16 Sep 2015 07:00
SafeCharge International Group Limited
("SafeCharge," the "Company," or the "Group")
Interim Results for the six months ended 30 June 2015
SafeCharge (AIM: SCH), the global provider of payments services, technologies and risk management solutions for online and mobile businesses, is pleased to announce its interim results for the six months ended 30 June 2015.
Highlights
§ Revenues up 44% to US$49.5m (H1 2014: US$34.4m)
§ Gross Profit up 40% to US$28.5m (H1 2014: US$20.3m)
§ Adjusted EBITDA(1) up 41% to US$15.2m (H1 2014: US$10.8m)
§ Adjusted profit(1) up 59% to US$16.1m (H1 2014: US$10.1m)
§ Cash flows from operations US$14.5m (H1 2014:US$10.2m)
§ Reported profit after tax US$12.4m (H1 2014: US$4.8m)
§ Cash balances as at 30 June of US$115.7m (30 June 2014: US$142m)
§ Recommended interim dividend up 39% to 4US$cents per share (H1 2014: 2.88US$cents per share). The dividend shall be paid in sterling, and shareholders will receive 2.6 pence per share
(1) Adjusted EBITDA and Adjusted profit are calculated after adding back certain non-cash charges and cash expenses relating to professional costs incurred in respect of the Company's Initial Public Offering, acquisition related costs and share-based payments charges (See Consolidated Statement of Comprehensive Income).
Current trading
The Group's business continues to grow, with new products and diversified clients portfolio, a very strong pipeline and many new clients committed to go live on the SafeCharge platforms in the second half. The Directors remain very confident for the full year 2015 and beyond.
Operational highlights
§ Successful launch of VISA acquiring services complementing MasterCard services launched in 2014
§ Over 100 new customer wins in the core processing business with a strong pipeline and several significant new customers to go live in H2
§ Core business processing volumes US$3.3 billion (H1 2014: US$ 2.6 billion)
§ PAY.com mobile wallet and Mastercard pre-paid card ready for commercial launch Q4. Multiple regional partners signed for reselling of the cards locally in Europe
§ 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:
"This is another set of very strong financial results. We have continued to develop and expand our technology base and product offering, particularly our acquiring services and issuing capabilities. With our strong current trading and pipeline, we look forward to the rest of the year with confidence and optimism."
- Ends -
Analyst presentation
A presentation for analysts and investors will be held on the day at 3.00 pm in the offices of Bell Pottinger, (6th Floor, Holborn Gate, 330 High Holborn, London, WC1V 7QD)
For more information
SafeCharge International Group Limited David Avgi, Chief Executive Officer Ali Khwaja, Chief Financial Officer Tim Mickley, Corporate Development Director c/o Bell Pottinger
| +44 (0) 20 3772 2500 |
Shore Capital Pascal Keane Toby Gibbs
| +44 (0) 20 7408 4090 |
Bell Pottinger David Rydell Olly Scott James Newman Anna Legge | +44 (0) 20 3772 2500 |
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, Cyprus, Bulgaria, Israel, Germany, Austria and Ireland.
www.safecharge.com
Chairman's statement
This is another set of strong financial results delivered in a period in which we continued to further develop and expand our technology base and win new customers. Revenue increased 44% to US$49.5 million, (2014: US$34.4 million) with Adjusted EBITDA increasing by 41% to US$15.2 million. Once again this performance was driven through new customer wins and expanded relationships with existing customers. Despite an increase in investment, which included the development of our PAY.com mobile wallet and digital account, the Group remained highly operationally cash generative. We closed the period having made four corporate investments and paid the final dividend, with US$115.7 million in cash and no debt.
Corporate milestones
During the first half we successfully launched our VISA acquiring capabilities. This was another significant achievement for the Group and will complement our MasterCard acquiring capability, which went live last year. The Group is able to process transactions from the majority of cards issued world-wide, enabling improved service to its customers.
In January we completed the strategic acquisitions of 3V Transaction Services Limited ("3V") and CreditGuard Limited. During the period we agreed a strategic partnership and minority investment in 2C2P, expanding our penetration into South East Asia. Additionally, we entered into a partnership and investment agreement with Germany's Frankfurt-listed Fintech Group AG to develop banking services offerings in transaction services, mobile payments and debit cards. We continue to look for additional M&A opportunities that can deliver strategic goals, improve our services and accelerate the Group's growth.
Board and governance
The Board remains committed to ensuring a robust governance structure is in place and, whilst recognising the size of the Company, is working to comply with best practice corporate governance.
I am grateful to all of the Directors for their contributions throughout what has been a highly successful first six months of the year and particularly congratulate David Avgi, his senior management team and all employees for their dedication and hard work.
Dividend
In line with the Company's dividend policy, the Board has recommended an interim dividend of 4US$ cents per share an increase of 39% compared to the same period in 2014. This represents 40% of Adjusted EBITDA for the first six months, with the Board expecting the full year dividend to total 50% 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 1.54, being the rate at 4.30pm on 15 September. As a result those shareholders entitled to the interim dividend will receive 2.6 pence per share. The interim dividend will become payable on 16 October 2015 to those shareholders on the Company's register as at the record date of 25 September 2015. The ex-dividend date is 24 September 2015.
Strong balance sheet
Despite continued investment in our technology platforms, which included the development of PAY.com, having made four corporate investments and paid the final dividend, the Group closed the period with US$115.7 million in cash and no debt.
Domicile
Following the approval received at the Company's AGM in May, the Board has progressed its work to re-domicile the Company out of the British Virgin Islands and into Guernsey. It is expected that this process will complete at the end of October.
Outlook
With our strong current trading and pipeline, and expanding product offering, we look forward to the rest of the year with real confidence and optimism
Roger Withers
Chairman
16 September 2015
Chief Executive's review
The first half of 2015 was a period of further success and growth for the Group. Revenues and Adjusted EBITDA grew by 44% and 41%, respectively, compared to the same period in 2014 with revenues reaching nearly US$50 million.
Throughout the period, SafeCharge continued to win new customers, closing the period with an extremely strong pipeline featuring significant and well-known names which are set to join the Company's platform later this year. We continue to advance our technology and expand the Group's product offering, whilst growing and diversifying the business into new markets and industries.
The first six months saw the Group complete on the 3V Transactions Services and CreditGuard acquisitions announced in late 2014. In addition, we agreed operational and investment partnerships with 2C2P and Fintech Group AG, expanding the business's South East Asian footprint and banking services, respectively. The Group also commenced VISA transaction acquiring during the period, complementing its MasterCard acquiring activities - enabling the platform to process transactions with the majority of the world's issued payment cards.
I am also pleased to report that SafeCharge Card Services (formerly named 3V Transactions Services) has made significant progress towards becoming an issuer in its own right. We expect our proprietary PAY.com pre-paid card to be ready for commercial launch in by the end of 2015.
Strategy
The Company's management continues to implement its growth strategy for the business focusing on organic and M&A-driven growth. Within our existing businesses the Group seeks to increase transaction volumes services deployed to new and existing clients; in addition to looking for new opportunities to expand our geographic footprint either through its own efforts or through strategic partnerships.
In parallel, the Group is actively seeking value accretive M&A opportunities that either add new services, technologies, markets, clients or otherwise accelerate our corporate development strategy. Since IPO the Group has examined a number of acquisition opportunities. Now, as then, we apply strict value-focused criteria to acquisition opportunities in the interests of creating a sustainable business delivering high quality returns for investors.
We have made significant progress with many aspects of our strategy during 2015, and we are delighted to see the benefits of these starting to flow through, with significant upsides set to be seen in 2016 and beyond.
Growth and performance
The operational momentum achieved during 2014 continued into the first half of 2015. This enabled SafeCharge to deliver strong growth in both revenues of US$49.5million (H1 2014 US$ 34.4 million) and Adjusted EBITDA US$15.2 million (H1 2014: US$10.8 million).
SafeCharge remained highly cash generative with US$14.5 million of free cash flow from operating activities (before tax) at the period end, generating cash conversion of 96%. Despite significant investments; acquisitions; technology development expenditure; and payment of the 2014 final dividend, the Group closed the period with US$115.7 million of cash and no debt.
As a result of the acquisitions announced late in 2014, 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 develop its technology platforms, including the new proprietary card issuing platform, created by the SafeCharge Card Services team in Ireland.
Core processing business performance
SafeCharge's processing business provides its customers with a wide range of payment and fraud prevention services; PCI de-scoping solutions; and a network of more than 100 payment methods and acquiring banks - all through a single customer integration. The Group's core processing business enjoyed strong growth compared to the comparable period in 2014, with revenues up 32% to US$45.5 million and gross profit margins remaining strong at 59%.
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. New clients who went live in the period included online casual games operators; NetMarble, GG Corp and Proficient City, all of which has helped to drive strong growth in digital goods and services, the largest sector in the period. The Group's technology platform remains highly scalable and reliable with up-time in excess of 99.99% throughout the period.
Performance of acquisitions
The CreditGuard and 3V transactions completed in January and both companies performed in line with expectations during the period, enabling an expanded product offering and synergies which we expect to continue into the future.
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 leveraging CreditGuard's relationships; winning its first clients in new territories; and targeting new industry sectors, including retail; travel and passenger aviation.
SafeCharge continues to invest in integration into acquirers and alternative payment method networks in Asia, Europe,the US and Latin America.
Expansion into additional areas of the payments value chain
During the first half the integration to the VISA backbone was completed and I am delighted that the Group is now operational with full scope transaction acquiring through both the MasterCard and VISA schemes. We look forward to enjoying the significant upsides of being an acquirer, which are expected to become material in 2016 and beyond.
The technology and expertise acquired as part of 3V (now Safecharge Card Services) has enabled the Group to develop a new proprietary card issuing platform. This platform, coupled with our in-house management capabilities, will enable SafeCharge to operate its own pre-paid card programme, called PAY.com, which is set for launch by the end of 2015. During the period we also launched the StarsCard in the UK for PokerStars.
Industry Awards
The strengths and benefits of the Group's technologies and services continue to be recognised by industry with SafeCharge winning a number of prestigious awards including the 'Innovation in Payments' and 'Overall Payments Company' categories of the eGaming Review Awards.
Current trading and outlook
The Group's business continues to grow, with new products, a strong pipeline and many new clients scheduled to go live on the SafeCharge system in the second half. The Directors remain very confident for the full year 2015 and beyond.
David Avgi
Chief Executive Officer
16 September 2015
Financial review
Group revenues for the period increased by 44% to US$49.5 million, (H1 2014: US$34.4 million) primarily driven by strong organic growth from existing customers and the addition of new customers. Adjusted EBITDA increased by 41%, reaching US$15.2 million (H1 2014: US$10.8 million). The conversion of Adjusted EBITDA to cash was strong with cash flows from operations (before tax paid) of US$14.5 million (H1 2014: US$10.2 million).
Revenues
The diversification of the Group's client revenues also improved during the period with new customers signing with the Group.
Margins
Gross profit margins of the core processing business remained stable at 59% during the period, whilst total consolidated gross margins and Adjusted EBITDA slightly decreased to 58% (H1 2014: 59%) and 31% (H1 2014: 31%) respectively primarily as a result of the impact of the acquisitions.
Expenses
Employee related costs, which account for the majority of SafeCharge's operating expenses, increased throughout the period as a result of acquisitions and growth in activities, rising to US$9.1 million (H1 2014: US$6.8 million).
The Group incurred share-based payment charges of US$746,000 in the period (H1 2014: US$919,000) and costs of US$1.5 million charged as expenses in relation to acquisitions. In order to reduce foreign exchange exposure, the majority of the Group's assets are held in US dollars, its functional and reporting currency. Net finance income of US$208,000 (H1 2014: US$31,000) primarily related to the translation of non-US dollar cash balances held at the end of the period.
Depreciation and amortisation of US$1.4 million was charged in the period (H1 2014: US$0.5 million), which included US$855,000 in respect of intangible asset amortisation (H1 2014: US$198,000).
Tax
The Group's reported tax income of US$0.7 million (H1 2014: US$0.7 million charge) was due to deferred tax credits arising in respect of acquisitions.
Cash flow
SafeCharge continues to be highly cash generative. In the first half of the year the Group generated US$14.5 million from operating activities (before tax) (H1 2014: US$10.2 million), a conversion rate of 96% from Adjusted EBITDA.
The Group's cash outflow from acquisition of businesses, net of cash acquired, was US$21.3 million (H1 2014: NIL), with acquisitions of available-for-sale investments of US$12.3 million (H1 2014: NIL) and a further US$2.5 million (H1 2014: US$0.9 million) investment in intangible assets, primarily capitalised development expenditure.
During the period the Group paid the final 2014 dividend of US$8.5 million.
Balance sheet
SafeCharge's strong balance sheet provides a high degree of operational flexibility as it implements its growth strategy. The Group closed the period with total assets of US$173.5 million, including US$115.7 million of cash and cash equivalents. The majority of the Company's cash was 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 30 June 2015 was US$30.8 million (H1 2014: US$4.8 million) of which US$10.8 million related to Goodwill and US$11.0 million related to IP technology, licenses and domains. During the period the Group capitalised US$2.5 million (H1 2014: US$0.6 million) in respect of technology development costs, including the development of the Group's PAY.com pre-paid platform.
Total current assets decreased to US$124.1 million (30 June 2014: US$ 146.8 million), primarily due to the movement in cash. Current liabilities increased to US$15.5 million (30 June 2014: US$ 9.8 million), primarily due to an increase in trade and other payables and contingent consideration related to the acquisitions.
The Group closed the period with no debt and is well placed to secure further strategic investment opportunities as it seeks to grow its market-leading offer.
Dividend
The Board has recommended the payment of an interim dividend of 4US$ cents per share, (US$6.1 million) representing 40% of Adjusted EBITDA for the period and in line with the Company's existing policy of paying at least 50% of Adjusted EBITDA for the full year. 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 1.54, being the rate at 4.30pm on 15 September. As a result those shareholders entitled to the interim dividend will receive 2.6 pence per share. The interim dividend will become payable on 16 October 2015 to those shareholders on the Company's register as at the record date of 25 September 2015. The ex-dividend date is 24 September 2015.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
|
| Six months ended 30 June 2015 | Six months ended 30 June 2014 | Year ended 31 December 2014 | |
|
| (Unaudited) | (Unaudited) | (Audited) | |
| Note | US$000s | US$000s | US$000s | |
Revenue |
| 49,473 | 34,437 | 76,940 | |
Cost of sales |
| (20,924) | (14,114) | (32,451) | |
Gross profit |
| 28,549 | 20,323 | 44,489 | |
Salaries and employee expenses |
| (9,089) | (6,806) | (13,875) | |
Share-based payments charge |
| (746) | (919) | (1,428) | |
Depreciation and amortisation |
| (1,431) | (497) | (1,185) | |
Premises and other costs |
| (1,335) | (832) | (1,736) | |
Other expenses |
| (2,936) | (1,898) | (4,195) | |
Costs in respect of IPO |
| - | (3,834) | (3,834) | |
Acquisition costs and contingent remuneration | 9 | (1,541) | - | (422) | |
Total operating costs |
| (17,078) | (14,786) | (26,675) | |
Adjusted EBITDA* |
| 15,189 | 10,787 | 24,683 | |
Depreciation and amortisation |
| (1,431) | (497) | (1,185) | |
Share-based payments charge |
| (746) | (919) | (1,428) | |
Costs in respect of IPO |
| - | (3,834) | (3,834) | |
Acquisition costs and contingent remuneration |
| (1,541) | - | (422) | |
Profit from operations |
| 11,471 | 5,537 | 17,814 | |
Finance income |
| 301 | 550 | 213 | |
Finance expense |
| (93) | (519) | (1,732) | |
Profit before tax |
| 11,679 | 5,568 | 16,295 | |
Tax income/(expense) |
| 726 | (729) | (1,860) | |
Profit after tax attributable to equity holders of the parent |
| 12,405 | 4,839 | 14,435 | |
Other comprehensive income for the period |
|
|
|
| |
Items that will be reclassified subsequently to profit or loss when specific conditions are met: |
|
|
| ||
Fair value adjustments of available-for-sale investments |
| 2,656 | - | - | |
Exchange difference arising on the translation and consolidation of foreign companies' financial statements |
| (1,439) | - | (4) | |
Total comprehensive income for the period |
| 13,622 | 4,839 | 14,431 | |
Earnings per share for profit attributable to the owners of the parent during the period | Note |
|
|
| |
Basic (cents) | 4 | 8.20 | 3.85 | 10.44 | |
Diluted (cents) | 4 | 8.03 | 3.78 | 10.37 | |
* 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, contingent remuneration and share-based payments charge. Where not explicitly mentioned, Adjusted EBITDA refers to Adjusted EBIDTA from continuing operations. The attached notes are an integral part of this condensed interim financial information. | |||||
For the six months ended 30 June 2015
As at 30 June 2015
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
|
| At 30 June 2015 | At 30 June 2014 | At 31 December 2014 |
|
| (Unaudited) | (Unaudited) | (Audited) |
| Note | US$000s | US$000s | US$000s |
|
|
|
|
|
Assets |
|
|
|
|
Non-current assets |
|
|
|
|
Property, plant and equipment |
| 2,635 | 1,392 | 2,091 |
Intangible assets | 5 | 30,793 | 4,753 | 5,686 |
Available-for-sale investments | 7 | 14,932 | - | - |
Other receivables |
| 1,039 | 1,159 | 1,072 |
Total non-current assets |
| 49,399 | 7,304 | 8,849 |
|
|
|
|
|
Current assets |
|
|
|
|
Trade and other receivables |
| 8,436 | 4,829 | 5,751 |
Cash and cash equivalents |
| 115,669 | 141,971 | 146,511 |
Total current assets |
| 124,105 | 146,800 | 152,262 |
Total assets |
| 173,504 | 154,104 | 161,111 |
|
|
|
|
|
Equity |
|
|
|
|
Share capital |
| 15 | 15 | 15 |
Share premium |
| 123,452 | 121,916 | 123,182 |
Capital reserve |
| 622 | 622 | 622 |
Available for sale reserve |
| 2,656 | - | - |
Translation reserve |
| (344) | 1,099 | 1,095 |
Share options reserve |
| 1,642 | 1,520 | 960 |
Retained earnings |
| 29,275 | 19,010 | 25,324 |
Total equity attributable to equity holders of parent |
| 157,318 | 144,182 | 151,198 |
|
|
|
|
|
Non-current liabilities |
|
|
|
|
Provisions |
| 171 | 129 | 115 |
Contingent consideration | 8 | 529 | - | - |
Total non-current liabilities |
| 700 | 129 | 115 |
|
|
|
|
|
Current liabilities |
|
|
|
|
Trade and other payables |
| 11,291 | 7,789 | 7,706 |
Contingent consideration | 8 | 1,744 | - | - |
Taxes payable |
| 2,451 | 2,004 | 2,092 |
Total current liabilities |
| 15,486 | 9,793 | 9,798 |
|
|
|
|
|
Total equity and liabilities |
| 173,504 | 154,104 | 161,111 |
|
|
|
|
|
The attached notes are an integral part of this condensed interim financial information.
CONSOLIDATED STATEMENT OF CASH FLOWS
|
| Six months ended 30 June 2015 | Six months ended 30 June 2014 | Year ended 31 December 2014 |
|
| (Unaudited) | (Unaudited) | (Audited) |
|
| US$000s | US$000s | US$000s |
Cash flows from operating activities |
|
|
|
|
Profit before tax |
| 11,679 | 5,568 | 16,295 |
Adjustments for: |
|
|
|
|
Depreciation of property, plant and equipment |
| 576 | 299 | 702 |
Amortisation of intangible assets |
| 855 | 198 | 483 |
Exchange difference arising on the translation of non-current assets in foreign currencies |
| 12 | 20 | (4) |
Charge to comprehensive income for provisions |
| 10 | 18 | 4 |
Finance income |
| (152) | (71) | (213) |
Share-based payments charge |
| 746 | 919 | 1,428 |
Cash flows from operations before working capital |
| 13,726 | 6,951 | 18,695 |
Decrease/(increase) in trade and other receivables |
| 277 | 1,205 | (69) |
Increase in trade and other payables |
| 515 | 2,015 | 2,191 |
Cash flows from operations |
| 14,518 | 10,171 | 20,817 |
Tax paid |
| (475) | (193) | (1,063) |
Net cash flows provided by operating activities |
| 14,043 | 9,978 | 19,754 |
Cash flows from investing activities |
|
|
|
|
Payment for acquisition of intangible assets |
| (2,553) | (901) | (2,119) |
Payment for acquisition of property, plant and equipment |
| (689) | (887) | (1,989) |
Acquisition of available-for-sale investments |
| (12,276) | - | - |
Advance payment for the acquisition of business |
| - | (28) | - |
Acquisition of subsidiaries, net of cash acquired (see below) |
| (21,271) | - | - |
Interest received |
| 152 | 71 | 213 |
Net cash flows used in investing activities |
| (36,637) | (1,745) | (3,895) |
Cash flows from financing activities |
|
|
|
|
Proceeds from issuance of shares |
| - | 126,074 | 126,074 |
Costs in respect of share issuance |
| - | (4,153) | (4,153) |
Proceeds from exercise of options |
| 270 | - | 1,266 |
Dividends paid |
| (8,518) | - | (4,352) |
Net cash flows (used in)/provided by financing activities |
| (8,248) | 121,921 | 118,835 |
(Decrease)/increase in cash and cash equivalents for the period | (30,842) | 130,154 | 134,694 | |
Cash and cash equivalents at the beginning of the period |
| 146,511 | 11,817 | 11,817 |
Cash and cash equivalents at the end of the period |
| 115,669 | 141,971 | 146,511 |
|
|
|
|
|
Acquisition of subsidiaries, net of cash acquired |
|
|
|
|
| Note | Six months ended 30 June 2015 (Unaudited) US$000s | Six months ended 30 June 2014 (Unaudited) US$000s | Year ended 31 December 2014 (Audited) US$000s |
|
|
|
|
|
Acquisition of Safecharge Card Services Limited (formerly named: 3V Transaction Services Limited) | 9A | 13,780 | - | - |
Acquisition of CreditGuard Limited | 9B | 7,491 | - | - |
|
| 21,271 | - | - |
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2015
Unaudited consolidated statement of changes in equity for the six months ended 30 June 2014: |
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|
|
|
|
|
|
|
|
| Share capital | Share premium | Capital reserve | Translation reserve | Share options reserve | Retained earnings | Total equity attributable to equity holders of parent |
| US$000s | US$000s | US$000s | US$000s | US$000s | US$000s | US$000s |
|
|
|
|
|
|
|
|
Balance at 31 December 2013 | 10 | - | 622 | 1,099 | 5,101 | 10,099 | 16,931 |
|
|
|
|
|
|
|
|
Comprehensive Income |
|
|
|
|
|
|
|
Profit for the period | - | - | - | - | - | 4,839 | 4,839 |
Total comprehensive income for the period | - | - | - | - | - | 4,839 | 4,839 |
|
|
|
|
|
|
|
|
Transactions with owners |
|
|
|
|
|
|
|
Issuance of shares | 5 | 126,069 | - | - | - | - | 126,074 |
Costs in respect of share issuance | - | (4,153) | - | - | - | - | (4,153) |
Share-based payments | - | - | - | - | 919 | - | 919 |
Exercise of options | * | - | - | - | (4,500) | 4,500 | - |
Dividends | - | - | - | - | - | (428) | (428) |
Balance at 30 June 2014 | 15 | 121,916 | 622 | 1,099 | 1,520 | 19,010 | 144,182 |
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|
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(*) Represents amount less than one thousand US$
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The attached notes are an integral part of this condensed interim financial information
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| ||||||
Unaudited consolidated statement of changes in equity for the six months ended 30 June 2015: |
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|
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|
|
|
|
|
| ||||
| Share capital | Share premium | Capital reserve | Available for sale reserve | Translation reserve | Share options reserve | Retained earnings | Total equity attributable to equity holders of parent | ||||
| US$000s | US$000s | US$000s | US$000s | US$000s | US$000s | US$000s | US$000s | ||||
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|
|
|
|
|
|
|
| ||||
Balance at 31 December 2014 | 15 | 123,182 | 622 | - | 1,095 | 960 | 25,324 | 151,198 | ||||
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|
|
|
|
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Comprehensive Income |
|
|
|
|
|
|
|
| ||||
Profit for the period | - | - | - | - | - | - | 12,405 | 12,405 | ||||
Other comprehensive income for the period | - | - | - | 2,656 | (1,439) | - | - | 1,217 | ||||
Total comprehensive income for the period | - | - | - | 2,656 | (1,439) | - | 12,405 | 13,622 | ||||
|
|
|
|
|
|
|
|
| ||||
Transactions with owners |
|
|
|
|
|
|
|
| ||||
Share-based payments | - | - | - | - | - | 746 | - | 746 | ||||
Exercise of options | * | 270 | - | - | - | (64) | 64 | 270 | ||||
Dividends | - | - | - | - | - | - | (8,518) | (8,518) | ||||
Balance at 30 June 2015 | 15 | 123,452 | 622 | 2,656 | (344) | 1,642 | 29,275 | 157,318 | ||||
|
|
|
|
|
|
|
|
| ||||
(*) Represents amount less than one thousand US$
|
|
|
|
|
|
|
|
| ||||
|
| |||||||||||
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 June 2015
Audited consolidated statement of changes in equity for the year ended 31 December 2014: |
|
|
|
| |||||
| Share capital | Share premium | Capital reserve | Translation reserve | Share options reserve | Retained earnings | Total equity attributable to equity holders of parent |
| |
| US$000s | US$000s | US$000s | US$000s | US$000s | US$000s | US$000s |
| |
|
|
|
|
|
|
|
|
| |
Balance at 31 December 2013 | 10 | - | 622 | 1,099 | 5,101 | 10,099 | 16,931 |
| |
|
|
|
|
|
|
|
|
| |
Comprehensive Income |
|
|
|
|
|
|
|
| |
Profit for the year | - | - | - | - | - | 14,435 | 14,435 |
| |
Other comprehensive loss for the year | - | - | - | (4) | - | - | (4) |
| |
Total comprehensive income for the year | - | - | - | (4) | - | 14,435 | 14,431 |
| |
|
|
|
|
|
|
|
|
| |
Transactions with owners |
|
|
|
|
|
|
|
| |
Issuance of shares | 5 | 126,069 | - | - | - | - | 126,074 |
| |
Costs in respect of share issuance | - | (4,153) | - | - | - | - | (4,153) |
| |
Shared based payments | - | - | - | - | 1,428 | - | 1,428 |
| |
Exercise of options | * | 1,266 | - | - | (5,569) | 5,569 | 1,266 |
| |
Dividends | - | - | - | - | - | (4,779) | (4,779) |
| |
Balance at 31 December 2014 | 15 | 123,182 | 622 | 1,095 | 960 | 25,324 | 151,198 |
| |
|
|
|
|
|
|
|
|
| |
(*) Represents amount less than one thousand US$ | |||||||||
The attached notes are an integral part of this condensed interim financial information.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
For the six months ended 30 June 2015
1. General information
SafeCharge International Group Limited (hereinafter - the "Group") was incorporated in the British Virgin Islands on 4 May 2006 as a private company with limited liability. On 2 April 2014, the Company's shares were listed for trading on the AIM of the London Stock Exchange in the Company's initial public offering. The principal activities of the Group are the provision of payments services, technologies and risk management solutions for online and mobile businesses.
2. Significant accounting policies
Basis of preparation
The interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting. The same accounting policies, presentation and methods of computation have been followed in the preparation of these results as were applied in the Company's latest annual audited financial statements.
The financial information for the six month period ended 30 June 2015 does not constitute the full statutory accounts for that period. The Independent Auditors' Report on the Annual Report and Financial Statements for the year ended 31 December 2014 was unqualified, and did not draw attention to any matters by way of emphasis.
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 July 2014). | ||||||
· Annual Improvements to IFRSs 2011-2013 Cycle (effective for annual periods beginning on or after 1 July 2014)
(ii) Standards and Interpretations not adopted by the EU
·
· Annual Improvements to IFRSs 2012-2014 Cycle (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 Directors.
Basis of consolidation
The Group interim consolidated financial statements comprise the financial statements of the parent company SafeCharge International Group Limited and the financial statements of the subsidiaries.
The interim 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.
2. Significant accounting policies (continued)
Business combinations (continued)
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. The choice of measurement basis is made on a transaction‑by‑transaction basis.
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 acquisition‑date fair value 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.
When a business combination is achieved in stages, the Group's previously held equity interest in the acquiree is remeasured to fair value at the acquisition date (i.e. the date when the Group obtains control) and the resulting gain or loss, if any, is recognised in the statement of comprehensive income. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to the statement of comprehensive income where such treatment would be appropriate if that interest were disposed of.
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.
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. Clients' money is not held directly, but is placed on deposit in segregated bank accounts with a financial institution.
Tax
Income tax expense represents the sum of the tax currently payable.
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.
2. Significant accounting policies (continued)
Tax (continued)
Deferred tax is provided in full, using the liability method, 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.
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 are measured as the difference between the net disposal proceeds and the carrying amount of the asset and 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, customer contracts and customer relationships 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 recognized as intangible assets. Subsequently computer software is carried at cost less any accumulated depreciation and any accumulated impairment losses. Expenditure which enhances or extends the performance of computer software programs beyond their original specifications is recognized as a capital improvement and added to the original cost of the computer software. Costs associated with maintenance of computer software programs are recognized 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 derecognized on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of comprehensive income when the asset is derecognized.
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:
| Useful economic life |
Domain names/Acquiring licences | Indefinite life |
Internally generated capitalised development costs | 5 years |
Other licences | 1 year |
Customer contracts and customer relationships | 5-15 years |
IP technology | 5-10 years |
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.
2. Significant accounting policies (continued)
Available for sale investments
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 unrealized gain or loss being recognized 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.
Significant judgements and estimates
There have been no changes in the nature of the critical accounting estimates and judgements as set out in Note 4 to the Group's audited financial statements for the year ended 31 December 2014.
3. 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 customers. This does not reflect the region of the end users of the Group's customers, whose locations are worldwide.
| Six months ended 30 June 2015 | Six months ended 30 June 2014 | Year ended 31 December 2014 | |
| (Unaudited) US$000s | (Unaudited) US$000s | (Audited) US$000s | |
Europe | 47,951 | 34,437 | 76,940 |
|
Other | 1,522 | - | - |
|
| 49,473 | 34,347 | 76,940 |
|
Geographical analysis of non-current assets
| Six months ended 30 June 2015 | Six months ended 30 June 2014 | Year ended 31 December 2014 |
| (Unaudited) S$000s | (Unaudited) S$000s | (Audited) US$000s |
British Virgin Islands | 6,194 | 4,306 | 5,160 |
Europe | 32,851 | 1,918 | 2,556 |
Asia | 9,924 | 650 | 703 |
North America | 430 | 430 | 430 |
| 49,399 | 7,304 | 8,849 |
4. Earnings per share
| Six months ended 30 June 2015 | Six months ended 30 June 2014 | Year ended 31 December 2014 |
| (Unaudited) US$ | (Unaudited) US$ | (Audited) US$ |
|
|
|
|
Basic (cents) | 8.20 | 3.85 | 10.44 |
Diluted (cents) | 8.03 | 3.78 | 10.37 |
|
|
|
|
|
|
|
|
| Six months ended 30 June 2015 | Six months ended 30 June 2014 | Year ended 31 December 2014 |
| (Unaudited) US$000s | (Unaudited) US$000s | (Audited) US$000s |
Profit for the period | 12,405 | 4,839 | 14,435 |
| Six months ended 30 June 2015 | Six months ended 30 June 2014 | Year ended 31 December 2014 |
| Number | Number | Number |
Denominator - basic |
|
|
|
Weighted average number of equity shares | 151,295,413 | 125,829,630 | 138,224,036 |
Denominator - diluted |
|
|
|
Weighted average number of equity shares | 151,295,413 | 125,829,630 | 138,224,036 |
Weighted average number of share options | 3,250,768 | 2,260,988 | 933,852 |
Weighted average number of shares | 154,546,181 | 128,090,618 | 139,157,888 |
Adjusted Earnings per Share
The adjusted earnings per share presents the profit for the year before charging depreciation, amortisation, costs incurred in respect of the Company's Public Offering, acquisition costs, contingent remuneration and share-based payments charge. The Directors believe that the adjusted profit represents more closely the underlying trading performance of the business.
| Six months ended 30 June 2015 | Six months ended 30 June 2014 | Year ended 31 December 2014 |
| (Unaudited) US$ | (Unaudited) US$ | (Audited) US$ |
Basic - adjusted (cents) | 10.66 | 8.02 | 15.41 |
Diluted - adjusted (cents) | 10.43 | 7.88 | 15.31 |
|
|
|
|
| Six months ended 30 June 2015 | Six months ended 30 June 2014 | Year ended 31 December 2014 |
| (Unaudited) US$000s | (Unaudited) US$000s | (Audited) US$000s |
Profit for the period | 12,405 | 4,839 | 14,435 |
Depreciation and amortisation | 1,431 | 497 | 1,185 |
Share-based payment charge | 746 | 919 | 1,428 |
Costs in respect of IPO | - | 3,834 | 3,834 |
Acquisition costs and contingent remuneration | 1,541 | - | 422 |
Adjusted profit for the period | 16,123 | 10,089 | 21,304 |
4. Earnings per share (continued)
| Six months ended 30 June 2015 | Six months ended 30 June 2014 | Year ended 31 December 2014 |
| Number | Number | Number |
Denominator- basic |
|
|
|
Weighted average number of equity shares | 151,295,413 | 125,829,630 | 138,224,036 |
|
|
|
|
Denominator - diluted |
|
|
|
Weighted average number of equity shares | 151,295,413 | 125,829,630 | 138,224,036 |
Weighted average number of share options | 3,250,768 | 2,260,988 | 933,852 |
Weighted average number of shares | 154,546,181 | 128,090,618 | 139,157,888 |
|
|
|
|
5. Intangible Assets
Unaudited Intangible Assets Note for the period ended 30 June 2015: |
|
|
|
| |
|
|
|
|
|
|
| Goodwill | Customer contracts and relationships | IP technology, licenses and domains | Research and development | Total |
| US$000s | US$000s | US$000s | US$000s | US$000s |
Cost |
|
|
|
|
|
Balance at 31 December 2014 | - | 1,776 | 2,716 | 2,173 | 6,665 |
Additions | - | - | 110 | 2,397 | 2,507 |
Assets acquired on business combinations | 11,330 | 3,219 | 10,481 | - | 25,030 |
Foreign exchange rate movement | (580) | 70 | (1,065) | - | (1,575) |
Balance at 30 June 2015 | 10,750 | 5,065 | 12,242 | 4,570 | 32,627 |
|
|
|
|
|
|
|
|
|
|
|
|
Amortisation |
|
|
|
|
|
Balance at 31 December 2014 | - | 265 | 669 | 45 | 979 |
Amortisation for the period | - | 297 | 534 | 24 | 855 |
Balance at 30 June 2015 | - | 562 | 1,203 | 69 | 1,834 |
|
|
|
|
|
|
Net book amount |
|
|
|
|
|
Balance at 30 June 2015 | 10,750 | 4,503 | 11,039 | 4,501 | 30,793 |
5. Intangible Assets (continued)
Unaudited Intangible Assets Note for the period ended 30 June 2014: |
|
| ||||||
|
|
|
|
|
| |||
| Goodwill | Customer contracts and relationships | IP technology, licenses and domains | Research and development | Total | |||
| US$000s | US$000s | US$000s | US$000s | US$000s | |||
Cost |
|
|
|
|
| |||
Balance at 31 December 2013 | - | - | 2,285 | 485 | 2,770 | |||
Additions | - | 1,776 | 296 | 605 | 2,677 | |||
Balance at 30 June 2014 | - | 1,776 | 2,581 | 1,090 | 5,447 | |||
|
|
|
|
|
| |||
Amortisation |
|
|
|
|
| |||
Balance at 31 December 2013 | - | - | 496 | - | 496 | |||
Amortisation for the period | - | 87 | 90 | 21 | 198 | |||
Balance at 30 June 2014 | - | 87 | 586 | 21 | 694 | |||
|
|
|
|
|
| |||
Net book amount |
|
|
|
|
| |||
Balance at 30 June 2014 | - | 1,689 | 1,995 | 1,069 | 4,753 | |||
|
|
|
| |||||
Audited Intangible Assets Note for the year ended 31 December 2014 |
|
| |||
| Goodwill | Customer contracts and relationships | IP technology, licenses and domains | Research and development | Total |
| US$000s | US$000s | US$000s | US$000s | US$000s |
Cost |
|
|
|
|
|
Balance at 31 December 2013 | - | - | 2,285 | 485 | 2,770 |
Additions | - | 1,776 | 431 | 1,688 | 3,895 |
Balance at 31 December 2014 | - | 1,776 | 2,716 | 2,173 | 6,665 |
|
|
|
|
|
|
Amortisation |
|
|
|
|
|
Balance at 31 December 2013 | - | - | 496 | - | 496 |
Amortisation for the year | - | 265 | 173 | 45 | 483 |
Balance at 31 December 2014 | - | 265 | 669 | 45 | 979 |
|
|
|
|
|
|
Net book amount |
|
|
|
|
|
Balance at 31 December 2014 | - | 1,511 | 2,047 | 2,128 | 5,686 |
|
|
|
|
|
|
6. Shareholders' equity
Distribution of Dividend
In May 2015 the group distributed US$8,518,000 as a final dividend for the year ended 31 December 2014.
In September 2014 the group distributed US$4,352,000 as an interim dividend and in January 2014 the group distributed interim dividend of US$428,000. (Dividend declared in January 2014 was netted of with receivable from the direct parent of the group with no cash impact).
7. Available-for-sale investments |
| |||
| At 30 June 2015 (Unaudited) | At 30 June 2014( Unaudited) | At 31 December 2014 (Audited) |
|
| US$000s | US$000s | US$000s |
|
|
|
|
| |
Balance brought forward | - | - | - |
|
Additions | 12,276 | - | - | |
Unrealised valuation movement in the period | 2,656 | - | - | |
Balance carried forward | 14,932 | - | - |
|
|
|
|
|
|
In April 2015, the Group invested US$1,000,000 in 2C2P, an unquoted business based in South East Asia. This was in exchange for approximately 2% of issued share capital. 2C2P shares are unquoted; however, given the proximity of the acquisition to the reporting date, the directors have assessed the cost of the transaction to be representative of fair value. Accordingly, this investment is classified as Level 2 for the purposes of disclosure in the fair value hierarchy as an adjustment to the price of recent transaction is not considered necessary at this point in time. The directors will reassess this position at year-end.
In June 2015 the Group invested US$ 11,276,000 (€10.1 million) 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 30 June 2015, the share price had increased from cost of €12.45 to €15.5, with the unrealized increase in valuation of US$2,656,000 recorded as an Available for Sale Reserve. As at 14 September 2015 the share price has reduced to €13.11, representing a non-adjusting event after the reporting period of US$ 1,887,000.
8. Deferred and contingent consideration
| At 30 June 2015 (Unaudited) | At 30 June 2014 (Unaudited) | At 31 December 2014 (Audited) |
| US$000s | US$000s | US$000s |
Non-current contingent consideration: |
|
|
|
Acquisition of Safecharge Card Services Limited (formerly named: 3V Transaction Services Limited) | 443 | - | - |
Acquisition of CreditGuard Limited | 86 | - | - |
Total non-current contingent consideration | 529 | - | - |
|
|
|
|
Current contingent consideration: |
|
|
|
Acquisition of Safecharge Card Services Limited (formerly named: 3V Transaction Services Limited) | 1,640 | - | - |
Acquisition of CreditGuard Limited | 104 | - | - |
Total current contingent consideration | 1,744 | - | - |
9. Acquisitions during the period
A. Acquisition of 3V Transaction Services Limited
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$15.7 million (€14.5 million), of which US$13.8 million (€11.6 million) was paid on completion. Safecharge Card Services Limited (formerly named: 3V Transaction Services Limited) is a technology provider which specialises in tools for issuing, processing and management of pre-paid card programmes.
The purchase price allocation set forth below represents the preliminary allocation of the fair value of assets acquired:
| Book value prior to acquisition | Adjustments | Fair value on acquisition |
| US$000s | US$000s | US$000s |
Cash and cash equivalents | 701 | - | 701 |
Trade receivables | 2,078 | - | 2,078 |
Property, plant and equipment | 300 | - | 300 |
Deferred Tax Liability | - | (1,301) | (1,301) |
Intangible Assets | - | 10,408 | 10,408 |
Other payables | (3,467) | - | (3,467) |
Net identified assets | (388) | 9,107 | 8,719 |
|
|
|
|
Fair value of consideration: |
|
|
|
Cash |
|
| 14,481 |
Contingent consideration |
|
| 1,246 |
Total consideration |
|
| 15,727 |
|
|
|
|
Goodwill |
|
| 7,008 |
|
|
|
|
Net cash outflow on acquisition of business: |
|
|
|
Initial consideration |
|
| 14,481 |
Cash purchased |
|
| (701) |
Net cash outflow on acquisition |
|
| 13,780 |
The main factor leading to the recognition of goodwill is the future expected revenues and the expected economic benefit from the business synergies.
Goodwill recognized is not deductible for tax purposes.
Management has not disclosed the contribution of Safecharge Card Services Limited (formerly named: 3V Transaction Services Limited) to the Group profit since the acquisition, nor the impact that the acquisition would have had on the Group's revenue and profits if it had occurred at the beginning of the period, due to the fact that the amounts are not significant to the Group.
Contingent consideration of €1,000,000 (US$1,246,000) was translated at the reporting date to US$1,109,000. This is payable in cash on satisfaction of certain criteria to be achieved by the acquired business in the second half of 2015.
A further contingent consideration in the amount of €2,875,000 is payable over the following three years to certain key individuals in the capacity of their now being employees of the Group and is dependent on their continued employment. Therefore, as required by IFRS 3, this is being charged to profit or loss and not included as consideration for the purpose of the business combination. As at 30 June 2015, US$922,000 in this respect has been recognised under acquisition costs and contingent remuneration in the statement of comprehensive income.
The fair value and gross contractual amounts receivable of trade receivables is equivalent to their book value upon acquisition
A deferred tax asset of US$1,301,000 was recognized on acquisition related to tax losses brought forward (upon which no asset was previously recognized) which has been set against an equivalent deferred tax liability on intangible assets arising on acquisition, included within tax payable.
9. Acquisitions during the period (continued)
B. Acquisition of CreditGuard Limited
On 9 January 2015, the Group acquired 100% of the share capital of CreditGuard Limited for an initial cash consideration of US$8 million and deferred consideration capped at US$0.4 million. CreditGuard Limited is a payment service provider for a wide range of businesses.
| Book value prior to acquisition | Adjustments | Fair value on acquisition |
| US$000s | US$000s | US$000s |
Cash and cash equivalents | 210 | - | 210 |
Trade receivables | 849 | - | 849 |
Deferred tax asset | 374 | - | 374 |
Deferred tax liability | - | (658) | (658) |
Intangible Assets | - | 3,292 | 3,292 |
Property, plant and equipment | 186 | - | 186 |
Other payables | (828) | - | (828) |
Long term payables | (46) | - | (46) |
Net identified assets | 745 | 2,634 | 3,379 |
|
|
|
|
Fair value of consideration: |
|
|
|
Cash |
|
| 7,701 |
|
|
|
|
Goodwill |
|
| 4,322 |
|
|
|
|
Net cash outflow on acquisition of business: |
|
|
|
Initial consideration |
|
| 7,701 |
Cash purchased |
|
| (210) |
Net cash outflow on acquisition |
|
| 7,491 |
The main factor leading to the recognition of goodwill is the future expected revenues and the expected economic benefit from the business synergies.
Goodwill recognized is not deductible for tax purposes.
Management has not disclosed the contribution of CreditGuard Limited to the Group profit since the acquisition, nor the impact that the acquisition would have had on the Group's revenue and profits if it had occurred at the beginning of the reporting period, due to the fact that the amounts are not significant to the Group.
The fair value and gross contractual amounts receivable of trade receivables is equivalent to their book value upon acquisition.