REG - Finseta PLC - Interim Results
10/09/2024 07:00
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RNS Number : 5032D Finseta PLC 10 September 2024
Certain information contained within this Announcement is deemed by the
Company to constitute inside information as stipulated under the Market Abuse
Regulation (EU) No. 596/2014 ("MAR") as applied in the United Kingdom. Upon
publication of this Announcement, this information is now considered to be in
the public domain.
10 September 2024
Finseta plc
("Finseta", the "Company" or the "Group")
Interim Results to 30 June 2024
Finseta (AIM: FIN), a foreign exchange and payments solutions company offering
multi-currency accounts to businesses and individuals through its proprietary
technology platform, is pleased to announce its unaudited interim results for
the six months ended 30 June 2024 ("H1 2024").
Highlights
H1 2024 H1 2023 Change
£m £m
Revenue 5.1 3.6 +£1.5m
Gross margin (%) 65.7% 61.0% +4.7pps
Adjusted(1) EBITDA 0.8 0.2 +£0.6m
Profit before tax 0.6 0.0 +£0.6m
Basic EPS (p) 0.79p 0.06p +0.73p
Cash from operating activities 0.8 0.1 +£0.7m
· Revenue increased by 40%, driven by on-going growth in active
customers(2) to 952 (H1 2023: 874) and an increase in average transaction
value of 29% on H1 2023
· Gross margin improvement of 470 basis points primarily driven by an
increase in the proportion of revenue accounted for by direct clients to 100%
(H1 2023: 91%), reflecting the strategic decision to offboard the historic
white label business in prior years
· Balance sheet further strengthened with cash and cash equivalents at
30 June 2024 of £2.8m (31 December 2023: £2.3m), resulting in net cash(3) of
£0.6m at 30 June 2024 (31 December 2023: £0.2m)
· Continued strategic progress in the period:
o New counterparty partnerships established to broaden the number of
currencies and countries where the Group can transact - now able to pay out to
over 165 countries in 140 currencies
o Received regulatory approval to provide payment services in Canada;
initial revenues expected in 2024
o Signed agreement with Mastercard to launch corporate card scheme later in
2024
o Adopted 'Finseta' as new company name to reflect differentiated offer and
as part of strategic growth plan
· The strong trading momentum in H1 2024 has continued into the second
half, and the Group remains on track to report significant growth for full
year 2024, in line with the Board's expectations
James Hickman, CEO of Finseta, said: "This has been a period of significant
growth for Finseta, which builds on the work we commenced last year to execute
on our renewed strategy. Through expanding our introducer network and payments
capabilities, while maintaining a high level of customer service, we have
increased the number of active customers and average transaction value. We
also achieved strategic milestones that will be key drivers of future growth -
most notably, signing an agreement with Mastercard to launch a corporate card
scheme and receiving regulatory approval in Canada where we are in the process
of launching a full-service office.
"Looking ahead, the strong trading momentum that was experienced during the
first six months of 2024 has been sustained into the second half and we are on
track to report significant growth for full year 2024, in line with the
Board's expectations. At the same time, with the excellent progress made in
executing on our strategic priorities, we have strengthened our operations and
the foundations to deliver long-term, sustainable growth. As a result, the
Board continues to look to the future with great confidence."
Notes
(1) Excluding share-based compensation, transaction costs, depreciation &
amortisation charges, profit from the disposal of a subsidiary, other
operating income related to interest on client balances and non-cash based
accounting adjustments in respect of the Group's corporate premises
(2) Defined as customers who traded through Finseta during the 12-month
periods to 30 June 2024 and 2023 respectively
(3) Defined as cash and cash equivalents less loan notes
Enquiries
Finseta plc +44 (0)203 971 4865
James Hickman, Chief Executive Officer
Judy Happe, Chief Financial Officer
Shore Capital (Nominated Adviser and Broker) +44 (0)207 408 4090
Daniel Bush, Tom Knibbs (Corporate Advisory)
Guy Wiehahn (Corporate Broking)
Gracechurch Group (Financial PR) +44 (0)204 582 3500
Harry Chathli, Claire Norbury, Henry Gamble
About Finseta
Finseta plc (AIM: FIN) is a foreign exchange and payments company offering
multi-currency accounts and payment solutions to businesses and individuals.
Headquartered in the City of London, Finseta combines a proprietary
technology platform with a high level of personalised service to support
clients with payments in over 165 countries in 140 currencies. With a track
record of over 12 years, Finseta has the expertise, experience and expanding
global partner network to be able to execute complex cross-border payments. It
is fully regulated, through its wholly-owned subsidiaries, by the Financial
Conduct Authority as an Electronic Money Institution and by the Financial
Transactions and Reports Analysis Centre of Canada as a Money Services
Business. www.finseta.com
(https://url.avanan.click/v2/___http:/www.finseta.com___.YXAxZTpzaG9yZWNhcDphOm86NDc0NTc2YjE2ZDdhNTM1OWMyYjdjY2QzMzdkODk4NWI6NjowZmM5OjM5NGRhN2Y3N2Q2YzQ0ZmYxNTdlOWY5N2U5Y2UxNDg4NTFmMzY0MzM2Zjc2YzE3NTdjNTZjYTE0MTRkMWU3OWM6cDpUOk4)
Investor Presentation
James Hickman, CEO, and Judy Happe, CFO, will provide a live presentation via
Investor Meet Company at 10.00am BST today. The presentation is open to all
existing and potential shareholders. Investors can sign up to Investor Meet
Company for free and add to meet Finseta via:
https://www.investormeetcompany.com/finseta-plc/register-investor
(https://url.avanan.click/v2/___https:/www.investormeetcompany.com/finseta-plc/register-investor___.YXAxZTpzaG9yZWNhcDphOm86NTdmYTcxZjIyYTdjYTAxNzMxMzg0ZTU0YzVkOGY2OWE6Njo1N2ZlOjMwMDMxMjY2ZGRiZWNmNzFkOTk1ZjU4MjE5NGFiZDU5NWQxN2UxMmU4ZDIxZmNjZWQ5ODlkYjEwYzQ2OTFmODY6cDpGOk4)
Strategic and Operational Review
Finseta delivered significant growth during the first half of 2024 as its
expanded sales team and introducer network drove increases in active customer
numbers and average transaction value. The Group also continued to enhance its
products and services and execute on its strategy, with key initiatives being
advanced that strengthen the foundations of the business and its ability to
deliver sustained growth. In particular, the Group signed an agreement to
launch a corporate card scheme with Mastercard and received regulatory
approval in Canada, which both represent significant milestones for the
business.
Performance
The Group delivered substantial growth in revenue to £5.1m (H1
2023: £3.6m), which was driven by increases in active customers and average
transaction value. Active customers increased to 952 compared with 874 for the
first half of 2023 as the Group continued to expand its sales team and
introducer network. Average transaction value increased by 29% over H1 2023
driven by an increased focus on providing an exceptional level of service to
its corporate and high net worth individual ("HNWI") clients.
The Group completed its transition to only serving clients directly, with all
revenue being generated by direct clients during the period (H1 2023: 91%).
This contributed to a significant, 470 basis point, increase in gross margin
in the period over the first half of 2023. By client type, there was an
increase in revenue generated by both private clients (primarily HNWIs) and
corporate accounts. The proportion of total revenue accounted for by private
clients remained at 60% (H1 2023: 60%) with corporate accounts contributing
38% (H1 2023: 37%). For the majority of private client revenue, whilst the
underlying transaction is with an individual, the relationship is via a
corporate that provides services to the individual. In addition, the Group
received £100k (H1 2023: £110k) in revenue, accounting for 2% of total
revenue, as the final income generated under a licencing agreement with the
acquirers of Avila House, a former subsidiary of the Group.
Strategy execution
The Group's growth strategy is founded on the three pillars of product,
geography and people - Finseta made considerable progress against all three
during the first half of 2024. This contributed to growth during the period,
but also strengthened the drivers of growth for the years to come.
Product
A core element of Finseta's strategy is to establish a global payments network
that will enable clients to be able to pay in from, and pay out to, any
jurisdiction (subject to regulatory restrictions) in any currency and via any
payment method. While it is still relatively early days, a number of
milestones in advancing towards this goal were achieved during the first half
of the year.
Currencies & countries
The Group continued to expand its global payments network by establishing new
counterparty partnerships. This enables the Group to broaden the number of
currencies and countries where it can transact, as well as expanding the
business sectors it can serve. The Group can now pay out to over 165 countries
in 140 currencies compared with over 150 countries and 58 currencies this time
last year.
Payment method
Finseta made significant progress in the period towards expanding its payment
method offering with the signing of a long-term agreement with Mastercard to
launch a corporate card scheme. The Group is on track to launch the scheme in
the current year, when it will be able to issue commercial cards co-branded
and supported by Mastercard for its corporate customers. This additional
payment rail will provide greater choice and flexibility for clients in
managing their business expenses and a further recurring income stream for
Finseta as clients sign up to use the corporate card offering.
Service
A key differentiator of the Group's offer is the high level of personalised
service provided to clients, along with the experience of Finseta's team and
the strength of its compliance capabilities. The Group's Finseta Solutions
offering, which was established in 2023 and is specifically focused on
providing solutions to clients with more complex needs and require a higher
level of service, made progress during the period. The Group has added further
resource to this new offering as the number of customers and partners has
continued to grow.
During the period, the Group undertook development work to enhance the
functionality of the Finseta platform, which will further improve clients'
experience. The Group expects to introduce the upgrades later this year.
Geography
A core pillar of the Group's strategy is geography - that is, expanding its
capabilities to enable clients to transact to and from anywhere in the world
(subject to regulatory restrictions). This includes through establishing
further counterparty relationships, as noted above, as well as expanding its
own geographical footprint and regulatory capabilities.
A significant milestone was achieved with the Group receiving a Money Services
Business ("MSB") licence from the Financial Transactions and Reports Analysis
Centre of Canada. This allows the Group to operate a payments company
in Canada and provide payments services to Canadian businesses and
individuals. Having previously received enquiries in Canada for its
services through its existing network, the establishment of a regulated
business will enable the Group to fully pursue such opportunities and leverage
local payment rails and lower transaction costs.
Following the receipt of the MSB licence, the Group commenced the process of
establishing a full-service office in Canada, which it expects to open in the
current year. This will allow the Group to provide customers in Canada with
the high-touch service-led approach that is core to the Finseta offering.
The Group also continued to make progress with the regulatory approval process
in other jurisdictions where it can leverage opportunities through its
existing network and thereby maximise its resources.
People
As a high-touch, service-led business, the strength of Finseta's people is
crucial. A fundamental contribution to the Group's growth during the period
was the enhancement of its sales team, which commenced in the prior year. To
strengthen its offer and drive its future growth, the Group also expanded,
post period, its Finseta Solutions team, as well as appointing a Country
Manager for Canada.
In addition, with the Group's client acquisition being predominantly
introducer-led, relationships are key to Finseta's ongoing growth. The Group
continued to expand and deepen its network of introducers in order to continue
to increase its active customer numbers and diversify payment flows across a
broader range of currencies.
Brand identity
In recognition of the substantial strategic progress that the Group has made
and the development of its business - with a fundamentally expanded offer,
capabilities and geographic footprint - the Group decided to adopt a new name.
The Group wanted a name that better aligned its brand identity with its
mission, values and the comprehensive range of services it provides. In
particular, the Group needed a unique name that reflected its differentiated
offer. Accordingly, the Group underwent a renaming process that commenced in
the prior year and completed during the period with the adoption of 'Finseta'.
Financial Review
Revenue for the six months to 30 June 2024 increased by 40% to £5.1m compared
with £3.6m for the first half of the previous year. On an underlying basis,
to exclude revenue generated by white label partners in H1 2023, the Group's
revenue grew by 54% in H1 2024 over H1 2023. This significant growth reflects
an increase in active customers and in average transaction value, reflecting
the Group's expansion of its sales team and introducer network and an
increased focus on providing an exceptional level of service to its clients.
Gross margin improved to 65.7% (H1 2023: 61.0%), which is primarily due to the
Group no longer deriving revenue from white label partners following its
strategic decision to manage down its historic white label business. The
improvement in gross margin combined with the increased revenue resulted in
substantial growth in gross profit to £3.3m (H1 2023: £2.2m).
Operating expenses were £2.8m in H1 2024 compared with £2.2m for the first
half of the previous year. This primarily relates to additional sales team
hires and increased performance-related bonuses commensurate with the Group's
performance; higher depreciation as a result of the Group's move to a new
leased corporate premises in the second half of 2023; and lower other
operating income as described below. Operating expenses as a proportion of
revenue improved to 55% for the first half of 2024 (H1 2023: 62%).
Thanks to the strong operating performance, there was a substantial
improvement in adjusted EBITDA to £831k compared with £190k for H1 2023.
Adjusted EBITDA is stated after the add-back of other operating income,
share-based compensation, profit from the disposal of a subsidiary and
transaction costs, and the rental cost of the Group's corporate premises (see
the statement of comprehensive income for further detail).
The Group generated other operating income of £93k (H1 2023: £184k) based
on interest on client cash balances (see note 3 to the financial statements).
Profit from operations increased to £628k compared with £138k for H1
2023.
Net finance costs were £59k (H1 2023: £115k), which primarily reflects £45k
of bank interest receivable during the period (H1 2023: £nil).
As a result of the increased profit from operations and reduced finance costs,
profit before tax grew substantially to £569k in H1 2024 compared with £23k
for the first half of the prior year.
The Group had a tax charge of £118k compared with a tax credit in the prior
year period of £12k, principally reflecting the increased profitability of
the Group. The tax charge was satisfied through the consumption of a deferred
tax asset and, accordingly, was a non-cash expense.
Basic earnings per share increased to 0.79 pence (H1 2023: 0.06 pence), which
was achieved despite an increase in the weighted average number of ordinary
shares in issue to 57,417,101 (H1 2023: 55,791,324). On a fully diluted basis,
earnings per share were 0.74 pence (H1 2023: 0.06 pence).
Cash generated from operating activities increased significantly to £782k (H1
2023: £114k) based on the improved trading performance. Cash used in
investing activities was £204k (H1 2023: cash from investing activities of
£85k), which primarily consists of the continued investment in developing the
Group's proprietary platform and a deferred consideration payment in respect
of the February 2022 acquisition of Capital Currencies. This was partly offset
by the receipt of the proceeds from the disposal of Capital Currencies, a
non-trading subsidiary with all of the customer and employment contracts
acquired in February 2022 having previously been novated to the Group's main
trading entity, Finseta Payment Solutions Limited. Cash used in financing
activities was £153k compared with £66k for H1 2023, with the difference
primarily reflecting lease payments associated with the move to the new
corporate premises.
As a result, as of 30 June 2024, cash and cash equivalents had increased to
£2.8m (31 December 2023: £2.3m), resulting in net cash of £0.6m at 30
June 2024 (31 December 2023: £0.2m).
Outlook
The strong trading momentum of the first six months of the year has been
maintained into the second half. Accordingly, the Group remains on track to
report significant growth for full year 2024, in line with the Board's
expectations.
This growth is being driven by the continued increase in the number of active
customers as a result of the ongoing expansion of the Group's introducer
network and continued investment in various revenue generating teams within
the Group. The Group is also looking forward to the launch of its corporate
card scheme and of its Canadian offering, which are expected to occur in the
second half of 2024 and make an initial contribution to revenue.
Looking further ahead, with the excellent progress that the Group made during
the period in executing on its strategic priorities, the Group has
strengthened its operations and established the foundations to deliver
long-term, sustainable growth. As a result, the Board continues to look to the
future with great confidence.
Consolidated Statement of Comprehensive Income
Unaudited 6 months to 30 June 2024 Unaudited 6 months to 30 June 2023 Audited
12 months to
31 Dec 2023
Notes £ £ £
Revenue 5,059,757 3,601,842 9,649,233
Cost of sales (1,733,605) (1,405,919) (3,533,897)
Gross profit 3,326,152 2,195,923 6,115,336
Share-based compensation 6 (169,007) (172,679) (333,061)
Further adjustments to adjusted EBITDA (see below) (126,564) (63,306) (357,348)
Other administrative expenses (2,495,486) (2,005,647) (4,415,113)
Total administrative expenses (2,791,057) (2,241,632) (5,105,522)
Other operating income 3 92,683 183,506 350,143
Adjusted EBITDA 830,666 190,275 1,700,223
Stated after the add-back of:
- other operating income (92,683) (183,506) (350,143)
- share-based compensation 6 169,007 172,679 333,061
- transaction costs - 4,500 4,500
- profit on disposal of subsidiary 8 (150,000) (207,480) (207,480)
- amortisation of intangible assets 7 279,153 256,707 533,649
- IAS 17 rent reversal (156,600) - (61,613)
- depreciation of property, plant and equipment 154,011 9,579 88,292
Profit from operations 2 627,778 137,797 1,359,957
Finance and other income 4 45,000 - 21,363
Finance costs 4 (103,507) (114,550) (90,635)
Profit before tax 569,271 23,247 1,290,685
Income tax (117,983) 11,699 843,168
Profit for the financial period 451,288 34,946 2,133,853
Total comprehensive profit for the period 451,288 34,946 2,133,853
Profit per share from continuing operations:
Profit per ordinary share - basic (pence) 5 0.79 0.06 3.77
Profit per ordinary share - diluted (pence) 5 0.74 0.06 3.76
Consolidated Statement of Financial Position
Unaudited as at 30 June 2024 Unaudited Audited
as at 30 June 2023 as at 31 Dec 2023
Notes £ £ £
ASSETS
Non-current assets
Intangible assets and goodwill 7 1,642,763 2,180,104 1,514,519
Tangible assets 36,314 30,923 34,356
Right-of-use assets 12 651,680 - 796,498
Deferred tax 13 579,921 - 697,864
2,910,678 2,211,027 3,043,237
Current assets
Trade and other receivables 9 1,057,289 1,503,464 1,359,641
Cash and cash equivalents 2,768,005 816,176 2,343,417
3,825,294 2,319,640 3,703,058
TOTAL ASSETS 6,735,972 4,530,667 6,746,295
Equity
Share capital 6 574,171 574,171 574,171
Share premium 6,191,748 6,191,748 6,191,748
Share-based payment reserve 949,396 620,006 780,389
Merger relief reserve 5,557,645 5,557,645 5,557,645
Contingent consideration reserve - 999,859 -
Reverse acquisition reserve (3,140,631) (3,140,631) (3,140,631)
Retained earnings (7,856,499) (10,406,693) (8,307,787)
TOTAL EQUITY 2,275,830 396,105 1,655,535
Non-current liabilities
Loan notes 11 2,000,000 2,172,578 2,000,000
Deferred tax liability - 88,117 -
Obligations under leases 14 399,293 - 543,555
Deferred consideration 15 - - 111,323
2,399,293 2,260,695 2,654,878
Current liabilities
Trade and other payables 10 1,475,854 1,873,867 1,882,771
Loan notes 11 172,578 - 172,578
Obligations under leases 14 280,009 - 263,357
Deferred consideration 15 132,408 - 117,176
2,060,849 1,873,867 2,435,882
TOTAL EQUITY AND LIABILITIES 6,735,972 4,530,667 6,746,295
Consolidated Statement of Changes in Equity
Share capital Share premium Share-based payment reserve Merger relief reserve Contingent consideration reserve Reverse acquisition reserve Retained earnings Total
£ £ £ £ £ £ £ £
At 1 January 2023 480,362 5,496,829 1,489,765 5,557,645 950,920 (3,140,631) (10,924,791) (89,901)
Issue of shares 35,299 194,143 - - - - - 229,442
Deferred equity-based consideration - - - - 48,939 - - 48,939
Share-based payments - - 172,679 - - - - 172,679
Settlement of equity-based incentives 58,510 500,776 (1,042,437) - - - 483,151 -
Other comprehensive income - - - - - - 34,946 34,946
574,171 6,191,748 620,007 5,557,645 999,859 (3,140,631) (10,406,694) 396,105
At 30 June 2023
Deferred equity-based consideration - - - - (771,360) - - (771,360)
Transfer to deferred consideration liability - - - - (228,499) - - (228,499)
Share-based payments - - 160,382 - - - - 160,382
Other comprehensive income - - - - - - 2,098,907 2,098,907
At 31 December 2023 574,171 6,191,748 780,389 5,557,645 - (3,140,631) (8,307,787) 1,655,535
Share-based payments - - 169,007 - - - - 169,007
Other comprehensive income - - - - - - 451,288 451,288
574,171 6,191,748 949,396 5,557,645 - (3,140,631) (7,856,499) 2,275,830
At 30 June 2024
Consolidated Cash Flow Statement
Unaudited Unaudited Audited
six months six months 12 months
to 30 June 2024 to 30 June 2023 to 31 Dec 2023
£ £ £
Profit before tax 569,271 23,247 1,290,685
Adjustments to reconcile profit before tax to cash generated from operating
activities:
Other operating income 8,274 - (27,167)
Finance income (45,000) - (21,363)
Finance costs 103,507 114,550 90,635
Share-based compensation 169,007 172,679 333,061
Profit on disposal of subsidiary (150,000) (207,480) (207,480)
Depreciation and amortisation 433,164 266,286 621,941
Write-off of property, plant and equipment - - 519
Loss on disposal of property, plant and equipment 656 - -
Decrease / (increase) in trade and other receivables 303,152 (164,354) 67,344
Decrease in trade and other payables (609,691) (90,969) (194,021)
Cash generated in operating activities 782,340 113,959 1,954,154
Investing activities
Purchases of property, plant and equipment (13,304) (824) (11,081)
Internally generated software development (235,711) (213,694) (491,013)
Proceeds from disposal of subsidiary 150,000 300,000 300,000
Settlement of deferred consideration (105,431) - -
Cash (used) / generated in investing activities (204,446) 85,482 (202,094)
Financing activities
Interest and similar income 35,883 - 10,587
Interest and similar charges (32,589) (65,611) (39,963)
Lease payments (156,600) - (61,613)
Cash used in financing activities (153,306) (65,611) (90,989)
Increase in cash and cash equivalents 424,588 133,830 1,661,071
2,343,417 682,346 682,346
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period 2,768,005 816,176 2,343,417
Notes to the financial statements
1. General information and basis of preparation
Finseta plc is a public limited company, incorporated and domiciled in
England. The Company was admitted to trading on AIM, London Stock Exchange's
market for small and medium size growth companies, on 6 April 2021. The
registered office of the Company is 14-18 Copthall Avenue, London, EC2R 7DJ.
Finseta plc is a foreign exchange and payments company offering multi-currency
accounts to businesses and individuals using a proprietary cloud-based
multi-currency payments platform.
The consolidated financial information contained within these financial
statements is unaudited and does not constitute statutory accounts within the
meaning of Section 434 of the Companies Act 2006. While the financial figures
included in this interim report have been prepared in accordance with IFRS
applicable to interim periods, this interim report does not contain sufficient
information to constitute an interim financial report as defined in IAS 34.
Financial information for the year ended 31 December 2023 has been extracted
from the audited financial statements for that year. The accounting policies
applied by the Group in this consolidated interim financial report are the
same as those applied by the Group in its consolidated financial statements as
at and for the year ended 31 December 2023.
The consolidated financial statements incorporate the financial statements of
the Company and its subsidiary undertakings. Entities are accounted for as
subsidiary undertakings when the Group is exposed to or has rights to variable
returns through its involvement with the entity and it has the ability to
affect those returns through its power over the entity.
Details of subsidiary undertakings and %
shareholding:
Finseta Payment Solutions Ltd
- 100% owned by the Company
Cornerstone Middle East
FZCO
- 100% owned by the Company
Pangea FX Limited
- 100% owned by the Company
Finseta Payments Corp
- 100% owned by the Company
On 4 June 2024 the Group completed the sale of Capital Currencies Limited. The
results of Capital Currencies were consolidated up to the date of disposal.
Going concern
During the period ended 30 June 2024, the Group made a profit of £451,288. As
at 30 June 2024 the Group's Statement of Financial Position showed cash and
cash equivalents of £2,768,005. The trading position of the Group has
strengthened during 2024 with continued revenue growth coupled with a strong
focus on cost control. As a result, the Group expects to continue generating a
net positive cash flow during the second half of 2024.
The Board continues to closely monitor the Group's performance and considers a
range of risks that could affect the future performance and position of the
Group. The Board considers the Group has a reasonable expectation that it has
adequate resources to continue to operate for the foreseeable future and
therefore the financial statements are prepared on a going concern basis.
2. Profit from operations
Unaudited six months to 30 June 2024 Unaudited Audited
six months to 30 June 12 months to 31 Dec
2023 2023
£ £ £
Profit from operations is stated after charging/(crediting):
Share-based compensation 169,007 172,679 333,061
Transaction costs - 4,500 4,500
Expensed software development costs 36,117 33,189 58,792
Depreciation of property, plant and equipment 9,193 9,579 15,883
Depreciation of right-of-use assets 144,818 - 72,409
Amortisation of intangible assets 279,153 256,707 533,649
Profit on disposal of subsidiary (150,000) (207,480) (207,480)
Short-term (2018 IAS 17 operating) - 137,236 -
lease
rentals
3. Other operating income
Unaudited six months to 30 June 2024 Unaudited Audited
six months 12 months
to 30 June 2023 to 31 Dec 2023
£ £ £
Interest receivable from client cash balances 92,683 183,506 350,143
Other operating income represents interest generated from client cash
balances. The current interest rate environment means that these accounts can
be interest bearing, whilst fulfilling regulatory safeguarding requirements.
Under the terms of the Group's Electronic Money Licence, the Group is not able
to pass any of the interest earned back to the clients.
Whilst the increased interest stream is a positive boost for the Group and a
natural by-product of its increasingly diversified product offering, the Group
is mindful that aspects of its dynamics are driven by macroeconomics beyond
its control. The Group has therefore chosen to recognise interest income on
client balances as 'other operating income', not revenue on the face of the
Consolidated Statement of Comprehensive Income. For the same reason, interest
income has been excluded from the presentation of adjusted EBITDA.
Interest earned on Finseta's own cash is recognised within finance and other
income in the Consolidated Statement of Comprehensive Income.
4. Interest and similar items
Unaudited six months to 30 June 2024 Unaudited Audited
six months 12 months
to 30 June 2023 to 31 Dec 2023
£ £ £
Total finance and other income
Bank interest receivable 45,000 - 21,363
Total finance costs
Unwinding / (release) of discount 9,340 48,939 (56,459)
Loan note interest 65,177 65,129 130,306
Other interest payable and charges - 482 483
Interest on lease liabilities 28,990 - 16,305
90,635
103,507 114,550
5. Earnings per share
Unaudited six months to 30 June 2024 Unaudited Audited
six months 12 months
to 30 June 2023 to 31 Dec 2023
£ £ £
Statutory profit 451,288 34,946 2,133,853
Weighted average number of shares used in basic EPS 57,417,101 55,791,324 56,613,145
Effect of dilutive share options 3,444,861 - 161,510
Weighted average number of shares used in diluted EPS 60,861,962 55,791,324 56,774,655
Earnings per share (pence)
Statutory total earnings per share
Basic 0.79 0.06 3.77
Diluted 0.74 0.06 3.76
6. Share capital
Allotted, called up and fully paid
Ordinary Share capital
shares
No. £
Ordinary shares of £0.01 each at 30 June 2024, 31 December 2023 and 30 June
2023
57,417,101 574,171
Options
On 22 February 2024, the Company granted 470,000 options under its
equity-settled share-based remuneration schemes for employees with a weighted
average exercise price of £0.32 and a vesting period between 1 and 3 years.
The Black-Scholes model was used for calculating the cost of options. The
model inputs for the options issued were:
Share price at grant date - £0.31
Risk-free
rate -
4.2%
Expected Volatility -
117.5%
Contractual
life - 5
years
During the period 20,000 options were forfeited (H1 2023: 248,360) at a
weighted average exercise price of £0.12 per share. No warrants expired
during the period (H1 2023: 63,114).
Share-based compensation charge
The Group's share-based compensation charge for the period ended 30 June 2024
of £169,007 (H1 2023: £172,679) consists of £64,172 (H1 2023: £49,115) in
respect of warrants (including the impact of warrant expirations) and
£104,835 (H1 2023: £123,564) in respect of share options granted under the
Company's share option scheme (including the impact of option forfeitures.
7. Intangible assets
Internally developed software Goodwill Trademarks Total
£ Software costs Customer relationships £ £ £
£ £
COST
As at 1 January 2024 1,515,097 15,611 615,756 420,300 46,114 2,612,878
Additions 396,423 - - - 10,974 407,397
At 30 June 2024 1,911,520 15,611 615,756 420,300 57,088 3,020,275
AMORTISATION
As at 1 January 2024 869,189 15,611 213,559 - - 1,098,359
Charge for the period 217,578 - 61,575 - - 279,153
As at 30 June 2024 1,086,767 15,611 275,134 - - 1,377,512
NET BOOK VALUE
At 30 June 2024 824,753 - 340,622 420,300 57,088 1,642,763
At 30 June 2023 630,069 - 463,773 1,086,262 - 2,180,104
At 31 December 2023 645,908 - 402,197 420,300 46,114 1,514,519
8. Disposal of Capital Currencies Limited
On 4 June 2024, the Group completed the sale of Capital Currencies Limited to
Universe Payments Ltd and received £150,000 in cash consideration following
the receipt of regulatory approval for the transaction from the FCA. The only
asset held in Capital Currencies Ltd at the date of sale was an API licence
with a £nil net book value. The profit on disposal recognised by the Group
upon the sale of Capital Currencies Limited was therefore £150,000.
9. Trade and other receivables
Unaudited Unaudited Audited
as at 30 June 2024 as at 30 June 2023 as at 31 Dec 2023
£ £ £
Trade receivables 308,410 347,655 347,491
Prepayments and accrued income 344,389 152,238 152,281
Derivative financial assets at fair value 184,660 674,424 340,241
Other receivables 145,359 52,523 147,536
Taxes and social security 74,471 276,624 372,092
Total trade and other receivables
1,057,289 1,503,464 1,359,641
10. Trade and other payables
Unaudited Unaudited Audited
as at 30 June 2024 as at 30 June 2023 as at 31 Dec 2023
£ £ £
Trade payables 412,134 216,298 248,493
Derivative financial liabilities at fair value 468,653 767,557 279,097
Other taxes and social security 165,986 391,513 480,612
Other payables and accruals 429,081 498,499 874,569
Total trade and other payables
1,475,854 1,873,867 1,882,771
11. Loan Notes
Unaudited Unaudited Audited
as at 30 June 2024 as at 30 June 2023 as at 31 Dec 2023
£ £ £
CURRENT 172,578 - 172,578
Convertible loan notes
NON-CURRENT 2,000,000 2,172,578 2,000,000
Loan notes
The non-current non-convertible loan notes comprise £2,000,000 issued to
Robert O'Brien, a major shareholder in the Company and employee of the Group,
repayable on 31 July 2026 and £172,578 of deferred consideration in relation
to the acquisition of Pangea FX Limited. The Pangea FX Limited loan note is
payable contingent upon achieving future revenue targets over a period of two
years from the acquisition date. These targets were achieved at the end of the
measurement period ended 31 August 2024 and the loan note will be repaid in
full in September 2024.
Both loan notes have a 6% coupon rate payable quarterly in arrears.
12. Right-of-use assets
Leasehold property
£
COST
At 1 January 2024 and 30 June 2024 868,907
AMORTISATION
At 1 January 2024 72,409
Charge for the period 144,818
At 30 June 2024 217,227
NET BOOK VALUE
At 30 June 2024 651,680
At 30 June 2023 -
At 31 December 2023 796,498
13. Deferred tax
Acquired intangibles Tax losses Total
£ Fixed asset and other temporary differences £
£ £
As at 1 January 2024 (100,549) (19,748) 818,161 697,864
Utilised during the period - - (153,773) (153,773)
Credit during the period 15,394 20,436 - 35,830
At 30 June 2024 (85,155) 688 664,388 579,921
Current 525,888
Non-current 54,033
At 30 June 2023 (115,943) 27,826 - (88,117)
Current -
Non-current (88,117)
14. Obligations under leases
Leasehold property
£
At 1 January 2024 806,912
Finance costs 28,990
Payments (156,600)
At 30 June 2024 697,302
Current 280,009
Non-current 399,293
At 30 June 2023 -
15. Deferred consideration
£
At 1 January 2024 228,499
Finance costs 9,340
Payments (105,431)
At 30 June 2024 132,408
Current 132,408
Non-current -
At 30 June 2023 -
16. Related party transactions
In addition to the transaction included in Note 11, as at 30 June 2024, an
amount of £8,750 was due from Terry Everson, a former director of Finseta
Payment Solutions Limited and a shareholder in the Company (30 June 2023:
£8,750).
17. Events after the reporting date
None
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