RNS Number:9366D
Financial Payment Systems Limited
17 September 2007
FINANCIAL PAYMENT SYSTEMS LIMITED
Interim Accounts for 6 months ended 30 June 2007
Financial Payment Systems Limited (the company together with its subsidiary,
"FPS", the "Group" or the "Company"), the AIM listed provider of electronic
payment approval systems to government agencies and corporations within the
Jiangsu Province of China, announces its interim results for the six months
ending 30 June 2007.
Financial Highlights (Six months to 30th June 2007)
- No revenue was generated by the Group.
- Loss for the period up 74% to 0.59 million (2006: 0.34 million).
- Cash balance of 2.6 million at 30th June 2007.
- Loss per share was 0.006 (2006: 0.022).
Inquiries:
Financial Payment Systems Limited +65 6270 1164
(please note office hours for this number
are 7 hours ahead of UK time)
Ong Lay Ann, Chief Executive Officer
Freddie Heng, Finance Director
Daniel Stewart & Company Plc +44 (0) 20 7776 6550
Lindsay Mair
Interim Accounts for 6 months ended 30 June 2007
Chairman's Statement
In the period since I last reported to shareholders, Financial Payment Systems
Limited (FPS) has progressed to the point where we are on the threshold of
establishing our connection to the Industrial and Commercial Bank of China
(ICBC). Once completed and verified, this will be the subject of a market
announcement and would represent achievement of the first of the three
milestones set out in the Chief Executive Officer's Report for the year to 31
December 2006. As such, this would be a significant step forward for the system,
and the overall project.
The development team has also completed the "trusted deposit" module of the
system, which will allow our users to create what is in effect a guarantee of
funds for a particular transaction, removing the credit risk inherent in the
traditional Chinese contractual payment model. Once again, we have worked
closely with ICBC to establish the deposit arrangements and the legal framework
surrounding the operation of the account, which in turn allows our users to be
comfortable in the probity and trustworthiness of the deposit-holder.
Overall, in terms of the business opportunities, we are seeing particular
interest from a range of trading portals, in both the private and public
sectors, which offers FPS the chance both to deploy the payment functionality
into existing platforms, as well as to participate in the development of new
platforms incorporating the FPS systems. In parallel to these efforts, we
continue our progress towards the deployment of inter-Government Department
transaction processing, as well as the B2B payment system for stand-alone
enterprises.
The remainder of 2007 will be an important time for the progress and direction
of the project.
Malcolm Williams
Chairman
Interim Accounts for 6 months ended 30 June 2007
Chief Executive Officer's Report
Financial Payment Systems Limited (FPS) has seen further progress in its project
during the six months to 30 June 2007, and the period to date. Interest in the
product offering remains strong, particularly within the business to business
(B2B) sphere.
Further, FPS has enjoyed the continuing support of Jiangsu Telecoms (a
subsidiary of the state-owned China Telecoms), a shareholder in the project, and
that in turn has opened further commercial possibilities for expansion and
development of the product offering. In particular, Jiangsu Telecoms has
strengthened its representation within the management of Jiangsu Electronic
Business Co., Ltd (FPS's joint venture partner) which serves to further cement
our relationship with this key stakeholder in the project.
On the personnel side, our team in China has been strengthened by the
appointment of Jet Cong, who heads up the Project Management function. Jet has
extensive experience in the development of payment infrastructure applications
for both private and Government sectors, as well as integrating such systems
with banks within China.
THE FPS SYSTEM
Current status
The FPS system has been developed to its core level of functionality to enable
transaction instructions to be generated by users and in turn communicated to
the necessary banking interfaces. As with any complex multi-function system,
enhancements to the functionality continue to be developed, in some cases being
particularly tailored to the requirements of specific potential users.
In particular, development of the "trusted deposit" function, whereby a seller
using our system can execute on a contract in the knowledge that funds to cover
the transaction are held in a deposit account, has been completed. The initial
trusted deposit account has been opened by our joint venture partner Jiangsu
Electronic Business Co., Ltd, which is partly state-owned and hence attracts the
confidence of potential users as the deposit holder. The first such account is
held at the Industrial and Commercial Bank of China (ICBC), China's largest
commercial bank, and FPS aims to increase the coverage of accounts with
different banking providers, again in response to customer requirements.
Bank relationships
FPS has an excellent working relationship with ICBC whose range of commercial
and Governmental customers is very broad. To complement the ICBC account,
further work is underway to open deposit accounts and subsequently to link those
accounts with the FPS system at other Chinese banks, most notably Guangdong
Development Bank, with whom FPS's technical team is exchanging and settling
interfacing requirements.
FPS has previously indicated its aim to achieve successful integration of its
systems to ICBC before the end of the current quarter, and remains confident
that this deadline will be met.
Interim Accounts for 6 months ended 30 June 2007
Operational deployment and back up
As planned, FPS has deployed its operational servers into the China Telecom
dedicated and secure hosting facility in Nanjing, Jiangsu Province. This
facility is used, amongst others, by numerous banks within the Province, and is
a state of the art facility. This in turn is backed up by a remote database
functioning as a disaster recovery facility, again within Nanjing but
necessarily physically apart from the China Telecom hosting centre, thus
ensuring data and system integrity in the unlikely event of either system
failure or utility denial.
USER BASE
Provincial Government Departments
As previously reported, whilst FPS continues to work with the Highways & Tolls
Department and, more recently, the Department of Taxation within Jiangsu
Province, to refine and enhance the internal systems and processes for executing
payment instructions between Government departments, progress to that end has
taken longer than anticipated.
Commercial enterprises
As a result of the relatively slow progress experienced in dealing with the
Provincial Government Departments, the FPS team has worked hard to advance the
uptake of the FPS system amongst commercial enterprises. It is likely that the
first adopters of the system will come from the B2B commercial sector, and
negotiations are well advanced with the parties FPS expects to be its first
"individual enterprise" customers, the Jiangsu Noble International Media, and
Jiangsu Zongheng Technology Co., Ltd.
In addition to the payment approval and deposit account functionality of the
system, discussions with potential users indicates that there is demand to tie
in the payment functionality with a range of trading portals, some of which are
operated, or in the course of development, by Government agencies. FPS is in
negotiations with several such bodies, including Jiangsu Telecoms, and the
Jiangsu Chemical Trading Centre (China's second largest chemical trading park).
We expect to sign a Memorandum of Understanding for the use of the FPS system
with Jiangsu Chemical Park shortly. Working with these organisations offers FPS
the opportunity to access their customer base, and thus to make the FPS system
available to those users. This has particular attractiveness to FPS in that it
effectively secures a broad base of potential users through one main
relationship being created with the portal provider. Other potential trading
portals with whom we continue in discussions include "9th Community" and
"2006B2B". Both have an existing membership base which could potentially utilise
the FPS system to transact online amongst themselves.
As our development team continues to broaden the system functionality in
response to user feedback, this has allowed the strong and motivated marketing
team we have established to secure and develop interest amongst small and medium
sized enterprises.
Interim Accounts for 6 months ended 30 June 2007
CONCLUSION
FPS is looking forward to completion of its system development and rollout, and
anticipates further advances in the remainder of 2007 in accordance with its
previously established timetables. FPS's team is focussed and enthusiastic in
bringing this system to market successfully over the coming months.
Ong Lay Ann
Chief Executive Officer
Interim Accounts for 6 months ended 30 June 2007
Financial Review
Group operational results
In the six months ended 30 June 2007 ("the Half Year"), the Group recorded a net
loss before minority interest of #590,071 (2006: #339,888). There was no revenue
generated by the Group for the Half Year and interest income amounting to
#41,405 (2006: #528) was recorded.
Operating costs for the Half Year were #631,476 (2006: #340,416). Employment
costs of #373,109 (2006: #230,320) which constitute approximately 59% (2006:
68%) of total operating costs for the Half Year continue to be the main item of
expense. Employment costs for the period under review recorded an increase of
approximately 62% compared to the same period last year. This increase reflects
the increase in the number of staff who are of higher caliber and therefore at
higher cost, recruited by the Group as the development of the project in Jiangsu
moved into higher gear. As at 30 June 2007, the headcount stood at 42 (2006: 32)
Legal and professional fees for the six months ended 30 June 2006 were stated as
#103,162. Following the full year audit, #72,226 of those fees relating to the
IPO last year was offset against capital reserves in accordance with IFRS 32. As
a result, the amended legal and professional fees for the half year ended 30
June 2006 stood at #30,936. In the Half Year, legal and professional fees
amounted to #30,064, little changed from the six months ended 30 June 2006.
Net foreign exchange losses in the Half Year was #41,406 (2006: nil), reflecting
the rising value of the pound sterling during the period against the underlying
operating currencies in the subsidiaries which were principally Singapore
dollars and the RMB.
Office rentals in the Half Year were #37,334 (2006: #27,025). The increase arose
from increased space usage in the Group in the Half Year over the same period in
the previous year commensurate with the higher headcount and increase in
activity in the project.
Balance sheet and cash balance
The Group balance sheet as at 30 June 2007 shows net assets of #3,215,309 which
includes goodwill of #195,531. Group cash balance at that date was #2,586,161 of
which #1,609,285 was in the Company and #804,392 in Jiangsu Electronic Payment
Services Co., Ltd. The Group cash balance saw a decrease from #3,220,759 as at
31 December 2006, representing a burn of about #635,000 for the Half Year or an
average of #106,000 per month. It is anticipated that the burn for the remaining
six months in the current financial year will not deviate significantly from the
Half Year. A slight increase in capital expenditure in the next six months may
be required as the development of the project progresses. The Half Year saw
additions to property, plant and equipment amounting to about #57,000.
The capital reserve and merger reserve accounts as of 30 June 2007, which stood
at #2,361,729 and (#2,591,768) respectively, show significant decreases as
compared to 30 June 2006, which stood at #5,580,998 and (#5,719,635)
respectively. As explained in the audited financial statements for the year
ended 31 December 2006, certain reclassifications were made in those accounts,
more accurately to reflect the transactions in line with IFRSs. They do not have
any significant impact on the financial statements as a whole.
Freddie Heng
Finance Director
CONSOLIDATED INCOME STATEMENT
For 6 months ended 30 June 2007
(Unaudited) (Unaudited) (Audited)
6 months ended 6 months ended Year
30 June 2007 30 June 2006 ended
31 Dec 2006
Revenue - - -
Other income - - 20,480
Exceptional
IPO expenses - - (365,925)
Other
administrative
expenses (631,476) (340,416) (800,974)
Total
administrative
expenses (631,476) (340,416) (1,166,899)
Operating loss (631,476) (340,416) (1,146,419)
Finance income 41,405 528 56,078
Loss before
taxation (590,071) (339,888) (1,090,341)
Taxation - - -
Net Loss for
the
period/year (590,071) (339,888) (1,090,341)
Loss attributable to:
Equity holders
of Parent (562,811) (327,116) (1,047,295)
Minority
interests (27,260) (12,772) (43,046)
(590,071) (339,888) (1,090,341)
Basic and
diluted loss
per share (0.006) (0.022) (0.020)
CONSOLIDATED BALANCE SHEETS
For 6 months ended 30 June 2007
(Unaudited) (Unaudited) (Audited)
6 Months Ended 6 Months Ended Year
30 June 2007 30 June 2006 Ended
31 Dec 2006
ASSETS
Non-current assets
Intangible
assets 352,833 142,857 360,519
Property,
plant and
equipment 107,303 14,472 59,364
Goodwill 195,531 30,734 195,531
655,667 188,063 615,414
Current assets
Other debtors,
deposits & 252,731 61,179 222,698
prepayment
Cash and cash
equivalents 2,586,161 4,355,136 3,220,759
2,838,892 4,416,315 3,443,457
Total assets 3,494,559 4,604,378 4,058,871
LIABILITIES
Current liabilities
Other
creditors &
accruals 274,194 106,748 265,828
Due to a
related party 5,056 415,275 -
Total
liabilities 279,250 522,023 265,828
Net assets 3,215,309 4,082,355 3,793,043
EQUITY
Capital and reserves
attributable to equity holders
of the Company
Share capital 4,583,333 4,583,333 4,583,333
Capital
reserve 2,361,729 5,580,998 2,361,729
Capital
contribution
reserve 204,125 - 204,125
Merger reserve (2,591,768) (5,719,635) (2,591,768)
Foreign
currency
translation
reserve (2,725) 3,837 (14,323)
Accumulated
losses (1,700,650) (422,125) (1,137,839)
2,854,044 4,026,408 3,405,257
Minority
interests 361,265 55,947 387,786
Total equity 3,215,309 4,082,355 3,793,043
STATEMENT OF CHANGES IN EQUITY
For 6 months ended 30 June 2007
Attributable to Equity Holders of the Parent
Total
Foreign amount
Share Capital Capital Merger Currency attribu-
Capital Reserve Contri- Reserve Transl- Accumu- table
bution ation lated to equity Minority Total
Reserve Reserve Losses holders Interests Equity
2007 # # # # # # # # #
Group
Balance at
01.01.2007 4,583,333 2,361,729 204,125 (2,591,768) (14,323) (1,137,839) 3,405,257 387,786 3,793,043
Loss for the
period - - - - - (562,811) (562,811) (27,260) (590,071)
Exchange
difference
arising on
consolidation - - - - 11,598 - 11,598 739 12,337
Balance at
30.06.2007 4,583,333 2,361,729 204,125 (2,591,768) (2,725) (1,700,650) 2,854,044 361,265 3,215,309
For 6 months ended 30 June 2006
2006
Group
Balance at
01.01.2006 2,500,000 3,500,000 - (5,848,167) 6,310 (90,544) 67,599 53,859 121,458
Shares issued
in AIM
listing 2,083,333 2,916,667 - - - - 5,000,000 - 5,000,000
IPO expenses
transferred
from income
statement - (835,669) - - - - (835,669) - (835,669)
Accumulated loss - - - - - - - - -
from acquired
subsidiaries
Loss for the
period - - - - - (327,116) (327,116) (12,772) (339,888)
Exchange
difference
arising on
consolidation - - - - (2,473) (4,465) (6,938) 14,860 7,922
Merger arising
from
acquisition of
subsidiaries - - - 128,532 - - 128,532 - 128,532
Balance at
30.06.2006 4,583,333 5,580,998 - (5,719,635) 3,837 (422,125) 4,026,408 55,947 4,082,355
For year ended 31 December 2006
2006
Group
Balance at
01.01.2006 2,500,000 - - (2,348,167) 6,310 (90,544) 67,599 53,859 121,458
Shares issued
in AIM
listing 2,083,333 2,916,667 - - - - 5,000,000 - 5,000,000
IPO expenses
transferred
from income
statement - (554,938) - - - - (554,938) - (554,938)
Accumulated
loss from
acquired
subsidiaries - - - - - - - 376,973 376,973
Loss for the
year - - - - - (1,047,295) (1,047,295) (43,046) (1,090,341)
Capital
contribution
during the
year - - 204,125 - - - 204,125 - 204,125
Exchange
difference
arising on
consolidation - - - - (20,633) - (20,633) - (20,633)
Merger arising
from
acquisition of
subsidiaries - - - (243,601) - - (243,601) - (243,601)
-
Balance at
31.12.2006 4,583,333 2,361,729 204,125 (2,591,768) (14,323) (1,137,839) 3,405,257 387,786 3,793,043
-
CONSOLIDATED CASH FLOW STATEMENTS
For 6 months ended 30 June 2007
(Unaudited) (Unaudited) (Audited)
6 Months Ended 6 Months Ended Year
30 June 2007 30 June 2006 Ended
31 Dec 2006
CASH FLOW FROM OPERATING
ACTIVITIES
Loss before
taxation (590,071) (339,888) (1,090,341)
Adjustment for :
Depreciation
of property,
plant and
equipment 9,308 1,423 7,183
Finance income (41,405) (528) (56,078)
Amortisation
of software
development - 140 -
Operating loss
before
movement in
working
capital (622,168) (338,853) (1,139,236)
activities
Debtors (30,033) (225,149) (171,480)
Creditors 13,422 522,023 (33,285)
Cash used in
operating
activities (638,779) (41,979) (1,344,001)
Interest
received 41,405 528 56,078
Net cash used
in (597,374) (41,451) (1,287,923)
operating activities
CASH FLOW FROM INVESTING
ACTIVITIES
Purchase of
property,
plant and
equipment (57,534) (8,273) (59,201)
Research and
development
expenditure - - (29,517)
Net cash used
in investing
activities (57,534) (8,273) (88,718)
CASH FLOW FROM FINANCING
ACTIVITIES
Proceeds from
issue of
shares,
representing
net of
expenses - 4,164,331 4,445,062
Net cash
generated from
financing
activities - 4,164,331 4,445,062
NET (DECREASE)
/ INCREASE IN
CASH AND CASH
EQUIVALENTS
DURING THE
FINANCIAL
PERIOD / YEAR (654,908) 4,114,607 3,068,421
CASH AND CASH
EQUIVALENTS AT
THE BEGINNING
OF THE
FINANCIAL
PERIOD/YEAR 3,220,759 156,348 156,348
Exchange
difference 20,310 84,181 (4,010)
CASH AND CASH EQUIVALENTS AT
THE END
OF THE
FINANCIAL
PERIOD / YEAR 2,586,161 4,355,136 3,220,759
NOTES TO THE FINANCIAL STATEMENTS
1. NOTES TO THE INTERIM REPORT
BASIS OF PREPARATION
The announcement was approved by the Board of FPS on 17 September 2007. The
interim financial statements for the six months ended 30 June 2007, which are
unaudited, have been prepared on a consistent basis using the same accounting
policies as the audited financial statements for the year ended 31 December
2006. The financial statements are expressed in pounds sterling, which is the
functional currency of the Group. The consolidated financial statements have
been prepared in accordance with International Financial Reporting Standards and
Interpretations in force ("IFRSs"), as endorsed by the European Union and
implemented in the UK.
2. LOSS PER SHARE
(Unaudited) (Unaudited) (Audited)
6 Months 6 Months Ended Year Ended
Ended
30 June 2007 30 June 2006 31 Dec 2006
Basic and diluted loss per
share
Loss for the
financial period /
year (590,071) (339,888) (1,090,341)
-
Number Number Number
Weighted average number of
ordinary share issued
during the period /
year 91,666,667 15,324,074 54,018,266
Basic and diluted
loss per share (0.006) (0.022) (0.020)
========= ======== =======
Basic loss per share has been calculated based on the loss for the period after
taxation and minority interests of 0.56 million (2006: 0.33 million) and the
weighted average number of shares of 91,666,667 (2006: 15,324,074). The basic
and diluted loss per share is #0.006 (2006: #0.022)
This information is provided by RNS
The company news service from the London Stock Exchange
END
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