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5 April 2017

Mi-Pay Group plc

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

Final Results

Mi-Pay Group plc (AIM: MPAY), the leading provider of mobile payment solutions to Tier 1 Mobile Network Operators and Mobile Virtual Network Operators, presents its final results for the 12 months ended 31 December 2016.

Financial Highlights

Operational Highlights

Seamus Keating, Chairman of Mi-Pay Group plc commented on the results:

"Mi-Pay has continued to make steady progress throughout 2016 as our market leading proposition becomes ever more relevant to Mobile Network Operators. We are pleased to see increased rates of migration to digital channels and we have continued to develop our growing suite of solutions.

The foundations we laid in 2015 to improve our operational efficiencies have continued and we are pleased to see our profit margin improve further. We plan to invest further in our core areas throughout 2017 and remain focused on aiding our clients in their strategy for digital transformation and moving towards profitability."

Both the full Annual Report and Financial Statements and the notice of AGM, convening a general meeting of the Company, to be held at 30 Crown Place, London, EC2A 4ES on the 15th May 2017 at 11 a.m. are available on our website at www.mi-pay.com/investor-document-centre/ and will be posted to Shareholders shortly.

For further information please contact:

About Mi-Pay Group

Founded in 2003, Mi-Pay Group delivers fully outsourced online and related payment solutions to digital ecommerce clients, primarily in the mobile sector. Its product offering provides the infrastructure to enable pre-paid mobile devices to be topped up via a variety of channels such as websites, mobile applications and social media applications and customers include Mobile Network Operators (MNOs) and Mobile Virtual Network Operators (MNVOs). Mi-Pay sells, integrates and operates its products and solutions on a global basis. For further information, please visit www.Mi-Pay.com or contact details as shown above.

Chairman's Statement

During 2016, Mi-Pay has continued to deliver improvements in its trading performance supported by changing trends in the global market. This increases service delivery complexity and the risk for mobile operators. This makes the Mi-Pay proposition increasingly relevant to our clients and the market in which we operate:

Mi-Pay therefore dedicates its resources to answer these challenges for our clients as they look to digitally transform their businesses. Our solutions have delivered a 29% increase in payments processed to £83.4 million during the year (2015: £64.7 million). We have seen consumers naturally migrating to the digital channels from the retail environment and we continue to roll out more solutions to our clients and deliver more market leading digital payment solutions to improve the on-line and on-device experience.

There is an increasing level of consolidation within the European mobile operator community which creates both opportunities for growth and risks to our existing revenues as their customer bases are merged and they consolidate their digital payment solutions. We believe our fully managed solution is well placed to be competitive in these opportunities.

Crucially, we have invested to ensure our solution provides the highest level of security, risk management and stability to our clients. As a consequence of our growth in volumes and investment we continue to see improved operational efficiencies, building on those achieved in 2015:

This growth enabled our cash outflow during the year to reduce to £0.3 million (2015: £0.8 million), when excluding the movement in client related funds. This included a £0.1 million exceptional expenditure as we reviewed opportunities to better utilise our scalable platform through potential mergers and acquisitions and we expect to continue to review opportunities in 2017. Importantly, in the 6-month period to 31 December 2016 there was no net cash outflow.

Outlook

We will continue to invest in the following core areas in 2017 - data security, payment security, best in class e-commerce payment solutions for digital products and channels to drive increased revenue and customer retention. We will remain focused on assisting our clients to transfer their existing customers from paper to digital, increase their revenues, reduce risk and churn and enhance their margins as well as deal with the challenges of market consolidation, which offers Mi-Pay larger growth opportunities but will take longer to deliver as Operators integrate their platforms.

In addition, our proven ability to manage payment data security via our secure vault solution and deliver dedicated payment fraud management solutions will provide wider revenue opportunities and whilst market development remains slow, we will continue our focus on the long-term opportunities including South East Asia.

Our financial performance improved significantly through 2016 and we continue to progress towards profitability. This is being driven by continuing growth in transaction volumes in early 2017, strong gross margins and a healthy cash position.

On behalf of the board I would like to thank all our employees, clients, investors and partners who have enabled Mi-Pay to deliver on its core targets and continue to support our growth.

Seamus Keating

Non-Executive Chairman

4 April 2017

CEO Review of Operations

Revenue

During 2014 and 2015 we focused on the investment of our infrastructure, new technology solutions and delivering long-term financial stability and we are now seeing the benefits of this. In 2016 we delivered a 29% increase in payment transaction value processed to £83.4 million (2015: £64.7 million) and a 66% increase since 2014 (2014: £50.1 million). This increased our core annuity based Transaction Services Revenues by 14% to £2.6 million from £2.3 million and was delivered primarily from our existing European clients who continue to deliver 90% of our revenues. The lower percentage revenue growth versus payment transaction value processed growth was due to a reducing average commission per transaction as we deliver more competitive solutions to our growing clients and a £0.2 million reduction in revenue over the comparative periods due to changes in the way we trade with a major client, who insourced the lower value payment processing element of our service that we traditionally charge at cost. This enabled us to re-sign with a two-year contract extension. Adjusting for this effect our underlying growth was 23%. Whilst both changes impacted our revenue growth, they had no negative impact on our gross profits demonstrating our ability to flexibly adapt our commercial model to our customers' requirements without impacting our performance levels.

We still expect our opportunities in Asia to deliver over the longer term, however, they remain slow in growing at this stage. Our Professional Service Revenues at £0.7 million remained consistent with 2015 following the continued implementation of new services to our clients and further in-house development of our tokenised card vault solution. Total revenues rose to £3.3 million from £3.0 million in 2015.

We deliver two core revenue streams from our clients:

Underlying Revenue Trends

Our focus is on our solutions in these areas. We continue to bring the best on-device payment solutions to the operator community, delivering Amazon Payments in 2016 alongside our existing PayPal relationship and have developed enhanced solutions in our cyber security and payment fraud management systems to accommodate these payment solutions. The ability to utilise device identification and be less reliant on cardholder data to make acceptance fraud based decisions is an increasing requirement for success.

Key Performance Metrics & Operational Investments

We will deliver long-term success from providing flexible, secure, risk free solutions targeted at increasing customer expenditure, enhancing customer retention whilst removing our clients' risks and future proofing their payment requirements.

Our major contracts indemnify our clients from fraudulent transactions and only charge for successfully completed ones, an offering more strategically aligned with our clients than that of the general payments market. As such it is critical that we deliver world class payment fraud management and payment transaction optimisation rates to both protect our gross profit margins but also deliver real business value to our clients and their customers. It is here that we target our investments.

We continued to see high levels of transaction success rates at 88%, improved against 2015 (86%). Critically, we delivered a 33% reduction in our payment fraud levels to 0.06% of transaction value which we see as market leading. This has enabled us to increase gross profits to £2.1 million (2015: £1.7 million) with our gross margin increasing to 64% (2015: 56%). This allows us commercial flexibility with our clients to support their needs and drive larger volumes.

Our market remains competitive and we have seen our average commission per transaction reduce from 4.3% in 2013 to 3.1% in 2016 as we offer better commercial terms to our clients as their volumes grow. We have successfully offset this reduction at margin level due to the ability to increase average expenditure per consumer, improve the percentage of successful transactions whilst reducing the number of fraudulent ones and driving a reduced cost of payment with our payment partners. It is pleasing to therefore see our increase in gross margins and profits whilst remaining commercially competitive.

The Group also considers its revenues, gross profit margins and administration expenses as key performance metrics and these are reviewed in the Financial Review.

Infrastructure Investments

Following our improvement in the efficiency of our delivery infrastructure in 2014 and 2015 we have looked to focus more on increasing the market relevance of our solutions and as such have increased our research and development expenditure, excluding tax credits received, to £0.9 million in 2016 from £0.6 million in 2015, with this increase offset by reductions in our general and administration costs. Our key areas of focus are:

This investment is primarily delivered by our own development team enabling us to retain intellectual

property and ensure the solution is applicable across all of our customers.

All of our investments in the growth of revenues, new markets, operational efficiency and infrastructures are reliant on the support and dedication of our employees. Their experience and dedication remains our most valuable resource and we would particularly like to thank them for their efforts, support and commitment in delivering these challenging projects successfully, which has created the platform and environment for success.

Michael Dickerson

Chief Executive Officer

4 April 2017

Financial Review

The 2016 financial performance reflects the expected progression from our investments in 2014 and 2015. We have increased revenues, delivered further improvements to our commercial trading model and infrastructure which has resulted in increased gross profit margins, reduced costs, and subsequently reduced losses for the year.

Revenues and gross profits

We continued to see strong growth in our payment transaction value processed, the core driver for our revenue. We processed 6.2 million transactions which generated £83.4 million of customers' payments. (2015: 5.2 million transactions and £64.7 million of customers' payments) with this growth being driven primarily from our existing client relationships. 80% of our top 10 customers increased their payment transaction values processed as their customers migrate to the digital channel.

Total revenue was £3.3 million for the year ended 31 December 2016, in line with management expectations and 9% ahead of the prior year.

For Transaction Services Revenue the year-on-year growth was 14% (2015: 11%). However, this was achieved despite the impact of a £0.2 million reduction in revenue over the comparative period due to changes in the way we trade with a major client who insourced the lower value payment processing element of our service that we traditionally charge at cost, making no impact on our gross profits. When adjusting for this, Transactional Services revenue growth for the year was 23%.

Professional Services Revenues were in line with the prior year at £0.7 million (2015: £0.7 million) as we developed new services to our clients and we continued to deliver chargeable enhancements to our Card Vault Solution during the year, which accounted for 59% of this revenue stream. Whilst Professional Services Revenues achieved a higher gross profit margin (usually in excess of 70%), they are primarily non-recurring one-off project based sales for payments for existing clients and over the longer term we expect this part of the business to reduce as our Transaction Services Revenues grow.

Our gross margins have remained strong and we have delivered another year-on-year improvement. This remains a key focus for us and demonstrates an ability to drive an efficient delivery model. We expect these to be consistent across geographies, however, our revenue segments drive differing gross profit margins and as such our revenue mix impacts our overall performance. This has not materially changed from 2015.

For the year ended 31 December 2016 our gross profits increased to £2.1 million (2015: £1.7 million), with gross profit margins increasing to 64% (2015: 56%). Since 2014, we have seen our gross margins increase from 45% despite the fact that our average commission rate across all our customers for Transaction Services Revenue has reduced from 4.1% to 3.1% over the same period and as such we have demonstrated an ability to maintain and grow margins against commercial pressures in the mature European market. Our core drivers for this increase are:

Commercial pressures remain and we expect to see continued focus on delivering improved terms to our clients as their volumes grow, however, we remain confident that our solution is efficient, commercially flexible and our added value in outsourcing fraud risk, cyber security services and customer relationship solutions will enable us to continue to add value to our clients above and beyond traditional payment processing.

We delivered a £1.0 million reduction to operating losses during the year, reducing to £0.4 million from £1.4 million in 2015.

2016 has therefore delivered another positive period of trading improvement for Mi-Pay at all levels within the Group and one in which we have increased focus on the development of our solutions.

We remain focused on delivering positive cash flow to the Group and have continued to progress over 2016. For the 6 months' period to December 2016, when, excluding depreciation, unpaid deferred Director salaries and non recurring expenditure on merger and acquisition activities, the Group delivered an underlying profit and this is reflected in our cash flows.

Our core business model is based upon monthly growth, high margin, annuity based revenue streams in combination with low working capital and capital investment requirements.

 Cash flow, assets and liabilities

The Group ended the year with £3.5 million in cash and cash equivalents (2015: £3.5 million), noting that £2.4 million of this balance related to the operation of managing client payments. Within our cash balance:

During the period, we recovered £0.3 million in Research and Development tax credits (2015: £0.3 million) directly attributable to the development costs of the group and we expect to deliver in excess of £0.2 million in 2017. In the 6-month period to 31 December 2016 our cash outflow excluding client related cash was neutral.

The Group had limited capital expenditure exposure at less than £0.1 million and does not meet the IAS 38 criteria to enable it to capitalise its internal development costs. The Group continues to service a finance lease related to the five-year license arrangement for our core transaction processing platform, effective from 28 June 2013 of which £0.1 million remained outstanding as at 31 December 2016.

Excluding the increase in client funds, there were no other material movements in working capital with the Group being well protected from risk in this area as its debtor fees relating to its core Transaction Services Revenues are deducted at source before net payments are made to clients. Trade and other payables increased by £0.6 million due to the growth in amounts due to our clients for payments received which is offset by the increased cash holding. The Group has no external borrowings.

John Beale

Chief Financial Officer, Company Secretary

4 April 2017

Consolidated Statement of Comprehensive Income

for the year ended 31 December 2016

Consolidated Statement of Financial Position

For the year ended 31 December 2016

Consolidated Statement of Cash Flows

For the year ended 31 December 2016