LONDON (Alliance News) - Earthport PLC Wednesday reported that its first-half pretax loss widened year-on-year, due to a provision for fair-value losses the payments company thinks are unlikely to be realised, while revenue increased almost threefold.
The cross-border payments company, which counts banks and money transfer companies among its customers, said it made a GBP5.4 million pretax loss in the six months ended December 31, 2014, compared with the GBP4.8 million pretax loss reported for the corresponding period last year.
Revenue almost trebled, increasing to GBP9.0 million from GBP3.3 million, with Earthport citing payment transactions, minimum revenue contracts and consulting engagements that generate professional services fees. According to Earthport, revenue doubled on a like-for-like basis.
Administrative expenses did not rise by as high a percentage as revenue, moving to GBP9.3 million from GBP5.9 million, mainly a result of Baydonhill, the foreign exchange provider acquired in 2013, being included for the full six months as opposed to just two months of the corresponding period last year.
However, higher share-based payment charges and the booking of an unrealised fair-value loss of GBP1.2 million due to "translation of unsettled transactions" at the end of the six months contributed to the widened pretax loss.
Earthport said the unrealised loss was partially due to the measurement of outstanding client contracts. It said that the GBP1.2 million unrealised loss was due to the difference between the book value of the outstanding client contracts and their fair value.
"These items represent the mark-to-market of open positions at the period and year end. These gains and losses would only crystallise in the unlikely event that any parties to the transactions default," Earthport said.
The payments company pointed to an unrealised fair value loss of GBP2.3 million in the financial year ended June 30, 2014, in saying that it doesn't expect the GBP1.2 million fair value loss in the six months ended December 31, 2014, to be realised.
"We are delighted with the continued progress that Earthport has made in the period resulting in accelerated revenue growth and decreased cash consumption," Hank Uberoi, chief executive, said in a statement.
Net cash used in operating activities decreased to GBP2.1 million, compared with GBP3.0 million in the corresponding period last year, Earthport said.
"Whilst transactional and professional service revenues have increased, we have also made significant progress in the expansion of our network, payment capabilities and world-class leadership team. Our pipeline of new customers continues to grow whilst significant embedded revenue potential remains a large opportunity with existing clients. We are therefore confident of a successful full year and beyond," Uberoi said.
Earthport shares were up 0.2% at 42.85 pence per share on Wednesday morning.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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