Month: August 2019

4Stop - Most Innovative Risk Management Platform (Western Europe)
Risk Management

Most Innovative Risk Management Platform (Western Europe)

Most Innovative Risk Management Platform (Western Europe)

Thanks to its impressive industry expertise, 4Stop, a leading fraud prevention provider, solves businesses riskbased approach through a modern, all-in-one KYB, KYC, compliance and anti-fraud solution at an international level. To celebrate the firm’s win in this year’s competitive FinTech Awards we profile it and share an insight into the innovative solutions it has to offer, speaking with members of the senior team to understand the true value of this exceptional solution.

Since its inception in 2016, 4Stop has onboarded various clients within its target markets of Payment Service Providers, Payment Gateways, eMobile payments, eCommerce, eWallets, and Cryptocurrency.

As all the founders of the company have collectively over 60 years of experience within the risk management realm, they understand the need for a simple, fail-safe, future-proof solution that businesses can effortlessly manage their risk requirements and more importantly with absolute confidence. When they first started their firm, their focus and challenges were to establish a product to resolve the cumbersome processes surrounding KYB, KYC, compliance and fraud prevention globally.

This drive led 4Stop to develop an all-in-one solution encompassing global data aggregation that resulted in a full suite of KYB and KYC data sources, and their proprietary risk management tools paired with automation and integrated analytics, all from a single AP. Removing the market pain point of multiple integrations and patchworked solutions to fully address risk management requirements.

Thanks to this unique technology, the firm now allows its diverse range of clients to easily perform required validation, verification and authentication at the point of onboarding through to transactional processing, both at the merchant and merchant consumer level.

Over the past three years the adoption and usability of the 4Stop solution have been well received. By encompassing a complete end-to-end solution for KYB, KYC, compliance and fraud prevention, 4Stop allows businesses to enjoy a single-view-ofrisk and it has already been proven to dramatically improve their overall performance and bottom line.

Today, the firm has achieved proven results for its clients and have cemented its place as a true revolutionary within the risk management and technology space. Businesses that have utilised 4Stop’s anti-fraud technology experience a 66.6% reduction in chargebacks in the first 2 months with an average of 81.5% approval authorisation rate. Additionally, businesses that have implemented the cascading KYC verification technology, have seen a growth of 10.9% in savings within the first two months.

4Stop’s revolutionary KYB solution is now leading the industry by performing granular business underwriting in near real-time with comprehensive data analysis surrounding business’ online presence, operational performance, structure. Comprehensive data analysis surrounding the business’ online presence, operational performance, structure, and compliance adherence. Enhanced by additional KYC due-diligence performed on directors/ UBO’s and required document retreival, businesses obtain all the data and documentation they require to confidently onboard businesses.

It is this unique solution that has driven 4Stop to win one of the 2019 FinTech Awards from Wealth & Finance International Magazine. Ingo Ernst, CEO of 4Stop, comments on the firm’s success in this award’s programme and how it is the direct result of the firm’s expert team’s hard work and dedication to excellence.

“This award is another great milestone for 4Stop. Our ever-changing online landscape demands innovation and for everyone at 4Stop, our focus is driving our technology advancements as an equalized force across all aspects of our product offering. Our teams’ hard work, diligence and passion have been the pathway for our success and we greatly look forward to continue bolstering our products to support online risk management.”

Seeking to change the face of risk management for the better, 4Stop’s KYC data hub solution encompasses one of the largest KYC data aggregations in the industry to provide true worldwide KYC data coverage. As a result, clients have access to thousands of global data points and hundreds of KYC data sources with real-time and on-demand activation. Additionally, this data creates full market profile data simulations in a seamless manner and allows businesses to make quantifiable decisions based on data science. Through 4Stop’s cascading verification logic costsavings on KYC data performance is maximised and the best data experience output is obtained. 4Stop continuously aggregates global data and KYC data sources so businesses can continue to enjoy all the data they require from their initial integration with zero touch on their IT and internal development resources.

Dedicated to safety as well as efficiency, 4Stop’s cutting-edge anti-fraud technology provides an automated and multi-faceted rules engine that performs real-time analysis with automated system actions through to providing granular risk monitoring and integrated intelligence. Businesses can apply risk thresholds and anti-fraud parameters per merchant, sub-merchant, region, type, market/ industry, date/time, etc. Clients have full control of their risk management in a fully automated manner. Through the single-view-of-risk, overall monitoring and risk analysis processes are efficient with minimal requirement for manual intervention.

Improving businesses authorisation rates, dramatically reducing chargebacks and accelerating their performance, the Businesses all-in-one solution provides everything required to manage risk from a single API.

Whilst its fully integrated solution is revolutionary in the FinTech market it enables 4Stop to overcome the KYC industry issue of managing so much data safely and effectively. The firm is constantly seeking to enhance this product for the benefit of its clients across the financial and business markets. 4Stops’s continued technological investment is based on a few variables within the market landscape.

By closely engaging within the industry through networking globally with key market leaders, events and conferences, close client engagement and staying abreast of global payment and risk management centric reports and trends.

Through this process, 4Stop develops vigorous assessments of the market landscape, emerging trends and evolving regulatory requirements, all of which are funnelled to their executive and product innovation teams to drive product expansion and ensure 4Stop’s all-in-one risk management solution remains leading-edge across the various industries in the market they services.

“4Stop has been designed to be future-proofed from a single API for our clients to manage KYB, KYC, compliance and anti-fraud technology on a global scale. It is our continued responsibility that the product does just that. Expanding our fraud technology and data aggregation accordingly to stay relevant to the rapid evolution of online payments and engagement.” States Brian Daly, Head of Product Implementation and Innovation, 4Stop.

At the point of inception 4Stop launched with a full suite of KYC data sources and their proprietary anti-fraud technology that encompasses a multi-faceted automated risk rules engine with cascading rule performance and automated system actions, alongside a dashboard with realtime intelligence and multiple reporting widgets. In early 2019 4Stop launched its global end-to-end KYB solution. Seeking to build upon its current success, moving forward 4Stop will continue to aggregate data and expand its KYB and KYC solution, in conjunction with furthering its features available such as machine learning to support the anti-fraud and risk monitoring technology. The firm has also recently completed a German-based €2.5 €Million Series A Round Investment from Ventech, the leading pan-European VC fund investing in early-stage tech-driven start-ups. This financing will help the company to expand its solution and drive real change in the market.

Ultimately, 4Stop is a global product with clients worldwide. In the coming years, the business has established a focused acquisition plan specific to regions and markets within Europe, Asia and the United States. These developments will drive the company to even greater global recognition and truly prove it as a pioneer in the risk management technology space. As many companies seek a single provider to manage all parts of their risk management cycle, 4Stop will become a key part of the payment’s ecosystem and the central aggregation hub in the eco-system.


Contact Information:
Name: Ingo Ernst
Address: Neusser Str. 85, Köln, Germany, 50670
Telephone Number: +49.151.1101.7175
Web Address: https://4stop.com/

Issues

Q3 2019

Welcome to the Q3 edition of Wealth & Finance International Magazine for 2019. Every issue we endeavour to provide fund managers, institutional and private investors with the very latest industry news in the traditional and alternative investment landscapes. Putting aside, at least for the time being, the tumultuous stock markets and dire warnings from financial experts on the topic of an ‘imminent’ global recession, we are focusing – as ever- on more optimistic shores.

Take, for instance, Inbound FinTech, a multi-award-winning growth agency that specialises in the financial sector. In the years since its establishment it has proven a crucial tool for the sector’s shining stars as they look to capitalise on a wealth of opportunities. Group CEO Sheila Mitham took a moment out of her busy schedule to tell us more.

In a very different vein, we profiled MPA Financial Management to see how they have thrived in their role as Independent Financial Advisers. The key to the firm’s success has always been their ability to serve their client’s best interests, helping them to achieve a secure financial future.

Here at Wealth & Finance we sincerely hope that you enjoy reading this issue and, as always, we look forward to hearing from you.

banking online
Banking

A machine learning balancing act: Payments, customer experience, fraud detection

By Manuel Rodriguez, Fraud Solutions Manager at SAS

The range of potential payment services has expanded rapidly over the last few years. Increasingly, we all want the flexibility of being able to pay with new payment methods, from contactless through to Apple Pay, mobile wallets and beyond. Digital natives, such as millennials, don’t just want this – they expect it. For banks, however, this demand for flexibility is a headache.

 

Banks and other financial institutions know that they have to adopt new payment methods to meet customer demand for convenience and flexibility. However, they also know that these new payment systems leave them open to new forms of fraud. The big question is how can they adapt to these new fraud types – to protect both themselves and customers – without creating poor customer experiences through large numbers of false positives?

 

Understanding payment fraud

There is no question that payment fraud has changed over the last few years. A few years ago, card fraud, from cloning cards, was a leading form of fraud. However, the use of card processing terminals that use Europay-Visa-Mastercard (EMV) technology has reduced this considerably. This technology – the gold standard for credit cards, using computer chips to authenticate and secure transactions – has been the norm in Europe for a while. Its use is now spreading to the US.

 

Card fraud has therefore migrated to “card not present” transactions, such as online purchases. Payment fraud is driven and supported by several risks, including data breaches at retailers, credit agencies and banks, and use of malware to obtain access to accounts. It is also, however, helped by moves towards faster payments, driven by both regulators and the industry. These are good for customers, but they also good for fraudsters. The faster it is to get funds or goods through fraudulent transactions, the less time banks have to detect the fraud.

 

Fraudsters always ahead

 

Fraudsters are faster and more adept than ever before. The issue for banks and other financial institutions is to recognise that fraudsters will always be ahead but to take action to address that. Fraud detection systems need to keep up, and there is little time for long-drawn-out checks. However, there is a catch. Fraud-prevention systems need to avoid too many false positives. Up to 10% of rejected orders are actually believed to be valid. In total, in one survey, 37% of merchants said that turning away good customers was a top concern.

 

New regulations are adding challenges. Instant Payments or Payments Services Directive 2 (PSD2) are enforcing new rules, needs and requirements. We need to fit into payment processes thresholds and other aspects to make payments faster, more available and smoother. On the other side, we need to apply proper security, customer authentication and risk-based approaches to monitor payments in a more complex environment involving banks and third-party providers.

 

Systems to catch fraud

 

There are many actions that banks can take to protect themselves and their customers from fraud. First, they must look at their systems, ensure they are connected and remove any silos. Disconnected systems are vulnerable to compromise.

 

Banks also have to move from rules-based to machine learning analytics systems for fraud detection. This approach gives them the chance to identify suspicious patterns and anomalies much faster, which is essential as more and more real-time payments systems come online. Real-time scoring and decision making should drive new systems, which should also take into account new forms of data, such as device fingerprints and information phone call routing.

 

Machine learning techniques include neural networks, regression techniques, decision trees, naïve Bayesian methods, clustering and network analysis. These approaches are particularly useful to detect rare payments fraud events hidden in big data sets. Machine learning tools can understand and learn from this type of data, and they can adapt to the changing behaviours associated with fraud through automated behavioural profiling and signatures.

 

They can automate models to find hidden insights without having to be programmed directly. This means that banks have some chance of keeping up with fraudsters. Machine learning techniques can also reduce the false positive rate by learning the behaviour of individual customers over time so that normal behaviour for an individual does not raise alerts.

 

With multiple analytics techniques available, banks can better detect fraud behaviours. But they can also monitor legitimate behaviour to provide enriched answers to business needs, different requirements and new regulations.

 

End-to-end and across channels

Ultimately, payment fraud detection systems have to be able to look at payment processes from end to end and also across channels. Gartner identifies five layers: entity link, cross-channel-centric, channel-centric, navigation-centric and end-point-centric. By looking across all five of these layers and drawing data from all points, machine learning systems can draw a complete picture of the transaction in the context of the customer.

 

This combination of rules-based and analytical techniques can monitor user behaviour with considerable accuracy and speed. It can, therefore, identify normal and unusual patterns very fast, even in real time. This makes it much harder for fraudsters to find gaps and loopholes, and easier to identify potential fraud accurately. It is essential for banks to move in this direction to protect themselves and their customers from payment fraud.

mobile bank fraud
BankingFinance

Mobile financial attacks rise by 107%

According to a recent report by Kaspersky, the number of mobile financial attacks it detected in the first half of the year rose by 107%, rising to 3,730,378. Analysts at the company said they discovered 3.7 million mobile financial attacks from January to June this year and found 438,709 unique users attacked by mobile Trojan bankers.

In the first half of 2019, attackers actively used the names of the largest financial services and banking organisations to attack mobile platform users. Researchers found 438,709 unique users attacked by mobile Trojan bankers. For comparison, in the first half of 2018, the number of attacked users was 569,057, a decrease of 23 per cent

Findings by Kaspersky showed the activity of a bank Trojan called Asacub banker, which attacked an average of 40,000 people per day, peaked rapidly in the second half of 2018 and reduced in half year 2019. The number of attacked users and detected attacks peaked rapidly in the second half of 2018; 1,333,410 users were attacked and there were 10,256,935 attacks.

The cybersecurity firm identified another malware, Anubis Trojan, which intercept data for access to services of large financial organisations and two-factor authentication data in order to extort money from users. The firm described the banking Trojan as one that spreads via instant e-messaging apps such as WhatsApp and sends a link to the victim’s contact list.

Lisa Baergen, director at NuData Security, a Mastercard company comments:

“Mobile banking fraud is easy to miss for consumers as Trojans are well hidden inside other legitimate-seeming applications or attachments. Once inside the customer’s phone, they can roam free to steal banking information or account assets.

With this increase on attacks through banking Trojans, it is hard for financial institutions to know if a legitimate user is making a transaction or someone else is hijacking the account. To avoid this growing type fraud many companies are including security layers that can see beyond credentials and passwords: passive biometrics.

Adding passive biometrics technology, banks are able to detect unusual behavior within an account, even if the right device is used. By having this visibility into the user’s behavior, banks can block or authenticate a user further when they detect unusual activity, thwarting account hijacking.

Building a holistic risk-based authentication infrastructure for user verification is proving effective in thwarting bad actors armed with stolen credentials or executing account hijacking. Many companies are now combining different layers of identification such as device, connection, and passive biometrics to power a dynamic and intelligent authentication system. This multi-layered security ensures a frictionless experience for customers while seamlessly eliminating fraudulent transactions.”

Bank tech
Banking

Over 50% of banks and telcos flying blind into cloud migration

CAST, a leader in Software Intelligence, today released its annual global cloud migration report. The report analyzes application modernization priorities in financial and telecommunications firms.

Findings show critical missteps mean cloud migrations are falling short of expectations in mature institutions, just 40% meeting targets for cost, resiliency and planned user benefits. Lack of pre-migration intelligence and fear of modernizing legacy mainframe applications are the main drivers for these shortcomings. Adoption of microservices as a modernization technique is also faltering from lack of financing.

While these legacy process institutions realise only third of their target benefits for cloud migration, cloud-native approaches are enabling FinTech firms to outperform traditional banks, achieving more than half their target benefits.

Fewer than 35% of technology leaders use freely-available analysis tools. There is a systematic failure to assess the underlying application readiness for cloud migration with Software Intelligence, a deep analysis of software architecture. IT leaders must ensure the right architectural model and compliance is in place to avoid increasing technical debt. Unchecked, this leads to more IT meltdowns such as TSB’s £330m re-platforming crisis in 2018, with customers paying the expensive price for these mistakes.

More than 50% of banks and telcos are effectively taking leaps of faith, not undertaking essential analysis-led evaluations to support and facilitate cloud migrations. Instead, half the CTOs surveyed use gut instinct and ad-hoc surveys with application owners as the primary basis of their decision to move applications to the cloud. IT leaders need to adopt an analysis-led approach over gut instinct to implement the right cloud migration strategy and realise all potential benefits of migrating to the cloud.

Greg Rivera, VP CAST Highlight at CAST, commented on the findings, “Pilots going into storms turn to their instruments. If you run headfirst into a cloud migration without objectively assessing your applications, you’re flying in the dark.

Even one small change to an application has a ‘butterfly effect’ on the rest of the code set, so a disruption as big as cloud migration has detrimental effects including IT outages and loss of business. Migration to the cloud is vital when digitally transforming a business. But, it needs to be done right if organizations want success instead of suffering.”

More than 40% of software leaders are yet to define a class based approach to application modernization. Heavily legacy process firms tend to rehost apps, while rehosting, or so-called ‘lift-and-shift’, benefits apps with up to three years before end of life. However, existing and continuously evolving apps should be re-platformed and restructured during cloud migration. To successfully complete migration first gather intelligence and actively assess applications objectively.

Armed with battle scars software leaders at banks and insurance firms are revisiting their initial ‘lift-and-shift’ approach to cloud migration plans. While FinTech firms outperform mature institutions on cloud-native apps, banks lead the way on cloud-ready applications with just fewer than 50% rewriting applications. A European Chief Digital Architect said, “Cloud migration is only really a problem if you’re moving workloads without changing the way they are shaped.”

Press releases

The 2019 Wealth and Money Management Awards Press Release

Wealth & Finance Magazine Announces the 2019 Wealth and Money Management Awards Winners

United Kingdom, 2019- Wealth & Finance magazine have announced the winners of the 2019 Wealth and Money Management Awards.

Wealth management is a vital part of the financial market, and with consumers increasingly focused on wealth creation and retention the sector is only getting more competitive.

As such, the 2019 Wealth and Money Management Awards return to honour those who remain committed to guiding individuals through one of the most daunting tasks presented in society today and offer the best financial services available for their clients.

Discussing the outcome of the programme, Katherine Benton, Awards Coordinator commented: “It is with great pride that I showcase a selection of the firms working with their clients to create, preserve and increase their wealth. Ethics, client service and professionalism are what links all of my winners, and I am honoured to be able to say congratulations to them and wish them the best of luck with their future endeavours.”  

To learn more about our deserving award winners and to gain insight into the working practices of the “best of the best”, please visit the Wealth & Finance website (http://www.wealthandfinance-news.com/) where you can access the winners supplement.

ENDS

Notes to editors.

About Wealth & Finance International

Wealth & Finance International is a monthly publication dedicated to delivering high quality informative and up-to-the-minute global business content. It is published by AI Global Media Ltd, a publishing house that has reinvigorated corporate finance news and reporting.

Developed by a highly skilled team of writers, editors, business insiders and regional industry experts, Wealth & Finance International reports from every corner of the globe to give readers the inside track on the need-to-know news and issues affecting banking, finance, regulation, risk and wealth management in their region.

Finance Business
Finance

FINANCE BUSINESSES MISSING THE MARK WITH GAMIFIED REWARDS

FINANCE BUSINESSES MISSING THE MARK WITH GAMIFIED REWARDS

75% of finances businesses currently offer a gamified rewards system

But only a minority of these are utilising the most effective kind of gamified reward

Research reveals which types of gamified rewards have the biggest impact on motivation and productivity of financial industry workers.

A survey of 1,219 UK workers, carried out by workplace incentives and rewards provider, One4all Rewards, and published in The Gamification Report surveyed employees from different age groups, genders and industries revealing which type of gamified rewards systems would motivate them the most or for the longest period of time. The research found that 35% of finance workers were most likely to cite fixed action rewards as being the biggest motivator.

But the research shows just a third (33%) of finance businesses are utilising this type of gamified reward.

30% of finance industry workers stated that they would work harder or for longer to unlock social treasure style rewards, which are awarded by peers.

Surprise or unexpected rewards came in third place (27%), with finance workers stating they would be motivated to work harder if their employer offered them.

Meanwhile, rolling or lottery style rewards where workers hit their targets are then entered into a lottery or raffle to win a reward or bonus, would work for almost 1 in 4 (24%) finance industry workers.

Random rewards in return for completing a certain task or action would work for 19% of finance workers.

The research found that a large number (75%) of finance businesses currently offer a gamified rewards and bonus system.

But the study shows that they could be utilising this type of system in a slightly different way, to have a bigger impact.

The research found that majority (43%) of finance businesses offering gamified rewards systems are relying on surprise or unexpected rewards – which award workers for a job well done – but in fact, it is actually fixed action rewards which workers say would motivate them the most.

Michael Dawson managing director of One4all said: “It’s fantastic that such a large number of finance businesses have already adopted a gamified reward and bonus system for their staff – but the research shows that some could be using them to greater impact employee productivity.

“It’s definitely worth bosses considering which style of rewards and bonuses will have the biggest impact on productivity and effort amongst their workforce.

“Given that these types of rewards truly embody the spirit of gamified rewards – which recognise and praise good behaviour, to encourage workers to repeat this in the hope of receiving another reward – this makes sense.”

One4all Rewards are industry experts in benefits and rewards. Working with over 6,000 businesses of all sizes nationwide, One4all Rewards helps to transform customer and employee relationships through successful rewards and incentive schemes.

For more information and to read The Gamification Report, visit https://www.one4allrewards.co.uk/blog/blog/research-reports/gamification-report-2019

The most popular types of gamified rewards most likely to improve productivity and motivation levels for finance workers:

  1. Fixed Action Rewards – 35%
  2. Social Treasures – 33%
  3. Surprise Rewards – 27%
  4. Rolling/ Lottery Rewards – 24%
  5. Random Rewards – 19%
Bitcoin $150000
FinanceFunds

Bitcoin to hit $15,000 as consensus grows on safe-haven status

The devaluation of China’s currency that is rattling global financial markets has revealed that Bitcoin is now becoming a safe haven asset.

The analysis from the CEO of one of the world’s largest independent financial advisory organisations comes as investors piled into the Bitcoin and other cryptocurrencies this week amid growing trade tensions between the U.S. and China. 

The Chinese renminbi fell to under 7 to the U.S. dollar on Monday – the lowest in more than a decade – igniting drops in stocks and emerging market currencies and driving a rally in government bonds.

Nigel Green, chief executive and founder of deVere Group, notes: “The world’s largest cryptocurrency, Bitcoin, jumped 10 per cent as global stocks were rocked by the devaluation of China’s yuan as the trade war with the U.S. intensifies.

“This is not a coincidence. It reveals that consensus is growing that Bitcoin is becoming a flight-to-safety asset during times of market uncertainty. 

“Bitcoin is currently realising its reputation as a form of digital gold. Up to now, gold has been known as the ultimate safe-haven asset, but Bitcoin  – which shares its key characteristics of being a store of value and scarcity – could potentially dethrone gold in the future as the world becomes increasingly digitalised.”

He continues: “With the Trump administration now officially labelling China a currency manipulator, escalating the tensions between the world’s two largest currencies economies, investors are set to continue to pile in to decentralized, non-sovereign, secure currencies, such as Bitcoin to protect them from the turmoil taking place in traditional markets.

“The legitimate risks posed by the continuing trade dispute, China’s currency devaluation and other geopolitical issues, such as Brexit and its far-reaching associated challenges, will lead an increasing number of institutional and retail investors to diversify their portfolios and hedge against those risks by investing in crypto assets.

“This will drive the price of Bitcoin and other cryptocurrencies higher.  Under the current circumstances, I believe the Bitcoin price could hit $15,000 within weeks.”

The deVere CEO concludes: “Cryptocurrencies are now almost universally regarded as the future of money – but what has become clear this week is that they are increasingly regarded a safe haven in the present.”

IMMOATIVE
FinanceFunds

Proposed Placing of new ordinary shares to raise approximately £2.0 million Proposed broker option to raise up to £0.5 million

Immotion Group, the UK-based immersive virtual reality (“VR”) out-of-home entertainment group, announces, following the success of its recent VR installations into a range of high quality partners (“Partners”), that it has decided to focus its strategy predominantly on the roll out of its Partnership Model into high footfall locations. The visibility of higher margins and recurring revenues delivered from this model is, the Directors believe, the best strategy for the Group and its shareholders. To support this strategy, the Company is carrying out a fundraising to raise approximately £2.0 million, before expenses, via the issue of an aggregate of approximately 29.6 million new Ordinary Shares (“Placing Shares”) at a price of 6.75 pence per share (“the Placing Price”) (the “Placing”).

 

WH Ireland Limited and Alvarium Capital Partners are acting as joint brokers in relation to the Placing (the “Brokers”) and furthermore, the Company has authorised the Brokers to raise up to a further £0.5 million through a broker option (the “Broker Option”), (together with the Placing, the “Fundraising”) in order to allow existing and other investors to participate in the Fundraising.  Ordinary Shares issued under the Broker Option will also be issued at the Placing Price and will therefore be limited to approximately 7.4 million new Ordinary Shares (the “Broker Option Shares”), expected to close by 5.00 p.m. on 30 July 2019. It is intended that the net proceeds of the Fundraising will be used to accelerate the Company’s growth plans under the revised strategy. A placing agreement has been entered into today between the Company and the Brokers in connection with the Fundraising (the “Placing Agreement”).

 

The Placing is being conducted, subject to the satisfaction of certain conditions set out in the Appendix to this Announcement, through an accelerated book-build process (the “Bookbuild”), which will be launched immediately following this Announcement.

 

Operational and Trading Highlights

 

  • Currently the Group has a total installed base of 237 headsets;
  • 34 new headset installs agreed across Madame Tussauds, Washington DC; two Legoland Discovery Centres; and two Al Hokair sites in the Middle East;
  • A further 118 headsets installs agreed subject to contract, expected to be installed through the remainder of 2019;
  • Based on current headset yields, the Directors expect overall monthly EBITDA breakeven at c.410 installed  headsets (expected Q1 2020);
  • Strong revenue per headset performance in the Partner venues being driven by sector focus;
  • Launch of ‘Underwater Explorer’, ‘Thrill Coasters’ and ‘Raw Data’ themed VR stands;
  • Strong demand and enquiries from both existing and new high footfall leisure destination Partners;
  • Roll-out of the Company’s VR Cinematic Platforms with Merlin Entertainments plc (“Merlin”), now encompassing the Legoland Discovery Centre, LEGOLAND®, Sea Life, and Madame Tussauds locations with 70 headsets now installed; and
  • ImmotionVR, the Company’s own VR operations, now also includes a partnership-based model focusing on high footfall leisure destinations, such as The O2, Soar Centre in Glasgow, and Star City in Birmingham.

Fundraising Highlights

  • Proposed Fundraising of up to approximately £2.5 million before expenses at a price of 6.75 pence per share by way of a Placing and Broker Option.
  • Placing being conducted through an accelerated book-build process which will open with immediate effect following this Announcement.
  • The Placing Shares and Broker Option Shares (“New Ordinary Shares”), assuming full take-up of the Placing and Broker Option, will represent approximately 13 per cent. of the Company’s enlarged issued share capital.
  • The final number of Placing Shares will be agreed by the Brokers and the Company at the close of the Bookbuild, and the result will be announced as soon as practicable thereafter.
  • The timing for the close of the Bookbuild and allocation of the Placing Shares shall be at the discretion of the Brokers, in consultation with the Company. The Fundraising is not underwritten.
  • The Broker Option is expected to close by 5.00 p.m. on 30 July 2019.
  • The Appendix to this Announcement (which forms part of this Announcement) contains the detailed terms and conditions of the Fundraising.

Background and Current Strategy

 

Immotion Group was established to exploit the ‘Out-of-Home’ VR immersive entertainment market. Since inception, it has developed an extensive range of both CGI and live-action experiences, all of which operate on the Company’s proprietary Content Management and Reporting System. Immotion’s core offering provides virtual reality experiences to be enjoyed on sophisticated motion platforms delivering a truly engaging and immersive experience.

 

In addition to the Company’s own consumer-facing VR operation, ImmotionVR, the Company has thus far offered its solutions to third parties via both a straight sales model, as well as a revenue share model with Partners (“Partnership Solution” or “Partnership Model”). In addition, the Company has also used its CGI studio to offer the development of VR experiences for major brands, as well as licensing its own experiences into countries where it doesn’t operate.

 

Over the past year the Company has experienced positive feedback from its existing Partners as well as new potential Partners. Its innovative Partnership Model has been well received in what is a fast growing, but still nascent market.

 

The Partnership Model developed by the Company allows high footfall leisure destinations to embrace VR, adding both consumer value as well as ancillary revenue to these locations. The decision process for the Partner moves from a prolonged capital investment decision to a simple operating decision, thus speeding up the decision process considerably.

 

Feedback from Partners in regard to the Partnership Model has been very positive, with demand demonstrating a strong appeal of this model as opposed to the straight sales model. Consequently, the Company has taken the decision to focus on its Partnership Solution.

 

The Directors believe the Partnership Model, in terms of both experiences and hardware, allow Partners to enter the early stage VR market with confidence. This underpinned with the Company’s proprietary Content Management and Reporting System allows Partners, big and small, the ability to upload remotely new experiences, as well as see ‘real-time’ data on usage and revenues and to receive remote support from Immotion Group.

 

The Company has seen very encouraging results in the Partner sites generally with the aquaria sites outperforming all others.  This has led the Company to conclude that it should develop solutions for a number of high footfall “edutainment” destinations such as aquaria, zoos, science centres and museums. Initial efforts have focused on aquaria and this has now begun to gain significant traction with experiences now in 7 major aquaria locations and many further discussions ongoing. The year to date average total gross revenue per headset per month of c.£2,100 in the aquaria sector is performing 1.6x that of the historic headset averages across the Partner estate and delivers an annual margin per headset of £12,000.

 

The average annual gross revenue and average annual blended contribution margin to Immotion Group, including the ImmotionVR estate is per headset, across the continuing estate, running currently at c.£16,300 (or £1,356 per month) and c.£7,000 per annum (or £583 per month) respectively. On a Partner only basis, excluding the ImmotionVR own retail sites, based on year to date performance, this gross average revenue per headset increases to circa £18,200 per annum (£1,517 per month). At the current level of fixed operating costs (net of commercial contract work) of £240,000 per month this implies a monthly breakeven level of c.410 headsets assuming the margin contribution of £583 per month. 

 

The Directors believe that there is scope for the overall average revenue per headset to grow significantly, driven by a number of factors. The mix of sites is expected to grow in favour of Partner sites and stronger performing vertical channels within that (such as aquaria) as noted above. Furthermore, the Company is developing new marketing and selling tools to support Partners in growing revenue.  Additionally, H2 19 should yield better performance as there are a greater number of school and other holidays in H2 in USA and Europe.

 

The Directors believe the focus on the Company’s growing Partnership Model will deliver greater shareholder value as it builds these recurring revenue streams. The number of quality Partners such as The O2, Al Hokair, Merlin Entertainments, Shedd Aquarium and Santa Barbara Zoo to name but a few, all of whom are already enjoying the benefits of this model, continues to grow rapidly. With over 34 new headsets contracted, and due to be installed in the coming weeks, along with a further 118 agreed, subject to contract, this gives the Company visibility to c.389 installed headsets.

 

As noted in the final results announcement on 3 April 2019, whilst there is demand for direct hardware sales in the VR market and the Directors recognise the positive impact in the financial year in which these sales are recognised, and that they do aide cashflow, this does not in the Directors’ view outweigh the benefits of building Partner relationships with longevity and recurring revenue.

 

On balance, the Company believes due to the “one-off” transaction revenue nature of direct sales, the competitive landscape in a nascent market, the lead-times to gain decisions from prospective customers as well as the margins achievable of c.£2,500 per headset for a direct sale of hardware, makes the Partnership Solution considerably more appealing for the Group and its shareholders as a whole in the long-term.

 

The innovative Partnership Model provides a collaborative business relationship for both the Partner and the Group. The decision process for the partner is much easier, and with on-going segmental focus the Directors believe the Company can continue to drive revenue per headset up delivering added benefits for both parties. 

 

The revenue share Partner Model drives recurring revenues for both parties and with a contribution to the Group of c.£21,000 over the 3-year expected life of a VR Cinematic Platforms, the Directors believe it is a better route for the Company and its shareholders. Furthermore, the potential to grow these margins with better utilisation will further improve margins for the Company, as well as delivering a greater revenue share for Partners.

 

The Group currently has an installed base of 237 headsets, 118 of these headsets are operated by the Company’s own staff, with the balance operated by our Partners’ staff. The Group’s contracted and subject to contract pipeline is currently for a further 34 and 118 headsets respectively, which are expected to be installed throughout the remainder of 2019. The Directors are targeting an installed base of 1,000 headsets by the end of 2020.

 

Based on current contribution per headset and the current costs of operation, the Directors believe the Group will reach EBITDA breakeven when approximately 410 headsets are installed, and the Directors expect this to be achieved in Q1 2020.

 

The move to a Partnership Model will help the Company build a recurring revenue stream which the Directors believe will benefit the Group in future years as well as drive the Group to EBITDA breakeven. The short-term impact of the focus on the Partnership Model will be lower expected revenue for the 2019 financial year, as the forecast “one-off” revenue from direct sales are exchanged for recurring revenues with Partners. As the number of Partners increases, and the volume of recurring revenues increases, the revenue and profit potential for future years will not only increase substantially but will also be much more predictable.

 

As a direct result in the decision to focus on the ‘Partnership Model’ strategy the Directors have reviewed its forecasts for the year and the timing of pipeline of orders that support those forecasts. The immediate consequence of this strategy is the reduction in both top-line revenue and profit from the sale of machines, this combined with an increased overhead cost as the Company focuses its efforts on engaging quality Partners will result in lower revenue and EBITDA for 2019. As a result of this the Directors now expect the Group’s EBITDA loss (excluding one off and exceptional items) for the current financial year to remain broadly in line with the year ended 31 December 2018.

 

Once the breakeven level of installations has been achieved, the contribution from each new installation flows predominantly to the bottom line. The Directors believe, assuming continued interest from partners, this model will be highly profitable in the medium to long term and is very scalable.

 

The Company has invested heavily in building a range of experiences, along with its proprietary Content Management and Reporting System and a range of themed motion platform VR offerings. This combination, along with its unique business model has enabled it to secure a range of quality leisure partners operating in high footfall locations. As the business continues its roll-out and approaches the ‘tipping point’, the Directors believe the impact in the medium to long term will be beneficial to shareholders and that the Group is well placed to take advantage of the opportunities ahead, to become a leading out-of-home immersive VR operator.

 

Martin Higginson, CEO of Immotion Group, said:

“Since inception we have invested heavily in building a range of VR experiences, the quality of which has not been seen before at affordable price points in the ‘out-of-home’ VR market. This fact, combined with our proprietary reporting software, themed stands and on-going investment in VR motion platforms has positioned us well in this nascent market.”

 

“However, it has been our determination to create a new and exciting business model that has and will define us. Creating a Partnership Solution where we work together with high footfall leisure locations to provide them with not only a new and interesting attraction, but also a valuable ancillary revenue stream has transformed our business. Demand from high quality aquaria partners is very strong and we are beginning to see demand from other verticals.”

 

“Our continued focus in creating not only the right environment as well as VR experience for our partner, is starting to show encouraging signs with revenues in our Partner estate growing strongly. The performance of our aquaria partners is particularly strong and the Directors see this as a highly scalable, potentially global opportunity.”

 

“As we move closer to EBITDA breakeven, this tipping-point business is poised for substantial growth. Our offering is unique, our experiences are the best in class, and our list of quality partners just gets better every day. With an offering that benefits our partners as much as us, we believe this model will allow us to lead this new and exciting market.”

car management
Finance

What finance options are there to know about when buying a car?

Unlike other purchases, you don’t need to worry about saving loads of money to buy a car outright. In fact, Vindis, who are also VW service providers, have detailed various finance options available to you when getting your hands on your next set of wheels when it’s new — other than buying the car outright obviously.

Keep reading as they offer insight into how many finance options are open to you when in the market for a used car too…

 

What do you need to know when buying new?

Personal loan

A personal loan is often the cheapest method to borrow money over a long-term period and also means that you will own the car from the moment you take out the loan. Competitive fixed interest rates can be gained if you shop around for your personal loan too, while you often won’t even need to worry about paying a deposit to get the loan.

But how do they work? Well, personal loans are taken out at a bank or building society and enable you to spread the cost of purchasing a new car over a period of time that can last anywhere from one year to seven years.

In fact, according to a survey by WhatCar? a personal loan is the most popular way to finance a new vehicle, with a third of those who were involved in the motoring publication’s poll saying they favoured this finance option over all others.

Other benefits of choosing a personal loan to pay for your new set of wheels include the fact that you won’t need to worry about any annual mileage restrictions, as well as that you won’t need to hand the car back to the dealership once the loan is paid — thus no need to be concerned about reconditioning costs either. Make sure however that you can keep up with your payments, as any of your assets can be seized should you be unable to pay one of your installments — only your vehicle will be vulnerable to being reprocessed should the same thing happen with dealer finance.

It’s important to note that a clean credit rating will likely be required if you want to take out a personal loan too, while you’ll also beat the brunt of your car’s depreciation due to you owning the vehicle from the moment you take out the loan. Ensure the vehicle that you have your eyes on will be something that you can imagine driving for years to come, as the lender will still require you to repay the full loan even if you sell it or it gets written-off.

 

Hire purchase (HP)

Hire purchase — or HP — is the next simplest method of purchasing a car. Sixteen per cent of those involved in the earlier mentioned WhatCar? survey admitted they favoured this type of car finance.

After typically paying a deposit — usually 10 per cent of the car’s total value at the time of purchase — you then repay the remaining balance in monthly installments, plus interest, throughout the rest of the loan period. Once the loan is paid in its entirety, you will own the vehicle outright. Up until then, you won’t need to be concerned about any excess mileage charges and there’s no reconditioning costs to worry about either.

There are a couple of consumer rights associated with HP agreements too. You may be able to return the vehicle once you’ve paid half the cost of the vehicle and not be required to make any more payments, for instance, while your lender will not be in a position to repossess your car without a court order after you’ve paid a third of the entire amount that you owe.

You must be aware however that the vehicle is not yours until the final payment has been made. Miss a payment or a collection of them and you could well be at risk of losing the car. Likewise, you won’t have a legal right to sell the car until all payments have been made.

 

Personal Contract Hire (PCH)

Personal contract hire — otherwise referred to by its acronym PCH — is the leasing option of the types of car finance which are available to you. This is because you will never own the car in question when taking out a PCH plan; it must be returned at the end of the contract term.

Instead this works by paying a dealer a fixed monthly amount to use one of their vehicles. Fortunately, the costs of servicing and maintenance are both factored into this amount. Once a PCH agreement ends, you simply hand the car back to the dealer and needn’t worry about the vehicle depreciating in value.

A PCH plan is therefore a wise option for drivers you like to change their cars frequently. However, take note that you must ensure the vehicle remains in good condition during the entire time it’s in your possession and that you don’t exceed the annual mileage limit agreed at the start of the agreement — extra costs could come your way otherwise. 

 

Personal Contract Purchase (PCP)

Ranked as the second most popular finance option when buying a new car according to the aforementioned WhatCar? poll, with 25 per cent of those involved in the poll saying they favour this technique, personal contract purchase — otherwise known as PCP — has a few similarities to hire purchase agreements. You again pay a deposit, which is often ten per cent of the vehicle’s overall value too, before paying a series of monthly installments.

However, the monthly installments will this time be actually paying for the deprecation in the car’s value during the contract period — as opposed to going towards the whole value like with HP. Once you reach the end of the contract term, you’ll be presented with three options with what you want to do next:

  1. Trade the vehicle in and use any GFV equity as a deposit towards getting your hands on a new set of wheels.
  2. Return the vehicle to its supplier — this won’t cost you anything unless you’ve exceeded your agreed mileage or fail to return the car in a good condition.
  3. Take full ownership of the vehicle — though for this option, you will be required to make a final ‘balloon’ payment. This amount will be the car’s guaranteed future value, or GFV for short.

In effect, with PCP the GFV is where you will be repaying the difference between what your vehicle is currently worth at the time of getting it from the dealership and the amount that it will be worth at the end of your contract, plus the cost of interest.

Take note too that the GFV will be agreed before a PCP contract begins, though so too will a mileage allowance — and any excess mileage charges will apply if you go over this limit.

There’s a few additional points to consider when it comes to PCP finance options too. You will be unable to sell the vehicle during the contract period of the PCP agreement, as you won’t own the car during this term, while some PCP contract providers will have a limit on the number of days that a vehicle can be out of the country — something that’s certainly worth thinking about if you drive abroad at least from time to time.

You’ll also be required to pay the difference between the vehicle’s current value and the payments which are outstanding if you choose to settle at an earlier date. Early settlement charges sometimes apply here too, so bear that additional cost in mind too when thinking about doing this.

 

What do you need to know when buying used?

While you may associate the above finance options when you’re only in the market for a new car, both HP finance and PCP finance can be used to afford a used vehicle as well — both using the same principles as discussed too. Of course, you can also take out a personal loan when looking for a way to finance a used car.

Leasing is a bit more complicated in the used car market. Some dealers will allow their second-hand vehicles to be leased, but not all of them. Many dealers will determine the amount that you have to pay on a monthly basis based on how much they expect the vehicle that’s being leased will depreciate over the finance term you have in mind. This may result in you witnessing more expensive leasing deals that you’d have expected though, as the residual values of used cars are usually more difficult to forecast and so dealers will be aiming to always cover the cost of any unexpectedly severe depreciation periods.

We hope this guide has helped you take a lot of stress out of buying your next set of wheels — all that’s left to do is to wish you a happy new (or used) car day!

Santander
Banking

SANTANDER CONSUMER FINANCE LAUNCHES ONLINE APPLICATIONS

  • Online loan application launch expands digital support for dealers

Santander Consumer Finance (SCF) is set to launch its online loan application platform with e-sign capability in a significant expansion of its support for dealers.

 

Selected dealers have started testing the system which will be rolled out across the country within the next month for partners already using Santander Consumer Finance’s free online finance calculator.

 

The new system is integrated into the dealer’s website and customers will be able to source a finance quote on the calculator before applying in Santander Consumer Finance’s secure online platform. Installation takes minutes for dealers who already have the calculator and Santander Consumer Finance will support dealers to help them make the most effective use of the digital proposition.

 

Customers receive a real-time decision on their selected product and accepted customers can then choose to sign their documentation at home or at the dealership. The system is designed to provide a simple, fair and personal experience for car buyers.

 

It builds on the success of Santander Consumer Finance’s partnership with Volvo Car UK launched in April enabling customers to configure and order their car and sign a finance agreement online.

 

Stewart Grant, Santander Consumer Finance Commercial Director said: “This is a significant step in our digital marketing strategy and underlines our commitment to supporting our dealer network in maximising sales and profitability within the growing digital market.

 

“It is a huge achievement for the teams involved at Santander Consumer Finance to be able to launch two Online Application systems in less than four months and within a year since the project was first planned.”

 

Dealers interested in using the calculator or wishing to register interest in the Online Application platform should contact their Business Development Manager or visit www.santanderconsumer.co.uk/dealer

 

Santander Consumer Finance, headquartered in Redhill, Surrey, employs 600 staff and is the UK’s leading independent finance company with over 500,000 live customer agreements in place.

liquidation 2
Finance

What Is The Difference Between Solvent And Insolvent Liquidation?

Occasionally, some companies may find themselves not being able to make ends meet when it comes to their bills and creditors.

When long-term financial obligations become impossible to meet, it may be time to register your business as insolvent.

Doing so will force your company into insolvent liquidation; striking it from the Companies House register.

But what about solvent liquidation?

Solvency vs insolvency

There are many reasons why a company may enter into liquidation – whether it be voluntary or not – but it all depends on its debts.

If a company remains able to meet its long-term financial obligations, but serves no further useful purpose as a business, it can be classed as solvent.

This also applies for closure processes caused by something other than finances, for example the company director’s retirement.

If you’re unsure whether your business would be classified as solvent or insolvent, there are three different ways of finding out:

● The Cash Flow Test – Under the Insolvency Act 1986 a business is rendered insolvent if it is ‘unable to pay its debts as they fall due’. This cashflow test highlights that if you are unable to meet your PAYE and VAT requirements, you may well be insolvent.

● The Balance Sheet Test – if the outstanding debts of your company outweigh your assets (e.g. property, cash, stocks, equipment), the company will be considered insolvent. This will prove problematic when the company’s assets are liquidised as this deficit will make it impossible to repay all creditors.

● The Legal Action Test – if a creditor is owed over £750 they are entitled to put forward a formal demand for the sum, or a County Court Judgement (CCJ), which must be paid within three weeks. If it is not paid the law will deem the company insolvent.

The ‘winding up’ procedure

Whether your business is solvent or insolvent, the process for winding up is quite similar.

A company winds up when it decides to close down, by ending all business affairs.

This covers every aspect of the business, including everything from customer/client relationships to obligations with employees.

If these business affairs are settled by the company director, this is classed as a voluntary winding up.

However, it doesn’t always go this smoothly.

Creditors who are owed more than £750 from a business are entitled to submit a winding up petition (WUP) to the court, which forces the company to be investigated and liquidated by the Official Receiver.

This involves an intrusive investigation into the company’s debts and trading history, and is not to be confused with the conventional winding-up procedure.

What is liquidation?

Liquidation is the process of bringing a business to a close by distributing its assets to pay off its debts, once all relationships have been severed.

The cause of liquidation often lies in the hands of the director(s), but other factors may also affect cash flow, such as:

● Late customer payments

● Customers/suppliers entering insolvency

● Market fluctuations

● Increased competition

● Mistakes in pricing of goods/services

Due to the complex nature of the process, the only person qualified to liquidate a company’s assets is a professional Insolvency Practitioner (IP).

This can be done in different ways depending on the company’s position:

● Members’ voluntary liquidation (MVL)

A members’ voluntary liquidation is the formal process whereby a solvent company is closed down.

This method divides the company’s assets in the most tax efficient way between creditors and directors.

As this is a solvent liquidation process, all creditors are repaid in full and the directors must each sign a declaration of solvency.

This declaration provides evidence that the company is able to settle its outstanding debts within 12 months of beginning the liquidation process.

● Creditors’ voluntary liquidation (CVL)

When a creditor is threatening to take legal action against an insolvent company (e.g. through a WUP) the safest and most harmonious option is to enter a creditors’ voluntary liquidation (CVL).

This means the appointed IP works on behalf of the creditors as opposed to the company directors, with a main priority of ensuring all debts are settled.

This option provides the best chance for creditors to receive a return, as well as helping directors to avoid being investigated for wrongful trading.

CVL and MVL procedures are very similar but because CVL companies are insolvent and unable to settle their debts, a meeting with the creditors is a fundamental step in the process.

As this procedure is voluntary as opposed to court led, the company directors can decide who their IP will be.

The directors will also have the option to purchase any assets as part of the company rescue process.

● Compulsory liquidation

Compulsory liquidation may be considered the final resort for an insolvent company to be forcefully liquidated.

Although compulsory liquidation can be proposed by its directors, it is more often a forceful procedure brought forward to a court by a company creditor owed over £750.

This can be done so by submitting a WUP.

If the courts grant this, business assets are settled using an IP and directors face a rigorous investigation – much more severe than those following a CVL.

The investigation aims to uncover the cause of insolvency and reveal any evidence of misconduct or illegal, wrongful trading.

Any evidence found could result in directors facing disqualification for 2-15 years, and criminal charges if necessary.

 

Company dissolution

Dissolution takes place at the final stage of closing a business, whereby the company’s existence is officially withdrawn by the law.

This is recorded and registered by the Registrar of Companies.

Dissolution may seem like an easy and cheap way to strike off a company, with just a £10 admin fee to submit an application.

But be sure to seek advice from a professional before proceeding.

 

Why you should act quickly

If you are headed towards insolvency, it is your legal responsibility to act fast in order to protect the interests of your creditors.

To avoid personal consequences for continuing to trade while insolvent, seek advice from an IP and register your company as insolvent when the time is right.

Hudson Weir are licensed insolvency practitioners with vast experience in all industries, and are available for liquidation services.