MVNOs). Our fully outsourced online payments solutions are enhanced by a fully integrated suite of risk management tools to provide the highest level of payment fraud management and data security for our clients and their customers. Mi-Pay sells, integrates and operates its products and solutions on a global basis.  For further information, please visit www.Mi-Pay.com or the contact details as shown above.

Chief Executive Officer's review

H1 2016 Overview

Mi-Pay has continued to deliver improvements in its trading performance seeing further strong growth in the value of transactions processed, our core long term growth engine. This in turn has driven increased gross profits. The transaction growth has enabled us to deliver our services more efficiently on our platform and increased our ability to negotiate improved terms with our partners further enhancing gross margins, and reducing our cost base.

We continue to see the natural migration of consumers to the direct, on-line digital sales channel from that of the traditional retail store 'paper' voucher model. We expect this to continue as our clients increasingly recognise this channel as a strategic requirement for marketing, growth and customer retention. Our clients' digital transformation strategies, alongside financial risk aversion and an ever increasing cybersecurity risk increases the attractiveness of Mi-Pay as a partner to help drive this transition with our flexible, simple and secure outsourced solutions.  We believe that our proven ability to provide a market leading digital content delivery platform and an optimised on device seamless payment experience in a risk free environment puts us in a strong position to take advantage of this continuing migration trend.

Strategy

'The changing world of payments enhances our position as a consolidator of the market to de-risk our client's future access to their customers'

As consumers continue to migrate from customer-present, paper payment methods to making payments virtually, using digital channels, the Mi-Pay proposition becomes increasingly relevant to our target audiences - in terms of growth, customer retention, risk mitigation and data security.  Furthermore, against the back-drop of the economic uncertainty caused by Brexit and the likelihood of client's having a renewed focus on driving business cost efficiencies, our outsourced model adds another compelling reason for potential clients to work with Mi-Pay.

Our strategy is to deliver outsourced person not present, primarily on-line payment solutions, in the main to Mobile Operators enabling them to better serve their pre-paid subscriber base. Our value proposition provides an excellent and complete outsourced end-user experience and where required, indemnifies our clients against fraudulent transactions and takes the responsibility of securing their customers data. Mi-Pay's products also increase revenue through better customer payment experience maximising payment success rates. In addition, our products provide an invaluable tool for customer relationship management - reducing churn rates and enabling online payment solutions as a marketing tool. Critically we are payment agnostic and will facilitate across our client base, the relevant market leading payment methods, applying our own experience and optimisation techniques to enhance the existing customer experience. This approach both improves the customer journey and future proofs our clients' payment, security and risk management capabilities.

We aim to offer our clients a multi-faceted payment solution to enhance their customer retention strategies. This will enable them to deliver long term direct channel strategies transitioning their customers from traditional unregistered 'card' payment, to 'one click', recurring, secure, multi-channel payment. As a result, our clients will also be able to market directly to their consumers via our channels, helping them to drive long term value.

Through our connections to major operators in the UK, Europe and Asia Pacific we continue to see strong migration onto the digital channel. We are targeting growth in volumes from existing clients as they continue to look for competitive solutions to retain and better manage their consumer bases. Our ability to consolidate multiple payment options, fraud and security solutions together with multiple customer contact channels de-risks our client's future access to their customers.

Asia Pacific is a market of significant potential for Mi-Pay where the penetration of consumers with both smartphones and bank accounts is growing to a level of critical mass. The global investments of Visa, MasterCard and subsequent payment specialists such as PayPal continue to drive the growth of consumers with bank accounts, facilitating our future growth in Asia Pacific and enabling us to engage with new and existing clients across the region.

Our solution provides a high value and risk free option to the Mobile Operators, whilst at the same time it provides our payment partners with access to growing markets. In Asia specifically our experience in optimising online payment solutions whilst managing fraud provides a clear competitive advantage as the market develops.

Operational Review

Trading

We delivered a 34% increase in total transaction value processed to £39.1 million versus £29.2 million for the same period in 2015, continuing our prior year trends of an annual 30% + per annum growth. This drove a 33% increase in gross profit to £1.0 million and our gross margin increased again from 49% in H1 2015 to 62% in H1 2016 as the increased transaction values enabled us to deliver improved terms with our partners and better manage our fraud risks.

Our total revenue increased to £1.6 million (£1.5 million H1 2015). Our revenue growth was impacted by a £0.2 million reduction in revenue over the comparative periods due to changes in the way we trade with a major client who insourced the lower value payment processing element of our service that we traditionally charge at cost. Our flexibility enabled us to re-sign a two-year contract extension and continue to deliver our higher value customer relationship channels, fraud and data security solutions with the change having no negative impact on our profits. This demonstrates our ability to flexibly adapt our commercial model to our customers' requirements without impacting our performance levels.

The growth in transactions continued to be delivered primarily from our existing European clients through the implementation of new services as we see the natural migration of their consumers to the on-line, digital channel. Additionally, we are seeing increasing client focus on security - both payment fraud management and cyber security to enhance the protection of consumer data. We see these trends continuing and Mi-Pay's solution has an increasing relevance in managing these challenges.

Whilst we continue to see the natural migration of consumers from the traditional 'in-store' paper voucher solutions onto the direct, digital solutions, we are now increasingly seeing our customers choosing website and 'on-device' payment channels such as Mobile Apps and Device Optimised Web pages. This now accounts for over 52% of our transactions processed (42% January 2015) versus that of the traditional Interactive Voice Solutions, which has reduced to less than 36% (41% January 2015). In addition, our consumers are now showing an increased preference for mobile wallet based payment solutions such as PayPal and Amazon Payments which have grown from 7% of our total volume to over 12% since January 2015. These are key areas for investment for Mi-Pay and one where we expect to see real growth helping to drive consumers onto the digital channel where we operate our services. During the last 12 months we have successfully delivered 'In-APP' payments to our two largest clients and have been the first payment provider to deliver Amazon Payments, alongside PayPal to the Operator community and expect to follow this up in H2 2016 with further new investments. We will continue to invest in market leading on-device payment solutions and on device delivery mechanisms.

Our service in the Philippines remains live with a major Mobile Operator, but we continue to see delays in marketing the solution and now expect the Mobile Operator to launch its marketing campaign later in 2016. In the United Kingdom we have seen 3 Virtual Mobile Network Operators close their service in the UK (Mobile By Sainsbury, Post Office Mobile and Globe Telecom) however we expect the majority of their customers to migrate to other client's services that we offer over time and this should therefore have limited impact over the long term.

Security and stability remains at our heart and the increasing risks that have been seen in the 'cyber community' in the last 12 months increases our solutions value to our clients and their customers. We are firstly pleased to see good infrastructure stability following the data center migration project in late 2015, which additionally led to a global IBM Cloud Solution award, and secondly, the continued stability in our employee base following the restructure in 2014 has led to improved solutions and reductions in our operational costs. We additionally continue to invest in our data security and were pleased to again achieve PCI DSS (3.2) level 1 accreditation for 2016/ 2017 for the 6th year running. We will deliver full data encryption, not simply payment data across our whole infrastructure to ensure all of our client's personal data is fully protected, but also to future proof and protect our clients to the highest level.

Financial Review

	Unaudited Six months ended 30 June 2016 £	Unaudited Six months ended 30 June 2015 £	Audited Year ended 31 Dec 2015 £
Transactional Services: Gross Revenue	39,051,426	29,158,408	64,666,714
Transaction Services Revenue excluding contractual change	1,158,998	904,951	1,994,111
Impacted Client Transaction Services Revenue	48,818	206,408	263,019
Transaction Services Revenue	1,207,816	1,111,359	2,257,130
Professional Services Revenue	378,122	388,713	757,044
Revenue	1,585,938	1,500,072	3,014,174
Gross profit	982,513	736,229	1,691,342
Gross profit %	62%	49%	56%
Administrative Expenses	(1,236,982)	(1,739,601)	(3,130,318)
Operating loss	(254,469)	(1,003,372)	(1,438,976)
Cash and cash equivalents at beginning of period	3,530,154	2,002,698	2,002,698
Adjusted Net cash flow from operating activities¹	(131,679)	(679,206)	(681,258)
Exceptional items	(50,902)	-	(4,360)
Cash inflow from management of client payments	152,950	865,254	707,478
Capital Expenditure	(27,113)	(45,958)	(74,899)
Cash flow from financing	(33,000)	1,613,495	1,580,495
Cash and cash equivalents at end of period	3,440,410	3,756,283	3,530,154
Basic and diluted loss per ordinary share	(0.6)p	(3)p	(3.6)p

¹Adjusted Net cash flow from operating activities excludes cash flows from the management of client payments and exceptional items

With transaction values, revenues and gross profits all growing, we are pleased to report a 33% increase in gross profits to £1.0 million, with a 13 percentage point improvement in gross margins. Additionally, we continued to manage effectively our administrative expenses, reducing these by a further £0.5 million against the same period in 2015 to £1.2 million which led to a reduction in our Operating losses of £0.7 million to £0.3 million. In addition, this loss included £0.1 million relating to deferred salaries not paid to Directors and £0.1 million of costs related to one-off exceptional activities. 

Our balance sheet remained consistent with prior periods with no material movements to report and our working capital requirements remain minimal due to our business model of collecting payments at source. Cumulative amounts due to Directors for deferred salaries unpaid closed the period at £0.2 million and we closed the period expecting to recover £0.4 million in cash for research and development tax credits due for the 18-month period to June 2016, £0.3 million of which was paid in August 2016.

The Group ended the period with £3.4 million in cash and cash equivalents (£3.8 million at 30 June 2015), noting that of this balance, £2.3 million related to the operation of managing client payments (£2.3 million as at 30 June 2015). Excluding a £0.1 million positive working capital movement due to client related cash balances as our transaction volumes grew, capital expenditure, finance lease payments and one off exceptional items, net cash outflow from operating activities was £0.1 million (£0.7 million for the 6-month period to 30 June 2015). In August 2016 we subsequently received a cash inflow of £0.3 million for research and development tax credits relating to the 12-month period to 31 December 2015.

Employees

We recognise that the performance achieved in this period would not have been possible without the support and continued dedication of our staff who have supported the new delivery model and continued to deliver solutions to our clients, support the strong transaction growth and develop improved, secure technologies despite the restructure during the period. They are our most valuable resource and we would like to thank them for their efforts.

Outlook

Mi-Pay has made significant progress towards delivering its short term objective of becoming cash generative. Having invested heavily in 2014 the benefits of this are now being demonstrated in the Group's performance at every level with increased revenues, gross profits and reduced administrative expenses. We expect to continue to reduce cash burn on a month-by-month basis, see continued revenue growth from all of our clients and continue to improve our gross margins.

Continued investment into our fraud management capabilities and delivery in 2015 of a flexible, highly secure and market compliant global infrastructure environment, will provide us with a platform to grow more effectively and with greater stability. Our focus for the rest of 2016 and beyond is to achieve profitability, continue to support and grow our existing client bases and deliver new clients, specifically targeting the increasing need for more mobile and social media based payment experiences in a safe, secure and fully managed environment.

For the full year, we expect transaction value processed to be in the region of £80 million (2015: £65 million). Together with our current visibility of professional services projects, we expect total revenue for 2016 in the range of £3.2-3.5 million with gross margins expected to be in line with those experienced in H1. The Board is confident that good progress is being made towards profitability and cash flow break even.

The Board remains confident that our total market opportunity continues to increase as the digital payments market expands globally and our solutions become increasingly relevant to a wider set of customers and geographies, and our growing relationship with all of our clients keeps us in a strong position to take advantage of this. The key market of Asia remains an opportunity and one that we expect to deliver growth for us over the longer term.

Michael Dickerson                                             Seamus Keating

CEO                                                                  Chairman

Consolidated Statement of Comprehensive Income

For the period of six months ended 30 June 2016

	Note	Unaudited Six months ended 30 June 2016                        £	Unaudited Six months ended 30 June 2015 £	Audited Year ended 31 Dec 2015 £
Transactional Services: Gross Revenue		39,051,426	29,158,408	64,666,714
Transactional Services: Net Commission Revenue		1,207,816	1,111,359	2,257,130
Professional Services Revenue		378,122	388,713	757,044
Revenue		1,585,938	1,500,072	3,014,174
Cost of sales		(603,425)	(763,843)	(1,322,832)
Gross profit	2	982,513	736,229	1,691,342
Administrative expenses
General and administration		(1,014,919)	(1,218,696)	(2,287,618)
Research and development		(104,089)	(237,390)	(384,909)
Depreciation		(67,072)	(81,042)	(127,121)
Share-based payment		-	(202,473)	(326,310)
Exceptional items	3	(50,902)	-	(4,360)
Total administrative expenses		(1,236,982)	(1,739,601)	(3,130,318)
Operating loss		(254,469)	(1,003,372)	(1,438,976)
Finance income		1,791	1,031	3,512
Finance expense		(30)	(471)	(478)
Loss before taxation		(252,708)	(1,002,812)	(1,435,942)
Taxation	4	-	(3,149)	(3,149)
Loss for the period/year		(252,708)	(1,005,961)	(1,439,091)
Other Comprehensive expense for the year
Exchange differences on translation of foreign operations		(645)	(1,927)	(695)
Loss and total comprehensive expense for period attributable to the owners of the parent		(253,353)	(1,007,888)	(1,439,786)
Basic and diluted loss per ordinary share	5	(0.6)p	(3)p	(3.6)p

Consolidated Statement of Financial Position

As at 30 June 2016

	Note	Unaudited Six months ended 30 June 2016 £	Unaudited Six months ended 30 June 2015 £	Audited Year ended 31 Dec 2015 £
ASSETS
Non-current assets
Property, plant and equipment		218,101	275,197	258,059
Total non-current assets		218,101	275,197	258,059
Current assets
Trade and other receivables	6	772,411	966,705	724,335
R&D tax credit receivable		374,375	451,512	203,657
Cash and cash equivalents		3,440,410	3,756,283	3,530,154
Total current assets		4,587,196	5,174,500	4,458,146
Total assets		4,805,297	5,449,697	4,716,205
LIABILITIES
Current liabilities
Trade and other payables	7	(3,849,186)	(3,866,172)	(3,473,741)
Obligations under finance lease		(66,000)	(66,000)	(66,000)
Total current liabilities		(3,915,186)	(3,932,172)	(3,539,741)
Non-current liabilities
Obligations under finance lease		(66,000)	(132,000)	(99,000)
Total non-current liabilities		(66,000)	(132,000)	(99,000)
Total liabilities		(3,981,186)	(4,064,172)	(3,638,741)
Net assets		824,111	1,385,525	1,077,464
Equity
Share capital		4,159,323	4,159,323	4,159,323
Share premium		1,403,923	1,403,923	1,403,923
Share options reserve		624,729	500,892	624,729
Reverse acquisition reserve		6,920,115	6,920,115	6,920,115
Merger reserve		6,808,742	6,808,742	6,808,742
Retained deficit		(19,092,721)	(18,407,470)	(18,839,368)
Total equity attributable to the equity shareholders of the parent		824,111	1,385,525	1,077,464

Michael Clay Dickerson

Chief executive officer

Consolidated Statement of Cash Flows

For the period of six months ended 30 June 2016

	Note	Unaudited Six months ended 30 June 2016 £	Unaudited Six months ended 30 June 2015 £	Audited Year  ended 31 Dec 2015 £
Cash flows from operating activities
Loss before tax from continuing operations		(252,708)	(1,002,812)	(1,435,942)
Adjusted for:
Depreciation		67,072	81,042	127,121
Finance income		(1,791)	(1,031)	(3,512)
Finance expense		30	471	478
Share based payment		-	202,473	326,310
R&D credits		(170,808)	(81,395)	(203,657)
(Increase) / decrease in trade and other receivables		(48,632)	(238,346)	34,808
Increase / (decrease) in trade and other payables		375,445	1,228,235	833,887
Adjusted profit/(loss) from operations after changes in working capital		(31,392)	188,637	(320,507)
Interest received		1,791	1,031	3,512
Interest paid		(30)	(471)	(478)
Corporation tax (paid)/received (inc R&D credits)		-	(3,149)	339,333
Net cash flows from operating activities		(29,631)	186,048	21,860
Cash flows from investing activities
Purchase of property, plant and equipment		(27,113)	(45,958)	(74,899)
Net cash flows from investing activities		(27,113)	(45,958)	(74,899)
Cash flows from financing activities
Proceeds from issue of share capital, net of issue costs		-	1,646,495	1,646,945
Finance lease payments		(33,000)	(33,000)	(66,000)
Net cash flows from financing activities		(33,000)	1,613,495	1,580,495
Net increase / (decrease) in cash and cash equivalents		(89,744)	1,753,585	1,527,456
Cash and cash equivalents at beginning of period		3,530,154	2,002,698	2,002,698
Cash  and cash equivalents at end of period		3,440,410	3,756,283	3,530,154

Consolidated Statement of Changes in Equity

For the period of six months ended 30 June 2016

For the period ended 30 June 2016	Share capital	Share premium	Share options reserve	Reverse acquisition reserve	Merger reserve	Retained deficit	Total
	£	£	£	£	£	£	£
At 1 January 2016	4,159,323	1,403,923	624,729	6,920,115	6,808,742	(18,839,368)	1,077,464
Loss for the period from continuing operations	-	-	-	-	-	(252,708)	(252,708)
Other comprehensive expense for the period	-	-	-	-	-	(645)	(645)
At 30 June 2016	4,159,323	1,403,923	624,729	6,920,115	6,808,742	(19,092,721)	824,111

Consolidated Statement of Changes in Equity

For the period of six months ended 30 June 2015

For the period ended 30 June 2015	Share capital	Share premium	Share options reserve	Reverse acquisition reserve	Merger reserve	Retained deficit	Total
	£	£	£	£	£	£	£
At 1 January 2015	3,398,453	518,298	298,419	6,920,115	6,808,742	(17,399,582)	544,445
Loss for the period from continuing operations	-	-	-	-	-	(1,005,961)	(1,005,961)
Other comprehensive expense for the period	-	-	-	-	-	(1,927)	(1,927)
Placing of new ordinary shares in the period	760,870	885,625	-	-	-	-	1,646,495
Share-based payment	-	-	202,473	-	-	-	202,473
At 30 June 2015	4,159,323	1,403,923	500,892	6,920,115	6,808,742	(18,407,470)	1,385,525

Consolidated Statement of Changes in Equity

For the year ended 31 December 2015

For the year ended 31 December 2015	Share capital	Share premium	Share options reserve	Reverse acquisition reserve	Merger reserve	Retained deficit	Total
	£	£	£	£	£	£	£
At 1 January 2015	3,398,453	518,298	298,419	6,920,115	6,808,742	(17,399,582)	544,445
Loss for the year from continuing operations	-	-	-	-	-	(1,439,091)	(1,439,091)
Other comprehensive expense for the period	-	-	-	-	-	(695)	(695)
Additional placing shares	760,870	885,625	-	-	-	-	1,646,495
Share-based payment	-	-	326,310	-	-	-	326,310
At 31 December 2015	4,159,323	1,403,923	624,729	6,920,115	6,808,742	(18,839,368)	1,077,464

Notes to the Financial Information

1     Basis of preparation

The unaudited consolidated half-yearly financial information in this report has been prepared on the basis of the accounting policies expected to apply for the financial year to 31 December 2016 and in accordance with recognition and measurement principles of International Financial Reporting Standards (IFRS) as endorsed by the European Union. The accounting policies applied in the preparation of this half-yearly financial information are consistent with those used in the financial statements for the year ended 31 December 2015. This interim report has not been reviewed by the Group's auditors, and does not constitute statutory accounts within the meaning of the Companies Act 2006.  The financial information for the six months ended 30 June 2016 and 30 June 2015 is not audited.

The financial information contained in this document does not include all of the information required for full annual financial statements and do not comply with all of the disclosures in IAS34 'Interim Financial Reporting'.  Accordingly, whilst this financial information has been prepared in accordance with IFRS they cannot be construed as being in full compliance with IFRS.

The financial information for the year ended 31 December 2015 does not constitute the full statutory accounts for that period. The Annual Report and Accounts for 31 December 2015 have been filed with the Registrar of Companies. The Independent Auditors' Report on the Annual Report and Accounts for 2015 was unqualified and did not include references to any matters which the auditors drew attention to by way of emphasis without qualifying their report and did not contain statements under Section 498(2) or 498(3) of the Companies Act 2006.

2     Segmental analysis

The chief operating decision maker has been identified as the Chief Executive Officer (CEO) of the group. The chief operating decision maker is responsible for regularly assessing the performance of the group's operating segments and performing the function of allocating resources. To assist the chief operating decision maker in this process, internally generated reporting is prepared for each operating segment.

The group has two operating segments that it reports on. These operating segments are:

·      Transaction Services Revenues: This segment generates revenue from the processing of transactions on behalf of clients and is Mi-Pay Group plc's core business.

·      Professional Services Revenues: This segment generates revenue from the development, delivery and hosting of our platform and client solutions.

The CEO assesses the performance of the operating segments based on revenue and gross profit. The CEO uses these measures to assess performance because they are quick to analyse and directly relevant to evaluating the results of each segment. ¹

2     Segmental analysis (continued)

Both segments are continuing operations and results are as follows:

Operating Segments

	Unaudited Six months ended 30 June 2016 £		Unaudited Six months ended 30 June 2015 £		Audited        Year ended 31 Dec 2015 £
Transaction Services Revenue	1,207,816		1,111,359		2,257,130
Professional Services Revenue	378,122		388,713		757,044
Total revenue	1,585,938		1,500,072		3,014,174
Transaction services cost of sales	542,866		670,071		1,167,525
Professional services cost of sales	60,559		93,772		155,307
Total cost of sales	603,425		763,843		1,322,832
Transaction services gross profit	664,950		441,288		1,089,605
Professional services gross profit	317,563		294,941		601,737
Total gross profit	982,513		736,229		1,691,342
Transaction services gross profit	55%		40%		48%
Professional services gross profit	84%		76%		79%
Total gross profit	62%		49%		56%

¹ There is no inter segment trading and assets and liabilities are not allocated to segments.

3     Exceptional items

The exceptional item recognised in the six month period to 30 June 2016 reflects costs that, in the opinion of the board of directors, are non-recurring as they relate to professional fees incurred on an aborted acquisition.

4     Taxation

	Unaudited Six months ended 30 June 2016 £		Unaudited Six months ended 30 June 2015 £		Audited         Year ended 31 Dec 2015 £
Foreign Tax
Current tax on foreign income for the year	-		3,149		3,149
Total tax charge	-		3,149		3,149

5     Loss per share

	Unaudited Six months ended 30 June 2016 £		Unaudited Six months ended 30 June 2015 £		Audited          Year ended 31 Dec 2015 £
Loss for the year	(252,708)		(1,005,961)		(1,439,091)
Weight-average shares outstanding (number)	41,593,229		38,776,750		40,175,719
Basic EPS	(0.6)p		(3)p		(3.6)p
Diluted EPS	(0.6)p		(3)p		(3.6)p

The numerators shown above represent the total loss from continuing operations for the period or year.

Since the Group was in a loss making position for all three periods presented, there was no difference between the weighted average number of shares used to calculate basic and diluted net loss per share.

6     Trade and other receivables

	Unaudited Six months ended 30 June 2016 £		Unaudited Six months ended 30 June 2015 £		Audited       Year ended 31 Dec 2015 £
Trade receivables	132,226		114,416		167,690
Less: provision for impairment of trade receivables	-		-		-
Trade receivables - net	132,226		114,416		167,690
Client receivables	490,243		749,960		471,428
Prepayments	117,877		63,861		65,785
Other receivables	32,065		38,468		19,432
Total trade and other receivables	772,411		966,705		724,335

7     Trade and other payables

	Unaudited Six months ended 30 June 2016 £		Unaudited Six months ended 30 June 2015 £		Audited       Year ended 31 Dec 2015 £
Trade payables	256,214		173,066		109,480
Client payables	2,822,383		3,068,999		2,626,055
Accruals	393,661		387,549		364,775
Deferred income	62,038		91,509		134,766
Other payables - tax and social security payments	44,565		74,473		95,365
Deferred directors' emoluments	213,504		62,796		138,150
Other Payables	56,821		7,780		5,150
Total trade and other payables	3,849,186		3,866,172		3,473,741

This information is provided by RNS

The company news service from the London Stock Exchange

END

IR URSNRNUAKUAR

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