Last checked at 15 Sep 2009 12:42
DATACASH GROUP PLC ('DataCash' or 'the Company')
INTERIM RESULTS
FOR THE SIX MONTHS
ENDED 30 JUNE 2009
15th September 2009
DataCash Group Plc: DATA / Index: AIM / Sector: Support Services
DataCash Group Plc ('the Company')
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2009
The Board of DataCash Group Plc, the payment service provider, is pleased to announce its half yearly results for the six months to 30 June 2009.
Overview:
Revenues increased to £18.0m (June 2008: £12.2m)
Adjusted pre-tax profits*, increased to £7.53m (June 2008: £6.15m)
Adjusted* earnings per share increased to 5.9p (June 2008: 4.0p)
Cash balances of £13.8m (June 2008: £19.1m) equivalent to 14.9p per share, after acquisition payments of £15.7m for The 3rd Man, ACK, ExperCash and EuroCommerce
Interim dividend increased by 25% to 0.5p (June 2008: 4.0p)
* Before goodwill amortisation and impairment and foreign exchange gains on deferred consideration.
Commenting on the results, Ashley Head, Chairman of DataCash said:
"DataCash remains in a good position. We have annuity income from a growing base of largely internet merchant accounts. We have a strong balance sheet and cash generation. We have every confidence that we will continue to deliver good growth in revenue, profits and dividends."
- END -
For further information please contact:
DataCash Group PLC
Carly Smith Tel: +44 (0)20 7421 9283 Marketing & Communications Email: Carly.Smith@datacash.com
David Bailey Tel:+ 44 (0)20 7421 8451
Non-Executive Deputy Chairman Mob:+44 (0)7836 258 558
Paul Burton Tel:+44 (0)20 7421 8453
Finance Director E-mail: Paul.Burton@datacash.com
Website: www.datacash.com General enquiries Tel: +44 (0)870 727 4761
About DataCash
DataCash Group Plc (AIM: DATA), a market leading provider of payment processing solutions, provides merchants with a single interface that allows them to process secure payments, both on and offline, anywhere in the world.
DataCash also provides a range of value added services with its fraud and Risk Management solutions supporting AVS/CV2, 3-D Secure (Verified by Visa and MasterCard Secure Code) together with traditional rules-based screening.
DataCash provides first-class service reliability at a fraction of the price of an in-house solution, servicing clients within the retail, travel, telecommunications and gaming sectors.
DataCash Group Plc
Interim Report & Accounts for the six months ended 30 June 2009
Chairman's Statement
The Board of DataCash is pleased to report on another very satisfactory performance for the six month period to 30 June 2009. Headline revenues increased by 47% to £18m (2008 £12.2m) and like-for-like revenues (excluding the acquisitions of ACK Limited, ExperCash GmbH and The 3rd Man plc) increased by 19%. Adjusted Group pre-tax profit (before amortisation and impairment of goodwill and foreign exchange gains on deferred consideration payments) rose by 22% to £7.53m and Adjusted earnings per share grew by 46% to 5.9p per share. The Board is pleased to announce an increase of 25% in the interim dividend to 0.5p per share (2008 0.4p) which will be paid on 20 November 2009 to those shareholders on the register on 23 October 2009. The Group remains confident of future growth driven from e-commerce, new products and international expansion.
In spite of the economic background, e-commerce continued to have strong growth during the period, and the Group saw like-for-like transaction year-on-year growth of approximately 30%. Gaming transactions have seen slower year-on-year growth, as reported by a number of our customers, partly because of the lack of a major summer football event this year. On-line transactions for our retailing customers have shown excellent progression, in spite of, and perhaps partly because of, the economic recession.
A feature of the recession has been to increase the pricing pressures on the basic transaction processing business. We continue to migrate our customers towards higher value added services, products and into long-term contracts, which offsets some of the impact of lower transaction fees.
As previously announced, the margins on several of our recent acquisitions, ACK, ExperCash and The 3rd Man are inherently lower than the margins on our historic business mix. These acquisitions represent approximately 9% of the turnover in the first half of 2009.
EuroCommerce, our business focussed on the airline and travel markets, has continued to grow well, albeit still loss-making in the first half. Although the airline market has been difficult, our innovative risk management product has resulted in new customer wins and strong transaction growth. We remain confident that this business will become profitable during the second half of the year, albeit at lower levels than previously forecast.
The Cardholder Present business has been adversely affected by delays in decision making by some retail prospects, and this is expected to impact on the integration and licensing revenues that we anticipated for the second half.
We have a substantial support operation in Cape Town and the strength of the South African Rand has had an impact on our costs. The Group is working hard to mitigate the effect on the overall costs, while continuing to invest to support the growth of the business.
The Group continues to generate cash, and as at 30 June, cash balances were £13.8m (£19.1m as at 30 June 2008), approximately 14.9p a share. Since June 2008 about £15.7m has been spent on strategic acquisitions and investments, £2.7m in dividends, and £5.1m in corporation tax.
Interest income on our cash holdings has fallen significantly since last year, and is likely to remain lower than previously anticipated until interest rates rise. The Group continues to explore acquisition opportunities with a view to expanding both markets and internationally.
The slowdown in gaming activity and the delayed take up of Card holder present projects will reduce revenue growth in the second half compared to previous expectations, although we expect margins to be higher thanks to an improved product mix. DataCash remains in a good position. We have annuity income from a growing base of largely internet merchant accounts. We have a strong balance sheet and cash generation. We have every confidence that we will continue to deliver good growth in revenue, profits and dividends.
Ashley Head Chairman
15th September 2009
DataCash Group plc
Unaudited Condensed Consolidated Statement of Comprehensive Income
For the 6 months ended 30 June 2009
| | 6 months ended 30 June 2009 £’000 | 6 months ended 30 June 2008 £’000 | Year ended 31 Dec 2008 £’000 |
| | | | |
| Revenue | 18,009 | 12,228 | 28,037 |
| | | | |
| Administrative expenses | (10, 677) | (6,728) | (14,205) |
| | | | |
| Operating profit before impairment and amortisation | 7,332 | 5,500 | 13,832 |
| | | | |
| Impairment | (1,569) | (1,010) | (2,773) |
| Amortisation | (3,567) | (1,973) | (5,240) |
| Total operating profit | 2,196 | 2,517 | 5,819 |
| | | | |
| Finance costs (notional interest on deferred consideration) | (43) | (154) | (280) |
| | | | |
| Finance income | 224 | 739 | 968 |
| | | | |
| Foreign exchange gains/(losses) on deferred consideration | | | |
| Unsettled gain/(loss) | 46 | - | (356) |
| Settled gain/(loss) | 236 | - | (722) |
| | | | |
| Share of profit of joint ventures | 12 | 63 | 72 |
| | | | |
| Profit before taxation | 2,671 | 3,165 | 5,501 |
| | | | |
| Taxation | (1,187) | (1,625) | (2,861) |
| | | | |
| Profit on ordinary activities after taxation | 1,484 | 1,540 | 2,640 |
| | | | |
| Other comprehensive income: | | | |
| | | | |
| Exchange differences on translation of overseas operations | (1,983) | (71) | 4,330 |
| | | | |
| Total comprehensive income for the period | (499) | 1,469 | 6,970 |
| | | | |
| Attributable to equity holders of Datacash Group Plc | 1,472 | 1,540 | 2,640 |
| Attributable to the minority interest | 12 | - | - |
| | 1,484 | 1,540 | 2,640 |
| | | | |
| Basic earnings per share | 1.61 p | 1.68 p | 2.89 p |
| Diluted earnings per share | 1.60 p | 1.67 p | 2.86 p |
DataCash Group plc
Unaudited Condensed Consolidated Balance Sheet
As at 30 June 2009
| | As at 30 June 2009 £’000 | As at 30 June 2008 £’000 | As at 31 Dec 2008 £’000 |
| Non current assets | | | |
| Intangible assets | 13,526 | 13,494 | 13,544 |
| Goodwill | 54,512 | 52,095 | 57,672 |
| Property, plant and equipment | 2,231 | 2,357 | 2,357 |
| Investments in joint ventures | 99 | 73 | 87 |
| Investments | 3,902 | - | 3,902 |
| Deferred tax assets | - | 108 | - |
| | 74,270 | 68,127 | 77,562 |
| Current assets | | | |
| Trade and other receivables | 3,910 | 5,247 | 5,161 |
| Cash and cash equivalents | 13,785 | 19,110 | 16,641 |
| | 17,695 | 24,357 | 21,802 |
| | | | |
| Total assets | 91,965 | 92,484 | 99,364 |
| | | | |
| Current liabilities | | | |
| Trade and other payables | (3,348) | (3,070) | (4,555) |
| Deferred consideration Current tax liabilities | (1,617) (1,587) | (2,478) (2,222) | (4,280) (2,304) |
| | (6,552) | (7,770) | (11,139) |
| Net current assets | 11,143 | 16,587 | 10,663 |
| | | | |
| Non-current liabilities | | | |
| Deferred tax liability | ( 3,110) | (3,298) | (3,196) |
| Deferred consideration | - | (2,203) | (1,706) |
| Other liabilities | (44) | (117) | (32) |
| | ( 3,154) | (5,618) | (4,934) |
| | | | |
| Total liabilities | (9,706) | (13,388) | (16,073) |
| | | | |
| Net assets | 82,259 | 79,096 | 83,291 |
| | | | |
| Capital and reserves | | | |
| Share capital | 923 | 921 | 923 |
| Share premium | 10,986 | 10,757 | 10,986 |
| Own shares | (1,512) | (1,268) | (1,512) |
| Foreign currency translation reserve | 2,052 | (295) | 4,035 |
| Share option reserve | 1,356 | 1,278 | 1,365 |
| Merger reserve | 63,603 | 63,603 | 63,603 |
| Retained earnings | 4,078 | 4,100 | 3,891 |
| | | | |
| Attributable to equity holders of Datacash Group Plc | 81,486 | 79,096 | 83,291 |
| | | | |
| Attributable to the minority interest | 773 | - | - |
| Total equity | 82,259 | 79,096 | 83,291 |
DataCash Group plc
Unaudited Condensed Consolidated Cash Flow Statement
For the 6 months ended 30 June 2009
| | 6 months ended 30 June 2009 £’000 | 6 months ended 30 June 2008 £’000 | Year ended 31 Dec 2008 £’000 |
| | | | |
| Net cash inflow from operations | 7,992 | 6,272 | 16,167 |
| | | | |
| Interest received | 224 | 739 | 968 |
| Tax paid | (3,068) | (1,447) | (3,502) |
| | | | |
| Net cash inflow from operating activities | 5,148 | 5,563 | 13,633 |
| | | | |
| Cash flow from investing activities | | | |
| Acquisition of subsidiary (net of cash) | (2,378) | (1,680) | (4,075) |
| Payment of deferred consideration | (3,928) | - | (3,101) |
| Investments | - | - | (3,902) |
| Purchase of property plant and equipment | (386) | (892) | (1,253) |
| Purchase of intangible fixed assets | (231) | (134) | (445) |
| | | | |
| Net cash outflow from investing activities | (6,923) | (2,706) | (12,776) |
| | | | |
| Cash flow from financing activities | | | |
| Net proceeds from issue of share capital | - | 119 | 350 |
| Purchase of own shares | - | (583) | (827) |
| Equity dividends paid | (1,285) | - | (1,372) |
| | | | |
| Net cash outflow from financing activities | (1,285) | (464) | (1,849) |
| | | | |
| Net Cash (outflow)/inflow | (3,060) | 2,394 | (992) |
| | | | |
| Cash and cash equivalents at start of period | 16,641 | 16,716 | 17,942 |
| | | | |
| Exchange gains/(losses) on cash and cash equivalents | 204 | - | (309) |
| | | | |
| Cash and cash equivalents at the end of the period | 13,785 | 19,110 | 16,641 |
DataCash Group plc
Unaudited Condensed Consolidated Statement of Changes in Equity
For the 6 months ended 30 June 2009
| Share Capital | Share Premium | Foreign Currency Translation Reserve | Share Option Reserve | Own Shares | Merger Reserve | Retained Earnings | Total | Minority Interest | Total Equity | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| At 1 January 2009 | 923 | 10,986 | 4,035 | 1,365 | (1,512) | 63,603 | 3,891 | 83,291 | - | 83,291 |
| Exchange differences on translation of overseas operations | - | - | (1,983) | - | - | - | - | (1,983) | - | (1,983) |
| Net income and expense recognised directly in equity | - | - | (1,983) | - | - | - | - | (1,983) | - | (1,983) |
| Profit for the period | - | - | - | - | - | - | 1,472 | 1472 | 12 | 1,484 |
| Total recognised income and expenses for 6 months to June 2009 | - | - | (1,983) | - | - | - | 1,472 | (511) | 12 | (499) |
| Share-based payments | - | - | - | (9) | - | - | - | (9) | (9) | |
| Dividends paid | - | - | - | - | - | - | (1,285) | (1,285) | - | (1,285) |
| Minority interest arising on business combinations | - | - | - | - | - | - | - | - | 761 | 761 |
| At 30 June 2009 | 923 | 10,986 | 2,052 | 1,356 | (1,512) | 63,603 | 4,078 | 81,486 | 773 | 82,259 |
| Share Capital | Share Premium | Foreign Currency Translation Reserve | Share Option Reserve | Own Shares | Merger Reserve | Retained Earnings | Total | Minority Interest | Total Equity | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| At 1 January 2008 | 919 | 10,640 | (224) | 1,152 | (685) | 94,676 | (28,513) | 77,965 | - | 77,965 |
| Exchange differences on translation of overseas operations | - | - | 4,259 | - | - | - | - | 4,259 | - | 4,259 |
| Tax effect in equity | - | - | - | - | - | - | 63 | 63 | - | 63 |
| Net income and expense recognised directly in equity | - | - | 4,259 | - | - | - | 63 | 4,322 | - | 4,322 |
| Profit for the period | - | - | - | - | - | - | 2,640 | 2,640 | - | 2,640 |
| Total recognised income and expense for 2008 | - | - | 4,259 | - | - | - | 2,703 | 6,962 | - | 6,962 |
| Share-based payments | - | - | - | 213 | - | - | - | 213 | - | 213 |
| Dividends paid | - | - | - | - | - | - | (1,372) | (1,372) | - | (1,372) |
| Own shares | - | - | - | - | (827) | - | - | (827) | - | (827) |
| Issue of shares | 4 | 346 | - | - | - | - | - | 350 | - | 350 |
| Reserve transfer | - | - | - | - | - | (31,073) | 31,073 | - | - | - |
| At 31 December 2008 | 923 | 10,986 | 4,035 | 1,365 | (1,512) | 63,603 | 3,891 | 83,291 | - | 83,291 |
| Share Capital | Share Premium | Foreign Currency Translation Reserve | Share Option Reserve | Own Shares | Merger Reserve | Retained Earnings | Total | Minority Interest | Total Equity | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| At 1 January 2008 | 919 | 10,640 | (224) | 1,152 | (685) | 94,676 | (28,513) | 77,965 | - | 77,965 |
| Exchange differences on translation of overseas operations | - | - | (71) | - | - | - | - | (71) | - | (71) |
| Net income and expense recognised directly in equity | - | - | (71) | - | - | - | - | (71) | - | (71) |
| Profit for the period | - | - | - | - | - | - | 1,540 | 1,540 | - | 1,540 |
| Total recognised income and expenses for 6 months to June 2008 | - | - | (71) | - | - | - | 1,540 | 1,469 | - | 1,469 |
| Share-based payments | - | - | - | 126 | - | - | - | 126 | - | 126 |
| Own shares | - | - | - | - | (583) | - | - | (583) | - | (583) |
| Issue of shares | 2 | 117 | - | - | - | - | - | 119 | - | 119 |
| Reserve transfer | - | - | - | - | - | (31,073) | 31,073 | - | - | - |
| At 30 June 2008 | 921 | 10,757 | (295) | 1,278 | (1,268) | 63,603 | 4,100 | 79,096 | - | 79,096 |
Notes to the Unaudited Condensed Financial Information
For the 6 months to 30 June 2009
1. Basis of Preparation
This Report for the 6 months ended 30 June 2009 was approved by the directors on 15 September 2009.
The current and the comparative 6 months to June have been prepared using accounting policies and practices consistent with those adopted in the accounts for the year ended 31 December 2008 but are unaudited, and are also consistent with those which will be adopted in the 2009 Annual Report and Accounts, which will be in accordance with International Financial Reporting Standards ("IFRS") as adopted by the EU and those parts of the Companies Act 2006 that remain applicable to companies reporting under IFRS.
The financial information contained in this Report does not constitute statutory accounts as defined by Section 434 of the Companies Act 2006.
The figures for the year ended 31 December 2008 have been extracted from the statutory accounts, which have been filed with the Registrar of Companies. The audit report was unqualified, did not include references to matters to which the auditors drew attention by way of emphasis without qualifying their report and did not contain a statement under section 237(2) or (3) of the Companies Act 2005.
Copies of this announcement are available from the company's website, www.datacash.com.
2. Dividend
An interim dividend of 0.5p (interim 2008: 0.4p, Final 2008: 1.4p) per ordinary share will be paid. In accordance with IAS 10 Events after the Balance Sheet date, this dividend has not been recognised in the accounts at 30 June 2009, but will be recognised in the accounting period ending December 2009.
3. Impairment and amortisation of intangible assets
In accordance with the group's accounting policies, intangible assets are amortised over their useful economic lives and goodwill is not amortised. Goodwill is subject to an annual impairment review, or more frequently if there are any indications that goodwill might be impaired.
The charge for the year comprises amortisation of intangible assets of £3.57m (6 months to 30 June 2008: £1.97m, full year 2008: £5.24m) and impairment of goodwill of £1.57m (6 months to 30 June 2008: £1.01m, full year 2008: £2.77m).
The amortisation of intangibles consists of £2,461k customer contracts, £1,069k software and £37k development costs.
The impairment of goodwill during all periods was entirely attributable to EuroCommerce as a result of the downturn in the airline industry.
4. Adjusted earnings reconciliation
| | 6 months ended 30 June 2009 | | 6 months ended 30 June 2008 | | Year ended 31 Dec 2008 |
| | £000 | | £000 | | £000 |
| | | | | | |
| Profit before taxation per consolidated statement of comprehensive income | 2,671 | | 3,165 | | 5,501 |
| Adjustments: | | | | | |
| - Impairment and amortisation | 5,136 | | 2,983 | | 8,013 |
| - Unsettled foreign exchange (gain)/losses on deferred consideration | ( 46) | | - | | 356 |
| - Settled foreign exchange (gain)/losses on deferred consideration | (236) | | - | | 722 |
| | | | | | |
| Adjusted profit before taxation | 7,525 | | 6,148 | | 14,592 |
| | | | | | |
| Taxation per consolidated statement of comprehensive income | (1,187) | | (1,625) | | (2,861) |
| Tax effect of adjustments detailed above | (920) | | (835) | | (2,545) |
| Adjusted taxation | (2,107) | | (2,460) | | (5,406) |
| | | | | | |
| Adjusted profit for the period | 5,418 | | 3,688 | | 9,186 |
The Directors believe that the adjusted profit for the period and the adjusted earnings per share figure assists in the presentation of the group's underlying performance.
5. Taxation
The group's effective tax rate for the period based on profit before taxation per the consolidated statement of comprehensive income is 44.4% (6 months to 30 June 2008: 51.3%, Full year 2008: 52.0 %).
The group's effective tax rate for the period based on the adjusted profit before taxation, as detailed in note 4 above, is 28.0% (6 months to 30 June 2008: 40.0%, Full year 2008: 37.0%).
6. Earnings per Share
The basic and diluted earnings per share is calculated using the profit for the year as set out in the income statement. The adjusted earnings per share is calculated using the adjusted profit for the year as detailed in note 4 above.
Basic earnings per share has been calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the period, determined in accordance with IAS 33 Earnings per share.
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares in issue on the assumption of conversion of all the potentially dilutive ordinary shares for which all the conditions have been met.
| Weighted average number of 1p ordinary shares in issue during the year is set out below: | 6 months ended 30 June 2009 | 6 months ended 30 June 2008 | Year ended 31 Dec 2008 | ||
| Number | Number | Number | |||
| For basic earnings per share | 92,300,490 | 91,945,183 | 91,472,062 | ||
| Dilutive effect of share options | 473,906 |
337,171 | 907,728 | ||
| For diluted earnings per share | 92,774,396 | 92,282,354 | 92,379,790 | ||
| Basic earnings per share | 1.61 p | 1.68p | 2.89p | ||
| Diluted earnings per share | 1.60 p | 1.67p | 2.86p | ||
| Adjusted basic earnings per share | 5.87 p | 4.01p | 11.21p | ||
| Adjusted diluted earnings per share | 5.84 p | 3.99p | 11.10p |
7. Analysis of net funds
| At 1 January 2009 | Cashflow | At 30 June 2009 | |
| £000 | £000 | £000 | |
| Cash and cash equivalents | 13,785 | (1,605) | 12,180 |
| Restricted cash held in escrow | 1,980 | (375) | 1,605 |
| 15,765 | (1,980) | 13,785 |
8. Reconciliation of profit for the period to net cash inflow from operating activities
| | 6 months ended 30 June 2009 | 6 months ended 30 June 2008 | Year ended 31 December 2008 |
| | £’000 | £’000 | £’000 |
| Profit for the period | 1,484 | 1,540 | 2,640 |
| Taxation | 1,187 | 1,625 | 2,861 |
| Finance income | (224) | (739) | (968) |
| Finance costs | 43 | 154 | 280 |
| Impairment and amortisation of goodwill and intangibles | 5,136 | 2,983 | 8,013 |
| Depreciation | 571 | 309 | 860 |
| Loss from sale of property, plant and equipment | - | - | 1 |
| Profit on joint ventures | (12) | (63) | (72) |
| Share option charge | (9) | (22) | 213 |
| Exchange movements | (282) | (92) | 1,078 |
| Changes in trade and other payables | (1,439) | 28 | 744 |
| Changes in trade and other receivables | 1,537 | 549 | 517 |
| | | | |
| Net cash inflow from operations | 7,992 | 6,272 | 16,167 |
9. Acquisitions
On 21 January 2009, the company acquired 76% of the issued share capital of The Third Man Group plc for cash consideration of £2,388,355. Total goodwill arising on the acquisition is £265,000. The fair values of net assets acquired are based on provisional assessments pending final determination of certain assets and liabilities.
| | Carrying values pre acquisition | Fair value adjustments | Fair value |
| | £’000 | £’000 | £’000 |
| | | | |
| Intangible assets | 162 | 3,688 | 3,850 |
| Property, plant and equipment | 59 | - | 59 |
| Trade and other receivables | 287 | - | 287 |
| Cash and cash equivalents | 298 | - | 298 |
| Trade and other payables | (244) | - | (244) |
| Deferred tax liabilities | - | (1,078) | (1,078) |
| | | | |
| Net assets acquired | 562 | 2,610 | 3,172 |
| | | | |
| Goodwill | | | 265 |
| Minority interest | | | (761) |
| | | | |
| Total purchase consideration | | | 2,676 |
| | | | |
| Consideration satisfied by: | | | |
| Cash | | | 2,388 |
| Directly attributable costs | | | 288 |
| | | | |
| | | | 2,676 |
The goodwill arising on acquisition of The Third Man Group Plc represents the value of anticipated future operating synergies from the combination. There is no deferred contingent consideration payable in respect of this acquisition.