Report and Financial Statements – Year ended 30th June 2015

Earthport plc | Annual Report and Accounts Fiscal Year 2015Earthport Ahead

Earthport plc Annual Report and Accounts Fiscal Year 2015

View online at Earthport.com/ar2015

Strategic Report Introduction 1

Chairman’s Statement 2

Chief Executive’s Letter 4

Reaching Ahead: Expanding in Geographic Regions 9

At a Glance 10

Innovation Ahead: Growing Acceptance For a New Cross-Border Payments Model 13

Our Clients and Network Partners 14

Market and Client Development 16

Our Strategy and Model 18

Investing Ahead: Fuelling for Growth 21

Principal Risks and Uncertainties 22

Directors’ ReportDirectors’ Report Earthport’s Management Team 27

Board of Directors 28

Directors’ Report 30

Corporate Governance Statement 34

Statement of Directors’ Responsibilities 35

Financial Statements Performance Ahead 37

Independent Auditor’s Report 38

Consolidated Statement of Comprehensive Income 39

Consolidated Statement of Financial Position 40

Company Statement of Financial Position 41

Consolidated Statement of Cashflows 42

Company Statement of Cashflows 43

Consolidated Statement of Changes in Equity 44

Company Statement of Changes in Equity 45

Notes to the Financial Statements 46

Notice of the Annual General Meeting 69

Directors and Advisers 73

With one connection to Earthport, our clients, among the most admired brands in the world, gain access to the largest open network for global bank payments in over 60 countries. Clients rely on Earthport to facilitate their global trade, ecommerce and remittance operations. Among the FinTech 50, Earthport in partnership with banks has been recognised for bringing positive disruption to the traditional correspondent banking model.

Unique ModelThe unique ‘hub-and-spokes’ model deployed by Earthport significantly improves the efficiency of the traditional multi-bilateral relationship approach traditionally deployed for cross-border payments.

Global NetworkWe have built a payments network, which enables the fastest settlement possible in over 60 countries, and growing.

Domain ExpertiseEarthport’s people have decades of experience in payments and local jurisdictions to quickly provide the best solutions and servicing for our clients.

Regulatory AssuredAs a regulated payments company Earthport has invested heavily in proactive controls to meet, and often exceed the compliance requirements around the world.

ScaleOur systems and operations accommodate high volumes of small value transactions, seamlessly, cost-effectively and transparently.

Introduction Strategic Attributes:

The largest cross-border bank payment network, providing the fastest payments possible.

Earthport Advancing Ahead

1Earthport plc Annual Report and Accounts Fiscal Year 2015

Strategic Report

2012 2013 2014 2015

£0

-£2,000

-£6,000

-£4,000

-£8,000

-£10,000

-2,903

-4,356

-5,912

-9,442

2012 2013 2014 2015

20,000

15,000

5,000

10,000

0

15,655

8,250

3,1842,347

2012 2013 2014 2015

25,000

20,000

10,000

15,000

5,000

0

19,267

10,820

4,1433,017

40,000

30,000

10,000

20,000

0

30,195

9,461

13,419

5,766

2012 2013 2014 2015

Introduction

Financial Highlights � 78% growth in revenue to £19.27 million

(FY 2014: £10.82 million) � On a like-for-like basis revenue grew

by over 55% � Transactional revenue was in excess

of 84% of the total revenue � 90% growth in adjusted gross profit to

£15.66 million (FY 2014: £8.25 million) � Net cash used in operating activities

decreased to £2.90 million (FY 2014: £4.36 million), despite significant new investments

� Loss before taxation increased to £8.71 million (FY 2014: £6.33 million) This includes: � Administrative costs of £19.94 million

(FY 2014: £14.37 million) which increased primarily due to full year costs of Baydonhill, warrant costs of £0.73 million (FY 2014: £0.32 million), share-based payment charge of £3.29 million (FY 2014: £1.75 million) and an adjustment of unrealised fair value gain amounting to £0.35 million (FY 2014: £2.27 million)

� Cash and cash equivalents at 30 June 2015 of £30.20 million (at 30 June 2014: £9.46 million)

� Achieved positive cash flow in multiple months during the second-half

Strong Operational Progress � 31 new clients signed during the year (FY 2014: 33) � 22 clients went live during the year

(FY 2014: 14) � Transacting new clients include some

of the largest and most sophisticated financial Institutions

� Continued growth in business from existing clients, including Bank of America, with multiple new add-on projects underway

� Success in the ecommerce and Shared Economy marketplaces, with some of the fastest-growing companies contracted

� Dollar value of payments grew by over 75%

Revenue (£’000)

Net Cash Used (£’000) Adjusted Gross Profit (£’000)

Net Cash (£’000)

In the last year broad acceptance of the Earthport model has accelerated, enabling the Company to experience increased demand and recognition for its services across industry segments and geographic areas. Given the size of the opportunity, which is estimated to be over $20 trillion in payments value, Earthport is investing at an accelerated pace in our people, geographic footprint and product development to maximise medium and long-term success. The Company will continue to focus on significant, demonstrable and recurring revenue, targeting financial institutions and money transfer organisations, as well as the high growth ecommerce and payment aggregator sectors.

Performing Ahead

2 Earthport plc Annual Report and Accounts Fiscal Year 2015

Strategic Report

I am very proud to be Chairman of Earthport and to be reporting another year of significant revenue growth and further enhancing our unique position in the international payments arena. In the year to June 2015, our gross revenue increased by 78% to £19.27 million and continues to improve our standing in the global payments landscape. In addition, the strength of our balance sheet, with cash reserves of over £30 million, gives us a platform on which to capitalise on the opportunities in our market.

It was appropriate to deliver our last Annual Report with the theme ‘Transformational Year’ as we continued to position the Company for the future. This year we have focused on ‘Earthport Ahead’ to describe how we have built on our core business to create real competitive advantage which Hank Uberoi, will detail more expansively in his CEO Letter.

Looking back, we are all well aware that the financial crisis in 2008 changed the whole face of banking, with increased financial pressures on the world’s largest financial institutions, and with increased scrutiny through the establishment of new regulators and their increased powers. That, coupled with the fierce financial penalties that have been levied recently against a number of top-tier banks, has continued this period of retrenchment. Not unnaturally, these banks have re-evaluated their risk profiles and the resultant lack of risk appetite has been keenly felt in the world of cross-border payments. The impact has been a significant reduction in the already reducing number of global correspondents.

During the last financial year, our brand recognition has risen appreciably. This visibility led to numerous invitations to deliver presentations at international forums and conferences, sharing the platform with international leaders and regulators who view Earthport as an important participant in the future of the payments ecosystem.

The relationships with our Tier 1 Banking partners are crucially important to us, not only for the direct value we can secure from their own payments businesses, but also to enable us to increase Earthport’s profile. In order to maintain these partners, we have to demonstrate the ‘best of breed’ compliance and governance that we have developed over the recent years. These relationships have taken a significant time to come to fruition as, rightfully, these banks have had to ensure the complete integrity of our practices and processes.

Progressing Ahead

Chairman’s StatementPhilip Hickman

As we move forward from our transformational period and look to the future, I am enthusiastic about the potential developments for Earthport that lie ahead.


55.3%

$20tn 39 60+ 1 31 22$20tn 39 60+ 1 31 22$20tn 39 60+ 1 31 22

$20tn 39 60+ 1 31 22$20tn 39 60+ 1 31 22$20tn 39 60+ 1 31 22

Market Capability Growth

Size of the annualised global trade market

by dollar value

Countries available on

Earthport Network

Number of new clients signed by Earthport in 2015

Average number of correspondent banks maintained by FIs for payment

Number of connections needed by Earthport

clients to access

Number of new clients implemented by Earthport in 2015

FY 2014 FY 2015

Earthport is increasingly recognised as a positive disruptive force in the market. The result has been to open the doors to other industry sectors who rely on international payments but find the traditional settlement methods expensive, cumbersome and inflexible. The payments landscape is changing with e-wallets, mobile apps, blockchain technologies and virtual currencies demanding a re-think in how payment providers interact. Earthport is rapidly becoming a ‘trusted third party’, which makes our business model attractive to cross-border trade.

As we move forward, the opportunities from the new wave companies and non-traditional payment providers are increasing, in response we are increasing our investment to ensure that we broaden our geographical presence and strengthen our relationships with our network partners.

Our belief is that we should structure our company for the long-term and ensure the resilience of our infrastructure, networks and products continue to give us the competitive advantage in a world that is rapidly evolving. We believe the size of our addressable market is growing and will continue to grow over the foreseeable future.

Finally, I would like to pay tribute to Hank Uberoi, his executive team and the entire Earthport staff for another year of total commitment and success. The Board and I look forward to working with them in the coming years ahead.

Philip Hickman Chairman

Transactional Growth

“ The world of payments in 2020 will look very unlike it does today, and market transformation has already begun” Dominic Broom, Managing Director, BNY Mellon


Strategic Report

Chief Executive’s LetterHank Uberoi

Leading Ahead

Over the past 12 months, Earthport has cemented its position as an innovative and unique solution for cross-border payments, signified by the signing of some of the largest and most sophisticated brands globally, significant engagement with central bank regulators, governments and industry influencers and expansion into the world’s largest growth markets where we see the potential for our model to flourish over the years to come.

The continued investment we are making to secure our position in this highly specialised, highly regulated field, supported by our focused vision on the areas within which we operate, is clearly now beginning to pay dividends.

From this juncture, my conviction of the potential for Earthport to play a role at the centre of fundamental structural change for payments within the financial services industry has never been stronger.

� The opportunity identified remains the largest in the payments arena globally, and the need for a faster, cheaper, more transparent and compliant solution is great

� The solution we have is unique and barriers to adoption and scale are vast and complex

� As we gain in momentum and recognition of our model increases, we must continue to do so through close consultation and collaboration with industry and regulators globally

� The pace of change and investment within the industry is great and Earthport has now developed the organisational leadership, capability and physical footprint to ensure that the organisation remains defensible and remains resilient and nimble in the face of potential competition

� Our focus on the enhancement of our core product capability continues to strengthen our value proposition, enabling our clients and partners to access new and innovative payment methods through a single connection with Earthport

Client Acquisition and PerformanceIn line with increased acceptance of the model, Earthport has seen a significant step change in new business activity with 22 clients going live and new clients being signed, including top global banks Standard Chartered, BBVA and Santander and 6 of the top 10 money transfer organisations globally.

Earthport continues to focus on diversifying its client base. As testimony, Stripe, one of the fastest growing payments providers in the world recently signed an agreement with Earthport, further augmenting our position as a provider to the ecommerce segment.

In addition to new business development, we continue to expand our engagement with existing clients such as Bank of America Merrill Lynch, providing the foundation for embedded financial performance in the coming years.

Earthport continues to confirm our position as the leading cross-border payments network that safely and effectively delivers payment services across the globe in a unique and highly competitive manner.


EP Payouts

75%

FY 2014 FY 2015

This multi-faceted approach to commercial expansion continues to drive year-on-year revenue growth for Earthport with the attainment of positive cash flow in multiple months during 2015, indicative of the strength of our commercial proposition.

Our revenues are derived mostly from transaction fees (approximately 84%) and professional services. As we expand, fees from transactions will continue to be the focus of our efforts to achieve the required benefits from scale as our model reaches its full potential.

Investing for GrowthThe achievement of positive cash flow in multiple months this fiscal year represented a pivotal point in our evolution, whilst at the same time we continue to engage with the sheer size of the opportunity. We strongly believe that now is the time to accelerate the pace of our investment in critical areas of the Company, such as infrastructure, geographic expansion, human capital and leadership, enabling us to fully capitalise on the growth opportunities being presented.

To that end, Earthport’s recent acquisitions have enabled the Company to nimbly assume the core capabilities and capacity to scale and effectively achieve differentiation in the market. The acquisition of Baydonhill in late 2013 has now been successfully integrated into the Group, enabling significantly enhanced Foreign Exchange (FX) and Treasury Service capability. Furthermore, the purchase agreements Earthport made in 2014 for a minority stake in ASPOne, a provider of IT Development for Financial Services companies based in Istanbul, Turkey, continues to bear fruit as a means for us to bolster our operating platform and further enhance customer experience.

By far the most important investment made this year has been in our executive and senior leadership talent with the appointments of Daniel Marovitz as President of Europe, Mia Shernoff, Group Head of Marketing and most recently, Simon Adamiyatt, the Company Chief Financial Officer, all seasoned and highly accomplished professionals. Additional focus has been on acquiring new sales and client management leadership in strategically critical locations (Germany, Singapore and Dubai) and for high growth sectors (US Banking, ecommerce).

Network and Geographic ExpansionOver the last year, continued efforts to expand our international payments network, in line with client requirements, has resulted in the successful establishment of new network partnerships in several critical markets, including Pakistan, Jamaica and Barbados. As we strive to ensure business continuity and exceptional client experience across the network, focus has also remained on the development of resiliency across live countries.

In support of this, the establishment of a physical presence in several regions including Miami to support Latin America and most recently, Singapore to support the broader Asia Pacific, has enabled us to strengthen relationships with bank partners from within the regions and quickly respond to opportunities to optimise our service and expand our partnerships.

These developments, supported by our existing operations in London, New York and Dubai and key alliances with organisations such as the International Finance Corporation (IFC), continue to provide Earthport with the strong global coverage and connections required to properly support expansion and maintenance of the network over the years to come.

Strong Compliance Expertise In a segment marked by ever-increasing regulatory complexity, Earthport has invested significantly in the compliance expertise required to enable banks to meet the measures being implemented to oversee international transfers. The very nature of traditional open-loop (correspondent banking or wire) payment systems makes it extremely difficult for any institution to understand and easily disclose to the end-user when a payment will arrive, what the ‘in-flight’ charges are and how much the beneficiary will receive. Earthport’s capabilities enable our clients to address these needs.

Earthport’s compliance capability is embedded in every client interaction and processed transaction. We apply a risk-based approach to the execution of compliance controls designed to ensure that the legislative and regulatory environment requirements are met. A comprehensive and detailed approach is utilised to further strengthen our counter-party’s own control regimes. We adopt a transparent partnership approach on an ongoing basis, including third party reviews, and audits as well as maintaining perpetual due diligence to monitor a client’s business activities. Transaction screening further augments the compliance processes. These effective controls manage our risk and ensure the safe growth of Earthport’s business.

Growth of Total Dollar Value of Payments


Strategic Report

Chief Executive’s Letter continued

Enhanced Client Service Delivering an unparalleled client experience is paramount to Earthport’s continued success and a focus on operational excellence to achieve this is at the forefront of priorities. As such, Earthport continues to expand service availability and transaction throughput to ensure the highest level of efficiency, accuracy and availability of our service.

There are three core components that comprise our service operations:

� Client integrations – Earthport continues to enhance systems to enable simplified integration options for clients and bank partners to connect to Earthport’s network

� Platform efficiency – As our volumes grow, continued focus is placed on developing the capacity to scale operations. These improvements enable Earthport to deliver better throughput results and timelines for payment delivery to meet clients’ Service Level Agreements

� Professional service engagements – Given the size of our client’s organisations and the complex nature of their operations, most new business engagements begin with a consultative assessment and discovery phase to guide a successful implementation. We continue to grow the calibre of our resources and processes that enable us to expertly assume new client volumes

Strong, Industry-Leading PresenceEarthport remains highly visible among industry leaders and policy makers by partaking in steering committees, presentations at industry conferences and by hosting events and webinars alongside some of the world’s largest banks and technology innovators.

In July, Earthport participated at a forum of Central Bankers from around the world at the invitation of the Bank for International Settlements in Basel. Increasingly, policy makers view Earthport’s model as a means to foster greater transparency and efficiency within established payment institutions. These opportunities continue to provide exposure for our thought leadership and represent acknowledgment of our solution.

Financial Review Total revenue for the year ended 30 June 2015 increased 78% to £19.27 million (FY 2014: £10.82 million). On a like-for-like basis, revenue grew by over 55%. The increase in underlying revenues has been driven primarily by payment transactions as existing clients increase activity and as new customers go live, as well as minimum revenue contracts and consulting engagements that generate professional services fees. Earthport achieved positive cash flow in multiple months during the second-half of 2015 fiscal year, before accelerating the pace of investments driven by the sheer size of opportunities ahead. Adjusted gross margin increased to 81% (FY 2014: 76%).

Adjusted operating loss, before share-based payment charges of £3.29 million (FY 2014: £1.75 million) and unrealised fair value adjustment of £0.35 million arising on the year end translation of unsettled transactions (FY 2014: £2.27 million), decreased by approximately 22% to £5.01 million (FY 2014: £6.44 million). The operating loss was £7.96 million (FY 2014: £6.35 million). A charge of £0.73 million has been recognised for warrants granted to Bank of America Merrill Lynch (FY 2014: £0.32 million). The Group loss before taxation increased to £8.71 million (FY 2014: £6.33 million), including £0.80 million in relation to unwinding of discount on deferred consideration. Overall, loss after taxation increased to £8.69 million (FY 2014: £6.70 million).

Cash and cash equivalents at 30 June 2015 were £30.20 million (at 30 June 2014: £9.46 million).

Net cash used in operating activities decreased to £2.90 million (FY 2014: £4.36 million). The continued decrease in net cash used in operating activities demonstrates that a turning point in cash used versus revenue growth has been reached.

Share Placing On 18 September 2014, Earthport announced the successful placement of 65,136,464 new ordinary shares at 40.85 pence per share with both new and existing institutional investors. The gross proceeds of £26.6 million ($43.43 million) have and will continue to enable accelerated geographic expansion in Asia and other geographies, investment in significant product opportunities, such as the recently announced distributed ledger solution, a first of its kind, and the ability to invest behind the growth and momentum achieved in North America and Europe.

Oppenheimer Funds Inc. of New York was the cornerstone investor in the round and held 8.62% (currently 10.20%) of the enlarged issued share capital of the Company at year end. The strengthened balance sheet adds significant comfort for clients and regulators around the world with the Group’s model and positioning. There are several revenue opportunities, such as US licencing and increased forward FX lines that will benefit from our stronger balance sheet, although not all will involve an actual increase in the use of cash.

Key Performance IndicatorsEarthport specialises in the large segment of low value cross-border payment disbursements. It is our vision to provide banks, money transfer organisations and other payment service providers with an improved way of servicing these payments through a single relationship, enabling them to serve their commercial and retail customer payments in a faster, cheaper and more transparent way.


The indicators of our success involve four characteristics under which we operate:

1. The incumbent process is antiquated, costly and prone to risk: the existing model is not fit for purpose and complexity increases as it proliferates at the expense of efficiency and regulatory compliance.

2. The market opportunity is significant: global trade and remittance flows exceed $21 trillion today with expectation of future growth.

3. The segment remains largely underserved: to date, the majority of attention, funding and new solutions have focused on the collections or retail side of payments, with acquirers, card networks and consumer applications thriving.

4. Our competitors are our clients: incumbants who are providing cross border disbursements and remittances are typically our clients focused on addressing a defined segment of the market.

Furthermore, Earthport’s proposition is based on partnership and is disruptive without being in competition with existing players in the segment. Our focus is on creating solutions for incumbents to remove the inefficiencies in their model, enabling them to focus on new product innovation and retention of the customer relationship.

To measure our success, the directors consider that the appropriate key performance indicators for the business are:

� Gross revenue � Gross margin � Number of bank partnerships across the network � Straight Through Processing (STP) ratio

EmployeesEarthport places considerable value in a diverse population of employees and their engagement as enablers of our performance.* To that end, within the bounds of commercial confidentiality as a matter of interest, information is shared with all levels of staff about matters that affect the progress of the Group.

Strategic PillarsConsistent with Earthport’s strategic intent to be the largest global bank payment network, Earthport remains focused on the development of the five key pillars of our model.

1. PlatformState-of-the-art platform, offering scale to manage millions of cross-border payment transactions complemented by versatile interface structures and formats ensuring Straight Through Processing (STP) rates of 99.5% plus.

2. NetworkA network of 60+ countries with a target of over a 100 countries where Earthport will deliver payments through an interface via the local clearing system.

3. Domain expertiseDomain expertise across all markets in the Earthport Network, providing automated access to one of the largest validation databases for payment formats, and an up-to-date knowledge base on payment systems across the world.

4. ComplianceA robust and fully integrated compliance process which ensures enhanced protection and risk mitigation to meet existing and evolving regulatory requirements.

5. Treasury services and evolving products Efficient Treasury Services offering liquidity management structures to optimise the journey of a payment in a wide range of currencies required by our clients, combined with new product innovations to capture evolving technologies such as, the distributed ledger/blockchain technology.

Proof points have now been achieved across each of these pillars, establishing Earthport’s foundation for expansion of its regional footprint and growing client base whilst enriching product suite and platform capability to cover emerging areas such as mobile payments, card/POS payments, collections, payment tracking and most recently, our distributed ledger offering.

OutlookEarthport enters the current financial year in an excellent position, with established relationships with some of the largest financial institutions in the world and a strong balance sheet. The current pipeline of opportunities is substantial within our core banking client market as well as in adjacent areas of the international payments ecosystem.

Earthport’s product positioning, extensive market opportunity, acceptance with our existing clients and prospects, provides us with the confidence to increase our investment with a focus on accelerated growth over the coming years.

We are entering a truly exciting phase in the evolution of the Company.

By order of the Board

Hank Uberoi Chief Executive Officer 28 September 2015

* For further information, please see our full diversity policy at http://www.earthport.com/wp-content/uploads/2014/02/ Equal_Opportunities_Dignity_at_Work.pdf


Strategic Report

62%Of emerging market population send payments by mobile phone

18.8%Cross border payment CAGR 2009 – 2014Source: Boston Consulting Group Global Payments Study 2014


Earthport’s success has been directly linked with the growth of our network and global reach, and in the last year we have driven expansion into key locations in response to client requirements. We will continue to establish Earthport’s fast-growing payments model internationally and demonstrate how and why it is solving such a specific global payments problem by challenging the status quo of the outdated existing payment method.

Earthport’s planned investments will grow our coverage, including placing people and resources where most effective. In the past 12 months, we have opened a new office in Singapore to service clients and partners across the APAC region, announced a new office in Miami to focus on Latin America and strengthened our relationships with clients across Europe with new relationship managers placed in Germany, Italy and Spain. We continue to grow our team in North America, while our office in Dubai addresses access to our interests in the Middle East and Africa.

The challenge ahead is to leverage our collective expertise across all locations, using technology and communications tools to enable quick access to solve the unique requirements of clients and partners across the globe.

Reaching Ahead:Expanding in Geographic Regions


Strategic Report

At a Glance

The Largest Open Network for Global Bank Payments

“It’s plumbing, but the payments market has opened up and its size could not be larger”Jan Hammer, Partner Index Ventures

Our VisionOur vision is to provide the industry with a better way of sending multi-currency payments, enabling financial institutions to retain ownership of the customer with transparent and efficient cross-border payment solutions. We help foster innovation, collaboration and the strategic growth of our clients’ business.

Through an innovative payments framework, specifically designed for high volumes of low (monetary) value cross-border payments, Earthport enables a cost-effective and transparent service for secure international payments. Financial institutions use our service to process payments that include:

� Trade related payments � Accounts payables � Pension and payroll disbursements � Expense disbursements � Ecommerce and royalty payments � P2P and remittance payments

How We WorkEarthport offers a proven service that delivers low (monetary) value cross-border payments. We bring increased efficiency to banks and other organisations while reducing delays, errors and fees, ensuring that their customers, consumers and/or commercial entities, experience exceptional customer experience.

Why Earthport?Designed to handle high volumes of transactions in over 60 countries worldwide, we continue to expand through the growth of our bank network partnerships. With a service that is competitive, easy to use and offers around-the-clock processing, our clients can count on Earthport to:

� Modernise trade payments by creating straightforward ways to make open account trade payments, at a fraction of the cost of existing methods

� Deliver high-urgency volume payments such as bulk payroll, expense disbursements and pension payments efficiently, accurately and on time

� Provide direct-to-bank remittance services enjoying charges that are typically less than 50% of the current market average for wire payments and international funds transfer, capturing flows of remittances and generating fee income

� Make and receive ecommerce payments efficiently, processing high volume, payments with reduced risk

Number of Staff:

215Number of Earthport Regional Offices:

5Number of Countries in Network:

60+

Through an innovative payments framework, specifically designed for high volumes of low (monetary) value cross-border payments, Earthport enables a cost-effective and transparent service for secure international payments.


Inclusion in the FinTech 50

‘Game-changers transforming the future of finance’

FinTech 2015

Excellence Awards

Grant Thornton

Technology Company

of the Year

FS Tech

B2B Payments Innovation of the Year

CFIco

Money Transfer Company of 2015

5 3 6

Who Relies on Earthport?With Earthport, clients can route high volumes of low (monetary) value payments through the most efficient clearing schemes. Clients include any entity which can benefit from this service.

of the top 25 Global

Banking InstitutionsEarthport helps banks and financial institutions extend their market share, increase Foreign Exchange (FX) revenues, reduce errors and increase transparency and efficiency. Earthport empowers its clients to improve the value of their offering.

of the most talked about

Digital MarketplacesEarthport helps ecommerce companies handle large volumes of commissions, fees, royalties and supplier payments efficiently and transparently.

of the top 10 Online Money

Transfer OrganisationsThrough Earthport, money transfer operators can easily access electronic remittance channels and make low-cost, highly reliable international payments without having to establish global banking networks.

Recent Industry Awards and Recognition

...and the millions of underlying corporations and consumers who need to send and receive secure,

compliant international payments.


Strategic Report


The growing acceptance of Earthport across new geographies and client segments is evidenced by the growing volume of our payment transactions and recurring revenue. Furthermore, the industry acknowledges Earthport with its continuous media coverage and demand for our participation to serve on panels and lead industry forums.

Innovation Ahead:Growing Acceptance For a New Cross-Border Payments Model “ Built in the 1970s the

current method for making overseas payment is ill-equipped for a digitised economy. New ventures like Earthport are rewiring a machine that addresses $20 trillion a year” Ed Robinson, Bloomberg Markets


Strategic Report

Single relationship

Automated validation

Simple connectivity

Sophisticated compliance

function

Bank-grade infrastructure

Global customer support and operations

Low cost per transaction

>99% deposit efficiency rates

No landing fees

Predictable outcome

� Earthport powers the growth and reach for our client’s business, enabling them to focus on their core competencies and the innovation of new services. With Earthport they are able to reach new market sectors, grow their reach into new locations and support new payment capabilities

� Earthport’s clients gain improved economics through the elimination of redundant operations, resources, technology and development associated with global payments provisioning. With a single integration to Earthport, we enable clients to access a wide range of growing countries, currencies and solutions

� Earthport assures compliance and regulatory requirements, enabling clients to better manage risks associated with payments. The high degree of control integrated throughout Earthport’s transactions means that clients can meet and often exceed objectives and regulatory requirements

� Earthport provides the fastest payments possible. From a single connection, Earthport enables the fastest settlement for outbound, low (monetary) value cross-border payments, through a single connection, enabling significant competitive advantage for our clients. Once connected, clients gain access to the fastest channels for payment settlement whether expedited through global ACH, through faster payments in the locations available, or real time payments available through distributed ledger protocol (blockchain) as that technology evolves

In short, Earthport’s proven model enables clients to provide greater efficiency and economic advantage to their customers.

Value Ahead: Bringing Competitive Advantage to Our Clients

Our Clients and Network Partners

As a result of our award-winning payment model, Earthport is able to provide a service that enables financial institutions, money transfer organisations, ecommerce and payment aggregators businesses to compete in new markets and bring new and better services to their customers.


Earthport’s Clients Are Concentrated Into Four Discrete Categories:Banks and Financial InstitutionsRapid advances in technology combined with significant shifts in consumer behaviour are transforming the payments landscape within banks and financial institutions. To confront new and non-traditional threats, these institutions are seeking effective payment solutions to avoid becoming disadvantaged in this fast-evolving environment.

With Earthport, financial institutions are expanding their geographic reach for international payments and capturing the revenue streams that are generated through FX while increasing margins through efficiency.

Global financial institutions, including Bank of America Merrill Lynch and Banco do Brasil, use our services to capture additional revenue streams by offering new differentiated payment propositions to their commercial, small business and retail customers. Earthport clears transactions locally across the world through a network of banking partners including Barclays, Bank of America, Maybank, SEB and Standard Bank.

Money Transfer Organisations With Earthport money transfer companies can now offer more competitive, lower cost global online remittance products all through a single commercial and technical integration.

Our award-winning infrastructure is available on a white-label basis with competitive terms. Earthport provides electronic remittance channels for leading money transfer companies such as Western Union, Transferwise, Azimo and Xoom.

Ecommerce CompaniesEarthport enables online and digital commerce providers, including merchant acquirers and payment gateways to handle large volumes of cross-border consumer and corporate payments efficiently and transparently through a single connection. Ecommerce companies often need a more effective means to quickly and transparently pay the proceeds of high volume sales to suppliers and global sub-merchants on a frequent, recurring and often, daily basis. This becomes a critical operation to realise their ecommerce marketplace economic model. Innovative ecommerce companies such as Payoneer and Stripe are clients of Earthport.

Payment AggregatorsCompanies providing banking software solutions and wholesale Financial Services benefit from integrating Earthport into their service offering. With Earthport, these companies enable a turnkey payments solution appended to their core service that generates new sources of revenue and enhanced retention of clients. Our white-label service seamlessly enables these payment aggregators to offer more competitive services and annuity transaction revenue. Some of the companies from this category using Earthport include Fiserv, Skrill and Transferwise.

Global Bank Network Partners – Representative SampleFundamental to our model is Earthport’s global network of bank partners, representing more than 50 banks today and growing. These providers are initiating or terminating payments across more than 60 countries. These major international brands include:

Earthport’s Clients – Representative Sample


Strategic Report

Market and Client Development

Opportunities Ahead

World population is becoming more mobile and commerce more global, with the Internet and mobile devices making it easier to shop and do business beyond national borders. While new competition and improved payment systems are redefining the domestic payment experience, the infrastructure to support international cross-border trade has not kept pace.

Traditionally, banks organised their systems and processes around their business lines, with payments services housed in those divisions, placing retail payments services in the domestic division of the bank. Cross-border payments services were kept in the high value, wholesale or cash management services division established to serve corporate customers. This model was designed in the 1970’s when only a few countries facilitated cross-border trade, in a handful of currencies. Fast forward to today and there are hundreds of countries, trading in hundreds of currencies but still using a model designed 40 years ago.

While these silo solutions, connected through a network of bi-lateral partnerships, may have remained sufficient for the market they were intended to serve, market pressure is now demanding change. Today, the rate of change in technology is far faster than that of Financial Services, and banks must become proactive if their payments businesses are to survive in the face of fundamental market transformations. Efficient, adaptable and secure systems for facilitating financial transactions are essential to any thriving modern economy.

The needs of all sizes of corporate customer are changing, opening significant opportunities for banks to provide value-added services around payments:

� Large enterprise payments will continue to grow in complexity, offering an opportunity to companies that can provide platform-based services that take away payment complexity, replacing them with growth-related value

� The internationalisation of small to medium sized businesses opens up substantial opportunity in markets that operated primarily in local economies

� Social payments will be a significant wild card, growing in value but driving the price of payments down to zero or below

� The market for cross-border, direct to customer ecommerce is expected to grow exponentially particularly with the acceptance of online shopping from consumers in emerging markets

� Remittances will continue on a steep growth trajectory and be subject to new payment technologies such as distributed ledger technologies

� Changes in pension arrangements globally will open new opportunities for managing personnel payment flows

� Large ecommerce business and digital marketplaces continue to take value from local economies creating new payment flows and representing new client categories for Earthport

Earthport’s on-going success is based on making the most of every opportunity, which means attracting new clients as well as developing the relationships with existing ones. The key to achieving this is to understand where our crucial markets are and identify who our potential customers are.

Global Digital Commerce

$900 billion

Global Remittances

$650billion

Volume growth of cross-border payments

11% CAGR

Global Trade Payments value

$22.6 trillion Source: Boston Consulting Group Global Payments Study, 2014; McKinsey Global Payments, 2014.

Payment Industry Metrics


Global Payments Market Insights

Wholesale PaymentsRevenues are Led by Transactions in Asia-Pacific The Asia Pacific (emerging) region has the strongest transaction-revenue growth. The rise of global challenger companies is fuelling a significant increase in balances and transaction flow. Banks will excel if they meet the needs of growing companies, particularly with regard to cross-border transactions.

Cross-Border PaymentsPayments are Streaming Across BordersCross-border payment flows will increase significantly in all regions, thanks to steady growth in international trade. Transaction-specific cross-border revenues will grow robustly.

Boston Consulting Group, Global Payment Interactive Report, 2014https://www.bcgperspectives.com/content/interactive/financial_institutions_pricing_global_payments_2014_interactive_edition/


Strategic Report

1. ExpeditedPayments(within 24 hours, via Global ACH Networks and SWIFT)

2. Faster Payments(intra-day in locations where available)

3. Real-time Payments(via Distributed Ledger and mobile wallet)

Earthport sits in a unique place in the payment lifecycle, providing cross-border, low value payment disbursements. The prospects for our business is compelling because of four primary reasons: � The incumbent process is broken. It is highly

fragmented, expensive and inconsistent. Although there are providers serving the market with automation, they are addressing the existing fragmented model which is costly, prone to risk and slow

� The market we are addressing is massive, representing global trade and remittances at over $21 trillion in value

� It is underserved. Most of the attention, funding and solutions tend to be on the collections or retail front end, with merchant acquirers, card networks and consumer applications proliferating

� Our competitors are our clients. Providers who are offering cross-border disbursements and remittances are typically our own clients and often addressing a small segment of the market

Earthport’s proposition as a white label service makes us collaborators, rather than competitors to our clients and partners.

Our Strategic Vision Our strategic vision is to power a global payment network that allows clients to reach any account, in any country, in any currency, through one connection, with world-class compliance, exceptional resilience and optimised routing for price and fastest speed possible.

The leading financial institutions, money transfer organisations and ecommerce companies around the world increasingly prefer Earthport as a way to effectively ‘future proof’ their payment operations. By being the payment enabler between their payers and beneficiaries, Earthport has the opportunity of being the transaction utility, or ‘middleware’ of money.

For our clients, we eliminate issues of format, technology, compliance, regime and liquidity through an outsourced service with flexible connectivity options, offering the widest range of payments options without the need for further burden of integration.

The delivery of payments is facilitated through the use of optimum mechanism and client chosen route, including: ACH, RTGS, mobile wallet, SWIFT, distributed ledger, token payments (e.g. PayPal) and others as they emerge.

Earthport Ahead: Our Strategy and ModelOur strategic vision is to become the ‘Middleware of Money’.

Earthport’s Channels to Fastest Payments Possible

Our Strategy and Model


Earthport Payment Network

FI:EUR

US:USD

HK:HKD

NO:NOK

UK:GBP

BR:BRL

TWN:NTD

ZA:ZAR

PO:PLN

NZ:NZD

PH:PHP

JP:JPY

InfrastructureOperationsComplianceChannel Receiving Bank

Payment is delivered through the Earthport network, at the lowest cost and via the fastest route

Sample currencies

Client’sSending Bank

BankCustomer

£

Deploying a hub-and-spokes model for cross-border payments

Earthport Operating ModelBefore Earthport, our clients had no simple, efficient and inexpensive way to send low (monetary) value payments, relying on an infrastructure designed for higher value international trade. Earthport’s service delivers predictability, transparency and efficiency through a model dedicated to the growing volumes of lower value of international payments.

Earthport offers a proven service that delivers low (monetary)value cross-border payments. It brings increased efficiency to banks and other organisations while reducing delays, errors and fees, ensuring the consumer or corporate has an exceptional customer experience.

“ We are creating a new network to move money around the world, eliminating the current inefficiency, rather than replacing the existing business model altogether”Hank Uberoi, CEO


Strategic Report

“ Cross border ecommerce alone is projected to triple by 2020”World Bank, Annual Report 2014


Earthport’s addressable market is massive and rapidly growing, representing global trade, remittance and ecommerce. To enable us to capture the opportunity ahead, investment is essential. It will ensure complete network reliability and resiliency, giving us the ability to comfortably provide exceptional client experience no matter how fast we grow.

Earthport’s commitment to putting people and resources where our clients need them has seen new offices opened in Singapore and Miami. Affiliations with key European partners is reflected by the addition of new relationship managers in Germany, Italy and Spain.

This year investments have been made to expand IT development and product management, adding skills and disciplines that allow us to create new solutions to meet demand. One example includes our partnership with Ripple and enabling real time payments seamlessly through our gateway.

This focus on expanded capabilities, such as our partnership with Ripple to facilitate real time payments will enable us to realise our vision as the defacto model for cross-border payments.

Investing Ahead: Fuelling for Growth

“Flows of goods, services and finance reached $26 trillion in 2012, or 36% of global GDP, 1.5 times the level in 1990. Now, one in three goods crosses national borders” McKinsey & Co, Global Institute (MGI) report 2014


Strategic Report

Principal Risks and Uncertainties

Like all companies, Earthport is exposed to various risk factors and uncertainties that could impact the execution of the Group strategy. In addition to this, given that Earthport is part of a highly regulated Financial Services industry operating in multiple jurisdictions, serving banks and other financial institutions, and companies in the fast-evolving ecommerce space, we recognise the importance of an adaptive and robust risk management process to support our growth objectives.

The Company therefore deploys a two-way ‘top down-bottom up’ approach to identify, mitigate and manage potential risks.

During the year a separate Operational Risk Committee was established under the Chairmanship of Chris Cowlard, Director and Chief Operating Officer. This committee complements the processes already in place across the Company covering Information Security risks, Financial risks and Compliance risks. Other members of the Operational Risk Committee are Tania Brownhill, Head of Group Operations, Andrew Brown, Head of Group Compliance and Asif Ali, Finance Director. Philip Hickman also sits on this Committee during its formative stages to give advice and guidance.

Under the Terms of Reference for Operational Risk Management, Operational risks are identified from across the business for systematic tracking and oversight of the Committee. All operational risks are objectively categorised by potential impact and likelihood of occurrence, with any serious risks being reported to the Board by the Operational Risk Committee Chairman.

At the execution level, key risks are identified, calibrated and managed across all functions within the organisation. The classification below captures the risk management process adopted by the Company.

Risk Risk description Trend of the risk in 2014-15 and mitigation

REVENUE RISK Concentration in a limited number of clients could cause a major fluctuation in the revenue stream.

We continue to develop a strong pipeline to broaden our client base in number, type and geography.

Clients might want to take the process in-house. We have established good relationships with our clients to understand their ambitions and work closely with them to identify broader product possibilities. We also ensure compliance with the stringent service Key Performance Indicators (KPIs) we have in place and are proud to share these with clients on a regular basis to demonstrate the quality of our service.

We continually invest in our product and network to enhance the value of our service to clients.

Time taken from the time a client signs up to actual revenue realisation is substantial and varies significantly across each client.

A dedicated Project Management Office has been created to manage and monitor progress of implementation of deals won, analysing and implementing improvements to this over time. Progress of individual deals and the ongoing implementation process are also actively monitored, with exceptions raised for action at the management committee and Board level as appropriate.



COMPLIANCE RISK Against a background of constantly changing (sometimes more restrictive) regulation and legislation, we must ensure that we are and remain, fully compliant and alert to the potential impact and consequences of the materialisation of Financial Crime and Regulatory Risks.

Key risks:1. Facilitating a serious financial crime (e.g. money laundering,

or the financing of terrorist activities).2. Breaching legislation and/or regulation relating to serious

financial crime.

Either of the above will lead to the materialisation of reputational risk alongside Regulatory and/or legal action including:

� Fines and/or loss of licence to operate (via withdrawal of authorisations to transact etc.)

� The withdrawal of clients and banking partners from commercial relationships

� Action against Directors and Officers of the Company including fines, loss of licence to work within Financial Services and imprisonment

Compliance risk grows exponentially in as much as each time we grow the business by entering new territories, delivering new products or entering strategic relationships, our risk profile changes accordingly. This is exacerbated by the uncertainty across some regulatory areas (subject and geography).

We mitigate compliance risk through the application of a ‘Monitor, Review, and Implement’ cycle which reflects the changing risk environment that the Company is exposed to.

We have increased the size and competence of our Group Compliance Function and the breadth, depth and quality of our:

� Counterparty due diligence � Transaction screening � Monitoring solutions

We remain alert to the nature and impact of external and internal environmental changes, and make appropriate amendments to our internal control framework, including resourcing further automation of technical controls, reviewing and remediating policies and procedures and enhancing our employee training program.

Employee fraud. Fraud remains a risk to the business, as it does in any financial processing business. Earthport is confident that the level of control apparent in the operating model (e.g. data security controls, four-eye processes, frequent reconciliations as well as strict staff on-boarding checks) continues to ensure that we remain vigilant against this potential.

Earthport has a strong Code of Conduct which incorporates a ‘Whistle Blowing’ policy ensuring members of staff have multiple routes to confidentially protect the integrity of the business.

Negative shareholder and major customer reaction to adverse client activity or corporate negligence.

The Financial Services Industry is highly integrated and we have built strong relationships particularly with the Risk and Compliance Departments in our customer organisations to mitigate any problems.

Where we feel a client and network partners cannot meet our stringent requirements we will exit those relationships as appropriate.


Strategic Report


INFORMATION SECURITY RISK

Sensitive information needs to be protected, no matter what form it takes, what technology is used to process it, who handles it, where the information may be located and in what stage of its lifecycle the information may be.

Earthport holds the ISO27001:2013 certification. This certification defines the annual process that identifies threats and vulnerabilities and results in a formal risk assessment.

Risks are constantly changing as new technologies are developed and new threats identified. The management of security therefore requires a dynamic approach within a cycle of continuous improvement. This requires that risk assessments are undertaken at appropriate intervals (at least annually or after significant change for ISO27001), that risk treatment plans are updated and identified security improvements are implemented.

The Information Security Management Forum, chaired by the Information Security Officer, reviews the results of risk assessments and makes decisions on risk treatment e.g. whether to accept the risk or reduce the risk by implementing additional security controls. The decision to implement additional controls will depend on a comparison of the risk value and the cost of control implementation. The effectiveness of each control in mitigating the risk is continuously measured in terms of residual risk and further consideration is made within the context of the organisational risk appetite. The approach taken is a qualitative one. Relevant information owners are consulted with during this process.

OPERATIONAL RISK Operational risk is defined as, “The risk of negative direct or indirect operational impacts resulting from human factors, inadequate or failed internal processes and systems or external events”.

In the Earthport Group, such an Operational Loss could be financial (company or client money), reputational, client relationship or other such risk.

Examples of such risk categories are:

� Execution, Delivery and Process Management � Inadequate management of third-party supplier services

(e.g. bank partners) � People capabilities, versus role requirements � Clients, Products and Business Practice

Recognising the impact operational risk can have on the Company, a new operational risk management process has been defined and is in operation.

The management of operational risk has two key direct objectives:

1. To minimise the impact of losses suffered in the normal course of business (expected losses)

2. To avoid or reduce the likelihood of suffering an extreme (unexpected) loss

Further results from this process are expected to include:

1. Reduced costs through reduction of money requiring write-off

2. Strengthened company brand and external reputation

The definition of the operational risk management framework and Governance process are defined within a company Terms of Reference document.

The operational risk Board meets at least four times per annum, a detailed operational risk register being maintained and reviewed within the meetings. In addition, the Executive Committee meets weekly to review and manage the business performance on an ongoing basis.

All Critical and High categorised risks within the Register are raised to the Earthport Board for review and appraisal.

Principal Risks and Uncertainties continued



Network partner performance risk.

Earthport’s business is dependent on its access to local clearing and payments systems in many markets across the world. This access is managed through an extensive network of bank partnerships.

Earthport’s ability to deliver on payment instructions received from its clients could be impacted if there is a disruption to the partnership or a performance issue with the partners.

Earthport’s dedicated banking network management team in partnership with the compliance team has a well-defined process which begins with the evaluation of each market, their respective regulatory framework, network partnership options, evaluation criteria for partnerships, performance SLAs, on-going partnership monitoring tools and resilience processes. In addition to these, Earthport is a member of SWIFT providing for uninterrupted services in case of a redundancy situation. Through its regional offices in Singapore, Dubai, New York and Miami, Earthport has strengthened its market and network partner management components, by adding resources closer to the countries.

Employee fraud or error. At the heart of Earthport’s operations is a high degree of automation, necessary in order to support a high-volume, high-STP transactional processing business.

Over the course of FY 2015, Earthport increased its investment in further software development and other resources to increase the degree of automation in place within the operations group both to support increasing scalability challenges as well as reducing the potential for human error to create operational risk.

During FY 2015, the process of reconciliation of client accounts was separated out of the Operations department and moved into a separate function within Finance for appropriate separation of duties and controls.

Business continuity risks. As part of the work feeding into our successful accreditation for the ISO27001 standard for Information Security, we have implemented a full business continuity planning (BCP) programme.

This includes planning, documenting and testing of three key continuity situations:

� System Datacentre Loss � Operations Centre Unavailability � Pandemic/Mass Absenteeism

Our production systems are operated on a minimum 99.9% availability model. This requirement is monitored by an external body and we are proud to show that our availability is typically run far above this minimum level through the use of highly-available infrastructure and a high degree of application and infrastructure automation.


Strategic Report


OPERATIONAL RISKcontinued

Organisational risk; inability to recruit and retain staff. We have a good retention record which we believe is through our fair terms of employment including both pensions and short and long-term incentive plans. As the Company grows and the brand is becoming more recognised, Earthport is seen as a “good place to work”.

The key management have long-term incentive plans through option schemes linked to the performance of the business.

Salary benchmarks are performed against external markets to ensure the correct level of compensation for staff and an objective-based bonus scheme has now been put into place for all non-commissioned staff.

Increased investment has been made into our Human Resources department in order to support the needs of the growing global business.

FINANCIAL RISKS Credit risk in that our counterparty will default in contractual obligations.

All new and existing customers are assessed for credit quality and risk. Customer contracts are drafted to reduce potential risk to the Group.

Capital management risk relates to the ability of the Company to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders.

This has been a key area of focus for both Management and the Board to ensure we have the appropriate capital adequacy both for existing operations and to meet our strategic ambitions. With the successful funding round in September 2014, the balance sheet has been considerably strengthened and gives the Company, our regulators and clients a stronger financial platform.

Liquidity risk is that the location of our liquidity does not match liquidity obligations.

Earthport ensures that funds are available from a client prior to payments being made, thereby ensuring that Earthport does not take on the financial risk of a transaction.

The Earthport Group closely monitors its cash position on a daily basis in each currency to ensure we have sufficient funds to meet these liabilities as they fall due. The Treasury function has been expanded and further investment continues to be made to ensure that our client money is moved and converted correctly in alignment with our liquidity needs.

Principal Risks and Uncertainties continued


Earthport’s Management Team

Hank UberoiChief Executive Officer

Simon AdamiyattChief Financial Officer

Andrew BrownGlobal Head of Compliance

Chris CowlardChief Operating Officer

Jonathan LearPresident, North America

Daniel MarovitzPresident, Europe

Mia ShernoffGlobal Head of Marketing and Market Development

Sajeev ViswanathanPresident, Global Strategy


Directors’ ReportDirectors’ Report

Board of DirectorsHank UberoiChief Executive Officer Executive Director

Hank has served as Earthport’s Executive Director since February 2010, and since 2012 as CEO of the Company, after holding an investment in the Company. Until April 2004 Hank was the Chief Operating Officer at Citadel Investment Group, and prior to that, spent 14 years at Goldman Sachs as a partner and Co-Chief Operating Officer of the technology division.

Hank graduated from Williams College, MA, with a BA, Magna Cum Laude, and continues to play an active role in investing and nurturing early stage companies.

Independent N/A

Committee MembershipNominations Committee (Chairman)

Philip HickmanChairman Non-Executive Director

With over 45 years of banking including 32-years at HSBC, Philip has served as Non-Executive Chairman since November 2010.

During his time at HSBC, Philip held various roles including Head of Developing Countries Division, Managing Director (Europe) for HSBC Global Payments and Cash Management and Head of Planning and Development (Commercial and Corporate) for HSBC plc. Philip runs his own independent consultancy focusing on numerous business functions including payments, strategic development, and governance and compliance. He has been a Non-Executive Director of a number of companies in the UK, Russia and the US.

Independent Yes

Committee MembershipAudit Committee (Chairman) Remuneration Committee, Nominations Committee

Chris Cowlard Chief Operating Officer Executive Director

Chris has been Earthport’s Chief Operating Officer since 2011, and was appointed to the Board as Executive Director in 2012.

Chris manages Earthport’s global operations, including payments processing, IT infrastructure, software development, data centre management, client implementation projects, and HR. Prior to Earthport, Chris held a number of technology and operations roles at Broadridge and Coexis Ltd and holds a degree in Mathematics and Computing from the University of Bath.

Independent N/A

Sajeev Viswanathan President, Global Strategy, Executive Director

Sajeev joined Earthport in June 2014, where he is driving Earthport’s strategy, including expanding the Company’s global footprint and payment network.

Sajeev’s 25 years of senior management roles in Financial Services includes, Chief Executive Officer of Bhartiya Samruddhi (BASIX), a microfinance company in India, 18 years at Citigroup as Managing Director of the Global Transaction Services division, Head of the Global Receivables and Trade Finance business, and Risk Director for the Board of Citicorp Trustee Company. Sajeev has an MBA from Thiagarajar School of Management and a BSc in Physics from Loyola College, Chennai.

Independent N/A

Complete biographies of the Directors may be found at http://www.earthport.com/discover-earthport/board-of-directors/


Directors’ Report

Mohit DavarNon-Executive Director

Mohit is an experienced payments executive with over 18 years’ experience in remittance industry, setting up and leading global teams and operations and managing relationships with banks/financial institutions and regulators at the senior most level. He has been involved as CEO, in two start-ups in this industry, firstly in 1997 he helped form the Joint Venture between MoneyGram and Thomas Cook, which was sold in 2003. He then set up Travelex Money Transfer, which was acquired by Coinstar Inc. in May 2006 and Sigue Corporation in 2011. Mohit is on the Board of and an advisor to other payment companies. Mohit is also the Chairman of the Advisory Committee of the International Association of Money Transfer Networks and a member of the Institute of Chartered Accountants in England and Wales.

Independent No*

Committee MembershipAudit Committee

*During the year Mohit Davar received 150,062 shares in respect of additional advisory services he provided to the Company. Mr Davar is not considered to be an Independent Director as a result of this additional contract.

Jorge Moran Non-Executive Director

Jorge joined Earthport’s Board in May 2014 after significant roles in Financial Services, including CEO and President of Sovereign Bank, US Country head for Santander, CEO of Santander’s insurance and asset management business. Prior to that Jorge was COO and a Board Director at Abbey UK and a partner of AB Asesores, since acquired by Morgan Stanley.

Jorge was conferred an Honorary Doctor of Commercial Science by Bentley University and holds a BA From the University of ICADE in Madrid.

Independent Yes

Vinode RamgopalNon-Executive Director

Vinode joined the Earthport Board in April 2010. Currently a Senior Advisor to Albright Stonebridge Group and an Executive Advisor to Aquiline LLC. Vinode previously founded and Chaired the Marco Polo Group, an electronic network for cross border trading of exchange listed securities. Prior to that, Vinode was a senior M&A banker in Lehman Brothers Investment Banking Division holding multiple management positions over a 15-year period. Vinode was educated at the London School of Economics and Merton College, Oxford.

Independent Yes

Committee MembershipAudit Committee, Remuneration Committee (Chairman)

Terry WilliamsNon-Executive Director

Since 2010 Earthport has benefited from Terry’s extensive expertise in developing fintech companies. With a history that includes the early days at NCR, the development of Wilco as a global leader in order processing systems, EPOS systems and Eurobond settlement systems, Terry has led considerable innovation in products across a number of high volume processing industries.

Independent Yes

Committee MembershipRemuneration Committee, Nominations Committee



Directors’ Report

The Directors submit their report together with the consolidated financial statements of the Company and its subsidiaries (the ‘Group’) for the year ended 30 June 2015. Earthport plc is a public limited company, incorporated and domiciled in England and Wales and quoted on AIM.

Governance Ahead

Principal ActivitiesThe principal activity of the Group is the provision of payment services through the combination of a network of segregated bank accounts in various geographies (the banking network), sophisticated software which mirrors the international movements of funds from bank to bank, the knowledge base embedded in the platform and the organisation related to each of the countries that Earthport delivers payments to. This service is available to financial institutions, aggregators, money service businesses and FX houses.

Review of Business and Future DevelopmentsA review of the development of the business during the year is given in the Strategic Report on pages 1 to 26. This also includes reference to the Group’s future prospects.

Going ConcernThe Directors believe that the Group has demonstrated further progress in achieving its objective of positioning itself as an infrastructure supplier to the global payments industry. During the year, the Group raised gross proceeds of £26.6 million (net £26.3 million) through the placing and subscription of 65 million ordinary shares and £0.26 million in relation to exercise of employees share options. The Directors have prepared a cash flow forecast covering a period extending beyond 12 months from the date of these financial statements after taking account of anticipated overhead costs and revenue. Therefore, the Directors consider that it is appropriate to prepare the Group’s financial statements on a going concern basis, which assumes that the Group is to continue in operational existence for the foreseeable future.

Results and DividendsThe Group loss for the year after taxation amounted to £8.69 million (FY 2014: £6.70 million).

The Directors are unable to recommend the payment of a dividend for the year (FY 2014: £Nil).

Research and DevelopmentResearch and development have always played a key role at Earthport. Our Product and Development teams anticipate trends, customer wishes and the future requirements of the payments industry, as well as technological advances and systematically implement these ideas into products. During the year, the Group spent £1.33 million (FY 2014: £1.10 million) in relation to research and development. A total of £0.15 million (FY 2014: £0.14 million) was expensed in the Income Statement and £1.18 million (FY 2014: £0.96 million) was capitalised.

Share CapitalChanges to the Company’s share capital during the year are set out in note 18 to the financial statements.

DirectorsThe following Directors have held office since 1 July 2014:

H Uberoi M DavarP Hickman J MoranV Ramgopal S Viswanathan (appointed 15 October 2014)T Williams P Thomas (resigned 2 March 2015) C Cowlard


Directors’ Report

Election of DirectorsIn accordance with the articles of association, one-third of Directors are required to retire at each Annual General Meeting (AGM). At the upcoming General Meeting, Chris Cowlard, Mohit Davar and Terry Williams will be retiring and standing for re-election.

Directors’ Indemnity InsuranceThe Directors have taken out an insurance policy to cover Directors’ and Officers’ liabilities.

Directors’ Interests in SharesThe Directors’ interests in the shares of the Company at the balance sheet date were as follows:

Ordinary shares

of 10p each30 June 2015

Ordinary shares

of 10p each30 June 2014

H Uberoi 25,920,121 26,062,450P Hickman 100,000 100,000T Williams 4,488,311 4,488,311M Davar 746,397 596,335V Ramgopal – –C Cowlard – –J Moran – –S Viswanathan – –

* During the year Mohit Davar received 150,062 shares in respect of additional advisory services he provided to the Company. Mr Davar is not considered to be an Independent Director as a result of this additional contract.

Details of transactions with related parties during the year are disclosed in note 23 to the financial statements.

The Directors believe that equity incentives are an important element of the remuneration of the Executive Directors and the senior management team in order to align Directors’ interests with the interests of shareholders. The Directors’ interests in options over the shares of the Company are as follows:

Weightedaverage

exercise prices

Ordinaryshares of10p each

30 June 2015(or date of

appointmentif later)

Ordinaryshares of10p each



Ordinaryshares of 10p each



Ordinary shares of10p each


appointment if later)

Options Warrants Options Warrants

H Uberoi 27p 41,000,000 – 41,000,000 –P Hickman 27p 1,200,000 – 1,200,000 –V Ramgopal 27p 800,000 – 800,000 –T Williams 27p 800,000 – 800,000 –M Davar 26p 1,150,000 – 1,150,000 –C Cowlard 10p 2,475,000 – 2,500,000 –J Moran N/A – – – –S Viswanathan 25p 1,750,000 – – –

Until January 2015, share Options were awarded to the Non-Executive Directors as part of their remuneration in order to preserve the cash balances in the Company. These Options were issued annually between 2010 and 2014 and each tranche vested over a two-year period. None of these awards were linked to company performance. As such, the Directors consider Messrs Hickman, Ramgopal, Moran and Williams fulfil the ‘Independence’ criteria.



Directors’ Report continued

Major Interests in SharesAs of 21 September 2015 the Company had been notified of the following interests in the issued ordinary share capital of the Company:

Ordinary shares of 10p each %

Oppenheimer Funds Inc. 48,629,572 10.2Henderson Global Investors 40,227,815 8.4International Finance Corporation 33,341,360 6.9Schroder Investment Management Ltd 29,650,286 6.2Bay Capital Investments Ltd* 27,973,121 5.9H U Investments L.L.C.** 25,920,121 5.4Ruffer LLP 25,460,000 5.3Blackrock Inc. 23,552,610 4.9Millennium Global High Yield Fund Ltd 15,320,986 3.2

Save for these interests, the Directors have not been notified that any person is directly or indirectly interested in 3% or more of the issued ordinary share capital of the Company.

* Hank Uberoi was the Vice Chairman and a non-controlling shareholder of Bay Capital investments Ltd. He stepped down from the Bay board in May 2015. ** Hank Uberoi is the Managing Partner of H U Investments L.L.C., includes holdings in subsidiaries.

Charitable and Other DonationsNo charitable or political donations made in the year ended 30 June 2015 (FY 2014: £Nil).

EmployeesOur continued success depends on our ability to recruit and retain talented, highly skilled and committed people. The Group provides competitive reward and benefit packages, supported by appropriate training and personal development programmes and ways to encourage and reward outstanding performance. The Group regularly communicates with employees on matters that affect them, consulting them or their representatives to ensure that their views are taken into account when making decisions that are likely to affect their interests. Employee involvement in the Group is encouraged, as we believe a common understanding by all employees of the financial and economic factors which affect the Group plays a major role in maintaining our growth and success. Senior executives regularly hold interactive sessions with staff to discuss relevant developments in different parts of the business and future activity.

Staff can also participate directly in the success of the Group through a variety of employee share option schemes. The Group is committed to maintaining a safe and healthy working environment and ensuring the health, safety and welfare of all employees, customers and the general public. There were no significant accidents in the work place during the year. Benefits for the health and wellbeing of staff include private medical insurance and employee assistance programmes.

The Group has adopted standards to promote corporate values designed to help employees in their conduct and business relationships. Policies in place include equal opportunities, dignity at work and health and safety. It is the Group’s policy to conduct business in an honest, open and ethical manner. A zero tolerance approach is taken to bribery and corruption, harassment, bullying and discrimination.

The Group is committed to employment policies based on best practice, including equal opportunities for all employees, irrespective of sex, age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief and sexual orientation. We give full and fair consideration to applications for employment from disabled people, having regard to their particular aptitudes and abilities. It is the policy of the Group that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.


Directors’ Report

Policy on Payment of SuppliersThe Group aims to pay suppliers at the end of the month following the month in which the invoice is received. At 30 June 2015, the Company had an average of 33 days purchases outstanding in trade payables (FY 2014: 35 days).

Financial InstrumentsDetails of financial instruments and financial risk management policies are set out in note 30 to the financial statements.

Annual General MeetingThe notice of the meeting for the 2015 Annual General Meeting is set out on page 69.

Statement as to Disclosure of Information to the AuditorThe Directors who were in office at the date of approval of these financial statements have confirmed that, as far as they are aware, there is no relevant audit information of which the Auditor is unaware. Each of the Directors has confirmed that they have taken all the steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that it has been communicated to the Auditor.

AuditorBaker Tilly UK Audit LLP has expressed its willingness to continue in office as Auditor of the Company and a resolution to reappoint Baker Tilly UK Audit LLP and to authorise the Directors to determine their remuneration will be proposed at the Annual General Meeting.

On behalf of the Board

Hank UberoiChief Executive Officer28 September 2015



Corporate Governance Statement

Under the rules of the AIM Market the Company is not required to comply with the UK Corporate Governance Code. The Board of Directors are committed to high standards of corporate governance and has adopted the policies and procedures which reflect the principles of the UK Corporate Governance Code that are consistent with the Corporate Governance Guidelines for Smaller Quoted Companies published by the Quoted Companies Alliance in 2013.

Philip Hickman Chairman

Governance Ahead

The Corporate Governance procedures that have been in effect during the year are described below:

Board of DirectorsThe Board of Directors at 30 June 2015 comprised three Executive Directors and five Non-Executive Directors of which four are deemed to be independent. The Board meets regularly throughout the year.

Audit and Compliance CommitteeThe Audit and Compliance Committee comprises Philip Hickman (Chairman), Vinode Ramgopal and Mohit Davar. The purpose of the Committee is to ensure the preservation of good financial practices throughout the Group, to monitor that controls are enforced to ensure the integrity of financial information, to review the interim and annual financial statements and to provide a line of communication between the Board and external Auditor. The Committee is also responsible for reviewing the independence of the Auditor and for agreeing their remuneration. The mandate of the Committee was extended to receive reports from the Head of Compliance due to the significance and importance of this function both within the Company and in respect of our relationships with our clients and partners. The terms of any related party transactions are required to be approved by the Committee. As Chairman of the Company, it is unusual for that person to also Chair the Audit and Compliance Committee. However, the Board agreed that it is in the best interests of the Company that Philip Hickman continue with this role for the foreseeable future. The Audit and Compliance Committee met five times during the year.

Remuneration CommitteeThe Remuneration Committee comprises Vinode Ramgopal (Chairman), Philip Hickman and Terry Williams. It is responsible for the Executive Directors’ remuneration, other benefits and terms of employment, including performance related benefits and share options. During the year the Committee commissioned an independent report to benchmark the salaries and benefits across the Executive Leadership team, Board members absent themselves from discussion involving their own remuneration. The Remuneration Committee met four times during the year.

Nominations CommitteeThe Nominations Committee comprises Hank Uberoi (Chairman), Philip Hickman and Terry Williams. It meets as necessary to select suitable candidates for the appointment of Directors and other senior appointments.

Terms of Reference for each of the above Board Committees can be found on the Company website.

Internal ControlThe Board is ultimately responsible for the Group’s system of internal control and for reviewing its effectiveness. A comprehensive business plan and budget is in place and actual results are compared to this plan and reported to the Board on a monthly basis.

Client FundsThe safety and security of clients’ funds is of paramount importance to the Company. All client funds are held in segregated bank accounts wherever the jurisdiction permits.


Directors’ Report

Statement of Directors’ Responsibilities in the Preparation of the Financial Statements

The Directors are responsible for preparing the Strategic Report and the Directors’ Report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare Group and company financial statements for each financial year. The Directors are required by the AIM Rules of the London Stock Exchange to prepare Group financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) and have elected under company law to prepare the Company financial statements in accordance with IFRS as adopted by the EU.

The financial statements are required by law and IFRS adopted by the EU to present fairly the financial position of the Group and the Company and the financial performance of the Group. The Companies Act 2006 provides in relation to such financial statements that references in the relevant part of that Act to financial statements giving a true and fair view are references to their achieving a fair presentation.

Under Company Law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of the affairs of the Group and Company and of the profit or loss of the Group for that year.

In preparing each of the Group and company financial statements, the Directors are required to:

a. Select suitable accounting policies and then apply them consistently

b. Make judgements and accounting estimates that are reasonable and prudent

c. State whether they have been prepared in accordance with IFRS as adopted by the EU

d. Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the Company will continue in business

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s and the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Earthport plc website.

Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.


Financial Statements

78%Year over Year increase in Earthport revenue


“ Viewed broadly, the payments industry has three quite attractive attributes, it’s large, it’s growing, and thanks to it’s relatively stable and predictable transaction volumes combined with low capital intensity, it can be highly attractive”

PwC Strategy & publication 2015 report

Earthport arrived at this financial year from a hugely transformational period, committed to driving payment transactions and delivering the growth we anticipated. We have also maximised the opportunities that this disruptive approach has revealed by getting closer to our clients and partners and by using the insights gained to better understand the true nature of the opportunities that this $21 trillion market offers. Embracing this new horizon has meant that we are better equipped to understand the services our clients would find attractive and grow the network and resources to deliver them.

The past 12 months has seen Earthport grow from strength to strength. We have signed 31 new customers in the last financial year and have momentum to realise significantly more on the horizon. We see continued volume and revenue expansion from existing clients, including those with new programs and plan to deepen our relationships with all our existing clients.

The last year has seen an increase in revenue of over 78% to £19.27 million. The dollar value of payments grew by over 75%.

Performance Ahead



Independent Auditor’s Report to the Members of Earthport plc

We have audited the Group and parent company financial statements (‘the financial statements’) on pages 39 to 68. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective Responsibilities of Directors and AuditorAs more fully explained in the Directors’ Responsibilities Statement set out on page 35 the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.

Scope of the Audit of the Financial StatementsA description of the scope of an audit of financial statements is provided on the Financial Reporting Council’s website at www.frc.org.uk/auditscopeukprivate.

Opinion on Financial StatementsIn our opinion:

� The financial statements give a true and fair view of the state of the Group’s and the parent company’s affairs as at 30 June 2015 and of the Group’s loss for the year then ended

� The Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union � The parent financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance

with the Companies Act 2006 � The financial statements have been prepared in accordance with the requirements of the Companies Act 2006

Opinion on Other Matter Prescribed by the Companies Act 2006In our opinion the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements.

Matters on Which We Are Required to Report by ExceptionWe have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

� Adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us

� The parent company financial statements are not in agreement with the accounting records and returns � Certain disclosures of Directors’ remuneration specified by law are not made � We have not received all the information and explanations we require for our audit

Paul Watts (Senior Statutory Auditor)For and on behalf of BAKER TILLY UK AUDIT LLP, Statutory AuditorChartered Accountants25 Farringdon StreetLondon EC4A 4AB

28 September 2015



Consolidated Statement of Comprehensive IncomeFor the year ended 30 June 2015

Notes 2015

£’0002014

£’000

Continuing operations:Revenue 44 19,267 10,820Cost of sales – before warrant charge (3,612) (2,570)

Adjusted gross profit 15,655 8,250Cost of sales – warrant charge 1818 (728) (317)

Gross profit 14,927 7,933Administrative expenses 88 (19,941) (14,370)

Adjusted operating loss (5,014) (6,437)Share-based payment charge 2424 (3,289) (1,745)Exceptional items – acquisition costs 2929 – (439)Unrealised fair value adjustment 2929 345 2,274

Operating loss (7,958) (6,347)Finance income 66 52 18Unwinding of discount on deferred consideration 2727 (803) –

Loss before taxation 77 (8,709) (6,329)Income tax income/(expense) 99 18 (371)

Loss for the year and total comprehensive income attributable to owners of the Parent (8,691) (6,700)

Loss per share – basic and fully diluted 1010 (1.91p) (1.76p)

There were no items of other comprehensive income for the year.



Consolidated Statement of Financial PositionAs at 30 June 2015

Notes2015

£’0002014

£’000

AssetsNon-current assetsGoodwill 2828 2,709 2,709Intangible assets 1111 6,406 6,394Investment 1313 250 225Deferred tax asset 1717 327 541Property, plant and equipment 1212 709 294

10,401 10,163

Current assetsTrade and other receivables 1414 8,329 7,468Derivative financial assets 3030 976 197Cash and cash equivalents 1515 30,195 9,461

39,500 17,126

Total assets 49,901 27,289

LiabilitiesCurrent liabilitiesTrade and other payables 1616 (5,711) (7,223)Derivative financial liabilities 3030 (2,766) (1,239)Loan 2626 – (344)

(8,477) (8,806)

Non-current liabilitiesContingent consideration 2727 (3,292) (2,489)Deferred tax liability 1717 (737) (867)

(4,029) (3,356)

Total liabilities (12,506) (12,162)

Net assets 37,395 15,127

EquityShare capital 1818 70,695 64,016Share premium 1919 78,272 58,213Interest in own shares 2020 (1,252) (1,456)Merger reserve 9,200 9,200Share-based payment reserve 12,557 9,632Warrant reserve 1,045 317Retained earnings (133,122) (124,795)

Equity attributable to owners of the Parent 37,395 15,127

The financial statements on pages 39 to 68 were approved by the Board of Directors and authorised for issue on 28 September 2015 and are signed on its behalf by:

Hank UberoiChief Executive Officer



Company Statement of Financial PositionAs at 30 June 2015

Notes2015

£’0002014

£’000

AssetsNon-current assetsIntangible assets 1111 1,939 1,662Property, plant and equipment 1212 605 166Investments 1313 6,072 6,047

8,616 7,875

Current assetsTrade and other receivables 1414 8,816 3,802Cash and cash equivalents 1515 23,227 5,847

32,043 9,649

Total assets 40,659 17,524

LiabilitiesCurrent liabilitiesTrade and other payables 1616 (1,869) (1,421)

(1,869) (1,421)

Non-current liabilities

Contingent consideration 2727 (3,292) (2,489)

(3,292) (2,489)

Total liabilities (5,161) (3,910)

Net assets 35,498 13,614

EquityShare capital 1818 70,695 64,016Share premium 1919 78,272 58,213Interest in own shares 2020 (1,151) (1,355)Merger reserve 9,200 9,200Share-based payment reserve 12,557 9,632Warrant reserve 1,045 317Retained earnings (135,120) (126,409)

Equity attributable to owners of the Parent 35,498 13,614

The financial statements on pages 39 to 68 were approved by the Board of Directors and authorised for issue on 28 September 2015 and are signed on its behalf by:

Hank Uberoi Chief Executive Officer



Consolidated Statement of CashflowsFor the year ended 30 June 2015

Notes2015

£’0002014

£’000

Net cash used in operating activities 2525 (2,903) (4,356)

Investing activitiesPurchase of property, plant and equipment (757) (244)Capitalised intangible fixed assets (1,916) (1,110)Purchase of trade investment (25) (225)Subsidiary acquired net of cash received – (1,841)

Net cash used in investing activities (2,698) (3,420)

Financing activitiesProceeds on issuance of ordinary shares (net of costs paid) 26,567 1,531Proceeds on exercise of warrants – 1,934Proceeds on exercise of options through Joint Share Ownership Plan 112 483Repayment of loan (344) (130)

Net cash from financing activities 26,335 3,818

Net increase/(decrease) in cash and cash equivalents 20,734 (3,958)Cash and cash equivalents at the beginning of the year 9,461 13,419

Cash and cash equivalents at the end of the year 30,195 9,461



Company Statement of CashflowsFor the year ended 30 June 2015

Notes2015

£’0002014

£’000

Net cash used in operating activities 2525 (7,372) (6,784)

Investing activitiesPurchase of property, plant and equipment (725) (176)Capitalised intangible fixed assets (1,177) (958)Investment in subsidiary – (3,331)Purchase of trade investment (25) (225)

Net cash used in investing activities (1,927) (4,690)

Financing activitiesProceeds on issuance of ordinary shares (net of costs paid) 26,567 1,531Proceeds on exercise of warrants – 1,934Proceeds on exercise of options through Joint Share Ownership Plan 112 483

Net cash from financing activities 26,679 3,948

Net increase/(decrease) in cash and cash equivalents 17,380 (7,526)Cash and cash equivalents at the beginning of the year 5,847 13,373

Cash and cash equivalents at the end of the year 23,227 5,847



Consolidated Statement of Changes in EquityFor the year ended 30 June 2015

Attributable to owners of the Parent

Share capital £’000

Share premium

£’000

Interest in own shares £’000

Merger reserve

£’000

Share-based

payment reserve

£’000

Warrant reserve

£’000

Retained earnings

£’000Total

£’000

Balance at 30 June 2013 61,587 57,020 (1,910) 9,200 8,980 914 (120,102) 15,689

Loss for the year, being total comprehensive income for the year – – – – – – (6,700) (6,700)

Transactions with owners– exercise of share options 610 950 454 – (1,093) – 1,093 2,014– employee share options charge – – – – 1,745 – – 1,745– warrants 1,759 175 – – – (597) 914 2,251Issue of ordinary shares 60 68 – – – – – 128

Total transactions with owners of the parent, recognised directly in equity 2,429 1,193 454 – 652 (597) (4,693) (562)

Balance at 30 June 2014 64,016 58,213 (1,456) 9,200 9,632 317 (124,795) 15,127


Transactions with owners– exercise of share options 101 63 204 – (364) – 364 368– employee share options charge – – – – 3,289 – – 3,289– warrants – – – – – 728 – 728Issue of ordinary shares 6,578 20,295 – – – – – 26,873Cost of share issues – (299) – – – – – (299)

Total transactions with owners of the parent, recognised directly in equity 6,679 20,059 204 – 2,925 728 (8,327) 22,268

Balance at 30 June 2015 70,695 78,272 (1,252) 9,200 12,557 1,045 (133,122) 37,395

Merger Reserve The merger reserve represents the premium attributable to shares issued in consolidation of the costs of acquisition of subsidiaries in prior years.

Share-based Payment ReserveThe share-based payment reserve represents the cumulative charge to date in respect of unexercised share options at the balance sheet date.

Warrant ReserveThe warrant reserve represents the cumulative charge to date in respect of unexercised share warrants at the balance sheet date.

Retained EarningsThe retained earnings represent the cumulative profit and loss net of distribution to owners.



Company Statement of Changes in EquityFor the year ended 30 June 2015

Attributable to owners of the Parent

Share capital £’000

Share premium

£’000

Interest in own shares £’000

Merger reserve

£’000

Share-based

payment reserve

£’000

Warrant reserve

£’000

Retained earnings

£’000Total

£’000

Balance at 30 June 2013 61,587 57,020 (1,809) 9,200 8,980 914 (120,184) 15,708


Transactions with owners– exercise of share options 610 950 454 – (1,093) – 1,093 2,014– employee share options charge – – – – 1,745 – – 1,745– warrants 1,759 175 – – – (597) 914 2,251Issue of ordinary shares 60 68 – – – – – 128

Total transactions with owners of the parent, recognised directly in equity 2,429 1,193 454 – 652 (597) (6,225) (2,094)

Balance at 30 June 2014 64,016 58,213 (1,355) 9,200 9,632 317 (126,409) 13,614


Transactions with owners– exercise of share options 101 63 204 – (364) – 364 368– employee share options charge – – – – 3,289 – – 3,289– warrants – – – – – 728 – 728Issue of ordinary shares 6,578 20,295 – – – – – 26,873Cost of share issues – (299) – – – – – (299)

Total transactions with owners of the parent, recognised directly in equity 6,679 20,059 204 – 2,925 728 (8,711) 21,884

Balance at 30 June 2015 70,695 78,272 (1,151) 9,200 12,557 1,045 (135,120) 35,498



Notes to the Financial StatementsFor the year ended 30 June 2015

1. General InformationEarthport plc is a public limited company incorporated and domiciled in England and Wales under the Companies Act 2006. The address of its principal place of business and registered office is 21 New Street, London EC2M 4TP. The nature of the Group’s operations and its principal activities are set out in the Directors’ Report on pages 28 to 35.

2. Going ConcernThe Directors believe that the Group has demonstrated further progress in achieving its objective of positioning itself as an infrastructure supplier to the global payments industry. During the year, the Group raised gross proceeds of £26.6 million (net £26.3 million) through the placing and subscription of 65 million ordinary shares and £0.26 million in relation to exercise of employees share options. The Directors have prepared a cash flow forecast covering a period extending beyond 12 months from the date of these financial statements after taking account of anticipated overhead costs and revenue. Therefore, the Directors consider that it is appropriate to prepare the Group’s financial statements on a going concern basis, which assumes that the Group is to continue in operational existence for the foreseeable future.

3. Accounting PoliciesBasis of accountingThe financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and the requirement of the Companies Act applicable to companies reporting under IFRS.

The financial statements have been prepared under the historical cost convention and the principal accounting policies are set out below:

Company Statement of Comprehensive IncomeAs permitted by s.408 Companies Act 2006, the Company has not presented its own Statement of Comprehensive Income. The Company’s loss for the financial year was £9,075,000 (FY 2014: £8,232,000).

New and amended standards adopted by the GroupThe following standards have been adopted in these financial statements and the Directors do not consider that there was any material impact:

• IAS 16 and IAS 38 Property, Plant and Equipment and Intangible Assets Amendments resulting from Annual Improvements• IAS 24 Related Party Disclosures. Amendments resulting from Annual Improvements• IAS 32 Offsetting Financial Assets and Financial Liabilities. The amendments provide additional guidance in respect of offsetting financial instruments and

therefore changes have also been made to IFRS 7• IFRS 3 Business Combinations. Amendments resulting from annual Improvements • IFRS 8 Operating Segments. Amendments resulting from Annual Improvements• IFRS 12 Disclosure of interests in other entities. Amendments for investment entities• IFRS 9 Financial Instruments. IAS 39 will be replaced by this standard over 3 phases. IFRS 9 specifies how an entity should classify and measure financial

assets, including some hybrid contracts plus requirements on accounting for financial liabilities

At the date of approval of these financial statements, the following principal standards and interpretations which were in issue but not yet effective:

• IFRS 9 – Financial Instruments• IFRS 10 and IAS 28 Amendments: Sale or Contributions of Assets between an Investor and its Associate or Joint Venture• IFRS 10, IFRS 12 and IAS 28: Amendments: Investment Entities: Applying the Consolidation of Exception• IFRS 11 Amendments: Accounting for Acquisitions of Interests in Joint Operations• IFRS 15 Revenue from Contracts with Customers• IAS 1 Amendments: Disclosure initiative• IAS 16 and IAS 38 Amendments: Clarification of Acceptable Methods of Depreciation and Amortisation• IAS 27 Amendments: Equity Method in Separate Financial Statements

The Directors do not anticipate that the adoption of these standards and interpretations will have a significant impact on the financial statements of the Group.

There were no other standards or interpretations, which were in issue but not yet effective at the date of authorisation of these financial statements, that the Directors anticipate will have a material impact on the financial statements of the Group.

Basis of consolidationThe Group financial statements consolidate the financial statements of Earthport plc and all of its subsidiaries for the year ended 30 June 2015. The results of subsidiaries acquired or sold are included in the Group financial statements from the date control passes, until control ceases. Profits and balances arising on trading between Group companies are excluded from the financial statements. All companies in the Group make up their financial statements to the same date.



3. Accounting Policies continuedRevenue recognitionRevenue from client transactions is recognised on completion of the transactions as they occur. Revenue from Foreign Exchange represents the gross value of the Foreign Exchange currency transaction including transaction fee less the cost of purchasing the currency relating to such transaction. Revenue is recognised after receiving the client’s authorisation. Where the Group enters into contracts with its clients, it also enters into matched contracts with its bankers. Revenue from client implementation and consultancy is recognised as the services are performed. In the normal course of business, certain balances arise which are not allocable to any client. Efforts are made to allocate such balances. If such balances remain unallocated for a period of at least six months, then in accordance with client contracts they are recognised as revenue.

Adjusted gross profitAdjusted gross profit is defined as gross profit before warrant charge.

Adjusted operating lossAdjusted operating loss is defined as operating loss before share-based payments charge, acquisition costs and unrealised fair value adjustments.

Foreign currency translationThe functional and presentational currency of the parent company and its subsidiaries is the UK Pound Sterling. Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance sheet date and exchange differences taken to the income statement.

Share-based payments and warrantsThe Group offers Executive and employee share schemes. For all grants of share options and warrants, the fair value as at the date of grant is calculated using an option pricing model and the corresponding expense is recognised either in the income statement or within equity over the vesting period. The expense of options granted is recognised as a staff cost and the associated credit is made against equity and included in the share-based payment reserve. The fair value of warrants granted in respect of equity fundraising activities is offset against the share premium account.

Current and deferred income taxCurrent tax is the expected tax payable on taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date and any adjustments to tax payable in respect of previous years.

Deferred tax expected to be payable or recoverable on differences at the balance sheet date between the tax bases and liabilities and their carrying amounts for financial reporting purposes is accounted for using the liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible differences can be utilised.

Deferred tax is calculated at the rates of taxation which are expected to apply when the deferred tax asset or liability is realised or settled based on the rates of taxation enacted or substantively enacted at the balance sheet date. Deferred tax is measured on an undiscounted basis.

Impairment of assetsIFRS requires management to undertake an annual test for impairment of assets with indefinite lives, including goodwill and, for assets with finite lives, to test for impairment if events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Impairment testing is an area involving management judgement, requiring assessment as to whether the carrying value of assets can be supported by the fair value less cost to sell or net present value of future cash flows derived from such assets using cash flow projections which have been discounted at an appropriate rate. In calculating the net present value of the future cash flows, certain assumptions are required to be made in respect of highly uncertain matters including management’s expectations of growth and discount rates. Changing the assumptions selected by management could significantly affect the Group’s impairment evaluation and hence results.

Intangible assetsDevelopment costs are only recognised as an intangible asset if each of the following conditions have been met:

• It is technically feasible to complete the asset so that it will be available for use• It is reasonably expected that the asset is likely to generate net future economic benefits• Development costs in relation to the asset can be reliably measured• Management intends to complete the asset and use or sell it

Where no intangible asset can be recognised, development expenditure is treated as expenditure in the period in which it is incurred.

Intangible assets acquired in a business combination and recognised separately from goodwill, including customer list and online system, are initially recognised at their fair value at the acquisition date.



3. Accounting Policies continuedIntangible assets continuedSubsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortisation. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period. The principal annual amortisation rates are as follow:

Development costs 4 yearsOnline system 3 – 5 yearsCustomer relationships 10 years

Property, plant and equipment and depreciationProperty, plant and equipment are stated at cost less depreciation and provision for impairment. Depreciation is provided at rates calculated to write down assets to their estimated residual values over their expected useful life as follows:

Leasehold improvements: short lease – straight-line per annum over lease termFixture, fittings and equipment – 20% – 33% straight-line per annumComputer equipment – 33% straight-line per annum

The carrying values of property, plant and equipment are reviewed for impairment annually and when events or changes in circumstances indicate that the carrying value may be impaired. Any impairment is taken direct to the income statement.

GoodwillGoodwill on consolidation, being the excess of the purchase price over the fair value of the net assets of subsidiary undertakings at the date of acquisition, is capitalised in accordance with IFRS 3 Business combinations. Goodwill is tested annually for impairment, or more frequently when there is an indication that goodwill may be impaired. Goodwill is carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed in a subsequent period.

LeasingLeases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Rentals payable under operating leases are charged against income on a straight-line basis over the lease term.

PensionsThe Group offers a stakeholder pension scheme to all employees and the contributions are charged to the income statement as they are incurred.

Financial risk management and financial instrumentsFinancial assets and liabilities are recognised in the Group’s balance sheet when the Group becomes party to the contractual provisions of the instrument. Where the Group has a legal right of set off and a practice of settling transactions on a net basis with counterparties, financial assets and liabilities for these counterparties are shown on a net basis within the statement of financial position.

The Group’s principal financial instruments comprise unsecured short-term creditors, cash, short-term deposits and loans. The main purpose of these financial instruments is to finance the Group’s operations, including any acquisitions where relevant. The Group has various other financial instruments, such as trade receivables and trade payables that arise directly from its operations.

It is the Group’s policy that no trading in financial instruments is undertaken. The Group borrows at both fixed and floating rates of interest. The Group’s policy in relation to the finance is to ensure that sufficient liquid funds are maintained for operations.

Trade receivables are initially measured at fair value and subsequently at amortised cost using the effective interest rate method, if material. Appropriate allowances for estimated irrecoverable amounts are recognised in profit or loss when there is evidence that the asset is impaired.

Cash and cash equivalents comprise cash in hand, demand deposits and other short-term highly liquid investments that are readily converted into a known amount of cash and are subject to insignificant changes in value.

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

Notes to the Financial Statements continuedFor the year ended 30 June 2015



3. Accounting Policies continuedDerivative financial instrumentsDerivative financial instruments are recognised on the Group’s Statement of Financial Position when the Group becomes a party to the contractual provisions of the instrument. The instrument is derecognised from the Statement of Financial Position when the contractual rights or obligations arising from the instruments expire or are extinguished.

Derivative financial instruments are recognised at fair value. The gain or loss on re-measurement to fair value is recognised immediately in the income statement.

Employee benefit trustShares to be awarded, and those that have been awarded, but have yet to vest unconditionally are held at cost by an employee benefit trust and shown as a deduction from equity shareholders’ funds in the Group balance sheet and included in a separate, negative reserve described as an interest in own shares.

Exceptional itemsExceptional items are disclosed separately because of their size or nature.

Significant judgements and estimates:

Capitalisation of development costsIn determining whether development costs should be capitalised, the Directors make estimates and assumptions based on the ability to reliably measure the costs and on the expected future economic benefits generated by products that are the result of these development costs. It is the Directors’ judgement that currently costs and future economic benefit can be measured with sufficient reliability to capitalise these cost at this time.

Share-based payments and warrantsRecognition and measurement of share-based payments require estimation of the fair value of awards at the date of grant. Judgement is also exercised when estimating the number of awards that will ultimately vest. Both of these judgements have a significant impact on the amounts recognised in the profit or loss and in the statement of financial position. To assist in determining each award’s fair value, the Directors engaged an independent valuation expert. Estimation of the number of awards that will ultimately vest and the timing of vesting is based on management’s best estimates, taking into account current projections reviewed by the Board. Warrants charge was recognised with in cost of sales due to the fact that warrants were directly related to revenue and the total charge has been taken in accordance with the actual revenue generated.

Available for sale investmentFor available-for-sale investments, gains and losses arising from changes in fair value are recognised directly in equity, until the investment is disposed of or is determined to be impaired, at which time the cumulative gain or loss previously recognised in equity, determined using the weighted average cost method, is included in the net profit or loss for the period.

Acquisition fair value accountingWhere the Group undertakes business combinations, the cost of the acquisition is allocated to identifiable net assets and contingent liabilities acquired and assumed by reference to their estimated fair values at the time of acquisition. The remaining amount is recorded as goodwill. Identifiable net assets are valued using external valuation providers and involve an element of judgement related to projected results.

Contingent considerationIFRS requires management to calculate the contingent consideration related to a business combination according to their best estimate and judgement and should disclose contingent liability unless the possibility of an outflow of economic resources is remote. Contingent consideration refers to the present value of the consideration payable after 30 June 2016 to ex-Baydonhill shareholders accepted earn out offer during acquisition, if the cumulative adjusted free cash flows of Baydonhill for the 3 year period to 30 June 2016 are above £3.55 million or prorated otherwise.

Deferred tax assetDeferred tax in respect of Baydonhill’s net derivative financial liabilities has been recognised in the year. This deferred tax asset arise on the temporary timing differences on a settlement of open contracts at the year end. The tax rates substantively enacted as at 1 April 2015 have been adopted in computing the deferred tax asset.




4. Segment InformationThe Group analyses the two business segments operating from the Group’s headquarters in London, UK. As the Group is still evolving, segmenting beyond revenue is under review and will be reported in future accounts. This is consistent with the information reviewed by the chief operating decision maker. Revenue categories and segmental analysis by location of customers is as follows:

2015 £’000

2014 £’000

Transactional* 16,266 9,615Professional services** 3,001 1,205

19,267 10,820

UK 12,275 7,220Europe 1,106 557North America 4,642 2,295Rest of the world 1,244 748

19,267 10,820

* Revenues related to payment transactions.** Revenues typically related to providing consulting/development services in relation to acquiring payment transactions.

5. Employees

The average monthly number of persons (including Executive Directors) employed by the Group during the year was:2015

Number2014

Number

Directors 3 3Other employees (excluding contractors) 158 141

161 144

Staff costs for the above persons:2015

£’0002014

£’000

Wages, salaries, commission and other 10,119 7,863Social security costs 1,125 894Share-based payment 3,289 1,745Other pension costs 259 206Gross staff costs 14,792 10,708

Less: staff costs capitalised (1,177) (977)

Staff costs after capitalisation 13,615 9,731

Of the staff costs shown above, £1,173,000 (FY 2014: £1,006,000) is included in cost of sales.

The above staff costs are exclusive of £1,177,000 (FY 2014: £977,000) which has been capitalised as a development cost during the year.



5. Employees continued

Basic salary

and fees £’000

Compensation for loss

of office £’000

Pension £’000

Total £’000

Directors’ emoluments 2015Non-Executive Chairman:P Hickman 65 – – 65

Executive Directors:H Uberoi* (from March 2015) 53 – – 53P Thomas (resigned 2 March 2015) 82 30 2 114C Cowlard 160 – 8 168S Viswanathan (appointed 15 October 2014) 106 – – 106

Non-Executive Directors:V Ramgopal 36 – – 36T Williams 34 – – 34M Davar 163 – – 163J Moran 32 – – 32

731 30 10 771

Directors’ emoluments 2014Non-Executive Chairman:P Hickman 40 – – 40

Executive Directors:H Uberoi* – – – –P Thomas 140 – 7 147C Cowlard 155 – 8 163

Non-Executive Directors:V Ramgopal 18 – – 18T Williams 18 – – 18M Davar 168 – – 168J Moran (appointed 11 June 2014) – – – –

539 – 15 554

* Hank Uberoi received a fixed £7,000 (FY 2014: £7,000) per month towards his expenses including international travel and accommodation that he incurs in relation to Earthport. This has been stopped as at 28 February 2015. From that date, all business related expenses were paid through expense claim process according to the Company’s expense claim policy. Included in accruals are amounts due to Hank Uberoi of £53,000 (FY 2014: £Nil).

Until January 2015, share Options were awarded to the Non-Executive Directors as part of their remuneration in order to preserve the cash balances in the Company. These Options were issued annually between 2010 and 2014 and each tranche vested over a two-year period. None of these awards were linked to company performance. As such, the Directors consider Messrs Hickman, Ramgopal, Moran and Williams fulfil the ‘Independence’ criteria.

Defined contribution pension benefits are being accrued for two (FY 2014: two) Directors.

Social security costs in respect of the Directors were £32,000 (FY 2014: £39,000).

The share-based payment charge in respect of the Directors was £2,188,000 (FY 2014: £1,310,000).

Mohit Davar has been issued 150,062 ordinary shares of 10 pence each at an average exercise price of 43 pence each, in lieu of fee for his consultancy services to the Board. Included in accruals are amounts due to Mohit Davar of £15,000 (FY 2014: £60,000).

During the year, Chris Cowlard exercised 250,000 options generating a gain of £43,152 (FY 2014: £Nil).

The Directors are considered to be the key management of the Group.




6. Finance Income

2015 £’000

2014 £’000

Interest receivable 52 18

7. Loss Before Taxation

2015 £’000

2014 £’000

Loss before taxation is stated after charging:Amortisation of intangible assets 1,904 1,247Depreciation of property, plant and equipment 342 162Development costs 151 137Operating leases:– property 359 322Fees payable to the Company’s Auditor:For the statutory audit of the: – parent and consolidated financial statements 43 40– subsidiary financial statements 30 30– additional fees in respect of the prior year audit 30 –Fees payable to associates of the Company’s Auditor:– for tax compliance 7 10– for other services 12 2– corporate finance – 55

8. Administrative Expenses

2015 £’000

2014 £’000

Staff and contractor costs 10,913 7,985Travel and entertainment costs 1,091 721Professional services costs 1,281 779Sales and marketing costs 514 259IT operational costs 1,469 998Other operational costs 432 596Other overheads 1,995 1,623Depreciation of property, plant and equipment 342 162Amortisation of intangible assets 1,904 1,247

19,941 14,370

Cost of sales includes bank transaction charges and sales commission.



9. Income Tax (income)/Expense

2015 £’000

2014 £’000

Current tax charge/(credit) 4 –Deferred tax charge/(credit) 84 371R&D tax (credit) received (106) –

(18) 371

Factors affecting the tax charge for the year:Loss before taxation (8,709) (6,329)Loss before tax multiplied by effective standard rate of corporation tax in the UK of 21% (FY 2014: 25.5%) (1,829) (1,424)Tax effect of:Expenses not deductible for tax purposes 5 5Temporary differences not recognised for deferred tax purposes 14 14Share-based payment charge not recognised for deferred tax purposes 397 393Losses not recognised for deferred tax purposes 1,395 1,383

Tax charge for the year (18) 371

No deferred tax asset has been recognised in relation to trading loss carried forward of £92 million (FY 2014: £83 million) due to the uncertainty over the timing of it’s recovery.

10. Loss Per ShareThe loss per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year.

2015 £’000

2014 £’000

Loss attributable to equity shareholders of the Company (8,691) (6,700)

2015 Number

2014 Number

Weighted average number of ordinary shares in issue (thousands) 461,444 388,817Less: own shares held (thousands) (7,113) (8,319)

454,331 380,498

2015 2014

Basic and fully diluted loss per share (pence) (1.91p) (1.76p)

The loss attributable to ordinary shareholders and weighted average number of ordinary shares for the purposes of calculating the diluted loss per share are identical to those used for basic loss per ordinary share. This is because the exercise of share options and other benefits would have the effect of reducing loss per share and is therefore not dilutive under the terms of IAS 33, Earnings Per Share.




11. Intangible Assets

Group

Development costs £’000

Online system

£’000

Customer relationships

£’000Total

£’000

CostAt 1 July 2013 1,784 – – 1,784Additions 958 172 – 1,130

Acquisition of subsidiary – 1,960 3,223 5,183

At 30 June 2014 2,742 2,132 3,223 8,097Additions 1,177 649 90 1,916

At 30 June 2015 3,919 2,781 3,313 10,013

Amortisation At 1 July 2013 456 – – 456Amortisation for the year 624 408 215 1,247

At 30 June 2014 1,080 408 215 1,703Amortisation for the year 900 676 328 1,904

At 30 June 2015 1,980 1,084 543 3,607

Net book value

At 30 June 2015 1,939 1,697 2,770 6,406

At 30 June 2014 1,662 1,724 3,008 6,394

At 30 June 2013 1,328 – – 1,328

Development costs

Company2015

£’0002014

£’000

CostAt 1 July 2,742 1,784Additions – internally developed 1,177 958

At 30 June 3,919 2,742

Amortisation At 1 July 1,080 456Amortisation for the year 900 624

At 30 June 1,980 1,080

Net book value at 30 June 1,939 1,662

Amortisation for all years is included in administrative expenses in the income statement.



12. Property, Plant and Equipment

Group

Computer equipment

£’000

Fixtures fittings and equipment

£’000

Short leasehold improvement

£’000Total

£’000

CostAt 1 July 2013 472 70 77 619Additions 161 83 – 244

Acquisition of subsidiary 25 69 – 94

At 30 June 2014 658 222 77 957Additions 662 95 – 757

At 30 June 2015 1,320 317 77 1,714

DepreciationAt 1 July 2013 393 32 76 501Charge for the year 120 41 1 162

At 30 June 2014 513 73 77 663Charge for the year 282 60 – 342

At 30 June 2015 795 133 77 1,005

Net book value

At 30 June 2015 525 184 – 709

At 30 June 2014 145 149 – 294

At 30 June 2013 79 38 1 118

Company

Computer equipment

£’000

Fixtures fittings and equipment

£’000

Short leasehold

improvement £’000

Total £’000

CostAt 1 July 2013 472 70 77 619Additions 133 43 – 176

At 30 June 2014 605 113 77 795Additions 633 92 – 725

At 30 June 2015 1,238 205 77 1,520

DepreciationAt 1 July 2013 393 32 76 501Charge for the year 106 21 1 128

At 30 June 2014 499 53 77 629Charge for the year 256 30 – 286

At 30 June 2015 755 83 77 915

Net book value

At 30 June 2015 483 122 – 605

At 30 June 2014 106 60 – 166

At 30 June 2013 79 38 1 118

Depreciation for all years is included in administrative expenses in the income statement.




13. Investments

Group2015

£’0002014

£’000

Available for sale investment 250 225

This is a trade investment with an option to take an equity stake in the future and licensing rights to technologies that will assist business development.

CompanyTotal

£’000

CostAt 1 July 2013 11,074Additions 6,045

At 30 June 2014 17,119Additions 25

At 30 June 2015 17,144

DepreciationAt 1 July 2013 11,072Impairment for the year –

At 30 June 2014 11,072Impairment for the year –

At 30 June 2015 11,072

Net book value

At 30 June 2015 6,072

At 30 June 2014 6,047

At 30 June 2013 2

The Company’s subsidiaries are: Country of incorporation Nature of business Holding

EnsurePay Limited England and Wales Dormant 100% Earthport Enterprises Limited England and Wales Dormant 100% Earthport Newco Limited England and Wales Dormant 100% Travelpay Limited England and Wales Dormant 100% Mobilepay Limited England and Wales Dormant 100% Earthport Middle East Limited England and Wales Dormant 100% Earthport Asiapac Limited England and Wales Dormant 100% Zabadoo.com Limited England and Wales Dormant 100% Epal Limited England and Wales Dormant 100% Earthport USA Limited England and Wales Dormant 100% Earthport North America Inc. United States of America Sales support 100% Baydonhill Limited England and Wales FX Services 100%

Dormant subsidiaries are exempt from audit under S479A of CA2006.

14. Trade and Other Receivables

Group Company2015

£’0002014

£’0002015

£’0002014

£’000

Trade receivables 6,464 6,427 1,756 819Other receivables 1,098 472 1,009 395Amount due from subsidiary undertakings – – 5,512 2,180Prepayments 767 569 539 408

At 30 June 8,329 7,468 8,816 3,802



14. Trade and Other Receivables continuedTrade receivables amounted to £6,464,000 (2014: £6,427,000), net of a provision of £100,000 (FY 2014: £129,000) for impairment. There were no provisions in the Company accounts. Movement on the Group provisions for impairment were as follows:

2015 £’000

2014 £’000

At 1 July 129 –Provision for impairment – 161Receivables written off during the year (29) (32)

At 30 June 100 129

The average credit period taken on sales of services is 30 days (2014: 27 days). No interest is charged on overdue balances. The Directors consider that the carrying amount of trade receivables approximates their fair value.

15. Cash and Cash Equivalents

Group Company2015

£’0002014

£’0002015

£’0002014

£’000

Cash at bank and in hand 30,195 9,461 23,227 5,847

Cash and cash equivalents comprise cash held by the Group and short–term bank deposits with an original maturity of three months or less. The carrying amount of these assets approximates their fair value.

16. Trade and Other Payables

Group Company2015

£’0002014

£’0002015

£’0002014

£’000

Trade payables 3,662 5,200 699 355Other payables 4 2 4 2Amount due to subsidiary undertakings – – 1 1Other taxation and social security 356 292 183 166Accruals 1,689 1,729 982 897

At 30 June 5,711 7,223 1,869 1,421

Trade payables and accruals principally comprise amounts outstanding in respect of operating costs. The average credit period taken for trade purchases is 33 days (FY 2014: 35 days). The Directors consider that the carrying amounts for trade and other payables and accruals approximate their fair value.

17. Deferred Tax

Deferred tax asset2015

£’0002014

£’000

At 1 July 541 –Acquisition of subsidiary – 1,032Deferred tax charge released to income statement (214) (491)

At 30 June 327 541




17. Deferred Tax continued

Deferred tax liability2015

£’0002014

£’000

At 1 July (867) –Acquisition of subsidiary – (987)Deferred tax credit released to income statement 130 120

At 30 June (737) (867)

Deferred tax liabilities (net) (410) (326)

The gross movement on the deferred tax is as follows:

2015 £’000

2014 £’000

At 1 July (326) –Acquisition of subsidiary – 45Accelerated capital allowances 92 –Tax losses relieved during the year (541) (491)Deferred tax credit released to the income statement 130 120Tax credit on net derivative financial liabilities 235 –

At 30 June (410) (326)

The deferred tax reconciliation on category basis of assets and liabilities is as follows:

Deferred tax assets

Accelerated Capital

Allowances £’000

Tax Losses £’000

Net Derivative Financial Liabilities

£’000Total

£’000

At 1 July 2013 – – – –Acquisition of subsidiary – 1,032 – 1,032(Charged)/credited to the income statement – (491) – (491)

At 30 June 2014 – 541 – 541

Credited/(charged) to the income statement 92 (541) 235 (214)

At 30 June 2015 92 – 235 327

Deferred tax liabilities

Intangible Assets arising on Acquisition

£’000Total

£’000

At 1 July 2013 – –Acquisition of subsidiary (987) (987)Credited to the income statement 120 120

At 30 June 2014 (867) (867)

Credited to the income statement 130 130

At 30 June 2015 (737) (737)

The potential deferred tax asset arising on the cumulative losses carried forward is £ 18.4 million (FY 2014: £16.6 million) has not been recognised owning to uncertainty as to its recoverability.



18. Share CapitalAuthorisedThe Articles of Association were amended on 24 March 2010. The Company has no authorised share capital limit.

Issued2015

£’0002014

£’000

At start of year: 409,572,414 (FY 2014: 385,283,294) ordinary shares of 10p each 40,957 38,528Shares issued in the year: 66,792,001 (FY 2014: 6,703,240) ordinary shares of 10p each 6,679 670Exercise of warrants: £Nil (FY 2014: 17,585,880) ordinary shares of 10p each – 1,759

At end of year: 476,364,415 (FY 2014: 409,572,414) ordinary shares of 10p each 47,636 40,957307,449,792 deferred shares of 7.5p each 23,059 23,059

At end of year 70,695 64,016

During the year to 30 June 2015 a total of 65,136,464 (FY 2014: Nil) ordinary shares of 10 pence each were issued to investors amounting to £26,611,000 (FY 2014: £Nil), a total of 1,005,570 (FY 2014: 6,102,958) ordinary shares of 10 pence each were issued in relation to exercise of employees share options amounting to £255,000 (FY 2014: £1,531,000), further 649,967 (FY 2014: 600,282) shares of 10 pence each were issued in lieu of fees amounting to £263,000 (FY 2014: £128,000). During the year to 30 June 2015, Nil (FY 2014: 17,585,880) ordinary shares of 10 pence each were issued against warrants amounting to £Nil (FY 2014: £1,934,000).

Deferred shares carry no rights to receive any dividend or other distribution. The holders of the deferred shares have no rights to receive notice, attend, speak or vote at any general meeting of the Company. On a return of capital on liquidation or otherwise, the holders of the deferred shares are entitled to receive the nominal amount paid up on the deferred shares after the repayment of £10,000,000 per ordinary share.

The following share issues were completed during the year:

Number of shares

issued

Average price in pence

Total premium

£

2015August 2014 841,236 23.87 200,778September 2014 65,196,464 30.84 20,105,999October 2014 40,000 19.00 7,600November 2014 145,000 15.00 21,750April 2015 569,301 20.03 114,019

66,792,001 20,450,146

2014December 2013 3,765,530 2.63 99,124March 2014 3,933,333 15.00 590,000April 2014 1,742,796 15.00 261,419May 2014 426,828 16.24 69,304June 2014 14,420,632 1.00 144,206

24,289,119 1,164,053

Transaction costs amounting to £299,000 (FY 2014: £Nil) in regard to issue of shares were deducted from equity and charged against the share premium account.

During the year no (FY 2014: 36,601,913) warrants were granted. A warrant charge of £728,000 (FY 2014: £317,000) was recognised within cost of sales due to the fact that warrants were directly related to revenue. The total warrant charge has been spread over 60 months but the charge for the year has been taken in proportion to the actual revenue generated.




18. Share Capital continued

Last date when exercisableExercise

price

Number of warrants

outstanding at 1 July

Granted number

Exercised number

Number of warrants

outstanding at 30 June

201517 December 2018 0.310 19,264,165 – – 19,264,16517 June 2021 0.242 17,337,748 – – 17,337,748

36,601,913 – – 36,601,913

201431 December 2014 0.110 17,585,880 – (17,585,880) –17 December 2018 0.310 – 19,264,165 – 19,264,16517 June 2021 0.242 – 17,337,748 – 17,337,748

17,585,880 36,601,913 (17,585,880) 36,601,913

Warrants2015 2014

Weighted average share price 24.12p 24.12pWeighted average exercise price 28p 28pVolatility 60.64% 60.64%Expected life 60 months 60 monthsRisk-free rate 0.49% 0.49%Expected dividend yield 0% 0%

Earthport plc signed a multi-year agreement with Bank of America Merrill Lynch in December 2013, commercial terms included minimum revenue of $11.3 million. Earthport granted warrants at a strike price of £0.242 per ordinary share over 17.3 million new ordinary shares to Bank of America Merrill Lynch, exercisable if this minimum revenue level is achieved. They may receive additional warrants over a further maximum of 19.3 million new ordinary shares at a strike price of £0.31 if they deliver payment revenues to Earthport that materially exceed the minimums under the commercial contract.

Volatility was determined by calculating the historical volatility of the Company’s share price over the 60 months prior to the date of grant. The expected life used in the model has been based on management’s best estimates for the effects of transferability, exercise restrictions and behavioural considerations.

The fully diluted share capital at 30 June 2015 and 2014 may be analysed as follows:

Number of ordinary 10p shares2015 2014

Shares in issue at 30 June 476,364,415 409,572,414Employee share options (see note 24) 80,612,523 73,635,155Warrants 36,601,913 36,601,913JSOP options included in issued share capital (6,932,837) (8,139,148)

Maximum potential fully diluted number of shares 586,646,014 511,670,334

19. Share Premium

Group and company2015

£’0002014

£’000

At 1 July 58,213 57,020New shares 20,295 68Exercise of warrants – 175Exercise of options 63 950Expenses of share issues (299) –

At 30 June 78,272 58,213

The share premium account represents the excess of consideration received for shares issued above their nominal value net of transaction costs.



20. Interest in Own Shares

Group2015

£’0002014

£’000

At 1 July (1,456) (1,910)Exercise of options 204 454

At 30 June (1,252) (1,456)

Company

At 1 July (1,355) (1,809)Exercise of options 204 454

At 30 June (1,151) (1,355)

Group and Company2015

Number2014

Number

At 1 July 8,139 10,878Exercise of options (1,206) (2,739)

At 30 June 6,933 8,139

The interest in shares account represents the acquisition of ordinary shares in the Company for cash consideration by the employee benefit trust and joint share ownership plan (JSOP). The purpose of the plan is to incentivise the senior employees and Directors of the Company. During the year 1,206,311 (FY 2014: 2,739,081) employee share options were exercised through the JSOP. The JSOP holds 6,932,837 (FY 2014: 8,139,148) shares with an exercise price of 25 pence per share.

21. Commitments Under Operating LeasesThe Group leases its office premises under non-cancellable operating lease agreements. The Group has aggregate future minimum lease payments under non-cancellable operating leases as follows:

2015 £’000

2014 £’000

Minimum lease payments under operating leases recognised as an expense in the year 359 322

2015 £’000

2014 £’000

Within one year 393 359Between two and five years 340 701

733 1,060

22. Retirement BenefitsThe Group offers a stakeholder pension scheme to all employees and all the contributions are charged to the income statement as they are incurred and amounted to £259,000 (FY 2014: £206,000).




23. Related Party TransactionsDuring the year the Company entered into transactions, in the ordinary course of business, with related parties as set out below:

The Company has a related party relationship with its subsidiaries.

Inter-Company receivables2015

£’0002014

£’000

Earthport Enterprises Limited 2 2Earthport North America Inc. 2,417 1,024Baydonhill Limited 3,093 1,154

5,512 2,180

Inter-Company payables2015

£’0002014

£’000

Travelpay Limited 1 1

1 1

During the year Earthport North America Inc. charged fees of £687,000 (FY 2014: £386,000) to Earthport plc, and Earthport plc levied interest charges of £59,000 (FY 2014: £20,000) on the balance amounting to £3,045,000 (FY 2014: £1,374,000) before off setting inter-company balances at the year-end.

During the year Earthport plc has given an interest free loan of £1.84 million (FY 2014: £1.1 million) to Baydonhill repayable on demand to facilitate the increase in credit limit. At 30 June 2015 Baydonhill owe Earthport £0.16 million (FY 2014: £0.054 million) in relation to the inter-company trades.

The remuneration of key management personnel and details of Directors’ emoluments are shown in note 5.

24. Share-based PaymentsThe Company has a share option scheme for all employees of the Group. Options granted during the financial year 2015 have a weighted average exercise price of 18 pence and in the majority of circumstances vest over three years. Option grants, including vesting conditions for Executive Directors, are determined by the Remuneration Committee. Of the 9,584,000 options granted during the year, 750,000 were granted with the following vesting conditions:

• Company becomes cash flow positive over two successive quarters• Company achieves annualised profitability of over £2 million for two successive quarters• The stock has to be trading above 30 pence

Details of the share options outstanding during the year are as follows:

2015 2014

Number of share options

Weighted average

exercise price (£)

Number of share options

Weighted average

exercise price (£)

Options at beginning of the year 73,635,155 0.287 71,257,362 0.271Granted during the year 9,584,000 0.184 14,410,000 0.322Lapsed during the year (394,751) 0.019 (3,190,167) 0.253Exercised during the year (2,211,881) 0.167 (8,842,040) 0.228

Outstanding at the end of the year 80,612,523 0.279 73,635,155 0.287

Of the outstanding options at 30 June 2015 36,560,691 (with an exercise price ranging from 0 pence to 32.75 pence) were exercisable (FY 2014: 29,747,823). The options outstanding at 30 June 2015 had a weighted average remaining contractual life of six years (FY 2014: six years). The total expense in respect of employees share-based payments recognised during the year was £3,289,000 (FY 2014: £1,745,000). 2,211,881 options were exercised in the year ended 30 June 2015, the weighted average share price at the date of exercise was £0.43 (FY 2014: £0.40).



24. Share-based Payments continuedThe fair value of the options has been calculated using the Black-Scholes Model. The model takes into account the following factors in determining the fair value of an option:

Options2015 2014

Weighted average share price 43.23p 20.57pWeighted average exercise price 37.45p 32pVolatility 51.63% 66.2%Expected life 60 months 70 monthsRisk-free rate 1.38% 1.01%

Expected dividend yield 0% 0%

Volatility was determined by calculating the historical volatility of the Company’s share price over the 60 months prior to the date of grant. The expected life used in the model has been based on management’s best estimates for the effects of transferability, exercise restrictions and behavioural considerations.

25. Reconciliation of Loss Before Tax to Net Cash Used in Operating Activities

Group2015

£’0002014

£’000

Loss before tax (8,709) (6,329)Amortisation of intangible assets 1,904 1,247Depreciation of property, plant and equipment 342 162Share-based payment and warrants charge 4,017 2,062Shares issued in lieu of fee 263 128R&D tax credit received 106 –Finance income (52) (18)Current year tax credit (4) –Unwinding of discount on deferred consideration 803 –

Operating cash outflow before movements in working capital (1,330) (2,748)Increase in receivables (1,640) (2,296)Increase in payables 15 670

Cash used by operations (2,955) (4,374)Interest received 52 18

Net cash used in operating activities (2,903) (4,356)

Company2015

£’0002014

£’000

Loss before tax (9,181) (8,232)Amortisation of intangible assets 900 624Depreciation of property, plant and equipment 286 128Share-based payment and warrants charge 4,017 2,062Shares issued in lieu of fees 263 128R&D tax credit received 106 –Finance (income)/costs (105) (35)Unwinding or discount on deferred consideration 803 –

Operating cash outflow before movements in working capital (2,911) (5,325)Increase in receivables (5,014) (2,369)Increase in payables 448 875

Cash used by operations (7,477) (6,819)Interest received 105 35

Net cash used in operating activities (7,372) (6,784)




26. Loan2015

£’0002014

£’000

Group loan – 344

Baydonhill had an outstanding loan amounting to £474,000 which Earthport also attained through the acquisition. The outstanding balance of £344,000 was paid during the year.

27. Contingent ConsiderationContingent consideration refers to the present value of the consideration payable after 30 June 2016 to ex-Baydonhill shareholders, who accepted earn out offer during acquisition, if the cumulative adjusted free cash flows of Baydonhill as at 30 June 2016 are above £3.55 million or prorated otherwise. The fair value of contingent consideration was calculated by independent valuation experts based on the best estimate, provided by the Group, of the probability of Baydonhill meeting the Earn Out conditions which were discounted at 15%.

Group2015

£’0002014

£’000

At 1 July 2,489 –

Acquisition of subsidiary – 2,489Unwinding of discount 803 –

At 30 June 3,292 2,489

28. GoodwillGoodwill arising on acquisition of Baydonhill amounts to £2.7 million and is not subject to amortisation but is tested annually for impairment. For the purpose of impairment test, goodwill is allocated to Baydonhill (the only separable cash-generating unit) that is expected to benefit from the synergies of combination.

2015 £’000

2014 £’000

Cost and net book valueAt 1 July 2,709 –Acquisition of subsidiary – 2,709

At 30 June 2,709 2,709

The value in use calculation includes estimates about the future financial performance of the CGU. The cash flow projections cover ten years based on management approved financial budgets for the first year, and reflect management’s expectations of the medium-term operating performance of the CGU and its growth prospects for the subsequent years.

The key assumptions in the value in use calculations are the revenue growth rates which directly influence the forecasted operating cash flows, as well as the discount rate applied. In determining the key assumption, management have taken in to account the current economic climate and the resulting impact on expected growth and discount rates, as applicable to the Group’s business and industry.

CGU

Long-term growth rate 2.25%Discount rate 15%Medium-term growth rate 20%

29. Exceptional ItemsAcquisition costs amounting to £Nil (FY 2014: £0.44 million) are related to the legal and professional services received by the Group in order to facilitate the acquisition of Baydonhill.

In accordance with IAS 39, Group fair valued its client’s contracts and all currency bank accounts as at spot rate. The revaluation of debtors, creditors and currency segregated accounts gave rise to a Foreign Exchange gain of £1.1 million (FY 2014: £3.4 million). All client contracts are covered with bank contracts and as a result, the revaluation of the bank contracts generated a net derivative loss of £0.75 million (FY 2014: £1.1 million). These gains and losses would only crystallise in the unlikely event that any party of the transaction would default.



29. Exceptional Items continued2015

£’0002014

£’000

Unrealised fair value adjustmentForeign Exchange gain 1,093 3,437Fair value (loss) on derivatives (748) (1,163)

Total 345 2,274

30. Financial InstrumentsThe Group has historically financed itself through equity.

Pursuant to becoming authorised by Financial Conduct Authority (FCA) as a Payment Institution (PI), the Group has been required to remain ‘capital adequate’. Capital Adequacy in this regard amounts to maintaining shareholders’ fund equivalent to at least 10% of 12 months of operating costs. Since becoming authorised as a PI, the Group has maintained capital adequacy.

The Group’s financial instruments comprise cash and various items arising directly from its operations, such as trade receivables and trade payables. The main purpose of these financial instruments is to provide working capital for the Group. The Group’s policy is to obtain a high rate of return on its cash balances, subject to having sufficient resources to manage the business on a day-to-day basis and not exposing the Group to unnecessary risk.

Risk management policiesThe Group’s finance function is responsible for procuring the Group’s capital resources and maintaining an efficient capital structure, together with managing the Group’s liquidity, Foreign Exchange and interest exposures.

All treasury operations are conducted within strict policies and guidelines that have been approved by the Directors.

Credit riskCredit risk is the risk that counterparty will default on its contractual obligations resulting in financial loss to the Group. Maximum credit risk at 30 June 2015 was as follows:

Group Company2015

£’0002014

£’0002015

£’0002014

£’000

Trade and other receivables 7,562 6,899 8,277 3,394Derivative financial assets 976 197 – –Cash and cash equivalents 30,195 9,461 23,227 5,847

38,733 16,557 31,504 9,241

Before accepting a new customer, the Group assesses each potential customer’s credit quality and risk. Customer contracts are drafted to reduce any potential credit risk to the Group. Where appropriate the customer’s recent financial statements are reviewed.

The trade receivables balances predominantly represent amounts not yet due under forward contracts. There is a possibility that if a forward contract fails to deliver, the market loss may exceed the deposit held from the customer. The mark to market position of outstanding forward contracts is monitored regularly and for the majority of customers there is an option to make a margin call.

The amount of trade receivables is presented in the balance sheet net of allowances for doubtful receivables. An allowance for impairment is made where a review of overdue accounts indicates circumstances, based on previous experience, where there might be a reduction in the recoverability of the cashflows.

There are no significant credit risks arising from financial assets that are neither past due nor impaired.

Cash and cash equivalents are held at banks with high credit ratings assigned by international credit-rating agencies. Cash and cash equivalents comprise cash held by the Group and Company and short-term bank deposits with an original maturity of three months or less. Cash and cash equivalents do not include client segregated accounts as the Group uses the offsetting model (IAS 32 Financial Instruments: Presentation).

The Group has no significant concentration of credit risk and the exposures are spread over numerous counterparties and customers.

Liquidity riskLiquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The Group closely monitors its cash position to ensure that it has sufficient funds to meet the obligations of the Group as they fall due. The Group’s treasury operations maintain flexibility in funding by maintaining availability under committed credit lines.



30. Financial Instruments continuedLiquidity risk continuedThe table below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cashflows:

Group

2015

Less than 1 year £’000

Total £’000

Trade payables 3,662 3,662Derivative financial liabilities 2,766 2,766Other payables 4 4Accruals 1,689 1,689

Total 8,121 8,121

2014

Trade payables 5,200 5,200Derivative financial liabilities 1,239 1,239Other payables 2 2Accruals 1,729 1,729

Total 8,170 8,170

Company

2015

Less than 1 year £’000

Total £’000

Trade payables 700 700Other payables 4 4Accruals 982 982

Total 1,686 1,686

2014

Trade payables 356 356Other payables 2 2Accruals 897 897

Total 1,255 1,255

Interest rate riskThe Group’s interest rate exposure arises mainly from its interest bearing deposits. All cash is held in variable rate accounts. Based on the balance sheet value of cash and cash equivalents, a 1% change in interest base rates would lead to an increase or decrease in income and equity of £302,000 (2014: £95,000). No hedging is undertaken given the amounts involved.

Foreign currency riskCurrency risk is the risk that the fair value or future cashflows of a financial instrument will fluctuate because of changes in Foreign Exchange rates. Currency risk arises on financial assets and liabilities that are denominated in a currency other than the functional currency of the entity by which they are held. No hedging is undertaken given the amounts involved. The Group and company’s exposure to currency risk was as follows:

Included in the Group cash and cash equivalents at 30 June 2015 was £255,000 in US Dollars (2014: £281,000) and £347,000 in Euros (2014: £92,000).

Based on the balance sheet value of cash and cash equivalents, as shown above, a 10% change in the currency exchange rate would lead to an increase or decrease in the income and equity of £60,000 (2014: £37,000).

Capital management riskThe Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. The Group seeks to maintain, at this stage of its development, sufficient funding drawn primarily from equity to enable the Group to meet its working capital and strategic needs.




30. Financial Instruments continuedFinancial instruments recognised in the balance sheet

Group 2015

Loans and receivables

£’000

Assets at fair value

through profit and

loss £’000

Non- financials

assets £’000

Available for sale assets £’000

Total £’000

Plant and equipment – – 709 – 709Intangible assets – – 6,406 – 6,406Available for sale investment – – – 250 250Deferred tax asset – – 327 – 327Trade and other receivables 7,562 – 767 – 8,329Derivative financial assets – 976 – – 976Cash and cash equivalents 30,195 – – – 30,195

Total assets 37,757 976 8,209 250 47,192

Group 2014

Loans and receivables

£’000

Assets at fair value

through profit and

loss £’000

Non- financials

assets £’000

Available for sale assets £’000

Total £’000

Plant and equipment – – 294 – 294Intangible assets – – 6,394 – 6,394Available for sale investment – – – 225 225Deferred tax asset – – 541 – 541Trade and other receivables 6,899 – 569 – 7,468Derivative financial assets – 197 – – 197Cash and cash equivalents 9,461 – – – 9,461

Total assets 16,360 197 7,798 225 24,580

Group 2015

Amortised cost

£’000

Liabilities at fair value

through profit and

loss £’000

Non- financial liabilities

£’000Total

£’000

Non-current liabilities – – 3,292 3,292Trade and other payables 4,022 – 1,689 5,711Derivative financial liabilities – 2,766 – 2,766Deferred tax liability – – 737 737

Total liabilities 4,022 2,766 5,718 12,506

Group 2014

Amortised cost

£’000

Liabilities at fair value

through profit and

loss £’000

Non- financial liabilities

£’000Total

£’000

Non-current liabilities – – 2,489 2,489Trade and other payables 5,494 – 1,729 7,223Derivative financial liabilities – 1,239 – 1,239Loan 344 – – 344Deferred tax liability – – 867 867

Total liabilities 5,838 1,239 5,085 12,162

The carrying values of all financial instruments above approximate to their fair values.



30. Financial Instruments continuedFair value hierarchyThe table below analyses financial instruments carried at fair value by the level in the fair value hierarchy. The different levels have been defined as follows:

Level 1: quoted prices (unadjusted) in active markets for identical liabilities.Level 2: inputs other than quoted prices included with in Level 1 that are observable for the liability, either directly (e.g. as prices) or indirectly (e.g. derived

from prices).Level 3: inputs for the asset or liability that are not basis on observable market data.

Group

Level 2 Observable

prices £’000

Level 3 Unobservable

prices £’000

Total £’000

Available for sale investment – 250 250Derivative Financial Asset 976 – 976

At 30 June 2015 976 250 1,226

Available for sale investment – 225 225Derivative Financial Asset 197 – 197

At 30 June 2014 197 225 422

Derivative Financial Liabilities (2,766) – (2,766)

At 30 June 2015 (2,766) – (2,766)

Derivative Financial Liabilities (1,239) – (1,239)

At 30 June 2014 (1,239) – (1,239)

Derivative financial instruments are recognised on the Company’s Statement of Financial Position when the Company becomes a party to the contractual provisions of the instrument. The instrument is derecognised from the Statement of Financial Position when the contractual rights or obligations arising from that instrument expire or are extinguished. The Group has a facility with its bankers for spot and forward Foreign Exchange trading up to a maximum contingent risk amount outstanding (as determined by the bank) of £5.5 million (FY 2014: £5.5 million).

Derivative financial instruments are recognised at fair value. The gain or loss on re-measurement to fair value is recognised immediately in the Income Statement. In order to show an appropriate picture of the Company’s position, Group has decided to exercise the offsetting model, as per IAS 32 Financial Instruments: Presentation where applicable.

Derivative Financial Assets2015

£’0002014

£’000

At 1 July 197 –Acquisition of subsidiary – 726Movement during the year 779 (529)

At 30 June 976 197

Derivative Financial Liabilities2015

£’0002014

£’000

At 1 July (1,239) –Acquisition of subsidiary – (605)Movement during the year (1,527) (634)

At 30 June (2,766) (1,239)

In August 2014, Earthport and ASPOne Limited re-enforced their customer-supplier relationship by the entry into an agreement for Earthport to purchase a 45% stake in ASPOne four years from the date of signing the agreement. The structure of the deal was performance-based and included flexible provisions to enable Earthport to take a larger stake in ASPOne.

In August 2015, ASPOne divested a segment of its business unrelated to Earthport. As a result of the deal structure between Earthport and ASPOne, the proceeds of this divestment will reasonably be offset against the future purchase of the 45% stake, and no further consideration will be due by Earthport for this invested stake. As a result of ASPOne’s divestment of one segment of the business, Earthport estimate the fair value of the agreement to be £Nil and the fair value of consideration payable in four years time also to be £Nil. Consequently no amounts have been recognised in these financial statements in respect of this agreement.




Notice of Annual General Meeting

Notice is hereby given that the Annual General Meeting of the Company will be held at the offices of Bird & Bird LLP at 15 Fetter Lane, London EC4A 1JP on Friday 20 November 2015 at 9.30 a.m. (London time) for the following purposes:

Ordinary BusinessTo consider and, if thought fit, pass the following resolutions as ordinary resolutions:

Resolution 1To receive and adopt the financial statements for the year ended 30 June 2015 together with the Reports of the Directors and Auditors thereon.

Resolution 2To re-elect Terry Williams as a Non-Executive Director who has retired by rotation in accordance with Articles 21.1 and 21.2 of the Company’s Articles of Association (the ‘Articles) and is therefore required to stand for re-election pursuant to Article 21 of the Articles.

Resolution 3To re-elect Mohit Davar as a Non-Executive Director who has retired by rotation in accordance with Articles 21.1 and 21.2 of the Articles and is therefore required to stand for re-election pursuant to Article 21 of the Articles.

Resolution 4To re-elect Chris Cowlard as an Executive Director who has retired by rotation in accordance with Articles 21.1 and 21.2 of the Articles and is therefore required to stand for re-election pursuant to Article 21 of the Articles.

Resolution 5To re-appoint Baker Tilly UK Audit LLP as the Company’s Auditor until the conclusion of the next Annual General Meeting, and to authorise the Directors to determine the Auditor’s remuneration for the ensuing year.

Special BusinessTo consider and, if thought fit, pass the following resolution as an ordinary resolution:

Resolution 6THAT, in substitution for all authorities in existence immediately prior to this resolution being passed, the Directors of the Company (the ‘Directors’) be and are hereby generally and unconditionally authorised to exercise all powers of the Company, pursuant to Section 551 of the Companies Act 2006 (the ‘Act’), to allot equity securities (within the meaning of Section 560 of the Act) up to an aggregate nominal amount of £16,672,754, which represents 35% of the aggregate nominal value of the Company’s issued ordinary share capital, provided that this authority shall expire at the conclusion of the next Annual General Meeting of the Company, save that the Company may before such expiry make an offer or agreement which would, or might require equity securities to be allotted after such expiry and the Board may allot equity securities in pursuance of such an offer or agreement as if the authority conferred hereby had not expired.

To consider and if thought fit, pass the following resolution as a special resolution:

Resolution 7THAT, subject to the passing of Resolution 6 above, the Directors be empowered in accordance with Section 570 and Section 571 of the Act to allot equity securities (within the meaning of Section 560 of the Act) for cash pursuant to the authority conferred on them pursuant to Resolution 6 above as if Section 561(1) of the Act did not apply to any such allotment provided that this power shall be limited to:

(a) the allotment of equity securities in connection with an open offer or otherwise in favour of ordinary shareholders in proportion (as nearly as possible) to the respective number of shares held, or deemed to be held, by them subject only to such exclusions or other arrangements as the Directors may consider appropriate to deal with fractional entitlements or problems arising in any territory or with the requirements of any recognised regulatory body or stock exchange in any territory;

(b) the allotment of equity securities (otherwise than pursuant to sub-paragraph (a) above) up to an aggregate nominal amount of £4,763,644 which represents 10% of the aggregate nominal value of the Company’s issued ordinary share capital.


Provided that this power shall expire at the conclusion of the next Annual General Meeting of the Company save that the Company may before such expiry make an offer or agreement which would or might require equity securities to be allotted after such expiry and the Board may allot equity securities in pursuance of such an offer or agreement as if the authority conferred hereby had not expired.

By order of the Board

Philip HickmanChairman

Dated: 28 September 2015Registered Office:21 New StreetLondon EC2M 4TP

Notice of Annual General Meeting continued



Explanatory Notes to the Notice of Annual General Meeting

Notes:1. A member entitled to attend and vote at the meeting is also entitled to appoint one or more proxies to attend, speak and vote instead of him. A member

may appoint more than one proxy in relation to the meeting, provided that each proxy is appointed to exercise the rights attached to a different share or shares held by that member. The proxy need not be a member of the Company. Please refer to the notes to the Form of Proxy for further information on appointing a proxy, including how to appoint multiple proxies (as the case may be).

2. If you wish your proxy to speak on your behalf at the meeting, you will need to appoint your own choice of proxy (not the Chairman) and give your instructions directly to them. If you wish to appoint a proxy other than the Chairman, write the full name of your proxy in the box provided in the Form of Proxy.

3. In the absence of instructions, the person appointed proxy may vote or abstain from voting as he/she thinks fit on the specified resolutions and, unless otherwise instructed, may also vote or abstain from voting on any other matter (including amendments to resolutions) which may properly come before the meeting.

4. In the case of joint holders, the signature of any one of them will suffice but the names of all joint holders should be stated. The vote of the senior who tenders a vote (whether in person or by proxy) will be accepted to the exclusion of the votes of the other holders. For this purpose, seniority is determined by the order in which the names stand in the register of members in respect of the joint holding.

5. To be effective, the enclosed Form of Proxy must be duly completed and deposited together with any power of attorney or other authority (if any) under which it is executed (or a duly certified copy of such power or authority) and lodged at the offices of the Company’s registrars, Capita Asset Services no later than 9.30 a.m. on Wednesday 18 November 2015 (being not more than 48 hours prior to the time fixed for the meeting).

6. Whether or not you propose to attend the Annual General Meeting, please complete and submit a Form of Proxy in accordance with the instructions printed on the enclosed form. Completion and return of the Form of Proxy will not preclude a shareholder from attending and voting in person at the meeting.

7. The Company, pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, specifies that only those members entered on the register of members of the Company at 6 p.m. UK time on Wednesday 18 November 2015 (being not more than 48 hours prior to the time fixed for the meeting) shall be entitled to attend and vote at the meeting or, if the meeting is adjourned, 6 p.m. UK time on such date being not more than two working days prior to the date fixed for the adjourned meeting. Changes to entries on the register of members after such time shall be disregarded in determining the right of any person to attend or vote at the meeting.

8. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so by using the procedures described in the CREST Manual. CREST Personal Members or other CREST sponsored members and those CREST members who have appointed a service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.

9. In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a ‘CREST Proxy Instruction’) must be properly authenticated in accordance with Euroclear UK and Ireland Limited’s specifications and must contain the information required for such instruction, as described in the CREST Manual (available via www.euroclear.com/CREST). The message, regardless of whether it constitutes the appointment of a proxy or is an amendment to the instruction given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received by the issuer’s agent (ID RA10) by 9.30 a.m. UK time on Wednesday 18 November 2015 For this purpose, the time of receipt will be taken to be the time (as determined by the time stamp applied to the message by the CREST Application Host) from which the issuer’s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means.

10. CREST members and where applicable their CREST sponsors, or voting service providers should note that Euroclear UK and Ireland Limited does not make available special procedures in CREST for any particular message. Normal system timings and limitations will, therefore, apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member, or sponsored member, or has appointed a voting service provider, to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and where applicable, their CREST sponsors or voting system providers are referred in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.

11. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.

12. Resolution 6, which is an ordinary resolution, authorises the Directors to allot unissued shares (or any other instrument which is convertible into, or represents rights over, ordinary shares in the capital of the Company having an underlying nominal value of £0.10 each including, but not limited to, options and/or warrants), up to an aggregate nominal value of £16,672,754. This authority, if granted, will expire on the conclusion of the next Annual General Meeting.


Resolution 6 represents an authority to allot equity securities up to an aggregate nominal amount of 16,672,754 (which represents 35% of the aggregate nominal value of the Company’s issued ordinary share capital). This percentage is outside the guidelines of the Association of British Insurers, but provides the Directors with greater future flexibility to raise funds for the Company subject to the restrictions imposed by Resolution 7. The Directors believe this is in the best interests of the shareholders.

13. If shares are to be allotted using the authority under Resolution 6, and are to be paid for in cash, Section 561(1) of the Act requires that those equity securities are offered first to existing shareholders in proportion to the number of ordinary shares they each hold at that time. An offer of this type is called a ‘rights issue’ and the entitlement to be offered the shares first is known as a ‘pre-emption right’.

In certain circumstances however, it may be in the interests of the Company for the Directors to be able to allot some of the shares for cash other than by way of a rights issue. Resolution 7, which is a special resolution, asks shareholders to waive their pre-emption rights, but only (i) in respect of the allotment of equity securities in connection with an open offer or rights issue subject to such exclusions or other such arrangements as may be appropriate to resolve legal or practical problems which for example, might arise with overseas shareholders and additionally (ii) for the issue of securities having a maximum aggregate nominal value of £4,763,644 which represents 10% of the aggregate nominal value of the Company’s issued ordinary share capital. This percentage is outside the guidelines of the Association of British Insurers, but provides the Directors with greater future flexibility. The Directors believe this is in the best interests of the shareholders. This authority will expire at the conclusion of the next Annual General Meeting unless revoked sooner.

14. The following documents will be available for inspection from the date of this notice until the meeting at the Company’s registered office and at the meeting convened by this notice:

(a) Register of Directors’ share interests;(b) Directors’ service contracts.

Notice of Annual General Meeting continued


Directors and Advisers

DirectorsP Hickman Non-Executive ChairmanH Uberoi Chief Executive Officer and Executive DirectorC Cowlard Executive DirectorS Viswanathan Executive DirectorV Ramgopal Non-Executive DirectorT Williams Non-Executive DirectorM Davar Non-Executive DirectorJ Moran Non-Executive Director

SecretaryA Ali

Registered Office21 New StreetLondon EC2M 4TP

Independent AuditorBaker Tilly UK Audit LLPChartered Accountants25 Farringdon StreetLondon EC4A 4AB

BankersBarclays Bank plc1 Churchill PlaceLondon E14 5HP

Nominated Adviser and BrokerPanmure Gordon (UK) Limited1 New ChangeLondonEC4M 9AF

RegistrarsCapita Asset ServicesThe Registry34 Beckenham RoadKent BR3 4TU

SolicitorsBird & Bird LLP15 Fetter LaneLondon EC4A 1JP

Earthport Payment Network21 New Street | London EC2M 4TPT +44 (0) 207 220 9700

New York | Miami | Singapore | Dubai

www.earthport.com

Earthport plc Annual Report and Accounts Fiscal Year 2015

Report and Financial Statements – Year ended 30th June 2015

Documents

Transcript of Report and Financial Statements – Year ended 30th June 2015