SafeCharge International Group Limited

 

("SafeCharge", the "Company" or the "Group")

 

Full Year Results

 

Record financial results with strong momentum flowing into 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 maiden preliminary results for the full year ended 31 December 2014.

 

Financial highlights

 

• Revenues up 78% to US$76.9 million (2013: US$43.2 million)
• Gross Profit up 79% to US$44.5 million (2013: US$24.9 million)
• Adjusted EBITDA* up 119% to US$24.7 million (2013:US$11.3 million)
• Adjusted net profit* up 122% to US$21.3 million (2013: US$9.6 million)
• Cash flows from operations US$20.8 million (2013:US$10.8 million)
• Reported profit after tax US$14.4 million (2013: loss US$1.3 million)
• Cash balances at year end of US$146.5 million (2013: US$11.8 million)
• Recommended final dividend of 5.28 US$ cents per share, giving total 2014 dividend of 8.16 US$ cents per share

 

*Adjusted EBITDA and Adjusted net 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 and terminated projects, acquisition costs, goodwill impairment and share-based payments charge (See Consolidated Statement of Comprehensive Income).

 

Current trading

 

The strong trading and momentum generated by the Group's core business in the last quarter of 2014 has continued into 2015 with January and February proving to be very strong months.

 

Operational highlights

 

•  Successful, oversubscribed IPO in April 2014 raising US$125 million before expenses
•  Attained Principal Membership of VISA Europe
•  Granted approval for Issuing Activity by MasterCard Europe
•  Achieved authorisation as an Electronic Money Institute
•  Signed 250 new customers (2013: 185)
•  Launch of significant new customers, including Sports Betting operator Ladbrokes, Game    developers JoyFun and Gaijin as well as FX brokerages Finsa and FXDD
•  Successful launch of an innovative automated onboarding solution
•  Winner of Payments Company of the Year at the eGaming Review B2B Awards
•  Completed acquisitions of 3V Transaction Services Limited and CreditGuard Limited after the year end.

 

Roger Withers, Chairman of SafeCharge, said:

 

"It is a privilege to present such an outstanding set of results in our first year as a public company. I congratulate David Avgi and the whole of the SafeCharge team, for an excellent performance during a landmark period for the group. We entered the year trading strongly with financial strength to pursue our stated M&A strategy."

 

David Avgi, CEO of SafeCharge, said:

 

"After a transformational year of progress, December saw record monthly revenues and earnings. This momentum has continued into the first three months of 2015 and we have enjoyed very strong trading. In 2015, we will continue to develop our technology and products and grow the business into new market and industries, enabling us to benefit from operational leverage." 

 

Recommended final dividend

 

Subject to shareholder approval of the final dividend at the Annual General Meeting, to be held on 19 May 2015, the dividend will be payable on 26 May 2015 to those shareholders on the Company's register as at the record date of 8 May 2015. The ex-dividend date is 7 May 2015.

 

In order to facilitate simpler settlement, shareholders will be paid their dividends in sterling. The dividend will therefore be subject to a conversion exchange rate from US dollars based on a GBP/USD rate of 1.48, being the rate at 4.30pm on 16^th March. As a result those shareholders entitled to the final dividend will receive 3.57 pence per share.

 

 

- Ends -

 

The Company will hold a presentation for analysts at 9.30 am this morning in the offices of Bell Pottinger, 6th Floor, 26 Southampton Buildings, London, WC2A 1AH.

 

 

For more information:

 

SafeCharge International Group Limited David Avgi Tim Mickley	+44 (0) 20 3051 3031
Shore Capital Pascal Keane Toby Gibbs	+44 (0) 20 7408 4090
Bell Pottinger David Rydell Olly Scott James Newman	+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

 

As we approach the end of our first year as a publicly-traded Company, it gives me great pleasure to present the maiden set of financial statements. The year has been one of real progress for the Group, with a highly successful IPO and strong development across the business. The results presented today and achievements throughout the year are a credit to the management team and all those working for and with the Company. I congratulate them for their efforts this year to which these results serve as testament.

 

As set out in more detail in this report, 2014 was a year of achievement and new development for the Group, underpinned by significant organic growth. Revenue increased 78% to US$76.9 million which, combined with the Group's operational gearing, resulted in Adjusted EBITDA increasing by 119% to US$24.7 million. Our performance was driven both through new customer wins and expanded relationships with existing customers. As a result the Group remained highly cash generative, maintained a strong balance sheet and invested substantially in its future growth.

 

I am pleased that the Company has exceeded market expectations since IPO and that this has been reflected in our share price performance. 

 

Corporate milestones

 

In addition to achieving a public listing, the Company has enjoyed significant additional corporate success, including achieving Electronic Money Issuer (EMI) status; Principal Membership for transaction acquiring with Visa in Europe; and Issuing status from MasterCard. These have enabled us to expand our offer to customers and facilitate innovative new integrated services to meet their needs.

 

Late in 2014 we announced the strategic acquisitions of 3V Transaction Services Limited and CreditGuard Limited, the benefits of which we will begin to fully enjoy in 2015 and beyond. 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 is committed to ensuring a robust governance structure is in place and, whilst recognising the size of the Company, is working to comply with corporate best practice.

 

I am grateful to all of the Directors for their contributions throughout what has been a highly successful year and particularly congratulate David Avgi, his senior management team and all employees for their dedication and hard work.

 

Dividend

 

Following the announcement that the Company would accelerate its interim dividend in September, the Board has recommended a final dividend of 5.28 $ cents per share, giving a total dividend of 8.16 $ cents per share for the year. This reflects the Company's strong underlying growth in earnings, cash generation and its dividend policy of paying out at least 50% of Adjusted EBITDA.

 

Strong balance sheet

 

Benefiting from strong cash generation and funds raised at IPO - and despite investing in the Group's development and declaring a maiden interim dividend - SafeCharge closed the year with more than US$146 million of cash and cash equivalents on its balance sheet and no debt.

 

Domicile

At the time of the Company's IPO the board indicated that it would review the potential to re-domicile the Company away from the British Virgin Islands. Following this review the directors are of the opinion that a migration to the Bailiwick of Guernsey in the Channel Islands, a dependency of the UK, is in the best interests of the Company, the Group and its shareholders.  The notice for the Company's forthcoming AGM will include resolutions seeking shareholder approval for such re-domicile.

Outlook

 

2014 was an exciting year, full of significant developmental milestones for the Company. The momentum generated throughout 2014 has continued into 2015 and accordingly I and the rest of the Board, look forward to 2015 with confidence and optimism.

 

Roger Withers

 

Chairman

17 March 2015

 

 

CEO's review

 

Overview

2014 was a transformational year for SafeCharge. The successful IPO was followed by a year of significant organic growth in the business with revenues and Adjusted EBITDA increasing by 78% and 119% respectively.

 

Throughout the year SafeCharge continued to win new customers, diversifying the source and geographical locations of its revenue streams.  Customer retention with no churn, along with the strong momentum of boarding new clients, enabled the fast pace of growth and demonstrated our client's trust in our products and services.

 

The year also saw several landmark operational achievements as the Group achieved principal membership of VISA, complementing its existing MasterCard membership, the license for which was extended. These developments enabled SafeCharge to become an issuer of pre-paid cards within Europe. Membership of both VISA and MasterCard represent a significant validation of the Company's offering and will generate many future benefits.

 

The Company also began its programme of strategic acquisitions, adding 3V Transaction Services Limited and CreditGuard Limited, both of which completed in January 2015, and which will add synergistic products to the Group's offering and diversify its client base.

 

Strategy

SafeCharge continues to adopt a strategy to grow the Group's business organically by increasing volumes processed and services sold to its existing client base; as well as adding new clients and entering new geographic markets by opening regional offices and hiring local sales personnel. The Company will also continue to look to expand its horizons through extensions and additions to its existing regulatory and corporate approvals.

 

In parallel to the Company's organic growth strategy SafeCharge is constantly looking for potential acquisitions with the capacity to facilitate and accelerate its access to new technologies, markets, clients and territories.

 

The Group made significant progress with many aspects of its strategy during 2014 and will seek to leverage these successes throughout 2015 and beyond.

 

Growth and performance

The operational momentum achieved during 2013 continued into 2014, securing the Group's growth trajectory. This enabled SafeCharge to deliver strong growth in revenues and EBITDA. Throughout the year the business benefited from organic growth with new and existing customers, including sports betting operators Ladbrokes and the Rank Group, the regulated brokerage, Finsa and FXDD as well as the games developers, JoyFun and Gaijin.

 

Revenues rose steadily throughout the period, reaching record levels in December.

 

Investment formed a central part of the Group's strategy, as outlined at its IPO. The Company increased headcount, particularly of technology staff; and grew its operational capabilities, including sales and marketing; risk and compliance; and finance. The increased headcount will enable the Group to manage its growth and further develop its technology platforms, extending SafeCharge's position at the forefront of payment technologies and expanding the product offering.

 

This significant investment in enhancements to IT services is expected to complete in 2015, ensuring hardware platforms in the Company's multiple data-centres can accommodate enhanced security and the Group's long-term growth expectations.

 

SafeCharge remained highly cash generative with US$19.8 million of free cash flow from operating activities at the year end. In September, following a very strong first half performance, the Board decided to accelerate the announcement of the Group's maiden dividend as a public company. After payment of the dividend and continued investment in new technology, balances of cash and cash equivalents at the end of the year totalled US$146.5 million. The Group has no debt.

 

Core processing business

The Group's core processing business enjoyed significant growth across multiple verticals, with full-year revenues up 78% to US$76.9 million. This increase was weighted to the second half of the year as the Company benefited from the growth of existing customers and the addition of new customers launched during the year.

 

The business achieved a gross profit margin of 58% in the year, with the majority of costs of sales being processing fees to third party acquiring banks.

 

SafeCharge is able to offer its customers a wide range of payment and fraud prevention services and PCI de-scoping solutions all provided through a single customer integration. This has enabled the Company to secure its position as a leader in the payments industry and is reflected in its high customer retention rate. The single integration additionally provides SafeCharge's customers with access to a network of more than 100 alternate payment methods and acquiring banks worldwide.

 

The Group's platform is highly scalable, and it continues to invest in order to provide greater functionality. Reliability - a prime element of customer confidence in the Company - remained extremely stable, with up-time in excess of 99.99% throughout the year.

 

The Group's technological investment through the year focused on securing SafeCharge's position at the forefront of the payment technologies sector. This was reflected in the further development of its platforms, and the expansion of the Group's product offerings.

 

Expansion into additional sectors and geographies

Whilst the Group's investment programme has primarily sought to create scalability, reliability and innovation to maintain SafeCharge's industry-leading position, it has also enabled sectorial and geographical diversification. The Group's improved connectivity and communication protocols, combined with its recently acquired CreditGuard technologies, means it can now support the needs of many of our target new industry sectors, including retail; travel and airlines; telecommunications and energy.

 

Expansion into additional areas of the payments value chain

Despite increased integration and set-up costs relating to the Group's relationships with MasterCard and VISA, integrating into the backbone of Card schemes enabled the Group to broaden its payments activities into full scope transaction acquiring. The technology acquired as part of the 3V transaction will enable SafeCharge to reach another significant milestone by developing card issuing and management capabilities, which will allow the Group to launch and manage its own pre-paid card programs and offer these services to third parties.

 

Automation

The first generation of SafeCharge's automated merchant onboarding services, including a unique sandbox, automated compliance processes and self-customisation of the checkout process was successfully launched this year. A key part of the Company's strategic vision is to automate all facets of its service. As the volume of transactions handled by the Group increases at an accelerated rate, the ability of its systems to safely and reliably process these transactions is a central factor in its continued success. The Company's continued focus on these capabilities will therefore sustain its current growth rate, enabling it to meet its own expectations.

 

Mobile payments

Since the beginning of 2014, mobile traffic has grown by 80% showing evidence of the impact that SafeCharge's Mobile Payment Solutions has made through identifying and catering for end-users' multichannel requirements. The Company's choice of mobile template and platform-agnostic technologies has been successfully implemented by both application developers and its traditional clientele going mobile.

 

Corporate developments

As a result of the Company's highly successful IPO, it raised US$122 million (net of transaction costs) to strengthen its balance sheet and support new growth. The IPO expanded the shareholder base to include a number of highly respected long term institutional investors, in addition to individual investors and family offices.

 

In September, SafeCharge announced that it had secured Principal Membership with VISA Europe, which complements its existing membership with MasterCard Europe, and enables the Company to offer acquiring services to merchants in Europe. The Company's technical teams delivered a smooth and successful integration into MasterCard's systems and SafeCharge went live processing through MasterCard in the fourth quarter, with VISA expected to go live in the first half of 2015. This is a significant achievement for the Group, expanding its offering and reducing business risk. The Company expects the full benefits of Principal Membership to begin to be realised in the second half of 2015.

 

The grant of MasterCard card Issuing status, which was achieved in October, was another significant milestone for the Group. The award enables SafeCharge to issue pre-paid cards within Europe and makes many opportunities accessible with new and existing customers. January 2015 acquisition of Ireland's 3V Transaction Services added the technologies, infrastructure and expertise to issue and manage international prepaid card programmes. It is the foundation of SafeCharge's Cards Services division and the Company is very excited by the prospects for this new division, which will operate in a large and rapidly-growing sector.

 

January 2015 also saw the closing of the acquisition of CreditGuard Limited, the leading payment solutions provider in the Israeli market. CreditGuard has a broad customer base, which includes airlines, retail businesses, governmental departments and utilities to whom SafeChage can cross-sell its technologies and solutions.

 

Current trading and outlook

The strong trading and momentum of the last quarter of 2014 has continued into 2015 and we entered the year trading strongly with financial strength to pursue our stated M&A strategy.

 

David Avgi

Chief Executive Officer

17 March 2015

 

 

Financial review

 

Highlights

Group revenues increased by 78% to US$76.9 million, (2013: US$43.2 million) driven by strong organic growth from existing customers and a significant number of new customers which joined the platform during the year. Adjusted EBITDA increased by 119%, reaching US$24.7 million (2013: US$11.3 million). The conversion of Adjusted EBITDA to cash was strong with cash flows from operations (before tax paid) of US$20.8 million (2013: US$10.8 million).

 

Revenues

Revenues increased across the Company's principal business lines throughout the year, culminating with record monthly revenues in December. The diversification of the Group's client revenues also improved during the year with 250 new customers signing with the Group.

 

Margins

Gross profit margins remained stable at 58% for the year, whilst Adjusted EBITDA margins improved to 32% from 26% as increased revenues and gross profit leveraged the Company's cost base.

 

Expenses

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

 

The Group incurred share-based payment charges of US$1.4 million in the year (2013: US$4.7 million) and costs of US$3.8 million charged as expenses in relation to the Group's IPO. In order to reduce foreign exchange exposure, the majority of the Group's assets are held in US dollars, its functional and reporting currency. Finance expense of US$1.7 million (2013: US$0.6 million) primarily related to the translation of non-US dollar cash balances held at the end of the year.

 

Depreciation and amortisation of US$1.2 million was charged in the period (2013: US$0.6 million), which included US$483,000 in respect of intangible assets amortisation (2013: US$129,000).

 

Tax

The Group's effective tax rate for the period stood at 11.4% with tax expenses of US$1.9 million (2013:US$1.8m) charged in the year, representing tax liabilities due on profits generated by the Company's subsidiary companies.

 

Cash flow

SafeCharge continues to be highly cash generative. In the year ended 31 December 2014, the Group generated US$19.8 million from operating activities (2013: US$10.2 million), a conversion rate of 80% from Adjusted EBITDA.

 

The Group's outflow from investing activities was US$3.9 million of which US$1.6 million related to the purchase of computer equipment with a further US$1.7 million in investment in capitalised development expenditure.

 

Net cash flow from financing activities was US$118.8 million, reflecting net proceeds from the Company's IPO of US$121.9 million and US$1.3 million received from the exercise of share options offset by the US$4.4 million interim dividend payment.

 

Balance sheet

SafeCharge's strong balance sheet following its IPO enables a high degree of operational flexibility as it delivers its growth strategy. The Group closed the year with total assets of US$161.1 million, including US$146.5 million of cash and cash equivalents. The majority of the Company's cash is held in current accounts and on-call deposit accounts, with US$60 million held on three-month deposit.

 

The net book value of intangible assets held at 31 December 2014 was US$5.7 million, (2013: US$2.3 million) of which US$1.7 million related to the capitalisation of technology development costs in the year, including the further development of the Group's cashier, digital wallet and acquiring bank technologies.

 

Total current assets increased to US$152.3 million, primarily as a result of funds raised in the IPO and cash generated through operations. Current liabilities increased by US$3.6 million to US$9.8 million due mainly to an increase in trade and other payables.

 

Total equity attributable to equity holders increased to US$151.2 million primarily as a result of the US$121.9 million (net of transaction costs) raised on flotation and US$14.4 million of retained earnings within the year.

 

The Group closed the year with no debt and is well placed to consider further strategic investment opportunities in 2015 as it seeks to grow its market-leading offer.

 

Dividends

Following the announcement of the interim dividend paid in September, the Board has recommended a final dividend of US$8.0 million (5.28 $ cents per share), giving a total dividend of US$12.34 million (8.16 $ cents per share) for the year which is in line with the Company's stated policy of paying out at least 50% of Adjusted EBITDA.

 

Tim Mickley

Chief Financial Officer

17 March 2015

 

 

Consolidated Statement of Comprehensive Income

Year ended 31 December 2014

 

 

		2014	2013
	Note	US$000s	US$000s
Revenue		76,940	43,158
Cost of sales		(32,451)	(18,262)
Gross profit		44,489	24,896
Salaries and employee expenses		(13,875)	(9,316)
Share-based payments charge		(1,428)	(4,682)
Depreciation and amortisation		(1,185)	(551)
Goodwill impairment charge	12	-	(4,573)
Premises and other costs		(1,736)	(1,156)
Other expenses		(4,195)	(3,157)
Costs in respect of terminated projects		-	(1,138)
Costs in respect of IPO		(3,834)	-
Acquisition costs		(422)	-
Total operating costs		(26,675)	(24,573)
Adjusted EBITDA*		24,683	11,267
Depreciation and amortisation		(1,185)	(551)
Goodwill impairment charge		-	(4,573)
Share-based payments charge		(1,428)	(4,682)
Costs in respect of terminated projects		-	(1,138)
Costs in respect of IPO		(3,834)	-
Acquisition costs		(422)	-
Profit from operations	6	17,814	323
Finance income	7	213	726
Finance expense	7	(1,732)	(613)
Profit before tax		16,295	436
Tax expense	8	(1,860)	(1,767)
Profit/(loss) after tax attributable to equity holders of the parent		14,435	(1,331)
Other comprehensive income for the year
Items that will be reclassified subsequently to profit or loss when specific conditions are met:
Exchange difference arising on the translation and consolidation of foreign companies' financial
statements		(4)	34
Total comprehensive income/(loss) for the year		14,431	(1,297)
Earnings per share for profit/(loss) attributable to the owners of the parent during the year
Basic (cents)	9	10.44	(1.33)
Diluted (cents)	9	10.37	(1.33)

 

 

*      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 and terminated projects, acquisition costs, goodwill impairment and share-based payments charge. Where not explicitly mentioned, Adjusted EBITDA refers to Adjusted EBITDA from continuing operations.

 

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

 

Consolidated Statement of Financial Position

31 December 2014

 

		31/12/2014	31/12/2013
	Note	US$000s	US$000s
Assets
Non-current assets		2,091
Property, plant and equipment	11		804
Intangible assets	12	5,686	2,274
Other receivables	15	1,072	1,147
Total non-current assets		8,849	4,225
Current assets		5,751
Trade and other receivables	14		7,220
Cash and cash equivalents	16	146,511	11,817
Total current assets		152,262	19,037
Total assets		161,111	23,262
Equity		15
Share capital	17		10
Share premium		123,182	-
Other reserves	18	2,677	6,822
Retained earnings		25,324	10,099
Total equity attributable to equity holders of parent		151,198	16,931
Non-current liabilities		115
Provisions	19		111
Total non-current liabilities		115	111
Current liabilities		7,706
Trade and other payables	20		4,783
Taxes payable	21	2,092	1,437
Total current liabilities		9,798	6,220
Total equity and liabilities		161,111	23,262

 

On 17 March 2015 the Board of Directors of SafeCharge International Group Limited approved and authorised these consolidated financial statements for issue and they were signed on their behalf by:

 

 

 

 

David Avgi                                                                      Tim Mickley

 

Director                                                                          Director

 

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

 

Consolidated Statement of Changes in Equity

Year ended 31 December 2014

 

 

	Note	Share capital US$000s	Share premium US$000s	Capital reserve US$000s	Translation reserve US$000s	Share options reserve US$000s	Retained earnings US$000s	Total equity attributable to equity holders of parent US$000s
Balance at 31 December 2012		10	-	622	1,065	419	46,430	48,546
Comprehensive income
Loss for the year		-	-	-	-	-	(1,331)	(1,331)
Other comprehensive income for the year		-	-	-	34	-	-	34
Total comprehensive income for the year		-	-	-	34	-	(1,331)	(1,297)
Transactions with owners
Dividends	10	-	-	-	-	-	(35,000)	(35,000)
Share-based payments		-	-	-	-	4,682	-	4,682
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
Dividends	10	-	-	-	-	-	(4,779)	(4,779)
Issuance of shares	17	5	126,069	-	-	-	-	126,074
Costs in respect of share issuance		-	(4,153)	-	-	-	-	(4,153)
Exercise of options		*	1,266	-	-	(5,569)	5,569	1,266
Share-based payments		-	-	-	-	1,428	-	1,428
Balance at 31 December 2014		15	123,182	622	1,095	960	25,324	151,198

 

(*)  represents amount less than one thousand US$

 

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

 

Consolidated Statement of Cash Flows

Year ended 31 December 2014

 

 

			2014	2013
	Note		US$000s	US$000s
Cash flows from operating activities
Profit before tax			16,295	436
Adjustments for:			702
Depreciation of property, plant and equipment	11			422
Amortisation of intangible assets	12		483	129
Write-off of property, plant and equipment			-	109
Goodwill impairment charge		12	-	4,573
Exchange difference arising on the translation of non-current assets in foreign currencies			(4)	34
Charge to statement of comprehensive income for provisions		19	4	26
Finance income		7	(213)	(726)
Share-based payments charge			1,428	4,682
Cash flows from operations before working capital changes			18,695	9,685
Increase in trade and other receivables			(69)	(461)
Increase in trade and other payables			2,191	1,563
Cash flows from operations			20,817	10,787
Tax paid			(1,063)	(574)
Net cash flows from operating activities			19,754	10,213
Cash flows from investing activities			(2,119)
Payment for acquisition of intangible assets	12			(659)
Payment for acquisition of property, plant and equipment	11		(1,989)	(578)
Payment for non-current receivables			-	(1,147)
Advance payment for the acquisition of business		14	-	(749)
Loans granted			-	(3,814)
Proceeds from sale of intangible assets			-	487
Interest received			213	82
Net cash flows used in investing activities			(3,895)	(6,378)
Cash flows from financing activities			126,074
Proceeds from issuance of shares				-
Costs in respect of share issuance			(4,153)	-
Proceeds from exercise of options			1,266	-
Dividends paid	10		(4,352)	-
Net cash flows from financing activities			118,835	-
Increase in cash and cash equivalents			134,694	3,835
Cash and cash equivalents at beginning of the year			11,817	7,982
Cash and cash equivalents at end of the year	16		146,511	11,817

 

Non-cash transactions:

 

Dividends declared in 2013 of US$35,000,000 were netted off with the loan receivable from the direct parent of the Group with no cash effect. In January 2014, dividend declared of US$427,000 was netted off with the receivable from the direct parent of the Group with no cash effect.

 

Finance expense of US$1,627,000 in 2014 relates to foreign exchange movements on cash balances held by the Group.

 

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

 

Notes to the Consolidated Financial Statements

Year ended 31 December 2014

 

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. Its registered office is at Trident Chambers, P.O. Box 146, Road Town, Tortola, British Virgin Islands. The principal activities of the Group are the provision of payment services, risk management and IT solutions for online businesses.

 

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 ('IPO'). As part of the IPO, the Company raised £75.75 million (about US$126 million), before expenses, via the placing of 46,759,260 new Ordinary Shares. The net effect from the IPO to the equity is US$121,921,000, being gross funds received from the IPO amounting to US$126,074,000 less transaction costs of US$4,153,000 in respect of the equity share issue. US$121,916,000 of this net increase has been included in the share premium account.

 

2. Accounting policies

 

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

 

Basis of preparation

 

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

 

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

 

Adoption of new and revised IFRSs

 

During the current year the Group adopted all the new and revised IFRSs that are relevant to its operations and are effective for accounting periods beginning on 1 January 2014.

 

(i) Standards and Interpretations adopted by the EU

 

New standards

 

•    IFRS 10 'Consolidated Financial Statements' (effective for annual periods beginning on or after 1 January 2014).

 

•    IFRS 12 'Disclosure of Interests in Other Entities' (effective for annual periods beginning on or after 1 January 2014).

 

Amendments

 

IFRS Interpretations Committee

 

•    IAS 27 (Revised): 'Consolidated and Separate Financial Statements' (effective for annual periods beginning on or after 1 January 2014).

 

•    Amendment to IAS32 'Offsetting Financial Assets and Financial Liabilities' (effective for annual periods beginning on or after 1 January 2014).

 

•    Amendment to IAS36 'Recoverable Amount - Disclosures for Non-Financial Assets' (effective for annual periods beginning on or after 1 January 2014).

 

•    Amendment to IAS39 'Financial Instruments: Recognition and Measurement', Novation of Derivatives and Continuation of Hedge Accounting (effective for annual periods beginning on or after 1 January 2014).

 

•    Transition Guidance for IFRS 10, 11 & 12 (effective for annual periods beginning on or after 1 January 2014).

 

A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 January 2015 and have not been applied in preparing these consolidated financial statements. Those which may be relevant to the Group are set out below. The Group does not plan to adopt these standards early. None of these are expected to have a significant effect on the consolidated annual financial statements of the Group except as noted below.

 

(ii) Standards and Interpretations not adopted by the EU

 

New standards

 

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

 

•    IFRS15 'Revenue from Contracts with Customers' (effective for annual periods beginning on or after 1 January 2017).

 

 

 

Amendments

 

•    Annual Improvements to IFRSs 2010-2012 Cycle (issued on 12 December 2013) (effective for annual periods beginning on or after 1 July 2014).

 

•    Annual Improvements to IFRSs 2011-2013 Cycle (issued on 12 December 2013) (effective for annual periods beginning on or after

 

1 July 2014).

 

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

 

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

 

•    IAS 27 (Amendments) 'Equity method in separate financial statements' (effective for annual periods beginning on or after 1 January 2016).

 

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

 

The Board of Directors expects that the adoption of these standards in future periods will not have a material effect on the Consolidated Financial Statements of the Group.

 

Basis of consolidation

 

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

 

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

 

Business combinations

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Revenue recognition

 

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

 

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

 

Finance income and finance expense

 

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

 

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

 

Foreign currency

 

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

 

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

 

 

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

 

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

 

Exchange differences arising, if any, are classified as equity and transferred to the Group's translation reserve. Such translation differences are recognised in the Statement of Comprehensive Income in the period in which the foreign operation is disposed of.

 

On the disposal of a foreign operation all of the exchange differences accumulated in equity in respect of that operation attributable to the owners of the Company are reclassified to the statement of comprehensive income.

 

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.

 

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.

 

Dividends

 

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

 

Property, plant and equipment

 

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

 

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

 

	Useful economic life
Furniture, fixtures and office equipment	10 years
Leasehold improvements	10 years
Motor vehicles	5 years
Computer equipment	3 years

 

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

 

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

 

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

 

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

 

Intangible assets

 

Internally-generated intangible assets - research and development expenditure

 

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

 

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

 

•      an asset is created that can be identified (such as software and new processes);
•      it is probable that the asset created will generate future economic benefits; and
•     the development cost of the asset can be measured reliably.

 

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

 

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

 

Externally acquired intangible assets

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

 

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

 

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

 

Amortisation

 

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

 

The principal annual rates used for this purpose, which are consistent with those of 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	5 years
IP technology	5 years

 

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

 

Financial instruments

 

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

 

Financial assets

 

(1) Classification

 

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

 

Loans and receivables

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

 

(2) Recognition and measurement

 

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

 

For financial assets measured at amortised cost, if in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through the statement of comprehensive income to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

 

Cash and cash equivalents

 

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

 

Trade receivables

 

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

 

Loans granted

 

Loans originated by the Group by providing money directly to the borrower are categorised as loans and are carried at amortised cost. This is defined as the fair value of cash consideration given to originate those loans as is determined by reference to market prices at origination date. All loans are recognised when cash is advanced to the borrower.

 

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

 

 

Financial liabilities

 

The Group has financial liabilities in the following category:

 

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

 

Derecognition of financial assets and liabilities

 

Financial assets

 

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

 

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

 

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

 

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

 

Financial liabilities

 

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

 

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

 

Impairment of assets

 

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

 

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

 

Share capital

 

Ordinary Shares are classified as equity.

 

Provisions

 

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

 

Share-based compensation

 

The Company operates equity-settled, share-based compensation plans, under which the entity receives services from employees as consideration for the Company's equity instruments (options). The fair value of the employee services received in exchange for the grant of the options is recognised as an expense. The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted, excluding the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options that are expected to vest.

 

At each reporting date, the entity revises its estimates of the number of options that are expected to vest. It recognises the impact of the revision of original estimates, if any, in the Statement of Comprehensive Income, with a corresponding adjustment to equity. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and retained earnings when the options are exercised.

 

Clients' deposits

 

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

 

3. Financial risk management

 

Financial risk factors

 

The Group is exposed to interest rate risk, credit risk, liquidity risk, currency risk, operational risk, compliance risk and capital risk management arising from the financial instruments it holds. The risk management policies employed by the Group to manage these risks are discussed below:

 

3.1 Market risk

 

Interest rate risk

 

Interest rate risk is the risk that the value of financial instruments will fluctuate due to changes in market interest rates. The Group's management monitors the interest rate fluctuations on a continuous basis and acts accordingly. The Group is exposed to interest rate risk to the extent that investment revenue earned on cash and cash equivalents is subject to fluctuations in interest rates. The Group's exposure to interest rate risk is limited as investments are held in liquid and short-term bank deposits. A sensitivity analysis has been performed wherein a 0.25% change in deposit interest rates offered would impact the profit before tax by $200,000. 0.25% has been used as a benchmark for sensitivity analysis as it reflects the maximum exposure in the coming year.

 

Currency risk

 

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

 

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

 

	Liabilities			Assets
	2014	2013		2014	2013
	US$000s	US$000s		US$000s	US$000s
Euro	2,381	1,627		26,161	7,852
United Kingdom Pound	1,573	58		16,329	1,793
New Israeli Shekel	3,760		2,402	8,866	485
Other	102	107		2,639	1,272
	7,816	4,194		53,995	11,402

 

Sensitivity analysis

 

A 10% strengthening of the United States Dollar against the following currencies at 31 December 2014 would have increased/(decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant. For a 10% weakening of the United States Dollar against the relevant currency, there would be an equal and opposite impact on the profit and other equity. 10% has been used as a benchmark for sensitivity analysis as it reflects the expected exposure in the coming year.

 

 

	Profit or loss
	2014	2013
	US$000s	US$000s
Euro	(2,378)	(623)
United Kingdom Pound	(1,476)	(174)
New Israeli Shekel	(511)	192
Other	(254)	(117)
	(4,619)	(722)

 

 

 

3.2 Credit risk

 

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

 

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

 

	2014	2013
	US$000s	US$000s
Trade and other receivables	5,751	7,220
Cash and cash equivalents	146,511	11,817
Other non-current receivables	1,072	1,147
	153,334	20,184

 

3.3 Liquidity risk

 

Liquidity risk is the risk that arises when the maturity of assets and liabilities does not match. An unmatched position potentially enhances profitability, but can also increase the risk of losses. The Group has procedures with the object of minimising such losses such as maintaining sufficient cash and other highly liquid current assets and by having available an adequate amount of committed credit facilities.

 

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

 

31 December 2014	Carrying amounts US$000s	Contractual cash flows US$000s	3 months or less US$000s	Between 3-12 months US$000s	Between 1-5 years US$000s	More than 5 years US$000s
Trade and other payables	7,706	7,706	7,706	-	-	-
	7,706	7,706	7,706	-	-	-
31 December 2013	Carrying amounts US$000s	Contractual cash flows US$000s	3 months or less US$000s	Between 3-12 months US$000s	Between 1-5 years US$000s	More than 5 years US$000s
Trade and other payables	4,783	4,783	4,783	-	-	-
	4,783	4,783	4,783	-	-	-

 

3.4 Operational risk

 

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

 

3.5 Compliance risk

 

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

 

3.6 Capital risk management

 

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

 

The capital structure of the Group consists of equity attributable to owners of the parent, comprising share capital, reserves and retained earnings as disclosed.

 

4. Critical accounting estimates and judgments

 

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

 

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

 

The areas requiring the use of estimates and critical judgements that may potentially have a significant impact on the Group's earnings and financial position are impairment of goodwill, impairment of intangible assets and property, plant and equipment, share-based payments, and income tax.

 

•    Impairment of goodwill

 

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

 

•    Income taxes

 

Significant judgment is required in determining the provision for income taxes. There are transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

 

5. Segmental analysis

 

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

 

Geographical analysis of revenue

 

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

 

	2014	2013
	US$000s	US$000s
Europe	76,940	43,158

 

During the year ended 31 December 2014 and 2013 there was one customer who individually accounted for more than 10 per cent of the total revenue of the Group. Revenue from these customers totalled $11,810,000 and $6,349,000 in each respective year.

 

Geographical analysis of non-current assets

 

	2014	2013
	US$000s	US$000s
British Virgin Islands	5,160	2,001
Europe	2,556	1,313
Asia	703	481
North America	430	430
	8,849	4,225

 

 

6. Operating Profit

 

 

	2014	2013
	US$000s	US$000s
Operating profit is stated after charging the following items:	483
Amortisation of intangible assets		129
Depreciation of property, plant and equipment	702	422
Share-based payment charge	1,428	4,682
Goodwill impairment charge	-	4,573
Costs in respect of terminated projects*	-	1,138
Costs in respect of IPO	3,834	-
Acquisition costs	422	-

 

*    Costs in respect of terminated projects represent development and marketing costs suffered by the Group to introduce new products and services. These projects have been terminated during 2013.

 

 

	2014	2013
	US$000s	US$000s
Director's compensation	224
Short-term benefits and bonuses of Directors before IPO		315
Short-term benefits of Directors since IPO	765	-
Share-based benefits of Executive Directors	429	62
Bonuses to Executive Directors since IPO	1,460	-
	2,878	377
	2014	2013
	US$000s	US$000s
Auditors' remuneration
Audit services	140
Parent company and Group audit		67
Audit of overseas subsidiaries	77	35
Non-audit services	565
Other fees and assurance services		10
Tax compliance	54	-
	836	112

 

7. Finance income and expense

 

 

	2014	2013
	US$000s	US$000s
Finance income	213
Interest received		726
	213	726
Finance expense	(1,627)
Foreign exchange differences		(548)
Bank fees	(105)	(65)
	(1,732)	(613)
Net finance (expense)/income	(1,519)	113

 

8. Tax Expense

 

	2014	2013
	US$000s	US$000s
Current income tax	1,860
Income tax on profits of subsidiary operations		1,767
	1,860	1,767
	2014	2013
	US$000s	US$000s
Profit before tax	16,295	436
Tax at effective rate in BVI	-	-
Higher rate of current income tax in overseas jurisdictions	1,860	1,767
Total tax charge	1,860	1,767

 

 

The parent company is domiciled in the British Virgin Islands and under the laws of that country is exempt from tax. The tax charge shown above arises from different tax rates applied to subsidiaries' jurisdictions.

 

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

 

There was no tax effect on Other Comprehensive Income in the current or prior year.

 

9. Earnings per share

	2014	2013
	US$	US$
Basic (cents)	10.44	(1.33)
Diluted (cents)	10.37	(1.33)

 

 

As at 31 December 2013, there were share options that could potentially dilute basic earnings per share in the future, but were not included in the calculation of diluted earnings per share because they were antidilutive for the year ended 31 December 2013.

 

	2014	2013
	US$000s	US$000s
Profit/(loss) for the year	14,435	(1,331)
	2014 Number	2013 Number
Denominator - basic
Weighted average number of equity shares	138,224,036	100,000,000
Denominator - diluted
Weighted average number of equity shares	138,224,036	100,000,000
Weighted average number of share options	933,852	3,814,630
Weighted average number of shares	139,157,888	103,814,630

 

 

Adjusted earnings per share

 

The adjusted earnings per share presents the profit for the year before charging non-cash items. The Directors believe that the adjusted profit represents more closely the underlying trading performance of the business.

 

	2014	2013
	US$	US$
Basic - adjusted (cents)	15.41	9.61
Diluted - adjusted (cents)	15.31	9.26
	2014	2013
	US$000s	US$000s
Profit/(loss) for the year	14,435	(1,331)
Depreciation and amortization	1,185	551
Goodwill impairment charge	-	4,573
Share-based payment charge	1,428	4,682
Costs in respect of terminated projects	-	1,138
Costs in respect of IPO	3,834	-
Acquisition costs	422	-
Adjusted profit for the year	21,304	9,613
	2014	2013
	Number	Number
Denominator - basic	138,224,036
Weighted average number of equity shares		100,000,000
Denominator - diluted	138,224,036
Weighted average number of equity shares		100,000,000
Weighted average number of share options	933,852	3,814,630
Weighted average number of shares	139,157,888	103,814,630

 

10. Dividends

 

 

	2014	2013
	US$000s	USD$000s
Dividends	4,779	35,000
	4,779	35,000

 

In September 2014 the Board of Directors approved the payment of an interim dividend of US$4,352,000 and in January 2014 the Board of Directors approved the payment of an interim dividend of US$427,000 (2013: US$35,000,000). Dividends declared in 2013 and in January 2014 were netted off with the receivable from the direct parent of the Group with no cash effect.

 

11. Property, plant and equipment

 

Cost	Leasehold  Improvements USD$000s	Motor vehicles USD$000s	Furniture and  office equipment USD$000s	Computer  equipment USD$000s		Total USD$000s
Balance at 31 December 2012	435	190	506	2,650		3,781
Additions	23	-	63	492		578
Disposals	(50)	-	(128)	(852)		(1,030)
Balance at 31 December 2013	408	190	441	2,290		3,329
Additions	221	92	85	1,591		1,989
Disposals	-	(18)	(1)	-		(19)
Balance at 31 December 2014	629	264	525	3,881		5,299
Depreciation
Balance at 31 December 2012	295	120	215	2,394		3,024
Charge for the year	22	25	58		317	422
On disposals	(9)	-	(74)	(838)		(921)
Balance at 31 December 2013	308	145	199	1,873		2,525
Charge for the year	24	33	42	603		702
On disposals	-	(18)	(1)	-		(19)
Balance at 31 December 2014	332	160	240	2,476		3,208
Net book amount
Balance at 31 December 2014	297	104	285	1,405		2,091
Balance at 31 December 2013	100	45	242	417		804

 

12. Intangible assets

 

 

	Goodwill USD$000s	Customer Contracts USD$000s	IP technology Licences and  domain USD$000s	Research and development USD$000s		Total USD$000s
Cost
Balance at 31 December 2012	4,573	-	2,598	-		7,171
Additions	-	-	174		485	659
Disposals	-	-	(487)		-	(487)
Impairment charge	(4,573)	-	-	-		(4,573)
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 2012	-	-	367	-		367
Amortisation for the year	-	-	129	-		129
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
Balance at 31 December 2013	-	-	1,789	485		2,274

 

Goodwill represents the premium paid to acquire investments by the Group which were purchased in 2010.

Goodwill is measured at cost less any accumulated impairment losses.

 

On 10 March 2014 the Company acquired the assets and liabilities of GTS Online Solutions Limited ('GTS'). GTS operated an online payment processing service and is controlled by a former board member of the Company who resigned in 2013. Under the terms of the transaction, the Company acquired the business agreements of GTS with clients, as well as the intellectual property of GTS. The cash consideration for the acquisition by the Company was US$792,000. Furthermore, the Company assumed net liabilities of GTS in the amount of US$453,000 and waived a receivable balance from GTS in the amount of US$422,000. Total consideration amounting to US$1,667,000 has been attributed to customer contracts intangible assets. Additionally, a further acquisition of customer contracts for a separate business was completed in the period with consideration of US$109,000. The Group has domain names and licences with an indefinite life with a carrying value of US$2,034,000 (2013: US$1,678,000). It is expected that these domain names and licenses with indefinite lives will be held for an indefinite period of time and are expected to generate economic benefits. There is no foreseeable limit on the period of time over which domain names and acquiring licences are expected to contribute to the cash flows of the Group. Management is committed to continue providing long term investment into these assets in order for them to continue to provide future economic benefits.

 

Impairment tests of goodwill

 

The recoverable amount of a Cash Generating Unit (CGU) is determined based on value-in-use calculations by discounting the future pre-tax cash flows generated from the continuing use of the unit and was based on the following key assumptions:

 

In 2013 the remaining Goodwill generated on the acquisition of the investments by the Group during 2010 was fully impaired, as the subsidiary was operating below expectations and the management of the Company believed that the Group would not be able to recover the carrying value of the Goodwill.

 

Cash flows were projected based on financial budgets approved by management covering 2014 to 2018. Revenue rates for 2015 and onwards had a growth of 5% per annum. For cost of sales a rate of 21% over revenue was applied in 2014, while in 2015 this was decreased to 20% and from 2016 and onwards to 18%.

 

A pre-tax discount rate of 10.24% was applied in determining the recoverable amount of the CGUs. The discount rate was estimated based on an industry average cost of capital and reflects specific risks relating to the relevant CGU.

 

13. Subsidiaries

 

The details of the Company's principal subsidiaries as at 31 December 2014 are as follows:

 

			Holding
Name	Country of incorporation	Principal activities	%
ELoad Solutions Limited	British Virgin Islands	Holding company	100
XT Commerce International Limited	Cyprus	Sales company	80
xt: Commerce GmbH	Austria	Sales company	80
SafeCharge Technologies Limited	British Virgin Islands	Sales company (Holding company in 2013)	100
(formerly named Donelon Holdings Limited)
SafeCharge (Israel) Limited	Israel	Development and support company	100
Webcharge Limited	Israel	Dormant	100
SafeCharge Limited	Cyprus	Payment Institution	100
SafeCharge (UK) Limited	United Kingdom	Marketing and support company (dormant in 2013)	100
SafeCharge (Bulgaria) EOOD	Bulgaria	Development and support company	100
SC Services GmbH	Germany	Ceased activities 31 December 2013	100

 

The subsidiaries Kimahri Software Inc and Icona Services Limited dissolved during the year ended 31 December 2013.

 

XT Commerce International Limited and xt:Commerce GmbH are both loss-making entities. All losses of these entities will be wholly suffered by the Group and therefore none of these losses have been transferred to non-controlling interests and therefore separate disclosure in respect of NCI has not been presented in the Statement of Comprehensive Income or Statement of Financial Position.

 

14. Trade and other receivables

 

 

	2014	2013
	US$000s	US$000s
Trade receivables	4,213	5,121
Receivables from related companies (note 22)	603	444
Advance payments for the acquisition of business	-	749
Other receivables	935	906
	5,751	7,220

 

On 20 June 2013, the Group signed an agreement to acquire a business controlled by a former Board member who resigned in 2013. The Group made a payment in advance of €580,000 (US$749,000) as part of this agreement.

 

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

 

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

 

15. Other non-current receivables

 

 

	2014	2013
	US$000s	US$000s
Deposits	1,072	1,147

 

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

 

16. Cash and cash equivalents

 

Cash balances are analysed as follows:

 

	2014	2013
	US$000s	US$000s
Cash and cash equivalents	142,939	8,430
Bank deposits	3,572	3,387
	146,511	11,817

 

The Group holds cash and cash equivalents amounting to US$66,286,000 as at 31 December 2014 (2013: US$48,664,000) on behalf of clients.

 

The amounts represent cash received on transactions processed by the Group which is then paid on to its clients. In substance, the Group's management consider these transactions do not entitle the Group to an asset and have therefore not recorded the resulting asset or liability to clients in its statement of financial position.

 

At 31 December 2014, the Group had contingent liabilities amounting to US$3,387,000 (2013: US$3,243,000) in respect of guarantees issued by banks on behalf of a subsidiary in favour of third parties in the ordinary course of business. These guarantees are secured by bank deposits of that subsidiary of this amount. These bank deposits mature in June 2015 and are subject to a fixed rate of interest of 0.18%. Termination of the deposit as at 31 December 2014 will incur a penalty of US$2,000 payable to the bank in respect of this deposit and accordingly it is treated as a cash equivalent.

 

Further to the above, the Group has a rent bank guarantee of US$144,000 (2013: US$81,000) and a credit card guarantee of US$41,000 (2013: US$63,000).

 

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

 

17. Share capital

 

 

	2014		2013
	Number of	2014	Number	2013
	shares	US$000s	of shares	US$000s
Authorised	unlimited	10
Ordinary Shares of US$0.0001 each ***			300,000,000	10
Issued and fully paid	100,000,000	10
Balance at 1 January			100,000,000	10
Issue of shares	46,759,260	5	-	-
Exercise of options	4,449,881	*	-	-
Balance at 31 December	151,209,141	15	100,000,000	10

 

*     represents amount less than one thousand US$

 

**    comparative balances have been adjusted to reflect split of shares (see note below).

 

***  Nominal par value in 2013 was $0.001 and it was adjusted to $0.0001 due to the share split in 2014.

 

By a resolution passed in a meeting of the Board of Directors on 20 March 2014 and a written resolution of the shareholders of the Company passed on 24 March 2014, it was resolved that the authorised share capital of the Company be altered to permit the Company to issue an unlimited number of Ordinary Shares and the Ordinary Shares of US$0.001 be each subdivided into ten Ordinary Shares of US$0.0001 each. This resulted in 10,000,000 shares converting into 100,000,000 shares as of 31 December 2013.

 

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

 

 

The movement in share options was as follows:

 

	2014
	Weighted			2013
	average exercise			Weighted average
	price		2014	exercise price *	2013
	US$	Number		US$	Number*
Outstanding at the beginning of the year	0.48	5,530,830		0.69	3,392,230
Granted during the year	3.11	9,370,370		0.14	2,700,000
Forfeited during the year	1.00		(29,682)	0.11	(561,400)
Exercised during the year	0.28	(4,449,881)		-	-
Outstanding at the end of the year	2.93	10,421,637		0.48	5,530,830

 

*  comparative balances have been adjusted to reflect split of shares (see note above).

 

The weighted average remaining contractual life of share options outstanding at 31 December 2014 equals to 9.29 years (2013: 8.90 years). The exercise price of the options outstanding at 31 December 2014 ranged between US$1 and US$3.65 (2013*: US$Nil and US$1.50).

 

Of the total number of options outstanding at 31 December 2014, 974,362 with a weighted average exercise price of US$1.34 (2013*: 2,540,920 with weighted average price of US$0.30) had vested and were exercisable.

 

The share-based payment charge in the statement of comprehensive income amounts to US$1,428,000 (2013: US$4,682,000).

 

During the year ended 31 December 2013, the vesting period of 3,000,000 options granted to the Group's employees, changed from 2 years to 3 months.

 

The total value of share options granted is calculated using the Black Scholes model. The fair value determined at the grant date is expensed over the vesting period of the options. The calculation is based on:

 

	2014	2013
Expected volatility	18%	25%
Weighted average exercise price	US$2.93	US$0.48
Risk-free interest rate ranging	0.25% to 0.605%	0.25% to 0.605%
Contractual life	10 years	10 years
Dividend growth rate	3%	No dividends are expected

 

The expected volatility of the options are based on the implied volatility from exchange traded options of the Company's shares, the historical volatility of the share price over the most recent period that corresponds with the expected life of the option, and the historical or implied volatility of similar entities. The expected life of the option is based on the maturity date and is not necessarily indicative of exercise pattern that may occur. The options include a service condition as the individuals participating in the plan must be employed by the company for a certain period of time in order to earn the right to exercise the share options. During 2014, the Company's shares were listed on the AIM of the London Stock Exchange. Therefore, the Group updated the expected volatility to 18% based on the share prices of the Company and other comparable companies. A sensitivity analysis has been performed based on other comparable companies wherein a 3% change in the expected volatility during 2014 would impact the statement of comprehensive income by US$154,000. As of reporting date the movement on the volatility is not expected to have a significant impact on the share options valuation, and the share options valuation will be reassessed at each reporting date.

 

18. Reserves

 

The following describes the nature and purpose of each reserve within owner's equity:

 

Share premium

 

Related to the issuance of shares at a premium.

 

Capital reserve

 

Relates to capital introduced by shareholders for assets contributed to the Group for no consideration and without the issue of shares.

 

Share options reserve

 

The reserve was created to record the cumulative amount recognised in respect of share-based payments.

 

Translation reserve

 

Exchange differences relating to the translation of the net assets of the Group's foreign operations from their functional currencies to the Group's presentation currency (i.e. United States Dollars) are recognised directly in other comprehensive income and accumulated in the foreign currency translation reserve. Exchange differences previously accumulated in the foreign currency translation reserve are reclassified to the statement of comprehensive income on the disposal or partial disposal of the foreign operation.

Retained earnings

 

Accumulated profit and loss, less dividends.

 

19. Provisions for other liabilities and charges

 

	Severance  pay US$000s
Balance at 31 December 2012	85
Charged to Statement of Comprehensive Income	26
Balance at 31 December 2013	111
Charged to Statement of Comprehensive Income	4
Balance at 31 December 2014	115

 

20. Trade and other payables

 

 

 

	2014 US$000s	2013 US$000s
Trade payables	708	362
Other payables	6,998	4,421
	7,706	4,783

 

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

 

21. Taxes payable

 

 

		2014 US$000s	2013 US$000s
	Income tax and other taxes	2,092	1,437
		2,092	1,437

 

22. Related-party transactions

 

The Company is controlled by Northenstar Investments Limited, the immediate parent company, which is incorporated in the British Virgin Islands. The ultimate parent company and controlling party is the Goodfidelity Trust, established under the laws of the Isle of Man. Mr. Teddy Sagi is the sole ultimate beneficiary of the Goodfidelity Trust.

 

The following transactions were carried out with related parties:

 

22.1 Related-party transactions

	2014	2013
	US$000s	US$000s
Salaries, consultancy fees and bonuses to Directors before IPO	(224)	(315)
Salaries, consultancy fees and bonuses to Directors since IPO	(2,225)	-
Rent expenses paid to Executive Directors	-	(46)
Other expenses paid to Executive Directors	-	(28)
Consultancy services received from related party by virtue of common significant shareholder	(56)	-
Revenue from services provided to companies related by virtue of common significant shareholder	6,882	3,518
Share-based payments expense related to Executive Directors	(429)	(62)
	3,948	3,067

 

The details of key management compensation (being the remuneration of the Directors) are set out in note 6.

 

22.2 Receivables from related parties (note 14)		2014	2013
Name	Nature of transactions
		US$000s	US$000s
Parent company	Sale of intangible assets	-	427
Related party by virtue of common significant shareholder	Provision of consulting services	603	17
		603	444
Related party by virtue of common significant shareholder	Trade receivable	-	35
		603	479
22.3 Client monies held on behalf of related parties		2014	2013
Name	Nature of transactions
		US$000s	US$000s
Related parties by virtue of common significant shareholder	Trade payables to clients	5,561	4,670
		5,561	4,670

 

The above balances are not recognised in the statement of financial position since they relate to client monies held on their behalf. All related party transactions are conducted on an arm's length terms and on a normal commercial basis.

 

 

23. Contingent liabilities

 

 

The Group had guarantees as at 31 December 2014 and 31 December 2013 (see note 16). The Group had no other contingent liabilities.

 

24. Commitments

 

 

Operating lease commitments

 

The Group has entered into operating leases with future aggregate minimum lease payments under non-cancellable operating leases of US$1,078,000 (2013: US$929,000) due in less than one year and US$714,000 (2013: US$1,231,000) due between one and five years.

 

25. Events after the reporting period

 

 

In January 2015, the Group completed the acquisition of all the shares of 3V Transaction Services Limited for a consideration of US$17.6 million (EUR 14.5 million), of which EUR 11.6 million was paid on completion, with the remaining balance payable over three years. 3V Transaction Services Limited is a technology provider which specialises in tools for issuing, processing and management of pre-paid card programmes.

 

Furthermore, in January 2015 the Group completed the acquisition of all the shares of CreditGuard Limited for an initial cash consideration of US$8 million (NIS 31.4 million) and deferred consideration capped at US$0.4 million (NIS 1.7 million). CreditGuard Limited is a payment service provider for a wide range of businesses.

 

During 2014, US$422,000 of acquisition costs was incurred in relation to these transactions, including due diligence costs.

 

The fair value of the identifiable assets and liabilities of 3V Transaction Services Limited and CreditGuard Limited has not yet been assessed.

 

There were no other material events after the reporting period, which have a bearing on the understanding of the consolidated financial statements.