MPAY.L Regulatory News (MPAY)

The information contained within this announcement is deemed by the Company to constitute inside information stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain

12 August 2019

Mi-Pay Group plc

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

Trading update, update on existing client and notice of interim results

Mi-Pay (AIM: MPAY), the leading provider of outsourced digital transformation and mobile payment solutions, today provides an update on trading in the year to date, one of the Company's major clients and timings for its interim results.

Trading update

Trading for the first half of 2019 was broadly in line with management's expectations, delivering a 15% increase in fully managed payment transactions processed to £58.1 million (H1 2018: £50.2 million) and successfully indemnifying £29.2 million of payments for fraud (H1 2018: £17.2 million). This increased revenues to £1.7 million for the period (H1 2018: £1.6 million). Gross profit margins remained strong at 63% and administrative expenses were in line with prior periods. The Company delivered an approximate breakeven EBITDA for the period (H1 2018: £0.1 million EBITDA loss). Two major contracts were renewed with clients representing 43% of the 2018 revenue during the period and strong operational metrics were delivered.

As a result of uncertainties in the e-commerce payment market with respect to the adoption of new European wider Payment Services Directives (PSD2) in September 2019 and the current economic climate, new business growth in the second half of the year is expected to be slower than anticipated. As a result, trading for the full year is expected to be behind current market expectations. The Company has invested to ensure it continues to deliver compliant solutions for its Clients and to take advantage of market uncertainties in the coming period.

Client update

One of the Company's clients is a mobile network operator which has been a customer of the Company for 12 years (the "Client"). The Company provides payment and fraud management services to the Client under a rolling contract and therefore there was a risk that the revenues received under this contract could be lost with a limited notice period. It has come to the attention of the Board of Mi-Pay that, as a result of a rationalisation exercise, the Client is likely to consolidate the services provided by the Company to another provider. The Company does not know when this will occur, however, should it becomes effective, it is expected that the Company will no longer generate revenues from this Client going forward.

In the year ended 31 December 2018, the Client accounted for £0.5 million of turnover for the Group, equivalent to 13% of the Company's revenue for that year and this level of revenue has continued in 2019 so far. Until the Client ceases to utilise the Company's services, it is not known what the financial impact of the Client loss will be on the Company's trading for the current year.

The Board will adjust the Group's budgets and spending accordingly to mitigate the expected loss and will continue to develop the relationships with its long-term contracted clients to drive growth, remaining focussed as a Company on delivering long-term profitable performance.

Notice of Interim Results

The Company will be announcing its Interim Results for the six months ended 30 June 2019 on Wednesday, 25 September 2019.

Management will be hosting a presentation for analysts on the day of results at 10:30 a.m. at Allenby Capital Limited, 5 St Helen's Place, London, EC3A 6AB.

Analysts who wish to attend should register their interest with Joscelin Pinnington, contactable at j.pinnington@allenbycapital.com or 0203 328 5656.

Michael Dickerson, Chairman of Mi-Pay Group plc commented:

"We are pleased with the continued growth and performance in the first half of 2019 and have invested in our solutions to ensure we continue to deliver fully compliant services to our clients. Whilst we are disappointed with the potential impact of the client loss, we will focus on mitigating the loss of revenue and margin and continuing the consistent growth we have delivered from our existing client relationships. In addition, we believe we are well placed to take advantage of the expected payment market uncertainties and risks over the longer term with our technology solutions and commercial flexibility."

For further information, please contact:

About Mi-Pay Group

Founded in 2003, Mi-Pay Group plc delivers fully outsourced online and related payment and fraud management solutions to digital ecommerce clients, primarily in the mobile and digital content sector. Its 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 and customers include Mobile Network Operators (MNOs) and Mobile Virtual Network Operators (MNVOs), additionally managing and indemnifying the data security and payment fraud risks. Mi-Pay sells, integrates and operates its products and solutions on a global basis. For further information, please visit www.Mi-Pay.com or contact details as shown above.