Loss-making earthport eyes Asia Pacific and US

Loss-making earthport eyes Asia Pacific and US

UK electronic payments service company earthport is moving ahead with plans to expand into the US and Asia Pacific despite recording a £3.5 million group operating loss before exceptional gains for the six months ending December 2003.

The AIM-listed e-money outfit, which has been significantly restructured since the collapse of the dotcom bubble, is reporting a lower-than-expected increase in turnover for the period to £0.42 million from £0.28 million in the six months to end-2002. A group operating loss of £3.5 million (H1 2000: £3.6m) has been cut back to £2.8 million following the restatement of an exceptional £1.2 million gain from the anticipated liquidation of subsidiary 101010 Limited.

In line with a stated strategy of extending its global banking coverage and aided by a £3 million fund-raising exercise in January, earthport has today announced a new strategic partnership in Asia Pacific and a pending acquisition in the US.

In Asia Pacific, the firm has taken a 28.5% shareholding in EPAL, a joint venture company set up with Singapore-based NetSecure Holdings (NHS), which recently won a five-year contract to supply payment processing services for smart ID cards being issued to 6.7 million Hong Kong citizens. Under the agreement with NHS, earthport's technology - supplied by EPAL - will operate an exclusive stored value wallet on the cards.

Issue of cards commenced in Q4 2003 and the payments service is expected to go live on 1 July 2004 and to be fully operational by December 2004. EPAL projected earnings from the first full year of operation in 2005, is $12.8 million based on a six per cent take up. Forecast earnings for earthport are up to $1.3 million.

Earthport and NSH have formed a 50/50 owned holding company, ep AsiaPac to roll out similar contracts in the Asia Pacific region should the initial EPAL project prove a success. An IPO of either EPAL or ep AsiaPac in Hong Kong by 2006 is also projected.

Details of the US acquisition target have yet to be disclosed.

Earthport shares were down eight per cent at 2.8 pence by mid-day, losing the speculative gains made in the run-up to the results statement.

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