TIDMNEO
RNS Number : 3988T
Neovia Financial PLC
28 September 2010
NEOVIA Financial Plc
Interim Results for the six months ended 30 June 2010
Tuesday, 28 September 2010 - NEOVIA Financial Plc ("NEOVIA" or the "Group"),
(NEO.L), the leading alternative payments business, today announces its results
for the six months ended 30 June 2010.
Highlights
· EBITDA (1) up 25% to $6.1m (H1 2009: $4.9m).
· Total revenues down 6% to $30.8m (H1 2009: $32.6m); trading revenues in
line on a like-for-like basis.(2)
· Core stored value business (e-wallet and Net+) revenues up 5% to $23.3m
(H1 2009: $22.3m).
· Balance Sheet remains strong. Group cash & cash equivalents of $61.7m (31
December 2009: $61.1m).
· Strong cost control from Business Transformation programme driving EBITDA
improvement - headcount down by 77 (17%) to 370.
· New stored value platform 'Newteller' now live.
· Strengthening of Board with senior appointments including new CFO.
Financial summary (unaudited)
Six months ended 30 June
2010
2009
US$ million
US$ million
Revenue
Stored Value (NETELLER e-wallet and Net+ cards)
23.3 22.3
Straight Through Processing (2) (NETBANX gateway & bureau)
7.1 9.2
Investment income
0.4 1.1
Total revenue
30.832.6
Gross profit margin
57.0% 56.2%
EBITDA (1)
6.1 4.9
Profit before other items
2.2 0.1
Loss after tax
(0.2) (6.7)
(1) EBITDA shown before other items including share option expense, foreign
exchange gain/loss, loss on investment, impairment loss and restructuring
costs.
(2) Difference due to revised presentation in 2010. Revenues now shown net of
rebates. On a like-for-like basis H1 2010 revenues were in line with H1 2009.
Commenting on today's results announcement, Mark Mayhew, NEOVIA's President &
CEO, said:
"The trading results reflect the success of our Business Transformation
programme to control costs but also the continuing difficult market conditions
which impacted clients in our core e-gaming vertical as the half unfolded. As a
result EBITDA was up 25% to $6.1m on total revenues down 6% to $30.8m. Trading
revenues were down 3% but on a like-for-like basis trading revenues were in line
with H1 2009 (2). Our Balance sheet remains strong. Group cash & cash
equivalents at 30 June 2010 were $61.7m and we have no debt.
The World Cup depressed some sectors of the e-gaming market, particularly poker
as reported widely elsewhere. However revenues in our Stored Value businesses
(NETELLER and Net+) held up well in the first half, despite these difficult
conditions and a lack of new products resulting from the delayed launch of our
Newteller platform. Our NETBANX Straight Through Processing business was
impacted by presentational re-pricing in H2 2009 and is otherwise in line with
2009. We were also pleased to announce a major client win in Shop Direct Group
recently.
After an extended period of development it is particularly pleasing to report
live status for our new stored value platform 'Newteller', and the process to
enhance our stored value product suite can now begin in earnest. The investment
in Newteller, while essential, has also meant that development of new revenue
generating products has been stalled. This situation should change now Newteller
is live and we expect to see the revenue benefits from new products in 2011.
Current trading and outlook
The softness in our e-gaming derived revenue that emerged during the second
quarter of this year has continued into the second half however we expect to
deliver a small improvement in total revenue this half year. The continued focus
on our Business Transformation programme will see further improvements to our
cost base, which should positively impact EBITDA in the second half and beyond.
The Board acknowledges the continued broader market uncertainties and
recessionary concerns but, in noting the ever changing regulatory climate and
increased corporate activity in alternative payments (both considered positive
factors longer term), remains confident about the Group's future."
For further information contact:
NEOVIA Financial Plc
Mark Mayhew President & CEO
+ 44 (0) 207 638 9571
Keith Butcher CFO
+ 44 (0) 7584 344 784
Andrew Gilchrist VP Communications
+ 44 (0) 1624 698 713
Email:investorrelations@neovia.com
Twitter: https://twitter.com/neovia
Citigate Dewe Rogerson
+ 44 (0) 207 638 9571
Sarah Gestetner / George Cazenove / Michael Berryman
Daniel Stewart & Co Plc
+ 44 (0) 207 776 6550
Paul Shackleton
* * * * *
The Group will host a meeting for invited UK-based analysts this morning to be
held at the offices of Citigate Dewe Rogerson at 9.30 a.m. A copy of the slide
presentation given at the meeting will be available on the Group's website later
today. In addition, there will be a conference call for international investors
and analysts on Tuesday 28 September 2010 starting at 2.00 p.m. BST (9.00 a.m.
EST), details of which are set out below:
Participant Dial-in numbers: UK (local):
0845 634 0041
International:
+44 208 817 9301
Participant PIN:
3558089
In order to ensure access to the call, attendees should please confirm their
attendance in advance by emailing NEOVIA Investor Relations at:
investorrelations@neovia.com. A recording of the conference call will be
available for 7 days following the call.
* * * * *
About NEOVIA Financial
Trusted by consumers and merchants in over 160 countries to move and manage
billions of dollars each year, NEOVIA Financial Plc operates the world's leading
independent online payments business. Through its Payment Suite, featuring
NETELLER , NETBANX and Net+(TM) brands, NEOVIA specialises in providing
innovative and instant payment services where money transfer is difficult or
risky due to identity, trust, currency exchange, or distance. Being independent
has allowed NEOVIA to support thousands of retailers and merchants in many
geographies and across multiple industries.
NEOVIA Financial Plc is quoted on the London Stock Exchange's AIM market, with a
ticker symbol of NEO. Subsidiary company NETELLER (UK) Limited is authorised by
the Financial Services Authority (FSA) to operate as a regulated e-money issuer.
For more information about NEOVIA Financial visit www.neovia.com or subscribe at
www.neovia.com/feeds/.
CHIEF EXECUTIVE'S REPORT
FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2010
I am pleased to report that in my first full twelve months, the Group has made
significant progress with EBITDA performance improved on the first half of 2009.
The first six months of trading in 2010 has demonstrated, in challenging market
conditions, the continuing resilience of NEOVIA's business model which brings
together gateway, e-wallet and card businesses under the NEOVIA Payment Suite.
Our principal offerings and brands are:
Stored Value services NETELLER e-wallet
and Net+ card business
Straight Through Processing (STP) NETBANX payment gateway
and bureau service
Our focus has been on simplification of our business, processes and products,
given continued pressure from clients and competitors alike. Our Business
Transformation programme is already bearing fruit as we saw improvements in
EBITDA, up 25% to $6.1m, arising from significant headcount reductions
(approximately 17%) and the streamlining of operations, which we expect to
continue into the second half of 2010 and beyond.
Fee revenues in the first half were $30.4 million (H1 2009: $31.5 million).
Revenues from our Stored Value business (e-wallet and Net+ prepaid cards) rose
5% however Straight Through Processing revenues (gateway and bureau) from
NETBANX were down 23% overall, compared to the same period in 2009. Within this
NETBANX Europe revenues grew slightly and that growth is expected to continue in
the second half. The decrease in NETBANX Asia revenues was caused by a pricing
change at the start of H2 2009 that lowered fee rates charged to merchants, but
also reduced rebates, thereby maintaining gross margins. On a like-for-like
basis NETBANX Asia revenues were in line with H1 2009. Low interest rates
worldwide continued to have an impact on investment income, which was $0.4
million in H1 2010 compared to $1.1 million for the same period in 2009. The
table below sets out the breakdown of Group revenues for the first half of 2010:
+---------------------+---------------------+---------------------+------------+
| Revenue ($ | H1 2010 | H1 2009 | % change |
| millions) | | | H1 2010 |
| | | | vs. H1 |
| | | | 2009 |
| | | | |
+---------------------+---------------------+---------------------+------------+
| Stored Value | | | |
| revenue | | | |
+---------------------+---------------------+---------------------+------------+
| Europe | 18.0 | 17.4 | 4% |
+---------------------+---------------------+---------------------+------------+
| Asia Pacific | 3.9 | 3.7 | 5% |
+---------------------+---------------------+---------------------+------------+
| Rest of World | 1.4 | 1.2 | 19% |
+---------------------+---------------------+---------------------+------------+
| Total Stored Value | 23.3 | 22.3 | 5% |
| revenue | | | |
+---------------------+---------------------+---------------------+------------+
| STP revenue (1) | 7.1 | 9.2 | -23% |
+---------------------+---------------------+---------------------+------------+
| Trading revenue | 30.4 | 31.5 | -3% |
+---------------------+---------------------+---------------------+------------+
| Investment income | 0.4 | 1.1 | -67% |
+---------------------+---------------------+---------------------+------------+
| Group Total | 30.8 | 32.6 | -6% |
+---------------------+---------------------+---------------------+------------+
(1) Difference due to revised presentation in 2010. Revenues now shown net
of rebates. On a like-for-like basis H1 2010 revenues were in line with H1
2009.
The Group's Stored Value business grew 5% in the first half arising from a
greater number of active members and as revenues generated from the Net+ prepaid
card continued to improve. However, later delivery than planned of the Group's
Newteller replatforming initiative delayed a number of revenue uplift
programmes.
Continued focus on business simplification should yield further improvement in
the second half, in addition to reduced expenditure on the Newteller development
programme.
The Group achieved income from operations of $6.1 million in H1 2010, up 25% on
H1 2009 ($4.9 million). Gross margin improved to 57.0% from 56.2% for H1 2009 as
the contribution from the lower margin Asian Gateway business was reduced.
General and Administrative expenses decreased by 15% to $11.4 million (H1 2009:
$13.4 million) largely resulting from targeted headcount reduction. In total,
Group headcount was reduced from 447 at 31 December 2009 to 370 by 30 June 2010.
Total restructuring expenses, including severance payments and legal fees were
$2.4 million (H1 2009: $1.6 million).
The cash and cash equivalents balance at 30 June 2010 of $61.7 million
represented the unrestricted cash of the Group. Cash available to the Group of
$69.7 million was the total of "Cash and cash equivalents", "Restricted cash"
and the excess of "Qualifying liquid assets" over "Payable to European
customers".
The working capital position of the Group, defined as current assets less
current liabilities, was approximately $49.3 million. Required cash inventory
comprising amounts held at processors, operating account balances to cover
payouts and the buffer on trust accounts was approximately $30 million,
resulting in available "free cash" of approximately $20 million.
Cash flow from operations remained positive in H1 2010 at $8.3 million, up from
$3.0 million in H1 2009. Notwithstanding the continuing cash spend on
development of the Newteller replatforming and restructuring costs related to
the Business Transformation programme, the Group recorded an overall net
increase in cash of $0.7 million from 31 December 2009. The Board has
recommended that no dividend is paid.
Business update
The Group continued to expand its merchant customer base in both the core
e-gaming vertical and broader e-commerce markets. The online gaming market has
shown modest growth in the first half of the year, despite a significant number
of regulatory developments impacting our clients' operations in key countries
such as France, Denmark and Norway. We see the outlook as more positive as a
number of European markets move towards regulated status for online gaming and
we are well positioned to take advantage of any growth as a result of our
merchant focus. We added a number of new countries to our e-wallet offering,
including India, Brazil and New Zealand, and added the Dineromail deposit option
which has been well received by our Latin American members.
A number of contract wins for the NETELLER e-wallet, were announced in the first
half including Bet-at-home, CAI Games, Littlewoods Game On, Buzzluck and
Play'n'go. Our gaming focus was further evidenced by member-targeted promotions
around the World Cup and also a partnership promotion with Virgin Bingo, a
leading UK bingo operator. In our straight through processing gateway business,
we continued to build on our blue-chip customer base with the addition of
Seesaw's IPTV service, where we are processing payments for their paid content,
Perform, for their Big Brother IPTV streaming paid content, as well as extending
our services with Shop Direct Group across their numerous UK retail websites.
The Net+ Prepaid MasterCard programme continued to successfully complement our
NETELLER e-wallet solution, with over 100,000 physical and virtual prepaid cards
issued to date. Volumes transacted via the Net+ Cards have now exceeded $300
million since programme launch in October 2008, and our efforts to market the
card to our existing members have been recognised with a nomination for "Best
Prepaid Marketing Campaign" at the forthcoming prestigious Prepaid Awards 2010
event.
The Group also introduced a new bureau service to its NETBANX service, allowing
merchants to accept and settle card payments directly without the complexity and
cost of managing an additional bank direct acquiring relationship. A number of
merchants have already adopted this service and we continue to transition other
existing merchants as part of a scheduled programme. This represents a
significant upgrade to our straight through processing business.
Newteller platform investment
The Group has invested heavily in building a new stored value platform,
Newteller, to provide a more scalable, stable infrastructure for existing
e-wallet services and facilitate bringing new services to market more quickly.
The Newteller platform went live in Q3 2010 after a development period of
approximately 30 months and has performed well to date.
Our capabilities in such key areas as disaster recovery, service availability
and risk management will be enhanced, with significantly reduced new product
development and deployment lead times; a number of product initiatives are in
process to take advantage of this.
We anticipate some cost savings from Newteller before the end of 2010 as a
result of improved operational efficiencies but the full impact will be seen
from 2011.
Board changes
Following the Company's AGM on 29 April 2010, Don Lindsay and John Webster
stepped down from the Board. We were pleased to announce the appointment of
Keith Butcher as Chief Financial Officer and board director on 20 May 2010. Ian
Francis was appointed as a non-executive director on 1 September 2010, and
subsequently was appointed as chairman of the Audit Committee.
Current trading and outlook
The softness in our e-gaming derived revenue that emerged during the second
quarter of this year has continued into the second half however we expect to
deliver a small improvement in total revenue this half year. The continued focus
on our Business Transformation programme will see further improvements to our
cost base, which should positively impact EBITDA in the second half and beyond.
The Board acknowledges the continued broader market uncertainties and
recessionary concerns but, in noting the ever changing regulatory climate and
increased corporate activity in alternative payments (both considered positive
factors longer term), remains confident about the Group's future.
Key Performance Indicators
The table below sets out those KPIs which the Group regards as important in
monitoring the performance of the business:
+----------------------------+-------+-----------+-----------+-----------+
| Six months ended 30 June | | 2010 | 2009 | % change |
+----------------------------+-------+-----------+-----------+-----------+
| |Notes | | | |
+----------------------------+-------+-----------+-----------+-----------+
| Active e-wallet users | 1 | | | |
| - Europe | | 80,897 | 73,557 | +10% |
| - Rest of World | | 29,263 | 20,568 | +42% |
| | | 110,160 | 94,125 | +17% |
+----------------------------+-------+-----------+-----------+-----------+
| | | | | |
+----------------------------+-------+-----------+-----------+-----------+
| Total signed up e-wallet | 2 | 1,978,986 | 1,534,816 | +29% |
| users | | | | |
+----------------------------+-------+-----------+-----------+-----------+
| | | | | |
+----------------------------+-------+-----------+-----------+-----------+
| Average daily deposits | | 492,755 | 436,057 | +13% |
| (US$) | | | | |
+----------------------------+-------+-----------+-----------+-----------+
| | | | | |
+----------------------------+-------+-----------+-----------+-----------+
| e-wallet fee revenue per | 3 | | | |
| e-wallet user ($) | | 109 | 116 | -6% |
| - Europe | | 86 | 113 | -24% |
| - Rest of World | | 103 | 116 | -11% |
| - Total | | | | |
| | | | | |
+----------------------------+-------+-----------+-----------+-----------+
| Average daily sign ups | 2, 4 | | | |
| - Europe | | 859 | 698 | +23% |
| - Rest of World | | 499 | 319 | +56% |
| | | 1,358 | 1,017 | +34% |
+----------------------------+-------+-----------+-----------+-----------+
| Notes |
| 1. An active e-wallet user is defined as a member whose e-wallet |
| account balance has changed during the past quarter. The change in |
| balance may be due to adding, removing, transferring or receiving |
| funds. Quarterly figures are averaged into half year segments to |
| allow better comparability. |
| 2. Excluding North America - the Group maintains a number of |
| wallets for Canadian residents but these are not able to be used |
| for merchant transfers. |
| 3. E-wallet fee revenue per e-wallet user is based on e-wallet |
| fees generated from direct use of the e-wallet (whether merchant or |
| member fees) but excluding any fees related to items such as Net+ |
| card charges. |
| 4. Average daily sign ups reflect the number of consumers signing |
| up for the NETELLER e-wallet service on an average daily basis. |
+----------------------------+-------+-----------+-----------+-----------+
Active e-wallet users increased 17% in H1 2010 to 110,160 from 94,125 in H1
2009, and up 11% from 99,168 in H2 2009. This increase was driven principally by
member targeted marketing promotions to improve activity in the period, as well
as better market penetration, particularly in European markets. However, the
overall actives figure of 110,160 was below expectations, and reflective of
adverse economic and regulatory factors impacting the online gaming sector.
Average daily deposits increased to $492,755 in H1 2010 from $436,057 in H1
2009. Increased deposit volume has allowed revenue to remain stable while
revenue per active e-wallet user has declined. In Europe, H1 2010 fees per
active user of $109 were down 6% from H1 2009, in part because of fee rebate
programmes run throughout the first half. The more developed European market is
more competitive, necessitating more active marketing programmes.
Average daily sign ups of 1,358 in H1 2010 improved from 1,017 in H1 2009 (an
increase of 34%) and 1,078 in H2 2009 (increase of 26%). This reflects the
trend seen in the first quarter where sign ups improved as a result of
increasing member promotion activities including the Ryanair Net+ promotion and
specific country-targeted campaigns with a number of poker merchants. In
addition, we saw positive growth in our Rest of World performance.
+---------------------------------------------------------------------------+
| NEOVIA Financial Plc |
| Condensed Interim Consolidated Statement of Financial Position |
| (Unaudited) |
| As at 30 June 2010 |
+---------------------------------------------------------------------------+
+----------------------------------------------+--------------+--------------+
| |30 June 2010 | 31 December |
| | Unaudited | 2009 |
| | | Audited |
+----------------------------------------------+--------------+--------------+
| | $ | $ |
+----------------------------------------------+--------------+--------------+
| | | |
+----------------------------------------------+--------------+--------------+
| ASSETS | | |
+----------------------------------------------+--------------+--------------+
| CURRENT ASSETS | | |
+----------------------------------------------+--------------+--------------+
| Cash and cash equivalents | 61,711,964 | 61,070,438 |
+----------------------------------------------+--------------+--------------+
| Restricted cash (Note 3) | 3,896,435 | 5,152,253 |
+----------------------------------------------+--------------+--------------+
| Qualifying Liquid Assets held for European | 77,981,212 | 83,612,310 |
| members (Note 4) | | |
+----------------------------------------------+--------------+--------------+
| Receivable from customers | 224,000 | 354,000 |
+----------------------------------------------+--------------+--------------+
| Trade and other receivables | 637,548 | 793,188 |
+----------------------------------------------+--------------+--------------+
| Prepaid expenses and deposits | 2,003,381 | 2,554,780 |
+----------------------------------------------+--------------+--------------+
| | 146,454,540 | 153,536,969 |
+----------------------------------------------+--------------+--------------+
| NON-CURRENT ASSETS | | |
+----------------------------------------------+--------------+--------------+
| Property, plant & equipment (Note 6) | 7,998,730 | 7,828,139 |
+----------------------------------------------+--------------+--------------+
| Intangible assets (Note 7) | 37,254,242 | 32,072,846 |
+----------------------------------------------+--------------+--------------+
| | 45,252,972 | 39,900,985 |
+----------------------------------------------+--------------+--------------+
| | 191,707,512 | 193,437,954 |
+----------------------------------------------+--------------+--------------+
| | | |
+----------------------------------------------+ + +
| | | |
+----------------------------------------------+--------------+--------------+
| LIABILITIES | | |
+----------------------------------------------+--------------+--------------+
| CURRENT LIABILITIES | | |
+----------------------------------------------+--------------+--------------+
| Trade and other payables | 21,134,826 | 21,370,500 |
+----------------------------------------------+--------------+--------------+
| Payable to European members (Note 4) | 73,866,276 | 76,384,591 |
+----------------------------------------------+--------------+--------------+
| Income taxes payable | 2,132,953 | 2,224,304 |
+----------------------------------------------+--------------+--------------+
| | 97,134,055 | 99,979,395 |
+----------------------------------------------+--------------+--------------+
| | | |
+----------------------------------------------+--------------+--------------+
| SHAREHOLDERS' EQUITY | | |
+----------------------------------------------+--------------+--------------+
| Share capital | 39,725 | 39,725 |
+----------------------------------------------+--------------+--------------+
| Share premium | 50,554,492 | 50,554,492 |
+----------------------------------------------+--------------+--------------+
| Capital redemption reserve | 147 | 147 |
+----------------------------------------------+--------------+--------------+
| Equity reserve on share option issuance | 8,985,709 | 8,601,168 |
+----------------------------------------------+--------------+--------------+
| Translation reserve | 582,669 | (392,908) |
+----------------------------------------------+--------------+--------------+
| Retained earnings | 34,410,715 | 34,655,935 |
+----------------------------------------------+--------------+--------------+
| | 94,573,457 | 93,458,559 |
+----------------------------------------------+--------------+--------------+
| | 191,707,512 | 193,437,954 |
+----------------------------------------------+--------------+--------------+
| | | |
+----------------------------------------------+--------------+--------------+
| | | |
+----------------------------------------------+--------------+--------------+
| | | |
+----------------------------------------------+--------------+--------------+
+-------------------------------------------------------------------------+
| NEOVIA Financial Plc |
| Condensed Interim Consolidated Statement of Comprehensive Income |
| For the six month period ended 30 June 2010 |
| (Unaudited) |
+-------------------------------------------------------------------------+
+-------------------------------------+-----------------+----------------+
| | Six month | Six month |
| |period ended 30 | period ended |
| | June 2010 | 30 June 2009 |
| | $ | $ |
+-------------------------------------+-----------------+----------------+
| | | |
+-------------------------------------+-----------------+----------------+
| Revenue | | |
+-------------------------------------+-----------------+----------------+
| Transaction fees | 30,433,595 | 31,512,139 |
+-------------------------------------+-----------------+----------------+
| Investment income | 371,298 | 1,118,016 |
+-------------------------------------+-----------------+----------------+
| | 30,804,893 | 32,630,155 |
+-------------------------------------+-----------------+----------------+
| Cost of sales | | |
+-------------------------------------+-----------------+----------------+
| Customer support | 3,788,414 | 3,960,749 |
+-------------------------------------+-----------------+----------------+
| Website maintenance | 2,949,812 | 2,223,582 |
+-------------------------------------+-----------------+----------------+
| Marketing and promotions | 433,144 | 210,043 |
+-------------------------------------+-----------------+----------------+
| Deposit and withdrawal fees | 5,612,370 | 7,447,032 |
+-------------------------------------+-----------------+----------------+
| Bad debts | 467,615 | 439,068 |
+-------------------------------------+-----------------+----------------+
| | 13,251,355 | 14,280,474 |
+-------------------------------------+-----------------+----------------+
| | | |
+-------------------------------------+-----------------+----------------+
| Gross profit | 17,553,538 | 18,349,681 |
+-------------------------------------+-----------------+----------------+
| | | |
+-------------------------------------+-----------------+----------------+
| Operating expenses | | |
+-------------------------------------+-----------------+----------------+
| General and administrative | 11,416,841 | 13,421,291 |
+-------------------------------------+-----------------+----------------+
| Share option expense (Note 9) | 384,541 | 1,358,479 |
+-------------------------------------+-----------------+----------------+
| Foreign exchange loss | 1,022,474 | 96,189 |
+-------------------------------------+-----------------+----------------+
| Depreciation and amortisation | 2,484,697 | 2,806,281 |
+-------------------------------------+-----------------+----------------+
| Investment loss | - | 533,116 |
+-------------------------------------+-----------------+----------------+
| | 15,308,553 | 18,215,356 |
+ +-----------------+----------------+
| | | |
+-------------------------------------+-------------------------------------+-----------------+
| Profit before other items | 2,244,985 | 134,325 |
+-------------------------------------+-----------------+----------------+
| | | |
+-------------------------------------+-----------------+----------------+
| Other items | | |
| Impairment loss | | |
+ +-----------------+----------------+
| | - | 4,568,511 |
+-------------------------------------+-------------------------------------+-----------------+
| Restructuring costs (Note 8) | 2,355,723 | 1,623,114 |
+-------------------------------------+-----------------+----------------+
| Loss on disposal of assets | 54,862 | 4,133 |
+-------------------------------------+-----------------+----------------+
| Acquisition costs impairment | - | 928,527 |
+-------------------------------------+-----------------+----------------+
| Loss before tax | (165,600) | (6,989,960) |
+-------------------------------------+-----------------+----------------+
| | | |
+-------------------------------------+-----------------+----------------+
| Income tax expense/(recovery) | 79,620 | (273,784) |
+-------------------------------------+-----------------+----------------+
| | | |
| | (245,220) | (6,716,176) |
+-------------------------------------+ + +
| Loss for the year | | |
+-------------------------------------+-----------------+----------------+
+-------------------------------------+-----------------+----------------+
| Other comprehensive income | | |
| Foreign currency translation | | |
| differences for | | |
+ +-----------------+----------------+
| | | |
+-------------------------------------+-------------------------------------+-----------------+
| foreign operations, net of | 975,577 | 308,708 |
| income tax | | |
+-------------------------------------+-----------------+----------------+
+-------------------------------------+-----------------+----------------+
| Total comprehensive income/(loss) | 730,357 | (6,407,468) |
| for the period | | |
+-------------------------------------+-----------------+----------------+
+-------------------------------------+-----------------+----------------+
| Basic earnings/(loss) per share | $0.00 | $(0.06) |
+-------------------------------------+-----------------+----------------+
| Fully diluted earnings/(loss) per | $0.00 | $(0.06) |
| share | | |
+-------------------------------------+-----------------+----------------+
+---------------------------------------------------------------------------+
| NEOVIA Financial Plc |
| Condensed Interim Consolidated Statement of Changes in Equity |
| For the six month period ended 30 June 2010 |
| (Unaudited) |
+---------------------------------------------------------------------------+
+---------------+----------+----------+---------+------------+-----------+-------------+------------+------------------+-------------+
| | SHARE | SHARE | TOTAL | | EQUITY |TRANSLATION | CAPITAL | RETAINED | |
| | CAPITAL | CAPITAL | SHARE | | RESERVE | RESERVE ON |REDEMPTION | EARNINGS$ | TOTAL |
| | - | - |CAPITAL | SHARE | ON | FOREIGN | RESERVE | | $ |
| |ORDINARY |DEFERRED | $ | PREMIUM | SHARE | OPERATIONS | $ | | |
| | SHARES | SHARES | | $ | OPTION | $ | | | |
| | $ | $ | | | ISSUANCE | | | | |
| | | | | | $ | | | | |
+---------------+----------+----------+---------+------------+-----------+-------------+------------+------------------+-------------+
| Balance | | | | | | | | | |
| as at | 21,725 | 18,000 | 39,725 | 50,554,492 | 5,954,728 | (1,320,417) | 147 | 44,470,606 | 99,699,281 |
| 1 | | | | | | | | | |
| January | | | | | | | | | |
| 2009 | | | | | | | | | |
+---------------+----------+----------+---------+------------+-----------+-------------+------------+------------------+-------------+
| | | | | | | | | | |
+---------------+----------+----------+---------+------------+-----------+-------------+------------+------------------+-------------+
| Net loss | - | - | - | - | - | - | - | (6,716,176) | (6,716,176) |
| for the | | | | | | | | | |
| period | | | | | | | | | |
+---------------+----------+----------+---------+------------+-----------+-------------+------------+------------------+-------------+
| Other | - | - | - | - | - | - | - | - | |
| comprehensive | | | | | | | | | |
| loss for the | | | | | | | | | |
| period | | | | | | | | | |
+---------------+----------+----------+---------+------------+-----------+-------------+------------+------------------+-------------+
| Foreign | | | | | | | | | |
| currency | - | - | - | - | - | 308,708 | - | - | 308,708 |
| translation | | | | | | | | | |
| differences | | | | | | | | | |
+---------------+----------+----------+---------+------------+-----------+-------------+------------+------------------+-------------+
| Total | | | | | | | | | |
| comprehensive | - | - | - | - | - | 308,708 | - | (6,716,176) | (6,407,468) |
| loss | | | | | | | | | |
+---------------+----------+----------+---------+------------+-----------+-------------+------------+------------------+-------------+
| Equity | | | | | | | | | |
| reserve | - | - | - | - | 1,358,480 | - | - | - | 1,358,480 |
| on | | | | | | | | | |
| option | | | | | | | | | |
| issuance | | | | | | | | | |
+---------------+----------+----------+---------+------------+-----------+-------------+------------+------------------+-------------+
| Balance | | | | | | | | | |
| as at 30 | 21,725 | 18,000 | 39,725 | 50,554,492 | 7,313,208 | (1,011,709) | 147 | 37,754,430 | 94,650,293 |
| June | | | | | | | | | |
| 2009 | | | | | | | | | |
+---------------+----------+----------+---------+------------+-----------+-------------+------------+------------------+-------------+
| | | | | | | | | | |
+---------------+----------+----------+---------+------------+-----------+-------------+------------+------------------+-------------+
| Net loss | - | - | - | - | - | - | - | (3,098,495) | (3,098,495) |
| for the | | | | | | | | | |
| period | | | | | | | | | |
+---------------+----------+----------+---------+------------+-----------+-------------+------------+------------------+-------------+
| Other | - | - | - | - | - | - | - | - | - |
| comprehensive | | | | | | | | | |
| loss for the | | | | | | | | | |
| period | | | | | | | | | |
+---------------+----------+----------+---------+------------+-----------+-------------+------------+------------------+-------------+
| Foreign | | | | | | | | | |
| currency | - | - | - | - | - | 618,801 | - | - | 618,801 |
| translation | | | | | | | | | |
| differences | | | | | | | | | |
+---------------+----------+----------+---------+------------+-----------+-------------+------------+------------------+-------------+
| Total | | | | | | | | | |
| comprehensive | - | - | - | - | - | 618,801 | - | (3,098,495) | (2,479,694) |
| loss | | | | | | | | | |
+---------------+----------+----------+---------+------------+-----------+-------------+------------+------------------+-------------+
| Equity | | | | | | | | | |
| reserve | - | - | - | - | 1,287,960 | - | - | - | 1,287,960 |
| on | | | | | | | | | |
| option | | | | | | | | | |
| issuance | | | | | | | | | |
+---------------+----------+----------+---------+------------+-----------+-------------+------------+------------------+-------------+
| Balance | | | | | | | | | |
| as at 31 | 21,725 | 18,000 | 39,725 | 50,554,492 | 8,601,168 | (392,908) | 147 | 34,655,935 | 93,458,559 |
| December | | | | | | | | | |
| 2009 | | | | | | | | | |
+---------------+----------+----------+---------+------------+-----------+-------------+------------+------------------+-------------+
| | | | | | | | | | |
+---------------+----------+----------+---------+------------+-----------+-------------+------------+------------------+-------------+
| Net loss | - | - | - | - | - | - | - | (245,220) | (245,220) |
| for the | | | | | | | | | |
| period | | | | | | | | | |
+---------------+----------+----------+---------+------------+-----------+-------------+------------+------------------+-------------+
| Other | - | - | - | - | - | - | - | - | - |
| comprehensive | | | | | | | | | |
| income for | | | | | | | | | |
| the period | | | | | | | | | |
+---------------+----------+----------+---------+------------+-----------+-------------+------------+------------------+-------------+
| Foreign | | | | | | | | | |
| currency | - | - | - | - | - | 975,577 | - | - | 975,577 |
| translation | | | | | | | | | |
| differences | | | | | | | | | |
+---------------+----------+----------+---------+------------+-----------+-------------+------------+------------------+-------------+
| Total | | | | | | | | | |
| comprehensive | - | - | - | - | - | 975,577 | - | (245,220) | 730,357 |
| loss | | | | | | | | | |
+---------------+----------+----------+---------+------------+-----------+-------------+------------+------------------+-------------+
| | | | | | | | | | |
+---------------+----------+----------+---------+------------+-----------+-------------+------------+------------------+-------------+
| Equity | | | | | | | | | |
| reserve | - | - | - | - | 384,541 | - | - | - | 384,541 |
| on | | | | | | | | | |
| option | | | | | | | | | |
| issuance | | | | | | | | | |
+---------------+----------+----------+---------+------------+-----------+-------------+------------+------------------+-------------+
| Balance | | | | | | | | | |
| as at 30 | 21,725 | 18,000 | 39,725 | 50,554,492 | 8,985,709 | 582,669 | 147 | 34,410,715 | 94,573,457 |
| June | | | | | | | | | |
| 2010 | | | | | | | | | |
+---------------+----------+----------+---------+------------+-----------+-------------+------------+------------------+-------------+
| | | | | | | | | | |
+---------------+----------+----------+---------+------------+-----------+-------------+------------+------------------+-------------+
+------------------------------------------+--------------+----------------+----+
| NEOVIA Financial Plc | |
+--------------------------------------------------------------------------+----+
| Condensed Interim Consolidated Statement of Cash Flows | |
+--------------------------------------------------------------------------+----+
| For the six month period ended 30 June 2010 | |
+--------------------------------------------------------------------------+----+
| (Unaudited) |
+-------------------------------------------------------------------------------+
| | Six months | Six months ended |
| | ended | 30 June 2009 |
| | 30 June | |
| | 2010 | |
+------------------------------------------+--------------+---------------------+
| | $ | $ |
+------------------------------------------+--------------+---------------------+
| OPERATING ACTIVITIES | | |
+------------------------------------------+--------------+---------------------+
| Loss before tax | (165,600) | (6,989,960) |
+------------------------------------------+--------------+---------------------+
| Adjustments for: | | |
+------------------------------------------+--------------+---------------------+
| Depreciation and amortisation | 2,484,697 | 2,806,281 |
+------------------------------------------+--------------+---------------------+
| Unrealised foreign exchange loss/(gain) | 4,965,888 | (2,452,591) |
+------------------------------------------+--------------+---------------------+
| Share option expense | 384,541 | 1,358,479 |
+------------------------------------------+--------------+---------------------+
| Investment loss | - | 533,116 |
+------------------------------------------+--------------+---------------------+
| Impairment loss | - | 4,568,511 |
+------------------------------------------+--------------+---------------------+
| Asset write off | 54,862 | 4,133 |
+------------------------------------------+--------------+---------------------+
| Operating cash flows before movements in | 7,724,388 | (172,031) |
| working capital | | |
+------------------------------------------+--------------+---------------------+
| Decrease/(increase) in receivable from | 130,000 | (413,000) |
| customers | | |
+------------------------------------------+--------------+---------------------+
| Decrease/(increase) in trade and other | 155,640 | (155,294) |
| receivables | | |
+------------------------------------------+--------------+---------------------+
| Decrease in prepaid expenses and | 551,399 | 853,310 |
| deposits | | |
+------------------------------------------+--------------+---------------------+
| (Decrease)/increase in trade and other | (247,786) | 2,889,278 |
| payables | | |
+------------------------------------------+--------------+---------------------+
| Cash generated by operations | 8,313,641 | 3,002,263 |
+------------------------------------------+--------------+---------------------+
| | | |
+------------------------------------------+--------------+---------------------+
| Tax paid | (170,971) | (177,322) |
+------------------------------------------+--------------+---------------------+
| | | |
+------------------------------------------+--------------+---------------------+
| Net cash generated by operating | 8,142,670 | 2,824,941 |
| activities | | |
+------------------------------------------+--------------+---------------------+
| | | |
+------------------------------------------+--------------+---------------------+
| INVESTING ACTIVITIES | | |
+------------------------------------------+--------------+---------------------+
| (Decrease)/increase in payable to | (2,518,315) | 6,780,438 |
| European members | | |
+------------------------------------------+--------------+---------------------+
| Purchase of property, plant & equipment | (7,932,562) | (9,507,290) |
| and intangible assets | | |
+------------------------------------------+--------------+---------------------+
| Decrease in restricted cash accounts | 1,255,818 | 17,896 |
+------------------------------------------+--------------+---------------------+
| Decrease/(increase) in Qualifying Liquid | 5,631,098 | (5,485,635) |
| Assets held for European members | | |
+------------------------------------------+--------------+---------------------+
| Investment in associate | - | (16,553) |
+------------------------------------------+--------------+---------------------+
| Net cash consumed by investing | (3,563,961) | (8,211,144) |
| activities | | |
+------------------------------------------+--------------+---------------------+
| FINANCING ACTIVITIES | | |
+------------------------------------------+--------------+---------------------+
| Mortgage receivable | - | (31,830) |
+------------------------------------------+--------------+---------------------+
| | | |
+------------------------------------------+--------------+---------------------+
| Net cash consumed by financing | - | (31,830) |
| activities | | |
+------------------------------------------+--------------+---------------------+
| | | |
+------------------------------------------+--------------+---------------------+
| INCREASE/(DECREASE) IN CASH AND CASH | 4,578,709 | (5,418,033) |
| EQUIVALENTS DURING THE PERIOD | | |
+------------------------------------------+--------------+---------------------+
| NET EFFECT OF FOREIGN EXCHANGE ON CASH | (4,953,775) | 2,722,386 |
| AND CASH EQUIVALENTS | | |
+------------------------------------------+--------------+---------------------+
| TRANSLATION OF FOREIGN OPERATIONS | 1,016,592 | (199,786) |
+------------------------------------------+--------------+---------------------+
| CASH AND CASH EQUIVALENTS, BEGINNING OF | 61,070,438 | 76,246,169 |
| PERIOD | | |
+------------------------------------------+--------------+---------------------+
| | | |
+------------------------------------------+--------------+---------------------+
| CASH AND CASH EQUIVALENTS, END OF PERIOD | 61,711,964 | 73,350,736 |
+------------------------------------------+--------------+---------------------+
| | | |
| | | |
+------------------------------------------+--------------+---------------------+
| NEOVIA Financial Plc |
| Notes to the Condensed Interim Consolidated Financial Statements |
| For the six month period ended 30 June 2010 |
| (Unaudited) |
+-------------------------------------------------------------------------------+
| | | | |
+------------------------------------------+--------------+----------------+----+
1. Basis of presentation
The principal operating currency of the Group is US dollars and accordingly the
financial statements have been prepared in US dollars. The interim results for
the period ended 30 June 2010 are unaudited and do not constitute statutory
accounts within the meaning of the Companies Acts 1931 to 2004. The statutory
accounts of NEOVIA Financial Plc for the year ended 31 December 2009 contain an
unqualified audit report. Copies can be obtained from the Registered Office of
the Company, Audax House, Finch Road, Douglas, Isle of Man, IM1 2PT
2. Statement of compliance
The condensed consolidated interim financial statements have been prepared in
accordance with applicable IOM law and with IAS 34 "Interim Financial
Reporting". They do not include all of the information required for the full
annual financial statements and should be read in conjunction with the
consolidated financial statements of the Group as at and for the year ended 31
December 2009.
These condensed consolidated interim financial statements were approved by the
Board of Directors on 27 September 2010.
3. Restricted cash
For Neteller and Neteller Asia e-wallet merchants and non-European members, the
Group maintains bank accounts with the Company's principal bankers which are
segregated from operating funds and which contain funds held on behalf of
customers, representing pooled customer funds. Balances in the segregated
accounts are maintained at a sufficient level to fully offset amounts owing to
the Group's merchants and members. A legal right of offset exists between the
balances owing to the merchants and members and the cash balances segregated in
the client accounts. As such, only the net balance of surplus cash is disclosed
on the balance sheet as Restricted Cash.
At 30 June 2010, the Group had the following balances:
+----------------------------+------------+------------+------------+
| | CLIENT | | |
| | ACCOUNT | BALANCE | RESTRICTED |
| | FUNDS | OWING | CASH |
+----------------------------+------------+------------+------------+
| | $ | $ | $ |
+----------------------------+------------+------------+------------+
| | | | |
+----------------------------+------------+------------+------------+
| Non-European Members | 26,262,340 | 25,320,372 | 941,968 |
+----------------------------+------------+------------+------------+
| | | | |
+----------------------------+------------+------------+------------+
| Merchants | 54,913,744 | 51,959,277 | 2,954,467 |
+----------------------------+------------+------------+------------+
| | | | |
+----------------------------+------------+------------+------------+
| | 81,176,084 | 77,279,649 | 3,896,435 |
+----------------------------+------------+------------+------------+
At 31 December 2009, the Group had the following balances:
+----------------------------+------------+------------+------------+
| | CLIENT | | |
| | ACCOUNT | BALANCE | RESTRICTED |
| | FUNDS | OWING | CASH |
+----------------------------+------------+------------+------------+
| | $ | $ | $ |
+----------------------------+------------+------------+------------+
| | | | |
+----------------------------+------------+------------+------------+
| Non-European Members | 26,400,113 | 25,375,833 | 1,024,280 |
+----------------------------+------------+------------+------------+
| | | | |
+----------------------------+------------+------------+------------+
| Merchants | 60,954,194 | 56,826,221 | 4,127,973 |
+----------------------------+------------+------------+------------+
| | | | |
+----------------------------+------------+------------+------------+
| | 87,354,307 | 82,202,054 | 5,152,253 |
+----------------------------+------------+------------+------------+
4. Qualifying Liquid Assets held for European Members
In compliance with the Financial Services Authority rules and regulations, the
Group holds Qualifying Liquid Assets at least equal to the amounts owing to
European members. These amounts are maintained in accounts which are segregated
from operating funds.
The Group had the following balances:
+-------------------------------------+--------------+--------------+
| | As at 30 | As at 31 |
| | June 2010 | December |
| | $ | 2009 |
| | | $ |
+-------------------------------------+--------------+--------------+
| Qualifying Liquid Assets held for | 77,981,212 | 83,612,310 |
| European members | | |
+-------------------------------------+--------------+--------------+
| Payable to European members | (73,866,276) | (76,384,591) |
+-------------------------------------+--------------+--------------+
| | 4,114,936 | 7,227,719 |
+-------------------------------------+--------------+--------------+
| | | |
+-------------------------------------+--------------+--------------+
5. Segmented Reporting
The Group has two reportable segments as disclosed below.
Stored Value(eWallet and Net+): fees are generated on transactions between
members and merchants using the Neteller and Neteller Asia wallet systems and
from the use of Net+ prepaid cards by members.
Straight Through Processing: fees are generated through the Netbanx and Netbanx
Asia gateway platforms where customers send money directly to merchants.
Information regarding the results of each reportable segment is included below.
Performance is measured based on revenue only given the transaction based
business model of the Group in which cost of sales and operating expenses are
shared across all products and regions and cannot be reasonably allocated
amongst the segments.
Reportable segments:
+------------------+-------------+------------+
| | PERIOD | PERIOD |
| | ENDED | ENDED 30 |
| | 30 JUNE | JUNE |
| | 2010 | 2009 |
| | $ | $ |
+------------------+-------------+------------+
| Stored Value | | |
| | 23,263,894 | 22,300,674 |
+------------------+-------------+------------+
| Straight Through | 7,169,701 | 9,211,465 |
| Processing | | |
+------------------+-------------+------------+
| | 30,433,595 | 31,512,139 |
+------------------+-------------+------------+
| | |
+------------------+-------------+------------+
Geographical information:
+------------------+-------------+------------+
| | PERIOD | PERIOD |
| | ENDED | ENDED 30 |
| | 30 JUNE | JUNE |
| | 2010 | 2009 |
| | $ | $ |
+------------------+-------------+------------+
| Europe | 20,524,455 | 19,728,580 |
+------------------+-------------+------------+
| Asia | 8,540,526 | 10,553,723 |
+------------------+-------------+------------+
| Rest of World | 1,368,614 | 1,229,836 |
+------------------+-------------+------------+
| | 30,433,595 | 31,512,139 |
+------------------+-------------+------------+
Major customer
The Group has one merchant who represented 14% of total fee revenue in the six
months ended 30 June 2010 (2009: 13%) across all reportable segments and
geographies.
6. Property, Plant & Equipment
During the period, intangible assets with a net book value of $734,832 were
reclassified to Property, Plant and equipment. There were no significant
disposals or write downs.
7. Intangible Assets
During the period, intangible assets with a net book value of $734,832 were
reclassified to Property, Plant and equipment. In addition, an amount of
$6,397,550 was spent on the Newteller project (the re-platforming of the core
operating systems for our stored value products). Amounts of $54,030 in
unrelated capital projects were identified as having no future economic benefit
and accordingly have been written off.
8. Restructuring costs
The Group incurred the following costs:
+--------------------------------------+------------+------------+
| |Six months |Six months |
| | ended 30 | ended 30 |
| | June 2010 | June 2009 |
| | $ | $ |
+--------------------------------------+------------+------------+
| Severance and retention | 1,205,104 | 1,528,912 |
+--------------------------------------+------------+------------+
| Lease impairment | 1,054,406 | - |
+--------------------------------------+------------+------------+
| Supplier contract renegotiation | - | (92,209) |
| (recovery) | | |
+--------------------------------------+------------+------------+
| Provision for supplier receivable | - | 54,765 |
+--------------------------------------+------------+------------+
| Professional and legal fees and | 96,213 | 128,915 |
| expenses | | |
+--------------------------------------+------------+------------+
| Other restructuring costs | - | 2,731 |
+--------------------------------------+------------+------------+
| | 2,355,723 | 1,623,114 |
+--------------------------------------+------------+------------+
The severance and retention costs for the period were incurred for employees
laid off in 2010.
The lease impairment is for unoccupied space at the Calgary office that the
Group has been unsuccessful in subleasing due to a large over supply of
commercial rental space available in the Calgary market. In addition, since it
is unlikely that the unoccupied space will be subleased in the future, the
restructuring costs also reflect an accrual of costs expected to be paid up
until the end of the lease term on 2 July 2011.
9. Share-based payments
The Company's share option plan was adopted pursuant to a resolution passed on 7
April 2004 and amended by the Board on 15 September 2008. The 2008 amendment
included the addition of a new 'approved' plan for UK based employees. Under
the 'approved' and 'unapproved' plans, the Board of Directors of the Company may
grant share options to eligible employees including Directors of Group companies
to subscribe for ordinary shares of the Company. As stated in the Company's
2009 annual report, it is not intended that further awards will be made pursuant
to the share option plan following the introduction of the Group's Long Term
Incentive Plan ("LTIP") (see below).
No consideration is payable on the grant of an option. Options may generally be
exercised to the extent that they have vested. Options vest according to the
relevant schedule over the grant period following the date of grant. Typically,
options have been granted for a three and a half year grant period and have
vested in equal thirds on or about the anniversary of the grant date. However,
the Directors are permitted under the Plan Rules to alter the vesting schedule
and the grant period. The exercise price is determined by the Board of
Directors of the Company, and shall not be less than the market value at the
date of grant. The option plan provides for a grant price to equal the average
quoted market price of the Company shares on the three days prior to the date of
grant. Share options are forfeited if the employee leaves the Group before the
options vest. A participant of the share option plan has 30 days following the
date of grant to surrender the option and if surrendered, the option will not be
deemed granted. On 14 April, 2010, 2,369,157 options granted on 20 November
2006 with an exercise price of GBP1.38 expired.
The Company adopted a LTIP which took effect from 1 January 2010. On 18 March
2010, certain executives and managers of the Group were awarded 2,182,393 LTIP
options to acquire ordinary shares in the capital of the Company for GBP0.0001
per share. The LTIP options vest in three equal tranches over each of the 2010,
2011 and 2012 financial years of the Company based on performance conditions to
be determined for each year, based on annual "stretch" EBITDA targets. In the
six months ended 30 June 2010 no expense related to the LTIP was recognised.
The Group recognised total expenses of $384,541 (Six months ended 30 June 2009:
$1,358,479) related to the equity-settled share-based payments transactions in
the period.
Equity-settled share option plan
+-------------------+----------+-------------+----------+-----------+
| | Six | Six | Year | Year |
| | months | months |ended 31 | ended |
| |ended 30 | ended 30 |December | 31 |
| | June | June | 2009 | December |
| | 2010 | 2010 |Weighted | 2009 |
| |Weighted | | | |
+-------------------+----------+-------------+----------+-----------+
| | average | Options | average | Options |
| |exercise | |exercise | |
| | price | | price | |
+-------------------+----------+-------------+----------+-----------+
| | | | | |
+-------------------+----------+-------------+----------+-----------+
| Outstanding at | GBP0.86 | 7,590,521 | GBP1.49 | 8,216,215 |
| the beginning of | | | | |
| period | | | | |
+-------------------+----------+-------------+----------+-----------+
| Granted during | - | - | GBP0.50 | 100,000 |
| the period | | | | |
+-------------------+----------+-------------+----------+-----------+
| Forfeited during | GBP0.61 | (1,418,167) | GBP0.72 | (630,156) |
| the period | | | | |
+-------------------+----------+-------------+----------+-----------+
| Exercised during | - | - | - | - |
| the period | | | | |
+-------------------+----------+-------------+----------+-----------+
| Expired during | GBP1.38 | (2,369,157) | GBP7.85 | (395,808) |
| the period | | | | |
+-------------------+----------+-------------+----------+-----------+
| | | | | |
+-------------------+----------+-------------+----------+-----------+
| Outstanding at | GBP0.63 | 3,802,927 | GBP0.86 | 7,590,521 |
| the end of period | | | | |
+-------------------+----------+-------------+----------+-----------+
| | | | | |
+-------------------+----------+-------------+----------+-----------+
| Exercisable at | GBP0.66 | 2,221,066 | GBP1.00 | 5,037,519 |
| the end of the | | | | |
| period | | | | |
+-------------------+----------+-------------+----------+-----------+
The options outstanding at the end of the period had a weighted average
remaining contractual life of 1.72 years (31 December 2009: 1.65 years).
The options granted are priced using a trinomial lattice model to reflect
factors including employee exercise behaviour, option life and option
forfeitures. No options were granted in the six months ended 30 June 2010 and
hence no inputs are shown for this period. The inputs into the model are as
follows:
+-------------------------------------+-----------+------------+
| | |Year ended |
| | | 31 |
| | | December |
| | | 2009 |
+-------------------------------------+-----------+------------+
| Weighted average exercise price | | GBP0.50 |
+-------------------------------------+-----------+------------+
| Expected volatility | | 56% |
+-------------------------------------+-----------+------------+
| Expected life | | 3.5 years |
+-------------------------------------+-----------+------------+
| Risk free interest rate | | 0.5% |
+-------------------------------------+-----------+------------+
| Expected dividends | | - |
+-------------------------------------+-----------+------------+
| Employee exit rate | | 7% |
+-------------------------------------+-----------+------------+
Expected volatility was determined by calculating the historical volatility of
the Group's share price from the time of issue to the date of grant. The
expected life used in the model has been adjusted, based on management's best
estimate, for the effects of non-transferability, exercise restrictions, and
behavioural considerations.
10. EBITDA
The Group defines EBITDA as earnings before interest, taxes, depreciation and
amortisation, share option expense, foreign exchange gain/loss, investment loss,
impairment loss, restructuring costs, loss on disposal of assets and acquisition
costs impairment.
+--------------------------------------+------------+-------------+
| |Six months | Six months |
| | ended 30 | ended 30 |
| | June 2010 | June 2009 |
| | $ | $ |
+--------------------------------------+------------+-------------+
| Net loss | (245,220) | (6,716,176) |
+--------------------------------------+------------+-------------+
| Adjustments for: | | |
+--------------------------------------+------------+-------------+
| Income tax expense/(recovery) | 79,620 | (273,784) |
+--------------------------------------+------------+-------------+
| Depreciation and amortisation | 2,484,697 | 2,806,281 |
+--------------------------------------+------------+-------------+
| Share option expense | 384,541 | 1,358,479 |
+--------------------------------------+------------+-------------+
| Foreign exchange loss | 1,022,474 | 96,189 |
+--------------------------------------+------------+-------------+
| Investment loss | - | 533,116 |
+--------------------------------------+------------+-------------+
| Impairment loss | - | 4,568,511 |
+--------------------------------------+------------+-------------+
| Restructuring costs | 2,355,723 | 1,623,114 |
+--------------------------------------+------------+-------------+
| Loss on disposal of assets | 54,862 | 4,133 |
+--------------------------------------+------------+-------------+
| Acquisition costs impairment | - | 928,527 |
+--------------------------------------+------------+-------------+
| | | |
| EBITDA | 6,136,697 | 4,928,390 |
+--------------------------------------+------------+-------------+
* * * * *
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR XDLLLBKFFBBE
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