Half Yearly Report

RNS Number : 0420Z
Datacash Group PLC
15 September 2009
 





DATACASH GROUP PLC ('DataCash' or 'the Company')


INTERIM RESULTS

FOR THE SIX MONTHS

ENDED 30 JUNE 2009



15th September 2009 


DataCash Group Plc: DATA / Index: AIM / Sector: Support Services


DataCash Group Plc ('the Company')


INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2009



The Board of DataCash Group Plc, the payment service provider, is pleased to announce its half yearly results for the six months to 30 June 2009


Overview:

  • Revenues increased to £18.0m (June 2008: £12.2m)

  • Adjusted pre-tax profits*, increased to £7.53m (June 2008: £6.15m)

  • Adjusted* earnings per share increased to 5.9p (June 2008: 4.0p)

  • Cash balances of £13.8m (June 2008: £19.1m) equivalent to 14.9p per share, after acquisition payments of £15.7m for The 3rd Man, ACK, ExperCash and EuroCommerce

  • Interim dividend increased by 25% to 5.0p (June 2008: 4.0p)


* Before goodwill amortisation and impairment and foreign exchange gains on deferred consideration.



Commenting on the results, Ashley Head, Chairman of DataCash said:

"DataCash remains in a good position. We have annuity income from a growing base of largely internet merchant accounts. We have a strong balance sheet and cash generation. We have every confidence that we will continue to deliver good growth in revenue, profits and dividends."

 

- END -


For further information please contact:



DataCash Group PLC


Carly Smith                              Tel: +44 (0)20 7421 9283
Marketing & Communications
       Email: Carly.Smith@datacash.com



David Bailey                             Tel:+ 44 (0)20 7421 8451

Non-Executive Deputy Chairman  Mob:+44 (0)7836 258 558


Paul Burton                              Tel:+44 (0)20 7421 8453

Finance Director                        E-mail: Paul.Burton@datacash.com



Website: www.datacash.com       General enquiries Tel: +44 (0)870 727 4761




About DataCash  


DataCash Group Plc (AIM: DATA), a market leading provider of payment processing solutions, provides merchants with a single interface that allows them to process secure payments, both on and offline, anywhere in the world.


DataCash also provides a range of value added services with its fraud and Risk Management solutions supporting AVS/CV2, 3-D Secure (Verified by Visa and MasterCard Secure Code) together with traditional rules-based screening.


DataCash provides first-class service reliability at a fraction of the price of an in-house solution, servicing clients within the retail, travel, telecommunications and gaming sectors.



DataCash Group Plc

Interim Report & Accounts for the six months ended 30 June 2009


Chairman's Statement


The Board of DataCash is pleased to report on another very satisfactory performance for the six month period to 30 June 2009. Headline revenues increased by 47% to £18m (2008 £12.2m) and like-for-like revenues (excluding the acquisitions of ACK Limited, ExperCash GmbH and The 3rd Man plc) increased by 19%. Adjusted Group pre-tax profit (before amortisation and impairment of goodwill and foreign exchange gains on deferred consideration payments) rose by 22% to £7.53m and Adjusted earnings per share grew by 46% to 5.9p per share. The Board is pleased to announce an increase of 25% in the interim dividend to 0.5p per share (2008 0.4p) which will be paid on 20 November 2009 to those shareholders on the register on 23 October 2009. The Group remains confident of future growth driven from e-commerce, new products and international expansion.


In spite of the economic background, e-commerce continued to have strong growth during the period, and the Group saw like-for-like transaction year-on-year growth of approximately 30%. Gaming transactions have seen slower year-on-year growth, as reported by a number of our customers, partly because of the lack of a major summer football event this year. On-line transactions for our retailing customers have shown excellent progression, in spite of, and perhaps partly because of, the economic recession. 

 

A feature of the recession has been to increase the pricing pressures on the basic transaction processing business. We continue to migrate our customers towards higher value added services, products and into long-term contracts, which offsets some of the impact of lower transaction fees. 


As previously announced, the margins on several of our recent acquisitions, ACK, ExperCash and The 3rd Man are inherently lower than the margins on our historic business mix. These acquisitions represent approximately 9% of the turnover in the first half of 2009.


EuroCommerce, our business focussed on the airline and travel markets, has continued to grow well, albeit still loss-making in the first half. Although the airline market has been difficult, our innovative risk management product has resulted in new customer wins and strong transaction growth. We remain confident that this business will become profitable during the second half of the year, albeit at lower levels than previously forecast. 

The Cardholder Present business has been adversely affected by delays in decision making by some retail prospects, and this is expected to impact on the integration and licensing revenues that we anticipated for the second half.  


We have a substantial support operation in Cape Town and the strength of the South African Rand has had an impact on our costs. The Group is working hard to mitigate the effect on the overall costs, while continuing to invest to support the growth of the business. 


The Group continues to generate cash, and as at 30 June, cash balances were £13.8m (£19.1m as at 30 June 2008), approximately 14.9p a share. Since June 2008 about £15.7m has been spent on strategic acquisitions and investments, £2.7m in dividends, and £5.1m in corporation tax.


Interest income on our cash holdings has fallen significantly since last year, and is likely to remain lower than previously anticipated until interest rates rise. The Group continues to explore acquisition opportunities with a view to expanding both markets and internationally.


The slowdown in gaming activity and the delayed take up of Card holder present projects will reduce revenue growth in the second half compared to previous expectations, although we expect margins to be higher thanks to an improved product mix. DataCash remains in a good position. We have annuity income from a growing base of largely internet merchant accounts. We have a strong balance sheet and cash generation. We have every confidence that we will continue to deliver good growth in revenue, profits and dividends.


Ashley Head
Chairman

15th September 2009


  

DataCash Group plc

Unaudited Condensed Consolidated Statement of Comprehensive Income

For the 6 months ended 30 June 2009


 

 
6 months ended
30 June
2009
£’000
6 months ended
30 June
2008
£’000
 
Year ended
31 Dec
2008
£’000
 
 
 
 
Revenue
18,009
12,228
28,037
 
 
 
 
Administrative expenses
(10, 677)
(6,728)
(14,205)
 
 
 
 
Operating profit before impairment and amortisation
7,332
5,500
13,832
 
 
 
 
Impairment
(1,569)
(1,010)
(2,773)
Amortisation
(3,567)
(1,973)
(5,240)
Total operating profit
2,196
2,517
5,819
 
 
 
 
Finance costs (notional interest on deferred consideration)
(43)
(154)
(280)
 
 
 
 
Finance income
224
739
968
 
 
 
 
Foreign exchange gains/(losses) on deferred consideration
 
 
 
Unsettled gain/(loss)
46
-
(356)
Settled gain/(loss)
236
-
(722)
 
 
 
 
Share of profit of joint ventures
12
63
72
 
 
 
 
Profit before taxation
2,671
3,165
5,501
 
 
 
 
Taxation
(1,187)
(1,625)
(2,861)
 
 
 
 
Profit on ordinary activities after taxation
1,484
1,540
2,640
 
 
 
 
Other comprehensive income:
 
 
 
 
 
 
 
Exchange differences on translation of overseas operations
(1,983)
(71)
4,330
 
 
 
 
Total comprehensive income for the period
(499)
1,469
6,970
 
 
 
 
Attributable to equity holders of Datacash Group Plc
1,472
1,540
2,640
Attributable to the minority interest
12
-
-
 
1,484
1,540
2,640
 
 
 
 
Basic earnings per share
1.61 p
1.68 p
2.89 p
Diluted earnings per share
1.60 p
1.67 p
2.86 p

 

DataCash Group plc

Unaudited Condensed Consolidated Balance Sheet

As at 30 June 2009


 
As at
30 June
2009
£’000
As at
30 June
2008
£’000
As at
31 Dec
2008
£’000
Non current assets
 
 
 
Intangible assets
13,526
13,494
13,544
Goodwill
54,512
52,095
57,672
Property, plant and equipment
2,231
2,357
2,357
Investments in joint ventures
99
73
87
Investments
3,902
-
3,902
Deferred tax assets
-
108
-
 
 74,270
68,127
77,562
Current assets
 
 
 
Trade and other receivables
3,910
5,247
5,161
Cash and cash equivalents
13,785
19,110
16,641
 
17,695
24,357
21,802
 
 
 
 
Total assets
91,965
92,484
99,364
 
 
 
 
Current liabilities
 
 
 
Trade and other payables
(3,348)
(3,070)
(4,555)
Deferred consideration
Current tax liabilities
(1,617)
(1,587)
(2,478)
(2,222)
(4,280)
(2,304)
 
(6,552)
(7,770)
(11,139)
Net current assets
 11,143
16,587
10,663
 
 
 
 
Non-current liabilities
 
 
 
Deferred tax liability
( 3,110)
(3,298)
(3,196)
Deferred consideration
-
(2,203)
(1,706)
Other liabilities
(44)
(117)
(32)
 
( 3,154)
(5,618)
(4,934)
 
 
 
 
Total liabilities
(9,706)
(13,388)
(16,073)
 
 
 
 
Net assets
82,259
79,096
83,291
 
 
 
 
Capital and reserves
 
 
 
Share capital
923
921
923
Share premium
10,986
10,757
10,986
Own shares
(1,512)
(1,268)
(1,512)
Foreign currency translation reserve
2,052
(295)
4,035
Share option reserve
1,356
1,278
1,365
Merger reserve
63,603
63,603
63,603
Retained earnings
4,078
4,100
3,891
 
 
 
 
Attributable to equity holders of Datacash 
Group Plc
81,486
79,096
83,291
 
 
 
 
Attributable to the minority interest
773
-
-
Total equity
82,259
79,096
83,291

  

DataCash Group plc

Unaudited Condensed Consolidated Cash Flow Statement

For the 6 months ended 30 June 2009



 
6 months
ended
30 June 2009
£’000
6 months ended
30 June 2008
£’000
 
 Year ended
31 Dec 2008
£’000
 
 
 
 
Net cash inflow from operations
7,992
6,272
16,167
 
 
 
 
Interest received
 224
739
968
Tax paid
(3,068)
(1,447)
(3,502)
 
 
 
 
Net cash inflow from operating activities
5,148
5,563
13,633
 
 
 
 
Cash flow from investing activities
 
 
 
Acquisition of subsidiary (net of cash)
(2,378)
(1,680)
(4,075)
Payment of deferred consideration
(3,928)
-
(3,101)
Investments
-
-
(3,902)
Purchase of property plant and equipment
(386)
(892)
(1,253)
Purchase of intangible fixed assets
(231)
(134)
(445)
 
 
 
 
Net cash outflow from investing activities
(6,923)
(2,706)
(12,776)
 
 
 
 
Cash flow from financing activities
 
 
 
Net proceeds from issue of share capital
-
119
350
Purchase of own shares
-
(583)
(827)
Equity dividends paid
(1,285)
-
(1,372)
 
 
 
 
Net cash outflow from financing activities
(1,285)
(464)
(1,849)
 
 
 
 
Net Cash (outflow)/inflow
(3,060)
2,394
(992)
 
 
 
 
Cash and cash equivalents at start of period
16,641
16,716
17,942
 
 
 
 
Exchange gains/(losses) on cash and cash equivalents
204
-
(309)
 
 
 
 
Cash and cash equivalents at the end of the period
 13,785
19,110
16,641


          DataCash Group plc

          Unaudited Condensed Consolidated Statement of Changes in Equity

           For the 6 months ended 30 June 2009 



Share Capital

Share Premium

Foreign Currency Translation Reserve

Share Option Reserve

Own Shares

Merger Reserve

Retained Earnings

Total 

Minority Interest

Total Equity


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000












At 1 January 2009 

923

10,986

4,035

1,365

(1,512)

63,603

3,891

83,291

-

83,291












Exchange differences on translation of overseas operations

-

-

(1,983)

-

-

-

-

(1,983)

-

(1,983)

Net income and expense recognised directly in equity

-

-

(1,983)

-

-

-

-

(1,983)

-

(1,983)












Profit for the period

-

-

-

-

-

-

1,472 

1472 

12

1,484 












Total recognised income and expenses for 6 months to June 2009

-

-

(1,983)

-

-

-

1,472 

(511)

12

(499)












Share-based payments

-

-

-

(9)

-

-

-

(9)


(9)

Dividends paid

-

-

-

-

-

-

(1,285)

(1,285)

-

(1,285)

Minority interest arising on business combinations

-

-

-

-

-

-

-

-

761

761












At 30 June 2009

923

10,986

2,052 

1,356 

(1,512)

63,603

4,078 

81,486 

773 

82,259 


 


Share Capital

Share Premium

Foreign Currency Translation Reserve

Share Option Reserve

Own Shares

Merger Reserve

Retained Earnings

Total 

Minority Interest

Total Equity


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000












At 1 January 2008

919

10,640

(224)

1,152

(685)

94,676

(28,513)

77,965

-

77,965












Exchange differences on translation of overseas operations

-

-

4,259

-

-

-

-

4,259

-

4,259

Tax effect in equity

-

-

-

-

-

-

63

63

-

63

Net income and expense recognised directly in equity

-

-

4,259

-

-

-

63

4,322

-

4,322












Profit for the period

-

-

-

-

-

-

2,640

2,640

-

2,640












Total recognised income and expense for 2008

-

-

4,259

-

-

-

2,703

6,962

-

6,962












Share-based payments

-

-

-

213

-

-

-

213

-

213

Dividends paid

-

-

-

-

-

-

(1,372)

(1,372)

-

(1,372)

Own shares

-

-

-

-

(827)

-

-

(827)

-

(827)

Issue of shares

4

346

-

-

-

-

-

350

-

350

Reserve transfer

-

-

-

-

-

(31,073)

31,073

-

-

-












At 31 December 2008

923

10,986

4,035

1,365

(1,512)

63,603

3,891

83,291

-

83,291


 


Share Capital

Share Premium

Foreign Currency Translation Reserve

Share Option Reserve

Own Shares

Merger Reserve

Retained Earnings

Total 

Minority Interest

Total Equity


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000























At 1 January 2008

919

10,640

(224)

1,152

(685)

94,676

(28,513)

77,965

-

77,965












Exchange differences on translation of overseas operations

-

-

(71)

-

-

-

-

(71)

-

(71)












Net income and expense recognised directly in equity

-

-

(71)

-

-

-

-

(71)

-

(71)












Profit for the period

-

-

-

-

-

-

1,540

1,540

-

1,540












Total recognised income and expenses for 6 months to June 2008

-

-

(71)

-

-

-

1,540

1,469

-

1,469












Share-based payments

-

-

-

126

-

-

-

126

-

126

Own shares

-

-

-

-

(583)

-

-

(583)

-

(583)

Issue of shares

2

117

-

-

-

-

-

119

-

119

Reserve transfer

-

-

-

-

-

(31,073)

31,073

-

-

-












At 30 June 2008

921

10,757

(295)

1,278

(1,268)

63,603

4,100

79,096

-

79,096


Notes to the Unaudited Condensed Financial Information

For the 6 months to 30 June 2009

 

1.  Basis of Preparation


This Report for the 6 months ended 30 June 2009 was approved by the directors on 15 September 2009.


The current and the comparative 6 months to June have been prepared using accounting policies and practices consistent with those adopted in the accounts for the year ended 31 December 2008 but are unaudited, and are also consistent with those which will be adopted in the 2009 Annual Report and Accounts, which will be in accordance with International Financial Reporting Standards ("IFRS") as adopted by the EU and those parts of the Companies Act 2006 that remain applicable to companies reporting under IFRS.


The financial information contained in this Report does not constitute statutory accounts as defined by Section 434 of the Companies Act 2006.


The figures for the year ended 31 December 2008 have been extracted from the statutory accounts, which have been filed with the Registrar of Companies. The audit report was unqualified, did not include references to matters to which the auditors drew attention by way of emphasis without qualifying their report and did not contain a statement under section 237(2) or (3) of the Companies Act 2005.


Copies of this announcement are available from the company's website, www.datacash.com.


 

2.  Dividend


An interim dividend of 0.5p (interim 2008: 0.4p, Final 2008: 1.4p) per ordinary share will be paid In accordance with IAS 10 Events after the Balance Sheet date, this dividend has not been recognised in the accounts at 30 June 2009, but will be recognised in the accounting period ending December 2009.


 

3.  Impairment and amortisation of intangible assets


In accordance with the group's accounting policies, intangible assets are amortised over their useful economic lives and goodwill is not amortised. Goodwill is subject to an annual impairment review, or more frequently if there are any indications that goodwill might be impaired.


The charge for the year comprises amortisation of intangible assets of £3.57m (6 months to 30 June 2008: £1.97m, full year 2008: £5.24m) and impairment of goodwill of £1.57m (6 months to 30 June 2008: £1.01m, full year 2008: £2.77m).


The amortisation of intangibles consists of £2,461k customer contracts, £1,069k software and £37k development costs.


The impairment of goodwill during all periods was entirely attributable to EuroCommerce as a result of the downturn in the airline industry.


 

4.  Adjusted earnings reconciliation


 
 6 months ended 30 June 2009
 
 6 months ended 30 June 2008
 

Year ended 31 Dec 2008
 
£000
 
£000
 
£000
 
 
 
 
 
 
Profit before taxation per consolidated statement of comprehensive income
2,671
 
3,165
 
5,501
Adjustments:
 
 
 
 
 
- Impairment and amortisation
5,136
 
2,983
 
8,013
- Unsettled foreign exchange (gain)/losses on deferred consideration
( 46)
 
-
 
356
- Settled foreign exchange (gain)/losses on deferred consideration
(236)
 
-
 
722
 
 
 
 
 
 
Adjusted profit before taxation
7,525
 
6,148
 
14,592
 
 
 
 
 
 
Taxation per consolidated statement of comprehensive income
(1,187)
 
(1,625)
 
(2,861)
Tax effect of adjustments detailed above
(920)
 
(835)
 
(2,545)
Adjusted taxation
(2,107)
 
(2,460)
 
(5,406)
 
 
 
 
 
 
Adjusted profit for the period
5,418
 
3,688
 
9,186

 

The Directors believe that the adjusted profit for the period and the adjusted earnings per share figure assists in the presentation of the group's underlying performance.


 

5.  Taxation


The group's effective tax rate for the period based on profit before taxation per the consolidated statement of comprehensive income is 44.4% (6 months to 30 June 2008: 51.3%, Full year 2008: 52.0 %).


The group's effective tax rate for the period based on the adjusted profit before taxation, as detailed in note 4 above, is 28.0(6 months to 30 June 2008: 40.0%, Full year 2008: 37.0%).


 

6.  Earnings per Share


The basic and diluted earnings per share is calculated using the profit for the year as set out in the income statement. The adjusted earnings per share is calculated using the adjusted profit for the year as detailed in note 4 above.

Basic earnings per share has been calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the period, determined in accordance with IAS 33 Earnings per share.


Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares in issue on the assumption of conversion of all the potentially dilutive ordinary shares for which all the conditions have been met.


 

Weighted average number of 1p ordinary shares in issue during the year is set out below:

6 months ended 30 June 2009


6 months ended 30 June 2008



Year ended 31 Dec 2008


Number


Number


Number







For basic earnings per share

92,300,490


91,945,183


91,472,062


Dilutive effect of share options


473,906


  

 337,171 



907,728


For diluted earnings per share


92,774,396



92,282,354



92,379,790







Basic earnings per share

1.61 p


1.68p


2.89p

Diluted earnings per share

1.60 p


1.67p


2.86p







Adjusted basic earnings per share

5.87 p


4.01p


11.21p

Adjusted diluted earnings per share

5.84 p


3.99p


11.10p



7.  Analysis of net funds


At 1 January 2009

Cashflow

At 30 June 2009


£000

£000

£000





Cash and cash equivalents

13,785

(1,605)

12,180

Restricted cash held in escrow

1,980

(375)

1,605


15,765

(1,980)

13,785



8.  Reconciliation of profit for the period to net cash inflow from operating activities

 
 
6 months ended
30 June
2009
 
6 months ended
30 June
2008
 

Year ended
31 December 2008
 
 
£’000
£’000
£’000
Profit for the period                                                  
1,484
1,540
2,640
Taxation
1,187
1,625
2,861
Finance income
(224)
(739)
(968)
Finance costs
43
154
280
Impairment and amortisation of goodwill and intangibles
 5,136
2,983
8,013
Depreciation
571
309
860
Loss from sale of property, plant and equipment
-
-
1
Profit on joint ventures
(12)
(63)
(72)
Share option charge
(9)
(22)
213
Exchange movements
(282)
(92)
1,078
Changes in trade and other payables
(1,439)
28
744
Changes in trade and other receivables
1,537
549
517
 
 
 
 
Net cash inflow from operations
7,992
6,272
16,167



9.  Acquisitions


On 21 January 2009, the company acquired 76% of the issued share capital of The Third Man Group plc for cash consideration of £2,388,355. Total goodwill arising on the acquisition is £265,000. The fair values of net assets acquired are based on provisional assessments pending final determination of certain assets and liabilities.


 
Carrying values pre acquisition
Fair value adjustments
Fair value
 
£’000
£’000
£’000
 
 
 
 
Intangible assets
162
3,688
3,850
Property, plant and equipment
59
-
59
Trade and other receivables
287
-
287
Cash and cash equivalents
298
-
298
Trade and other payables
(244)
-
(244)
Deferred tax liabilities
-
(1,078)
(1,078)
 
 
 
 
Net assets acquired
562
2,610
3,172
 
 
 
 
Goodwill
 
 
265
 Minority interest
 
 
(761)
 
 
 
 
Total purchase consideration
 
 
 2,676
 
 
 
 
Consideration satisfied by:
 
 
 
Cash
 
 
2,388
Directly attributable costs
 
 
288
 
 
 
 
 
 
 
2,676

 



The goodwill arising on acquisition of The Third Man Group Plc represents the value of anticipated future operating synergies from the combination. There is no deferred contingent consideration payable in respect of this acquisition.



This information is provided by RNS
The company news service from the London Stock Exchange
 
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