It is still early days for cross-border payments service provider, Earthport (EPO) - that's because it's introducing a new payments processing system into the banking sector which was always going to be a slow burner. However, there are early signs that the group's offering is beginning to achieve broader acceptance in the sector.
The core business model is focused on a technology platform that processes low value cross-border payments - crucially, it's cheaper and more transparent than conventional processes. It's good business, too, with the gross margin having risen to 77 per cent. The downside is that it can take two years from signing up a new customer to establishing a revenue stream so, to bolster cash flow, Earthport has introduced a fee system that kicks in after preliminary discussions have taken place.
Some 21 new customers were signed up during the year and 13 customers went live - including one Bank of America business unit. American Express was signed up in March, too, and is expected to go live some time next year. Moreover, after adjusting for a non-cash share incentive charge, the operating loss narrowed from £8.5m to £6.5m.
Depending on the pace that customers go live, broker Charles Stanley reckons that the operating loss next year will be between £6.6m and £4.6m, with revenue growth of between 90 per cent and 178 per cent.
| EARTHPORT (EPO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 20.8p | MARKET VALUE: | £80m | |
| TOUCH: | 20.5-20.8p | 12-MONTH HIGH: | 25p | LOW: 14.9p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 4p | NET CASH: | £13.4m | |
| Year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 1.95 | -5.08 | -5.26 | nil |
| 2011 | 2.49 | -7.52 | -4.42 | nil |
| 2012 | 3.02 | -9.63 | -3.87 | nil |
| 2013 | 4.14 | -8.13 | -2.55 | nil |
| % change | +37 | - | - | - |
Ex-div: - Payment: - | ||||
