SafeCharge Regulatory News (SCH)

SafeCharge International Group Limited

("SafeCharge", the "Company" and together with its subsidiaries, the "Group")

Full Year Results

SafeCharge (AIM: SCH), a leader in advanced payment technologies, is pleased to announce its results for the full year ended 31 December 2015.

Financial highlights

* Adjusted EBITDA is a non-GAAP, company-specific measure which is earnings excluding interest, taxes, depreciation, amortisation, costs incurred in respect of the Company's Initial Public Offering, acquisition costs and contingent remuneration, restructuring costs and share-based payments charge (See Consolidated Statement of Comprehensive Income).

Current trading

The Group has enjoyed an encouraging start to 2016 following on from the strong trading and momentum experienced in 2015. The Group has a strong sales pipeline with significant customers expected to go-live, reflecting the major advances in the Group's product and platform suite. The Directors look forward with confidence for 2016 and beyond.

Operational highlights

§ Successful launch of VISA acquiring services complementing MasterCard services

§ New customer wins with a strong pipeline and several significant new customers due to go live in H1 2016

§ Significant advance in core business processing transaction value of US$6.9 billion (2014: US$5.7 billion)

§ Convergence of acquiring and issuing under a single technology platform

§ Development and certification of multichannel and airline solutions

§ PAY.com MasterCard pre-paid card successfully launched

§ Recognition of technology leadership winning four prestigious awards including 'Innovation in Payments' and 'Overall Payments Company' categories of the eGaming Review Awards

David Avgi, CEO of SafeCharge, said:

"The year of 2015 was another period of strong financial performance and continued growth. We have continued to innovate, develop and deliver our payment products and technologies, enabling us to deepen our relationships and win new business with large scale customers. With continued strong momentum and an excellent pipeline of new business, we look forward to the rest of the year with confidence and optimism."

- Ends -

For more information

About SafeCharge

SafeCharge International Group Limited is a global provider of payments services, technologies and risk management solutions for online and mobile businesses. The SafeCharge group has a diversified, blue chip client base and is a trusted payment partner for customers from various e-commerce verticals. SafeCharge has been Payment Card Industry Data Security Standard ("PCI-DSS") Level 1 certified since 2007 and is listed on the London Stock Exchange AIM market (LSE: SCH). The Company's wholly owned subsidiary, SafeCharge Limited, is an authorized Electronic Money Institution regulated by the Central Bank of Cyprus and a principal member of MasterCard Europe and VISA Europe. The SafeCharge group has operations in the UK, Guernsey, Cyprus, Bulgaria, Israel, Germany, Austria and Ireland.

www.safecharge.com

Chairman's statement

Introduction

I am delighted to report that 2015 - SafeCharge's first full year as a public company - marked a further period of strong performance and growth for the Group. Consolidated revenues grew 29.7% to US$99.8 million and Adjusted EBITDA* increased 26.1% to US$31.1 million, with the Group continuing to generate significant free cash flows from its operations.

SafeCharge's impressive performance was primarily driven by its core business, which benefitted from the growth of existing customers and new customer wins. Core revenues (excluding 2015 acquisitions) grew by 20.4% with Adjusted EBITDA* growing by 27.3%.

In addition to a robust financial performance, we remain committed to advancing our technologies and expanding the Group's product offering, thereby strengthening engagement with customers whilst growing and diversifying the business into new markets and industries.

The Board continues to focus on making effective use of the Group's cash resources and investigate potentially large strategic and complementary acquisition opportunities, whilst continuing to apply strict criteria when assessing such acquisition opportunities.

Board and governance

The Board remains committed to ensuring a robust governance structure is in place and, whilst recognising the size of the Company, is working to comply with corporate best practice. In December 2015 we announced the strengthening of the Board with the appointment of Yuval Ziv as Group COO, recognising the importance of the role within our growing business. Yuval brings with him considerable experience from within both the payments industry and the SafeCharge Group.

In October 2015 the Company completed its re-domicile from the British Virgin Islands to Guernsey which the Board believes will provide a number of benefits, including expanding access to the Company's equity to a wider constituency of investors.

I thank the Directors for their continued contribution to the Group throughout what was a highly successful year and congratulate David Avgi, his senior management team and all employees for their dedication and hard work.

Dividends

The Company's stated dividend policy is to pay-out at least 50% of Adjusted EBITDA. Given the Group's strong underlying growth in earnings and cash generation, the Board has recommended a final dividend of 7.30 US$ cents per share, giving a total dividend of 11.30 US$ cents per share for the year (2014: 8.16 US$ cents), representing 55% of Adjusted EBITDA* for the period.

The dividend shall be paid in sterling and therefore it will be subject to a conversion exchange rate from US dollars based on a GBP/USD rate of 1.42, being the rate at 4.30pm on 9 March 2016. As a result, those shareholders entitled to the dividend will receive 5.14 pence per share. Subject to shareholder approval at the annual general meeting, to be held on 18 May 2016, the final dividend will become payable on 27 May 2016 to those shareholders on the Company's register as at the record date of 20 May 2016. The ex-dividend date is 19 May 2016.

Outlook

Having achieved another exciting year of growth and operational development, the Group has maintained momentum into 2016 such that we look to the future with confidence and optimism.

Roger Withers

Chairman

10 March 2016

* Adjusted EBITDA is a non-GAAP, company-specific measure which is earnings excluding interest, taxes, depreciation, amortisation, costs incurred in respect of the Company's Initial Public Offering, acquisition costs and contingent remuneration, restructuring costs and share-based payments charge (See Consolidated Statement of Comprehensive Income).

Chief Executive's review

Introduction

In a year of continued progress and financial success for the Group it is clear that our new and innovative products and services are creating significant opportunities.

Throughout 2015, SafeCharge continued to win new customers, closing the period with an extremely strong pipeline that features significant - and well-known - businesses which are set to join the Company's platform in 2016. Recent client wins are due primarily to our proprietary technologies, reinforcing the validity of our strategy to focus on research and development; and adapting the platform to suit the individual needs of the sectors we serve.

We have continued to invest in our core technologies, expand the Group's product offering and diversify the business into new markets and industries. In 2015 we completed a number of highly significant business developments, which will create new platforms for growth, including the successful launch of SafeCharge's own acquiring facilities; and the innovative PAY.com MasterCard prepaid, which together with our existing payment products, enables SafeCharge to offer a unique converged payments ecosystem.

Strategy

The Group has a clear organic growth strategy, aiming to diversify the products and services offered to its clients, thereby seeking to grow revenues from existing customers, whilst looking to further expand by entering attractive new verticals, such as online games, travel and retail.

In parallel to our organic growth strategy, we are constantly looking for potential acquisitions with the capacity to facilitate and accelerate our access to new markets, clients and territories - whilst continuing to apply strict criteria to such opportunities in the interests of creating a sustainable business delivering high quality returns to shareholders.

The Group made significant progress with many aspects of its strategy during 2015; and we are delighted to see the benefits of these starting to flow through, with further upside set to be enjoyed in 2016 and beyond.

Growth and performance

The Group's continued momentum through 2015 enabled it to achieve strong growth in revenues of 30% to US$99.8 million (2014: US$76.9 million), with Adjusted EBITDA* improving 26% to US$31.1 million (2014: US$24.7 million).

SafeCharge remained highly cash generative with US$29.3 million of free cash flow from operating activities (before tax) in the period (2014: US$20.8 million); and a cash conversion of 94.0%, (2014: 84.3%) from adjusted EBITDA. Despite significant investments; acquisitions; technology development expenditure; and payment of the final 2014 and interim 2015 dividends, the Group closed the period with US$114.9 million of cash, US$18.6 million classified as available-for-sale investments; US$1.4 million assets classified as held for sale; and no debt.

As a result of the acquisitions completed in 2015, the Group increased headcount, particularly of technology staff and grew its operational capabilities, extending its knowledge base. This increased headcount has enabled SafeCharge to manage its growth and continue to develop its technology platforms.

Core processing business performance

SafeCharge's processing business provides its customers with a wide range of payment and fraud prevention services; PCI descoping solutions; and a network of more than 100 payment methods and acquiring banks through a single customer integration. The Group's core processing business enjoyed strong growth compared to 2014, with stable gross profit margins and Adjusted EBITDA up 27.3% to US$31.4 million.

As evidence of the Company's strong service offering and technological robustness, SafeCharge continued to enjoy a high customer retention rate whilst adding new customers in the period. The Group's technology platform remained highly scalable and reliable with uptime in excess of 99.99% throughout the period.

Performance of acquisitions

The acquisitions of CreditGuard and 3V Transaction Services (renamed SafeCharge Card Services) completed in January 2015. During the period CreditGuard performed in-line with management's expectations. PAY.com MasterCard pre-paid has been launched and restructuring of 3V Transaction Services is nearing completion. I am delighted to report that both are now integrated with the core processing platform. We are excited by the opportunities that both SafeCharge Card Services and CreditGuard are creating through the synergies and benefits they bring to the Group.

Expansion into new sectors and geographies

Our investment activities have made sectorial and geographical diversification a possibility and have been accelerated following the acquisition of CreditGuard, with the core SafeCharge business benefiting from CreditGuard's relationships, winning its first clients in new territories and industry sectors, including retail; travel and passenger aviation.

SafeCharge continues to invest in the global expansion of its acquirers and its alternative payment method network in Asia, Europe and North America.

Expansion across the payments ecosystem and value chain

As reported in our interim results, the Group is fully able to undertake Acquiring through the MasterCard and VISA schemes; and I am delighted with the performance to date as we prepare to accelerate the growth through our own acquiring platform.

The year also brought the first live transactions flowing through PAY.com, our own brand and digital account with the product launched in early 2016.

By using our core gateway and linking the Group's acquiring and issuing platforms, SafeCharge can now offer its customers a greater range of efficient solutions.

I am also excited to report that in late 2015 our development team took another important step by developing our first physical point-of-sale product. This product, which has since gained accreditation, complements our "online" product suite and will enable SafeCharge to offer an integrated multi-channel solution to merchants with both on and off-line payment activities.

New client wins

In 2015, we won strategic clients as a result of our advanced products and technology. Our full suite payment platform has been selected by Rank Group, EL AL and other significant operators. PaddyPower Betfair recently selected our Cashier for its global alternative payments methods, with launch expected in H1 2016. Our efforts to increase our presence in the retail market were fruitful and I am pleased that we have been selected to provide full acquiring services in specific jurisdictions to Nayax, a global provider of cashless payment.

Games developers represent a growth segment for the Group and during the year we added Netmarble, GGCorp, ProficientCity, who are all using our Cashier as their global checkout platform and benefiting from our diverse global payments solutions and fraud prevention expertise.

Industry awards

The strengths and benefits of the Group's technologies and services continue to be recognised by the wider industry, with SafeCharge winning a number of prestigious awards, including the 'Innovation in Payments' and 'Overall Payments Company' categories of the eGaming Review awards.

David Avgi

Chief Executive Officer

10 March 2016

* Adjusted EBITDA is a non-GAAP, company-specific measure which is earnings excluding interest, taxes, depreciation, amortisation, costs incurred in respect of the Company's Initial Public Offering, acquisition costs and contingent remuneration, restructuring costs and share-based payments charge (See Consolidated Statement of Comprehensive Income).

Financial review

Highlights

Group revenues in the period increased by 30% to US$99.8 million (2014: US$76.9 million) driven by organic growth from existing customers and new customers which joined the platform during the year. Adjusted EBITDA* increased by 26%, reaching US$31.1 million (2014: US$24.7 million). The conversion of Adjusted EBITDA* to cash was strong, with cash flows from operations (before tax paid) of US$29.3 million (2014: US$20.8 million).

Revenues

Revenues increased across the Company's principal business lines throughout the year, culminating with record monthly revenues in December. The diversification of the Group's client revenues also improved during the year with new customers signing with the Group.

In order to reduce foreign exchange exposure, the majority of the Group's assets are held in US dollars, its functional and reporting currency. The 2015 financial results were particularly pleasing given that the strengthening of the US dollar against certain currencies during the year had a material negative impact on the revenues and profits reported by the Group.

Margins

Gross profit margins remained stable at 58% for the year, whilst consolidated Adjusted EBITDA margins slightly decreased to 31% (2014: 32%) due to the impact of acquisitions, whilst the EBITDA margins in the core business (core payments business, which accounted the majority of revenues in 2015 and excludes 2015 acquisitions) increased to 58.8% as the Company's core cost base and operational capabilities experienced economies of scale from greater revenues and gross profit.

Expenses

Employee related costs, which account for the majority of SafeCharge's operating expenses, increased primarily as a result of acquisitions. Costs in the core business increased moderately throughout the year as the Group invested in additional resources to support growth in transaction volumes; deliver a more aggressive sales strategy; and ensure that its hardware technologies can scale effectively to safely and reliably exceed customer demands for SafeCharge's growing offer.

The Group incurred share-based payment charges of US$1.37 million in the year, (2014: US$1.43 million). Furthermore, during the year the Group incurred restructuring costs of US$2.86 million, primarily within the recently acquired SafeCharge Card Services business, including costs relating to the early settlement of deferred terms with 3V Transaction Services's founders. Acquisition costs and contingent remuneration in the year of US$1.5million (2014: US$422,000) related to transaction related costs and deferred elements of the CreditGuard and 3V acquisitions.

Finance expense of US$0.2 million (2014: US$1.7 million) primarily related to the translation of non-US dollar cash balances held at the end of the year. Depreciation and amortisation of US$3.2 million was charged in the period (2014: US$1.2 million) which included US$1.9 million charge in amortization of intangible assets, mainly due to the two acquisitions in 2015 (2014: US$483,000).

Tax

The Group reported a net tax income of US$124,000 (2014: tax expense of US$1.9 million) in the year, representing income tax liabilities of US$1.2 million due on profits generated by the Company's subsidiary companies, offset by deferred tax credits of US$1.3 million.

Cash flow

SafeCharge continues to generate significant cash flows from its activities. In the year ended 31 December 2015, the Group generated US$27.7 million from operating activities after tax (2014: US$19.8 million), a conversion rate of 88.9% from Adjusted EBITDA (2014: 80.0%). The Group's outflow from investing activities was US$45.4 million (2014: US$3.9 million) which included US$21.3 million related to the acquisition of subsidiaries; US$12.3 million in respect of the acquisition of the stakes in FinTech AG and 2C2P; and US$5 million of working capital facilities provided to certain non-related customers, which is secured against their on-going cash flows. Net cash outflow from financing activities was US$13.9 million (2014: US$118.8 million inflow) reflecting US$14.6 million of dividend payments offset by US$646,000 received from the exercise of share options.

Balance sheet

The Group closed the year with total assets of US$182.2 million (2014: US$161.1 million) including US$114.9 million of cash and cash equivalents; US$18.6 million of available-for-sale investments; and US$1.4 million of assets classified as held for sale. The majority of the Company's cash is held in current accounts and on-call deposit accounts, with US$40 million held on three-month deposit. The net book value of intangible assets held at 31 December 2015 was US$31.0 million (2014: US$5.7 million) which included US$23.9 million related to the assets acquired on business combinations during the period, primarily CreditGuard and 3V Transaction Services; and US$5.0 million of capitalisation of technology development costs in the year, primarily the development of PAY.com's platform as well as the Acquiring platform.

Total current assets decreased to US$127.3 million (2014: US$152.3 million) as a result of investments in the year, with current liabilities increased to US$14.1 million (2014: US$9.8 million) due mainly to an increase in trade and other payables.

Total equity attributable to equity holders increased to US$167.3 million (2014: US$151.2 million) primarily as a result of the increase in retained earnings within the year and US$7.7 million of available-for-sale reserves, being the US$6.3 million increase in value on revaluation of the investment made in FinTech AG and US$1.4 million which is expected to be received following the sale of VISA Europe to VISA Inc.

As was the case in 2014, the Group closed the year with no debt.

Dividends

Following the announcement of the interim dividend paid in September, the Board has recommended a final dividend of US$11.1 million (7.30 US$ cents per share) giving a total dividend of US$17.1 million, (11.30 US$ cents per share) (2014: 8.16 US$ cents per share) for the year, representing 55% of Adjusted EBITDA* for the period.

In order to facilitate simpler settlement, shareholders will be paid their dividends in sterling. The dividend will therefore be subject to a conversion exchange rate from US dollars based on a GBP/USD rate of 1.42, being the rate at 4.30 pm on 9 March 2016. As a result those shareholders entitled to the final dividend will receive 5.14 pence per share.

Tim Mickley

Chief Financial Officer

10 March 2016

* Adjusted EBITDA is a non-GAAP, company-specific measure which is earnings excluding interest, taxes, depreciation, amortisation, costs incurred in respect of the Company's Initial Public Offering, acquisition costs and contingent remuneration, restructuring costs and share-based payments charge (See Consolidated Statement of Comprehensive Income).

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Year ended 31 December 2015

* Adjusted EBITDA is a non-GAAP, company-specific measure which is earnings excluding interest, taxes, depreciation, amortisation, costs incurred in respect of the Company's Initial Public Offering, acquisition costs and contingent remuneration, restructuring costs and share-based payments charge. Where not explicitly mentioned, Adjusted EBITDA refers to Adjusted EBITDA from continuing operations.

The notes below form an integral part of these consolidated financial statements

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Year ended 31 December 2015

On 10 March 2016 the Board of Directors of Safecharge International Group Limited approved and authorised these consolidated financial statements for issue and were signed on their behalf by:

The notes below form an integral part of these consolidated financial statements

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Year ended 31 December 2015

(*) represents amount less than 1 thousand US$

The notes below form an integral part of these consolidated financial statements

CONSOLIDATED STATEMENT OF CASH FLOWS

Year ended 31 December 2015

The notes below form an integral part of these consolidated financial statements

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Year ended 31 December 2015

1. General information 

Safecharge International Group Limited (hereinafter - the 'Company') was incorporated in British Virgin Islands on 4 May 2006 as a private company with limited liability. On 30 October 2015 the Company re-domiciled to Guernsey. Its registered office is at Dorey Court, Admiral Park, St Peter Port, Guernsey, GY1 2HT. The principal activities of the Company and its subsidiaries (hereinafter - the 'Group') are the provision of payments services, technologies and risk management solutions for online and mobile businesses.

2. Accounting policies

The principal accounting policies adopted in the preparation of these Consolidated Financial Statements are set out below. These policies have been consistently applied by the Group in all years presented in these Consolidated Financial Statements.

Basis of preparation

These Consolidated Financial Statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.

The Company does not prepare stand-alone financial statements, as Guernsey law does not require it. The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates and requires Management to exercise its judgment in the process of applying the Group's accounting policies. It also requires the use of assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on Management's best knowledge of current events and actions, actual results may ultimately differ from those estimates.

Adoption of new and revised IFRSs

During the current year the Group adopted all the new and revised IFRSs that are relevant to its operations and are effective for accounting periods beginning on 1 January 2015.

(i) Standards and Interpretations adopted by the EU

Amendments

IFRS Interpretations Committee

§ Annual Improvements to IFRSs 2010-2012 Cycle (effective for annual periods beginning on or after 1 February 2015).

§ Annual Improvements to IFRSs 2011-2013 Cycle (effective for annual periods beginning on or after 1 January 2015). 

A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 January 2016, and have not been applied in preparing these consolidated financial statements. Those which may be relevant to the Group are set out below. The Group does not plan to adopt these standards early.

(ii) Standards and Interpretations not adopted by the EU

New standards

§ IFRS 9 ''Financial Instruments'' (effective for annual periods beginning on or after 1 January 2018).

§ IFRS15 "Revenue from Contracts with Customers" (effective for annual periods beginning on or after 1 January 2018).

§ IFRS 16 "Leases" (effective for annual periods beginning on or after 1 January 2019).

Amendments

§ Annual Improvements to IFRSs 2012-2014 Cycle (effective for annual periods beginning on or after 1 January 2016).

§ Amendments to IAS 16 and IAS 38 ‑ Clarification of Acceptable Methods of Depreciation and Amortisation (effective for annual periods beginning on or after 1 January 2016).

§ Amendments to IAS 1 "Presentation of Financial Statements" (effective for annual periods beginning on or after 1 January 2016).

The impact of these standards on the consolidated financial statements of the Group has not yet been fully assessed by the Board of the Directors.

Basis of consolidation

The Group consolidated financial statements comprise the financial statements of the parent company Safecharge International Group Limited and the financial statements of the subsidiaries as shown in Note 13 of the consolidated financial statements.

Subsidiaries are considered to be controlled where the Group has the power to direct activities of the investee, as well as the exposure to variable returns from the subsidiary and the power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control.

Subsidiaries are consolidated from the date that the Group gains control and de-consolidated from the date that control is lost.

The financial statements of all the Group companies are prepared using uniform accounting policies. All inter‑company transactions and balances between Group companies have been eliminated during consolidation.

Business combinations

Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition‑date fair values of the assets transferred by the Group, liabilities incurred by the Group and the equity interests issued by the Group in exchange for control of the acquiree. Acquisition‑related costs are generally recognised in the statement of comprehensive income as incurred.

At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value at the acquisition date, except that:

§ deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognised and measured in accordance with IAS 12 Income Taxes and IAS 19 Employee Benefits respectively;

§ liabilities or equity instruments related to share‑based payment arrangements of the acquiree or share‑based payment arrangements of the Group entered into to replace share‑based payment arrangements of the acquiree are measured in accordance with IFRS 2 Share‑based Payment at the acquisition date; and

§ assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non‑current Assets Held for Sale and Discontinued Operations are measured in accordance with that Standard.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non‑controlling interests in the acquiree, and the fair value of the acquirer's previously held equity interest in the acquiree (if any) over the net of the acquisition‑date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition‑date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non‑controlling interests in the acquiree and the fair value of the acquirer's previously held interest in the acquiree (if any), the excess is recognised immediately in the statement of comprehensive income as a bargain purchase gain.

Non‑controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity's net assets in the event of liquidation may be initially measured either at fair value or at the non‑controlling interests' proportionate share of the recognised amounts of the acquiree's identifiable net assets.

When the consideration transferred by the Group in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its fair value at acquisition date and included as part of the consideration transferred in a business combination. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the 'measurement period' (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date.

The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or a liability is remeasured at subsequent reporting dates in accordance with IAS 39, or IAS 37 Provisions, Contingent Liabilities and Contingent Assets, as appropriate, with the corresponding gain or loss being recognised in the statement of comprehensive income.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognised at that date.

Goodwill 

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's share of the net identifiable assets of the acquired undertaking at the date of acquisition. Goodwill on acquisition of subsidiaries is included in intangible assets.

Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Gains and losses on the disposal of an undertaking include the carrying amount of goodwill relating to the undertaking sold. Goodwill is allocated to cash‑generating units for the purpose of impairment testing.

Revenue recognition

Revenue comprises the invoiced amount for the sale of products net of Value Added Tax, rebates and discounts. Revenues earned by the Group are recognised on the following bases:

Service revenues are generated from fees charged to merchants for payment processing and risk management services. Revenues are generated by transaction related charges billed as both a percentage based discount fee of the payment volumes processed and a fee per transaction. In addition to this volume-dependent sales revenue, service revenues are derived from a variety of services fees, such as fees for monthly minimum transaction fee requirements, set up fees, and fees for other miscellaneous services. Discount and other fees related to payment transactions are recognised at the time the merchant's transactions are processed. Revenues are recognised gross, with any commission expenses paid to acquiring banks recognised as cost of sales. Revenues derived from service fees are recognised at the time the service is performed.

Finance income and finance expense

Finance income includes interest income which is recognised based on the effective interest rate basis.

Interest expense and other borrowing costs are charged to the statement of comprehensive income based on the effective interest rate basis.

Foreign currency

The individual financial statements of each group entity are presented in the currency of the primary economic environment in which the entity operates. For the purpose of the consolidated financial statements, the results and financial position of each entity are expressed in United States Dollars, which is the functional currency of the Company, and the presentation currency for the consolidated financial statements.

In preparing the financial statements of the individual entities, transactions in currencies other than the entity's functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each reporting date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on the reporting date. Non‑monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non‑monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in the statement of comprehensive income for the period. Exchange differences arising on the retranslation of non‑monetary items carried at fair value are included in the statement of comprehensive income for the period except for differences arising on the retranslation of non‑monetary items in respect of which gains and losses are recognised in other comprehensive income and then in equity. For such non‑monetary items, any exchange component of that gain or loss is also recognised in other comprehensive income and then in equity.

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group's foreign operations are expressed in United States Dollars using exchange rates prevailing on the reporting date. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used.  

Exchange differences arising, if any, are classified as equity and transferred to the Group's translation reserve. Such translation differences are reclassified from other comprehensive income to profit or loss in the period in which the foreign operation is disposed of.

Tax

Income tax expense represents the current and deferred tax charges for the period.

Current tax liabilities and assets are measured at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and laws that have been enacted, or substantively enacted, by the reporting date.

Deferred tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Currently enacted tax rates are used in the determination of deferred tax.

Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred taxes relate to the same fiscal authority.

Dividends

Dividends are recognised when they become legally payable. Interim dividends are recognised in equity in the period in which they are paid. In the case of final dividends, this is when approved by the shareholders at the AGM.

Property, plant and equipment

Property, plant and equipment are stated at historical cost less accumulated depreciation and any accumulated impairment losses.

Depreciation is calculated on the straight‑line method so as to write off the cost of each asset to its residual value over its estimated useful life. The annual depreciation rates used are as follows:

The assets residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.

Where the carrying amount of an asset is greater than its estimated recoverable amount, the asset is written down immediately to its recoverable amount.

Expenditure for repairs and maintenance of property, plant and equipment is charged to the statement of comprehensive income of the year in which it is incurred. The cost of major renovations and other subsequent expenditure are included in the carrying amount of the asset when it is probable that future economic benefits in excess of the originally assessed standard of performance of the existing asset will flow to the Group. Major renovations are depreciated over the remaining useful life of the related asset.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the statement of comprehensive income.

Intangible assets

Internally‑generated intangible assets ‑ research and development expenditure 

Expenditure on research activities is recognised as an expense in the period in which it is incurred.

An internally‑generated intangible asset arising from the Group's e‑business development is recognised only if all of the following conditions are met:

§ an asset is created that can be identified (such as software and new processes);

§ it is probable that the asset created will generate future economic benefits; and

§ the development cost of the asset can be measured reliably.

Internally‑generated intangible assets are amortised on a straight‑line basis over their estimated useful lives once the development is completed and the asset is in use. Where no internally‑generated intangible asset can be recognised, development expenditure is charged to the statement of comprehensive income in the period in which it is incurred.

An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognised in the statement of comprehensive income when the asset is derecognised.

Externally acquired intangible assets

Externally acquired intangible assets comprise of licences, internet domains names, IP technology and customer contracts which are stated at cost less accumulated amortisation. Where intangible assets are acquired as part of a business combination they are recorded initially at their fair value. Carrying amounts are reviewed on each reporting date for impairment. Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down to its recoverable amount.

Costs that are directly associated with identifiable and unique computer software products and internet domain names controlled by the Group and that will probably generate economic benefits exceeding costs beyond one year are recognised as intangible assets. Subsequently computer software is carried at cost less any accumulated amortisation and any accumulated impairment losses. Expenditure which enhances or extends the performance of computer software programs beyond their original specifications is recognised as a capital improvement and added to the original cost of the computer software. Costs associated with maintenance of computer software programs are recognised as an expense when incurred. Computer software costs are amortised using the straight-line method over their useful lives, not exceeding a period of five years. Amortisation commences when the computer software is available for use and is included within administrative expenses.

An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognised in the statement of comprehensive income when the asset is derecognised.

Amortisation

Amortisation is calculated at annual rates estimated to write off the costs of the assets over their expected useful lives and is charged to operating expenses from the point the asset is brought into use.

The principal annual rates used for this purpose, which are consistent with those of the previous years, are as follows:

Management believes that the useful life of the domain names and acquiring license is indefinite. Domain names and acquiring license are reviewed for impairment annually.

Financial instruments 

Financial assets and financial liabilities are recognised in the Group's consolidated statement of financial position when the Group becomes a party to the contractual provisions of the instrument.

Financial assets

(1) Classification

The Group has financial assets in the following categories. Management determines the classification of financial assets at initial recognition.

§ Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and for which there is no intention of trading the receivable. They are included in current assets, except for maturities greater than twelve months after the reporting date. These are classified as non-current assets. The Group's loans and receivables comprise trade and other receivables and cash and cash equivalents in the consolidated statement of financial position.

§ Available-for-sale investments and assets classified as held for sale

Investments are recognised and de-recognised on trade date. The Group manages its investments with a view to profiting from the receipt of investment income and capital appreciation from changes in the fair value of equity investments. Quoted investments are designated as available-for-sale and subsequently carried in the statement of financial position at fair value with unrealised gain or loss being recognised in available-for-sale reserve within other comprehensive income. Fair value is measured using the closing bid price at the reporting date, where the investment is quoted on an active stock market. Unquoted investments are valued at the price of recent transaction if this is representative of fair value or using other valuation techniques based on unobservable inputs.

(2) Recognition and measurement

Regular way purchases and sales of financial assets are recognised on trade‑date which is the date on which the Group commits to purchase or sell the asset. Loans and receivables are carried at amortised cost using the effective interest rate method.

Where a fall in the value of an investment is prolonged or significant, it is considered an indication of impairment. In such an event, the investment is written down to fair value and the amounts previously recognised in the consolidated statement of comprehensive income in respect of cumulative changes in fair value, are taken to the consolidated income statement as an impairment charge.

Provision for specific doubtful debts is made when there is evidence that the Group may not be able to recover balances in full. Balances are written off when the receivable amount is deemed irrecoverable.

Available-for-sale financial assets are carried at fair value with changes in fair value generally recognised in other comprehensive income and accumulated in the available-for-sale reserve. In accordance with IAS 39, a significant or prolonged decline in the fair value of an available-for-sale financial asset is recognised in the consolidated statement of comprehensive income. Realised gains are reclassified from other comprehensive income to profit or loss on disposal of the asset.

Cash and cash equivalents

For the purpose of the consolidated cash flow statement, cash and cash equivalents comprise cash at bank and short‑term bank deposits with original maturities of three months or less.

Trade receivables

Trade receivables are measured at initial recognition at fair value and are subsequently measured at amortised cost using the effective interest rate method. Appropriate allowances for estimated irrecoverable amounts are recognised in the statement of comprehensive income when there is objective evidence that the asset is impaired. The allowance recognised is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition.

Loans granted

Loans originated by the Group by providing money directly to the borrower are categorised as loans and are carried at amortised cost. Interest free advances are measured at the fair value of cash consideration given, discounted back to present value using a market rate of interest. All loans are recognised when cash is advanced to the borrower.

An allowance for loan impairment is established if there is objective evidence that the Group will not be able to collect all amounts due according to the original contractual terms of loans. The amount of the provision is the difference between the carrying amount and the recoverable amount, being the present value of expected cash flows including amounts recoverable from guarantees and collateral, discounted at the original effective interest rate of loans.

Financial liabilities

The Group has financial liabilities in the following category:

§ Trade payables

Trade payables and contingent consideration are initially measured at fair value and are subsequently measured at amortised cost, using the effective interest rate method.

§ Contingent consideration

Contingent consideration, resulting from business combinations, is recognised at fair value at the acquisition date as part of the business combination, and discounted where the time value of money is material. When the contingent consideration meets the definition of a financial liability, it is subsequently remeasured to fair value at each reporting date through the consolidated statement of comprehensive income, along with finance charges where discounting has been applied.

Derecognition of financial assets and liabilities

Financial assets

A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised when:

§ the rights to receive cash flows from the asset have expired;

§ the Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a 'pass through' arrangement; or

§ the Group has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

Financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the statement of comprehensive income.

Impairment of non-financial assets

Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment.

Assets that are subject to depreciation or amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash‑generating units).

Share capital

Ordinary Shares are classified as equity.

Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Where the Group expects a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain.

Share‑based compensation

The Group operates equity‑settled, share‑based compensation plans, under which the entity receives services from employees as consideration for the Company's equity instruments (options). The fair value of the employee services received in exchange for the grant of the options is recognised as an expense. The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted, excluding the impact of any non‑market vesting conditions (for example, profitability and sales growth targets). Non‑market vesting conditions are included in assumptions about the number of options that are expected to vest.At each reporting date, the entity revises its estimates of the number of options that are expected to vest. It recognises the impact of the revision of original estimates, if any, in the statement of comprehensive income, with a corresponding adjustment to equity. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and retained earnings when the options are exercised.

Clients' deposits

All money held on behalf of clients has been excluded from the balances of cash and cash equivalents and amounts due to clients, brokers and other counterparties. Client money is not held directly, but is placed on deposit in segregated bank accounts with a financial institution. The amounts held on behalf of the client's at the reporting date are included in Note 16.

Other expenses

Other expenses charged in the consolidated statement of comprehensive income include marketing expenses, travel expenses, IT expenses and professional services.

Operating leases

Operating leases are recognised on a straight line method over the life of the lease.

3. Financial risk management

Financial risk factors

The Group is exposed to interest rate risk, credit risk, liquidity risk, currency risk, operational risk, compliance risk and capital risk management arising from the financial instruments it holds. The main risks arising from Financial Instruments are: Market risk, Credit risk, Liquidity risk, Operational risk, Compliance risk and Capital risk management. Each of these risks is examined in detail below.

3.1 Market risk

Interest rate risk

Interest rate risk is the risk that the value of financial instruments will fluctuate due to changes in market interest rates. The Group's management monitors the interest rate fluctuations on a continuous basis and acts accordingly.

The Group is exposed to interest rate risk to the extent that investment revenue earned on cash and cash equivalents is subject to fluctuations in interest rates. The Group's exposure to interest rate risk is limited as investments are held in liquid and short-term bank deposits. A sensitivity analysis has been performed wherein a 0.25% change in deposit interest rates offered would impact the profit before tax by $150,000. 0.25% has been used as a benchmark for sensitivity analysis as it reflects the maximum exposure in the coming year.

Currency risk

Currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange rates. Currency risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is not the Group's functional and presentation currency. The Group is exposed to foreign exchange risk arising from various currency exposures primarily with respect to the United States Dollars (the functional and presentation currency), the Euro, the United Kingdom Pounds and the New Israeli Shekel. The Group's management monitors the exchange rate fluctuations on a continuous basis and acts accordingly.

The carrying amounts of the Group's foreign currency denominated monetary assets and monetary liabilities at the reporting date are as follows:

Sensitivity analysis

A 10% strengthening of the United States Dollar against the following currencies at 31 December 2015 would have increased/(decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant. For a 10% weakening of the United States Dollar against the relevant currency, there would be an equal and opposite impact on the profit and other equity. 10% has been used as a benchmark for the sensitivity analysis as it reflects the expected exposure in the coming year.

3.2 Credit risk

Credit risk arises when a failure by counterparties to discharge their obligations could reduce the amount of future cash inflows from financial assets on hand at the reporting date. Cash balances are held with high credit quality financial institutions rated "Baa1" and above according to Moody's Investors Service's ratings, and the Group has policies to limit the amount of credit exposure to any financial institution. As of reporting date none of the group financial assets were impaired or past due.

The Group has an established credit policy to ensure that it only transacts with counterparties that are able to meet satisfactory rating requirements. Counterparty limits are reviewed and set centrally by Management. Management is responsible for ensuring that it remains within these limits and the Risk function monitors and reports any exceptions to the policy. In individual cases, collateral is obtained for specific contractual relationships.

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:

3.3 Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. The Group has procedures with the object of minimising losses such as maintaining sufficient cash and other highly liquid current assets and by having available an adequate amount of committed credit facilities.

The following tables detail the Group's remaining contractual maturity for its financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. The table includes both interest and principal cash flows.

3.4 Operational risk

Operational risk is the risk that derives from the deficiencies relating to the Group's information technology and control systems as well as the risk of human error and natural disasters. The Group's systems are evaluated, maintained and upgraded continuously.

3.5 Compliance risk

Compliance risk is the risk of financial loss, including fines and other penalties, which arises from non‑compliance with laws and regulations of the state. The risk is limited to a significant extent due to the supervision applied by the Compliance Officer, as well as by the monitoring controls applied by the Group.

3.6 Capital risk management

The Group meets its objectives of managing capital and ensuring that it will be able to continue as a going concern while maximising the return to shareholders through the optimisation of the debt and equity balance. The Group's overall strategy remains unchanged from last year.

The Group considers its share capital and reserves to constitute its total capital. The Group's policy in respect of capital risk management is to maintain a strong capital base so as to retain investor and market confidence. The Group maintains sufficient cash resources to meet its liabilities as and when they fall due, taking into account cash forecasts. Liquidity risk is mitigated by the high levels of cash balances in the business.

4. Critical accounting estimates and judgments

Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results.

The areas requiring the use of estimates and critical judgments that may potentially have a significant impact on the Group's earnings and financial position are impairment of goodwill, share-based payments, determination of fair value of intangible assets acquired and determination of fair value of contingent consideration.

§ Impairment of goodwill

Determining whether goodwill is impaired requires an estimation of the value in use of the cash generating units of the Group on which the goodwill has been allocated. The value in use calculation requires the Group to estimate the future cash flows expected to arise from the cash‑generating units using a suitable discount rate in order to calculate present value (see Note 12).

§ Share‑based payments

The Company measures the cost of equity‑settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. Estimating fair value requires determining the most appropriate valuation model for a grant of equity instruments, which dependent on the terms and conditions of the grant. This also requires determining the most appropriate inputs to the valuation model including the expected life of the option, volatility, dividend yield, risk-free rate and making assumptions about them (see Note 18).

§ Determination of fair value of intangible assets acquired

The fair value of the intangible assets acquired is based on the discounted cash flows expected to be derived from the use of the asset. Further information in relation to the determination of fair value of intangible assets acquired is given in Note 25.

§ Determination of fair value of contingent consideration

The fair value of contingent consideration is based on the probability of expected cash flow outcomes and the assessment of present values using appropriate discount rates (see Note 24).

5. Segmental analysis

Management considers that the Group's activity as a single source supplier of online payment technologies and services, risk management and IT solutions constitutes one operating and reporting segment, as defined under IFRS 8.

Geographical analysis of revenue

Analysis of revenue by geographical region is made according to the jurisdiction of the Group's direct customer. This does not reflect the region of the end users of the Group's customers, whose locations are worldwide.

During the year ended 31 December 2015 there were no (2014: one) customers who individually accounted for more than 10 per cent of the total revenue of the Group. In 2014 revenue from this customer totalled US$11,810,000.

Geographical analysis of non-current assets

6. Auditors' remuneration

7. Finance income and expense

8. Tax Expense

The tax charge for the year can be reconciled to accounting profit as follows:

There was no tax effect on other comprehensive income in the current or prior year.

9. Earnings per share

10. Dividends

In May 2015 the Group distributed US$8,518,000, 5.28 US$ cents per share, as a final dividend for the year ended 31 December 2014.

In October 2015 the Group distributed US$6,032,000, 4.0 US$ cents per share (2014: US$4,779,000, 2.88 US$ cents per share) as an interim dividend.

11. Property, plant and equipment 

12. Intangible assets

Goodwill represents the premium paid to acquire investments by the Group which were purchased in 2015.

Goodwill is measured at cost less any accumulated impairment losses.

On 10 March 2014 the Company acquired the assets and liabilities of GTS Online Solutions Limited (hereinafter - 'GTS'). GTS operates an online payment processing service and is controlled by a former board member of the Company who resigned in 2013. Under the terms of the transaction, the Company acquired the business agreements of GTS with clients, as well as the intellectual property of GTS. The cash consideration for the acquisition by the Company was US$792,000. Furthermore, the Company assumed net liabilities of GTS in the amount of US$453,000 and waived a receivable balance from GTS in the amount of US$422,000. Total consideration amounting to US$1,667,000 has been attributed to customer contracts intangible assets. Additionally, a further acquisition of customer contracts for a separate business was completed in the period with consideration of US$109,000.

On 8 January 2015, the Group acquired 100% of the share capital of 3V Transaction Services Limited (which later changed its name to Safecharge Card Services Limited) for a consideration of US$14.6 million of which total consideration of US$9.9 million was paid in respect of IP technology, total consideration of US$0.4 million was paid in respect of customers' contract and customers relationships and total consideration of US$6 million was paid in respect of goodwill (see Note 25(A)).

On 9 January 2015, the Group acquired 100% of the share capital of CreditGuard Limited for an initial cash consideration of US$8 million of which total consideration of US$2.8 million was paid in respect of customers' contracts and customers' relationships, total consideration of US$0.6 million was paid in respect of IP technology and total consideration of US$4.3 million was paid in respect of goodwill (see Note 25(B)).

The Group has domain names and licences with an indefinite life with a carrying value of US$2,122,000 (2014: US$2,034,000). It is expected that these domain names and licenses with indefinite lives will be held for an indefinite period of time and are expected to generate economic benefits. There is no foreseeable limit on the period of time over which domain names and acquiring licenses are expected to contribute to the cash flows of the Group. Domain names and licences with an indefinite life are checked for impairments at each reporting date or more frequently if there are indicators that the carrying value is impaired. As of the reporting date no impairment was found. Management is committed to continue to provide long term investment into these assets in order for them to continue to provide future economic benefits.

Impairment tests of intangible assets

The recoverable amount of all intangible assets was determined based on value‑in‑use calculations by discounting the future pre‑tax cash flows generated from the continuing use of the unit and was based on the following key assumptions.

Management determined these key assumptions by assessing current market conditions and through the utilisation of forward looking external evidence:

The terminal value has been calculated assuming a long-term growth rate of 2% per annum in perpetuity, based on the Group's view of long-term nominal growth, which does not exceed market expectations.

Cash flows projections for the intangible assets derived from CreditGuard Limited business combination were projected based on financial budgets approved by management covering 2016 to 2022 based on the use of the economic life of the acquired assets. Revenue rates for 2016 and onwards had an average growth of 8% per annum. A pre‑tax discount rate of 13% was applied in determining the recoverable amount of the intangible assets. The discount rate was estimated based on an industry average cost of capital and reflects specific risks relating to the relevant intangible assets.

Cash flows projections for the intangible assets derived from Safecharge Card Services Limited business combination were projected based on financial budgets approved by management covering 2016 to 2025 based on the use of the economic life of the acquired assets. Revenue rates for 2016 and onwards had an average growth of 58% per annum based on the early life stage of the products and the forecasted growth within their market. A pre‑tax discount rate of 15% was applied in determining the recoverable amount of the intangible assets. The discount rate was estimated based on an industry average cost of capital and reflects specific risks relating to the relevant intangible assets.

Sensitivity analysis was performed on the key inputs, including growth rate and discount rates, the sensitivity on key inputs did not indicates any impairments.

13. Subsidiaries

The details of the Company's subsidiaries as at 31 December 2015 are as follows:

XT Commerce International Limited and xt:Commerce GmbH are both loss making entities. All losses of these entities will be wholly suffered by the Group and therefore none of these losses have been transferred to non‑controlling interests and therefore separate disclosure in respect of NCI has not been presented in the statement of comprehensive income or statement of financial position.

14. Trade and other receivables

The fair values of trade and other receivables due within one year approximate to their carrying amounts as presented above.

The exposure of the Group to credit risk and impairment losses in relation to trade and other receivables is reported in Note 3 of the consolidated financial statements. As of reporting date none of the items in trade and other receivables have been impaired or are past due.

15. Other non‑current receivables

Other non‑current receivables represent deposits that are held as collateral by card schemes as part of the Group's activities.

16. Cash and cash equivalents

Cash balances are analysed as follows:

The Group holds cash and cash equivalents amounting to US$96,734,000 as at 31 December 2015 (2014: US$66,286,000) on behalf of clients. The amounts represent cash received on transactions processed by the Group which is then paid on to its clients. In substance, the Group's management consider these transactions do not entitle the Group to an asset and have therefore not recorded the resulting asset or liability to clients in its statement of financial position.

At 31 December 2015, the Group had contingent liabilities amounting to US$3,209,000 (2014: US$3,387,000) in respect of guarantees issued by banks on behalf of a subsidiary in favour of third parties in the ordinary course of business. These guarantees are secured by bank deposits of that subsidiary of this amount. Termination of the deposit as at 31 December 2015 will not incur a penalty payable to the bank in respect of this deposit and accordingly it is treated as a cash equivalent.

Further to the above, the Group has a rent bank guarantee of US$158,000 (2014: US$144,000) and a credit card guarantee of US$21,000 (2014: US$41,000).

The exposure of the Group to credit risk in relation to cash and cash equivalents is reported in Note 3 of the consolidated financial statements.

17. Available-for-sale investments including classified as held for sale

Fair value hierarchy

The following assets types are carried at fair value after initial recognition.

The group uses the following hierarchy for determining and disclosing the fair value of financial assets by valuation technique:

Level 1: quoted (unadjusted) prices in active markets for identical assets,

Level 2: other techniques where all inputs, which have a significant effect on the recorded fair value, are observable either directly or indirectly; and

Level 3: techniques where inputs which have a significant effect on the recorded fair value that are not based on observable market data.

There have been no transfers of financial instruments between levels during the year.

The following is a reconciliation of the movement in the group financials assets classified at Level 3 during the year:

Assets classified as held for sale include the Group's shares in Visa Europe and the valuation is based on assessment of the consideration entitled to the Group as part of the purchase of Visa Europe by Visa Inc in 2016. These are based on unobservable inputs due to a discount rate of 6% applied to market price of shares to be converted and estimated cash due to be received. The unrealised increase in valuation of US$1,384,000 is recorded as an available-for-sale reserve.

Sensitivity analysis has been performed on the key inputs into the valuation, being the discount rate and the future cash flows and resulted in no significant difference to the fair values recognised that, if adjusted for, would impact the profit attributable to the owners of the parent.

The remaining available-for-sale investments are held at fair value and measured based on Level 1 and Level 2 inputs:

In April 2015, the Group invested US$1,000,000 in 2C2P, an unquoted business based in South East Asia. This was in exchange for approximately 2% of issued share capital. 2C2P shares are unquoted. This investment is classified as Level 2 for the purposes of disclosure in the fair value hierarchy as the valuation is based on observable market prices from recent transaction.

In June 2015 the Group invested US$11,276,000 (€10,084,500) in FinTech Group AG, a business listed on the Frankfurt Stock exchange, for a 5% equity interest as part of a strategic partnership. As at 31 December 2015, the share price had increased from cost of €12.45 to €19.9, with the unrealised increase in valuation of US$6,334,000 recorded as an available-for-sale reserve. As at 8 March 2016 the share price has reduced to €16.63, representing a non-adjusting event after the reporting period of US$2,817,000.

18. Share capital

(*) represents amount less than 1 thousand US$

By a resolution passed in a meeting of the board of Directors on 20 March 2014 and a written resolution of the shareholders of the Company passed on 24 March 2014, it was resolved that the authorised share capital of the Company be altered to permit the Company to issue an unlimited number of ordinary shares and the ordinary shares of US$0.001 be each subdivided into ten Ordinary Shares of US$0.0001 each.

The Company operates an equity‑settled share based remuneration scheme for employees, executive Directors and certain senior management. The only vesting condition being that the individual remains an employee of the Group over an agreed period (vesting period). The options include no other performance conditions.

The movement in share options was as follows: