TIDMEQLS
RNS Number : 4698G
Equals Group PLC
30 March 2022
For immediate release 30 March 2022
Equals Group PLC
('Equals' or the 'Group')
Final Results
'Significant growth and operational progress, along with strong
cash generation'
Equals (AIM:EQLS), a leading fintech payments group focused on
the SME marketplace, announces its final results for the year-ended
31 December 2021 (the 'year' or 'FY-2021') and an update on trading
for the period from 1 January 2022 to 28 March 2022.
FY-2021: Financial Summary
FY-2021 FY-2020 Change*
GBP millions GBP millions
Underlying transaction values
* FX 4,352 2,672 + 63%
* Banking 1,331 821 + 62%
846 -
* Solutions Platform
------------- -------------
* Total 6,529 3,493 + 87%
------------- -------------
Revenue 44.1 29.0 + 52%
% of revenue from B2B 81% 70%
Gross profits 24.0 18.3 + 31%
Adjusted EBITDA 6.7 1.1
EBITDA 5.7 (2.0)
Loss after taxation (2.3) (6.9)
Memo:
Capitalised staff costs 3.0 4.0 - 25%
Separately reported items (below
Adjusted EBITDA) 0.7 2.6 - 73%
R&D credits received 1.4 2.5
Impairment of travel cash business 1.6 -
Cash per share (at balance sheet
date) 7.3p 5.6p + 30%
*based on underlying, not rounded, figures.
FY-2021 Financial Highlights
-- Total Revenue increased by 52% to GBP44.1 million (FY-2020: GBP29.0 million), supported by:
o Like for like transactional values increasing by 63% to GBP5.7
billion (FY-2020: GBP3.5 billion)
o Immediate success in the Solutions Platform which contributed
GBP0.8 billion in transaction values and GBP3.6 million in
revenues
-- Gross profits increased 31% to GBP24.0 million (FY-2020: GBP18.3 million)
-- Cash-based expenditure fell a further 7% (GBP1.6 million) to
GBP21.2 million (FY-2020: GBP22.8 million)
-- Adjusted EBITDA** increased to GBP6.7 million (FY-2020: GBP1.1 million)
-- Year-end cash increased 31% to GBP13.1 million (FY-2020: GBP10.0 million)
FY-2021 operational and product highlights
-- Focus on B2B and non travel-related revenue streams successfully continued
o Business customer revenue increased to represent 81% of total
revenues (FY-2020: 70%)
o Non-travel revenue represented 94% of the total, up from 91%
in FY-2020
-- Group continuing to attract larger corporates: won a
significant mandate to transact a single but complex trade yielding
GBP1.5 million of revenue and GBP0.8 million of gross profits
-- 'Own-name' multi-currency IBAN launched mid-year
-- Improved sales and data focus through both staff hires and
CRM; a significant contributor to increased revenues
-- R&D continued throughout the year, with further technical
developments including 'Confirmation of Payee' and Linked cards
-- Operational improvements through greater reconciliation automation and client onboarding
Q1-2022 Group highlights
-- Revenue from 1 January 2022 to 28 March 2022 up 78%, and
averaged GBP222k per day (same period 2021 GBP125k)
-- Total revenue from 1 January 2022 to 28 March 2022 of GBP13.6 million
-- Strong performance across all sectors
Commenting on the Results, Ian Strafford-Taylor, CEO of Equals
Group PLC, said:
"We ended 2021 in a very strong position, both financially and
operationally. The surge in our reported revenue and EBITDA speaks
to a successful repositioning of our model to focus on B2B and away
from legacy travel operations. This process began in 2020, put us
on the front-foot for 2021, and we are now progressing into 2022
with sustained confidence. Our product set is being adopted by
existing and new customers at a faster rate than we anticipated and
that has allowed us to more quickly develop and roll out new
functionality to a broader range of customers. We are making
excellent progress in the early stages of 2022 with rapid growth
continuing while we navigate the geo-political backdrop. We remain
highly confident for our prospects both in 2022 and beyond."
Analyst meeting
A conference call for analysts hosted by Ian Strafford-Taylor
(CEO) and Richard Cooper (CFO) will be held at 09.30 today, 30
March 2022. A copy of the presentation will be available after
midday on the Equals website. A copy of the Final Results
presentation is also available at the Group's website:
https://equalsplc.com .
For retail investors, an audiocast of the conference call with
analysts will be available after midday today:
https://webcasting.buchanan.uk.com/broadcast/62319d7461bd9a4d10292906
Notes
*Transactions with business customers are reported as 'B2B' and
transactions with retail customers are reported as 'B2C'.
**Adjusted EBITDA is defined as: earnings before depreciation,
amortisation, impairment charges, share option charges, foreign
exchange differences and separately reported items. Separately
reported items are large, non-recurring items.
*** The financial statements were approved for release at 07:00
hours on 30 March 2022 to the London Stock Exchange via RNS after
being approved by the Board on 29 March 2022 after the close of the
stock market on that day.
For more information, please contact:
Equals Group PLC
Ian Strafford-Taylor, CEO Tel: +44 (0) 20 7778
Richard Cooper, CFO 9308
www.equalsplc.com
Canaccord Genuity (Nominated Advisor
/ Broker)
Max Hartley / Georgina McCooke Tel: +44 (0) 20 7523
Alex Aylen (Sales) 8150
Buchanan (Financial Communications)
Henry Harrison-Topham / Steph Whitmore Tel: +44 (0) 20 7466
/ Toto Berger 5000
equals@buchanan.uk.com www.buchanan.uk.com
Notes to Editors:
Equals Group is a technology-led international payments group
augmented by highly personalised service for the payment needs of
SME's whether these be FX, card payments or via Faster Payments.
Founded in 2007, the Group was listed on AIM in 2014 and currently
employs around 250 staff across sites in London and Chester. For
more information, please visit www.equalsplc.com .
Chief Executive Officer's Report
2021
Management's objective for 2021 were to significantly increase
both the quantum and mix of revenues from B2B customers and
products. We achieved both by building on the payments
infrastructure and connectivity already assembled, and further
enhanced this by providing customers with 'own-name multi-currency
IBAN' accounts. Concurrently, the Group expanded and refined its
sales processes and go-to-market strategy.
Summary of financial performance
I am delighted to report that:
-- Like for like transactions executed on the Group's platforms
rose 63% to GBP5.7 billion (FY-2020: GBP3.5 billion)
-- Transactions from our new Solutions Platform were GBP0.8
billion from a standing start (FY-2020: Nil)
-- Revenue rose 52% to GBP44.1 million, with GBP15.3 million in Q4-2021 alone
-- Adjusted EBITDA rose from GBP1.1 million to GBP6.7 million
-- Year-end cash closed at GBP13.1 million (FY-2020: GBP10.0 million)
A full financial analysis is presented in the Chief Financial
Officer's Report which follows this statement.
COVID-19
2021 saw the world continue to struggle through COVID-19
variants and lockdowns. Despite this, the Group achieved rapid
growth, benefiting from measures taken in 2020 to focus the Group
on a B2B customer base and thereby reducing any reliance on the
legacy B2C travel-related products. In addition, the lessons
learned in 2020 in terms of hybrid working meant that the Group
could operate efficiently throughout the year during the various
phases of the pandemic.
Marketplace and competitive landscape
The global payments market is a complex space and can be
measured in many trillions of pounds, comprising all the various
payment mechanisms from cash, cards, account-to-account transfers,
and other methodologies across physical, internet and mobile
interfaces. Against this background, the Group remains somewhat
unique in that it spans both account-to-account transfers and
cards, overlaid on infrastructure providing bank-grade connectivity
and security on superior customer interfaces. The flexibility in
the payment methodology that the Group can support from one unified
platform is increasingly vital to business customers, for example
many e-commerce businesses only accept card payments whereas other
companies may typically only accept bank transfers.
Within the vast payments market, the Group remains strongly
focused on the B2B customer segment. Within that, it has identified
small and medium-sized enterprises (SMEs) as the optimal target
audience for its products and services. The Group aims to deliver
this via its 'Equals Money' proposition - a single platform
comprising account-to-account transfers and card products for both
UK and international transactions. The Group's 'target' customer is
an SME between 50-500 employees with UK and overseas payment needs.
Engineering, product, and design resources are focused on providing
solutions to this customer segment; however, the Group's products
equally serve both smaller and larger B2B customers.
Despite the continuing growth of fintech within the wider
market, it remains the case that most payments activity continues
to flow through the incumbent banks and payment networks.
Therefore, winning business from these institutions remains a key
focus for the Group in terms of both product development and sales
and marketing activities. However, investment into the fintech
competitors of Equals also makes it essential that the Group
continues to innovate and invest into its platform and connectivity
to remain ahead of the competition in its chosen B2B payments
space. The success of this strategy to date is clear in the Group's
FY-2021 results.
Performance in 2021
A key milestone to achieving accelerated growth for the Group
was passed in May 2021 when Equals launched its capability to offer
'own-name multi-currency IBAN' accounts to its customers. This
enables the business customers of Equals to pay and receive into a
single account in their own name, and that account can process all
currencies automatically. Further, the Group can offer its
customers the flexibility to open multiple own-name IBAN accounts
or multiple sub-accounts within a single IBAN. This flexibility
places Equals in a position where it can solve many payment and
reconciliation problems for business customers, all delivered
through one unified platform.
Equals Solutions
The own-name multi-currency IBAN capability, and the flexibility
it offers, underpinned the creation of a new revenue stream: Equals
Solutions. Launched in June 2021, it contributed GBP0.3 million to
revenues in the first half-year and GBP3.6 million for the full
year, with a significant GBP1.7 million contribution of which was
the fourth quarter showcasing its rapid growth and take-up by
business customers.
Equals Solutions is targeted at larger corporates and provides a
bespoke platform for each client. The flexibility in terms of being
able to onboard a complex B2B customer rapidly and provide multiple
own-name IBAN accounts and sub-accounts combined with the ability
to implement complex authorisation hierarchies and protocols for
the customer is a capability that few companies can offer.
Incumbent banks are unable to compete given their operations remain
on slow and often outdated infrastructure, while a typical fintech
competitor concentrates on B2C not B2B customers and even may only
have some - and not all - of the capabilities needed. Equals are
therefore set apart given it provides a complete suite of services
and products with the latest tech proposition.
Equals Money
Equals Money combines account-to-account payments, card payments
and current accounts in one unified platform and is targeted at SME
customers.
Along with Equals Solutions, the ability to offer own-name IBAN
accounts to customers has significantly enhanced the capabilities
of the Equals Money platform. In addition, during 2021 the Group
implemented additional developments to the Equals Money platform
including a new customer interface via website and app, batch
payments and multi-tier configurable approval functionality.
Equals Pay and Equals Exchange
Equals Pay is the Group's customer-facing international payments
product. Numerous enhancements have been made to this product,
including the ability to make batch payments and improved forward
contract functionality.
Equals Exchange is the Group's internal dealing platform which
runs on the same infrastructure as Equals Pay. This was launched
during the year and is proving a very capable platform and is well
regarded by Equals' dealers.
Other achievements and product launches
-- Improved onboarding journey for all customers allied to
automated compliance checks to minimise new-customer friction
-- Appointment of new Head of Sales and simplification of commission structure
-- Implementation of Growth Team comprising marketing and business development
-- Continued development of CRM (HubSpot) platform yielding improved sales traction
-- Creation of Data Team and investment into data capabilities and insights
-- Further upgrades to the Group's compliance capabilities and personnel
-- Joining the 'Confirmation of Payee' scheme for UK Payments
-- Implementation of automated reconciliations utilising
Kani-payments platform, resulting in additional operational
efficiency
-- Launch of 'Linked Cards' for FairFX B2C cards platform
-- Banking platform re-branded
Strong financial performance - growth and resilience throughout
the year
2021 was a year of significant growth for the Group in terms of
transaction volumes, revenues and expanded product suite delivering
enhanced operational capacity. Growth was broad-based across the
B2B products, aided by the advent of the Equals Solutions revenue
stream in June. The growth in revenues has flowed through to EBITDA
as the Group became increasingly operationally geared and also cash
generative.
The transaction table below shows how the volumes through the
Group's platform have almost doubled since 2019 despite the impacts
of the COVID-19 pandemic. Overall transaction volumes have
increased by 97% over pre-pandemic 2019 levels and 63% over 2020
activity. Within these totals, currency transactions have increased
by 105% since 2019 and 63% since 2020, whilst banking transactions
have increased by 73% and 62% respectively.
Table A: Transaction amounts since January 2019
In GBP millions Banking Currency Like for Solutions Group total
sold like total Platform
Q1-2019 171 451 622 - 622
Q2-2019 189 448 637 - 637
Q3-2019 202 575 777 - 777
Q4-2019 209 643 852 - 852
------------------- -------- --------- ------------ ---------- ------------
Total, FY-2019 771 2,117 2,888 - 2,888
------------------- -------- --------- ------------ ---------- ------------
Q1-2020 194 664 858 - 858
Q2-2020 169 533 702 - 702
Q3-2020 221 660 881 - 881
Q4-2020 237 815 1,052 - 1,052
------------------- -------- --------- ------------ ---------- ------------
Total, FY-2020 821 2,672 3,493 - 3,493
------------------- -------- --------- ------------ ---------- ------------
Increase on prior
year +21% +21%
Q1-2021 230 829 1,059 - 1,059
Q2-2021 340 909 1,249 143 1,392
Q3-2021 374 1,199 1,573 313 1,886
Q4-2021 387 1,415 1,802 391 2,193
------------------- -------- --------- ------------ ---------- ------------
Total, FY-2021 1,331 4,352 5,683 846 6,529
------------------- -------- --------- ------------ ---------- ------------
Increase on prior
year +63% +87%
The ability to process a doubling of activity in two years
demonstrates the resilience of the platform the Group has built,
the value of the investment in infrastructure which was commenced
in 2018, along with the acquisition of Casco in 2019. Furthermore,
the acceleration in transactions in the 3(rd) and 4(th) quarters of
FY-2021 shows the effect of the own-name IBAN roll-out combined
with Equals Solutions driving increased activity.
The revenue table below tells a similar story with strong
revenue growth compared to both 2019 pre-pandemic levels and the
2020 performance. Overall revenues grew 43% over 2019 levels and
52% over the Covid-impacted 2020 result. Within the revenue
performance, the shift towards B2B is clear to see. FY-2021
revenues were split 81% B2B and 19% B2C compared to a 55/45 split
in FY-2019 and a 70/30 split in FY-2020.
Table B: Revenues since January 2019
In GBP'000s B2B B2C Total Revenue Revenue
margin per day*
Q1-2019 3,831 3,087 6,918 1.1% 110
Q2-2019 4,069 3,636 7,705 1.2% 124
Q3-2019 4,164 3,847 8,011 1.0% 123
Q4-2019 5,231 3,080 8,311 1.0% 128
---------------------- ------- ------- ------- -------- ----------
Total, FY-2019 17,295 13,650 30,945 1.1% 121
---------------------- ------- ------- ------- -------- ----------
Mix 56% 44%
Q1-2020 5,354 2,672 8,026 0.9% 125
Q2-2020 3,928 1,819 5,747 0.8% 99
Q3-2020 5,273 2,033 7,306 0.8% 112
Q4-2020 5,797 2,084 7,881 0.7% 122
---------------------- ------- ------- ------- -------- ----------
Total, FY-2020 20,352 8,608 28,960 0.8% 114
---------------------- ------- ------- ------- -------- ----------
Change on prior year +18% -37% -6%
Mix 70% 30%
Q1-2021 5,626 2,438 8,064 0.8% 128
Q2-2021 7,179 1,662 8,841 0.7% 145
Q3-2021 9,925 1,980 11,905 0.8% 183
Q4-2021 12,873 2,408 15,281 0.8% 239
---------------------- ------- ------- ------- -------- ----------
Total, FY-2021 35,603 8,488 44,091 0.8% 174
---------------------- ------- ------- ------- -------- ----------
Change on prior year +75% -1% +52%
Mix 81% 19%
* based on underlying, not rounded, figures and expressed as
revenue divided by the number of working days in each quarter.
In terms of growth and productivity, revenue per employee rose
by 80% to GBP172k per employee (FY 2020: GBP96k), a testament both
to productivity, incentives and strong headcount control.
Product outlook
Unified platform - Equals Money & Equals Solutions
Great strides were made during 2021 in the development of
'Equals Money', which incorporates the payments, cards and current
account solutions that the Group can offer in one unified platform
and ties directly into the strategic vision for the Group to
simplify money movement for business customers.
The investment made in prior years to assemble infrastructure
providing bank-grade security and connectivity, including the
integration into the Faster Payments network and the implementation
of the Citibank partnership to provide 'local' settlement in over
40 countries, form the underlying platform for clearing payments
efficiently. The scalability of this platform has been evidenced by
the doubling of transaction volumes processed in the last two
years.
To optimise revenues from this assembled infrastructure, it is
essential to make it simple both to become a customer and then for
that customer to use the platform. For the customer acquisition
journey, investment has been made into further refining the
onboarding process, utilising automated compliance checks overlaid
with additional compliance personnel to fast-track non-standard
cases. For the ease-of-use of the platform, the Group has applied
extensive resources into refining the User Experience (UX)
utilising both extensive research into customer needs and the
in-house product and design expertise at Equals.
In 2022 the Group will continue to invest in platform
capabilities, onboarding efficiency and UX to constantly improve
both the platform functionality and usability. This is expected to
translate into increased revenues from existing customers whilst
improving sales success and conversion of leads into new customers.
Further, the Group will integrate the platforms with major
accountancy software providers thereby providing another sales
channel and expanding the pool of customers who can access Equals'
products and services.
Payment infrastructure, 'Boxes'
2021 saw major advances in the Group's capabilities to deliver
enhanced account services to its customers. The most significant
advance was the ability to give a customer an 'own name
multi-currency IBAN' - an account in their own name denoted by a
unique IBAN ('International Bank Account Number') which supports
multiple currencies. As the account is in the name of the customer,
a so-called 'first party' account, this allows more use-cases than
payments into a 'pooled account' from a compliance perspective.
Further, having one IBAN for all currencies enables a customer to
provide one single account identifier to all of its customers and
suppliers, thereby simplifying both sales and procurement
processes.
To offer own-name multi-currency accounts, many third-party
integrations were needed, including partner banks and SWIFT.
However, the key framework to support the flexible platform we
require is referred to as 'Boxes'. A Box is our internal title for
a single currency container in which you can store an asset. Hence,
each own-name multi-currency IBAN has one Box per currency. Further
flexibility is gained by the fact that a Box can support sub-Boxes
so a customer can pay directly into their IBAN or directly to a
sub-Box. This sub-Box capability allows us to offer customers an
own-name IBAN with unlimited sub-accounts if they require it.
The Boxes infrastructure also provides the capability for an
Equals Customer to create own-name IBAN accounts for its own
customers - subject to Equals compliance checks. This capability
can resolve complex reconciliation issues for companies that have
multiple parties paying into one bank account per currency. Each
party can have a unique IBAN to pay into, in any currency, and
therefore the Equals customer knows at point of receipt of funds
who has remitted them.
Supporting this configuration is the Boxes service which
automatically creates a Box on receipt of funds and auto-processes
funds into and out of a Box via SWIFT, BACS, Faster Payments and
SEPA.
Further development of the Boxes infrastructure is planned for
2022, enabling us to deliver key additional functionality for both
Equals Money and Equals Platforms including real-time running
balances, statements and enhanced reporting for customers, bulk
payments and the recently announced direct integration into the
SEPA (Single European Payments Area) network. In addition, the
Group will build out its capability to offer its IBAN and Boxes
functionality via API - thereby allowing more sophisticated
customers to directly integrate with the Equals platform and
support white-label opportunities.
Card Products
Similar to the account-to-account payment infrastructure that
Equals has assembled, 2021 saw significant progress in the
development of the Group's card platform that underpins a strong
pipeline of customer-facing features to be deployed in 2022. The
new infrastructure can power the Group's card products for the
medium term and allow Equals to run card schemes in overseas
locations. 2022 will see the launch of the new Equals Money card,
replacing the Equals Spend cards which run on legacy
infrastructure. The new cards, which are multi-currency, can be
both virtual and physical and have many more features and
capabilities. Equals are also moving towards being its own Issuer
for its card products, thereby eliminating another party from the
supply chain and speeding up development cycles.
Sales and Marketing - a high growth agenda
The Group further enhanced its capabilities in Sales and
Marketing in 2021. The roll-out of HubSpot, the new CRM system for
Equals, continued during the year, focusing on the B2B customer
segment. Many activities previously performed in isolation are now
processed automatically via the HubSpot platform so that the Group
has a single database on customers and a central hub from which all
customer interaction is performed and recorded. The focus for 2022
will be to harness this capability to drive new customer
acquisition and to further drive enhanced revenues from the
existing client base.
Equals created a 'Growth Team' during the year which combined
marketing with the overall growth agenda. This team is responsible
for HubSpot in terms of ensuring optimisation of how it is used
across the Group and that the benefits derived from it are
maximised. The focus of the team is to enable growth by a
combination of delivering increased revenue from existing customers
whilst driving new customer acquisition. The key for the success of
the team is the interaction with the revenue teams to support them
in reaching their targets.
In keeping with the overall strategy of the Group, the focus for
growth is on the B2B customer base. Unlike B2C customer
acquisition, where above-the-line ('ATL') marketing such as TV and
billboard advertisements augmented by digital marketing is the
driving force, B2B customer acquisition relies more on the outbound
sales function augmented by and integrated with a coherent digital
marketing strategy and content production. Accordingly, the Growth
Team works very closely with the Sales functions across the Group
in defining campaigns and assisting the sales efficacy with
targeted digital marketing and an in-house pay-per-click ('PPC')
team.
The challenge for Equals in 2022 in sales and growth is managing
the transition from being a product-led business to a platform-led
business. Previously, the Group has sold its products -
International Payments, Card Products and Current Account products
- using largely separate sales teams and marketing strategies. As
Equals moves forward, it will be selling Equals Money to the SME
customer base and Equals Solutions to the larger B2B customers. The
transition from product to platform differentiates Equals from
vanilla FX businesses, as the Group can compete not just on FX
rates, but on platform capability and service. The Sales skills
required are also different and therefore the Group appointed a new
Head of Sales during the year, revised the commission structure and
upgraded its sales teams.
The steps taken in 2021 position Equals well for the transition
from product to the platform as it now has a stronger sales team, a
single-source-of-truth CRM platform and the Growth Team is
established internally as the fulcrum around which will drive the
Group's unified Sales approach.
Board composition
On 9 April 2021, we welcomed Christopher Bones as a
Non-Executive Director of the Company with his background in both
Human Resources and Marketing. He has been invaluable in the
formulation of a compensation strategy for the Group as well as
assisting in the development of a go-to-market strategy.
Employees
The Group has been focusing on enhancing 'bench-strength' to
support the executive layer that sits just below the Board.
Pursuant to this, the Group took on a Head of Compliance to
compliment the already strong operational team, and the CFO,
Richard Cooper, recruited a new Director of Finance to enable him
to work even more closely with myself on corporate opportunities
and investor relations.
The Group's employees continue to be its greatest strength. The
loyalty, commitment, and hard work demonstrated in 2020 and now in
2021 has been tremendous and deserves to be acknowledged. I would
like to take this opportunity to personally thank every colleague
for everything they have done for the Group. We are delighted to
have a diverse workforce and are proud to train and promote from
within as well as seek fresh talent from elsewhere.
Three senior members of the executive team left the Group during
2021 and I thank them for their time whilst at Equals.
Whilst the Group continues to seek efficiencies and has a strong
cost-control culture, the Board intends to invest these gains in
further capacity for growth rather than reductions in staff
numbers. This in turn will benefit investors as Equals will have
strong operational gearing as it grows, with its cost base
increasing at a lower rate than transactions and revenues.
The labour market in the UK, particularly in the fintech space,
is extremely competitive. Accordingly, in 2021 the Group introduced
a company-wide share-ownership scheme ('SIP') where all eligible
employees received the same number of shares in Equals. The Group
will seek to make similar awards on an annual basis. In addition,
Equals introduced a long-term incentive plan ('LTIP') scheme for
senior employees and a similar plan with performance conditions for
Executive Directors. Both the SIP and the LTIP schemes have lengthy
vesting periods and thereby provide strong retention benefits for
the Group.
ESG
Equals wholeheartedly embraces ESG initiatives and takes
Equality, Diversity, and Inclusivity ('EDI') extremely seriously.
Our EDI strategy, which covers not only employees but also
customers, includes an internal EDI network populated with elected
representatives and regular employee surveys. This is a key
objective for all Executive Committee members and forms part of
their appraisal.
Future plans and opportunities
The strategic direction of the Group remains clearly focused on
the B2B customer segment with Equals Money being targeted at the
SME base and Equals Solutions at larger corporate opportunities.
The growth potential, now that Equals has assembled the core
capabilities of own-name IBAN and bank-grade connectivity and
clearance, is extremely strong due to the complexity and time
required to replicate the Group's capabilities and will only be
enhanced by the developments planned for 2022.
Equals will continue to look for growth opportunities and can do
so with a strong balance sheet and cash position. The Group will
examine overseas expansion beyond its current predominantly
UK-centric customer base and will also take a considerate and
opportunistic approach to acquisitions as they present
themselves.
Recent geo-political events
The current uncertainty caused by the conflict from Russia to
Ukraine does not have a material impact on Equals as the Group's
direct exposure to the region is extremely limited. In addition,
clearly, to the extent the situation affects global confidence and
trade volumes, this could impact general commercial activity levels
during 2022. We have not seen any direct impact to date but
continue to monitor the situation closely.
Q1-2022 trading and Outlook
2022 has started exceptionally well with revenues to 28 March,
78% higher than the same period in 2021 at GBP13.6 million. Strong
revenue growth continues to come from B2B with all product lines
progressing well. Equals Solutions, which contributed GBP3.6
million of revenues in FY-2021, has already contributed GBP2.6
million in FY-2022 to-date and is expected to continue to grow
strongly as the Group adds new functionality to its payments
platform during the year.
Equals, therefore, has a strong outlook resulting from the
investments it has made to create a payments platform comprising
International and Domestic Payments, Card Payments and Banking
Services underpinned by exceptional technology and direct
connections to multiple payment networks. Further investments made
in compliance, onboarding and user experience mean that the rich
functionality of the platform is made easily accessible to current
and potential customers. Finally, advances made in Sales, Marketing
and Data mean that Equals now sells its products and platform more
efficiently. Accordingly, the Board looks forward to the future
with confidence.
Ian Strafford-Taylor
Chief Executive Officer
29 March 2022
Chief Financial Officer's Report
I present my review and financial analysis for the year ended 31
December 2021.
TABLE 1: INCOME AND EXPENSE ACCOUNT
FY-2021 FY-2020
GBP millions GBP millions
------------- -------------
Revenue (table 3) 44.1 29.0
------------- -------------
Gross Profits (table 3) 24.0 18.3
Less: Marketing (1.2) (1.2)
------------- -------------
Contribution 22.8 17.1
Expenditure (table 9) (16.1) (16.0)
Adjusted EBITDA 6.7 1.1
------------- -------------
Less: Share option expense (0.3) (0.4)
Less: Exceptional items and acquisition
costs (0.7) (2.7)
------------- -------------
EBITDA 5.7 (2.0)
------------- -------------
IFRS 16 Depreciation (0.9) (0.9)
Other depreciation (0.4) (0.5)
Amortisation of acquired intangibles (1.3) (1.2)
Other amortisation (4.5) (3.2)
Contingent consideration cost (0.1) (0.6)
Impairment of the Bureau operations (1.6) -
------------- -------------
(8.8) (6.4)
------------- -------------
EBIT (3.1) (8.4)
Lease interest (0.2) (0.2)
Foreign exchange differences (0.1) (0.2)
Contingent consideration finance
charges (0.3) (0.2)
(0.6) (0.6)
------------- -------------
LOSS BEFORE TAXATION (3.8) (9.0)
Corporate and deferred taxation 1.1 0.7
R&D tax credits receivable 0.4 1.4
------------- -------------
1.5 2.1
------------- -------------
LOSS FOR THE YEAR (2.3) (6.9)
============= =============
TABLE 2: EARNINGS PER SHARE
Normal Adjusted
Basic 2021 (1.35)p (0.73)p
2020 (3.87)p (2.33)p
Diluted 2021 (1.35)p (0.73)p
2020 (3.87)p (2.33)p
TABLE 3: REVENUE AND GROSS PROFITS
A. Revenue summary by business line
FY-2021 FY-2020
-------- --------
GBP millions Revenues Gross profits Revenues Gross profits
International Payments
(Table 4) 29.5 14.0 17.4 11.1
Spend Platform 6.3 4.3 3.7 2.0
Personal cards 2.4 1.6 2.1 1.1
Banking 5.6 4.0 5.1 3.8
Bureau operations and
other 0.3 0.1 0.7 0.3
--------- -------------- --------- --------------
44.1 24.0 29.0 18.3
--------- -------------- --------- --------------
B. Revenue and gross profits by customer grouping and markets
B2B v B2C Non-travel v Travel
---------- --------------------
GBP millions B2B B2C Total Non-travel Travel Total
REVENUES
- 2021 35.6 8.5 44.1 41.4 2.7 44.1
- 2020 20.4 8.6 29.0 26.3 2.7 29.0
% change* +75% -1% +52% +58% - +52%
GROSS PROFITS
- 2021 16.6 7.4 24.0 22.1 1.9 24.0
- 2020 12.8 5.5 18.3 16.8 1.5 18.3
- 2021 % 47% 87% 54% 53% 70% 54%
- 2020 % 63% 64% 63% 64% 56% 63%
*based on underlying, not rounded, figures.
The Group has many individual revenue lines (and associated
variable costs), but broadly these can be summarised as
follows:
International payments: This includes direct, affiliate and
white-label foreign exchange for business customers and to a lesser
extent, affluent private customers.
It also includes the bulk of the 'solutions' product, launched
during the year, which leads with an own-name IBAN, facilitating
both same-to-same transactions and currency A to currency B
transactions, as well as bulk payments using our 'Faster Payments'
membership gateway.
The white-label business trading under the Equals Connect brand,
allows smaller providers to 'piggy-back' off our excellent
compliance processes and speed of delivery.
The white-label business acquired in 2019 had a stellar year
growing its revenues from GBP2.4 million to GBP7.7 million,
although at a tighter gross profit margin of 14% due to both
competitive pressures and one particularly large affiliate.
The Material trade (announced on 28 October 2021) was a 'bonus'
but took many weeks to see through a highly complicated transaction
and demonstrates the ability of the Group to deal with transactions
of this size and complexity.
Solutions, as fully described in the CEO's Report came on stream
late in H1-2021 and ramped-up each month since.
TABLE 4 - INTERNATIONAL PAYMENTS, FY-2021 and FY-2020
FY-2021 Turnover Number of Revenue Margin Gross profit
GBP millions transactions GBP millions (in bp*) %
Core 2,473.1 88,314 16.7 65.4 62%
White label 1,094.2 34,090 7.7 70.8 14%
Material trade 114.4 1 1.5 132.3 54%
FX trades from Solutions
clients 241.1 584 2.5 101.8 24%
-------------- -------------- -------------- ---------- -------------
Sub-total, currency 3,922.8 122,989 28.4 72.4 47%
Other flows from Solutions
clients 845.9 3,241 1.1 13.0 89%
-------------- -------------- -------------- ----------
Totals 4,768.7 126,230 29.5 61.9
-------------- -------------- -------------- ----------
- B2B 4,400.6 97,515 26.3 59.8
- B2C 368.1 28,715 3.2 88.5
-------------- -------------- -------------- ----------
Totals by segment 4,768.7 126,230 29.5 61.9
-------------- -------------- -------------- ----------
- Spot 3,199.1 114,391 23.2 72.5
- Forward 723.7 8,598 5.2 71.9
-------------- -------------- -------------- ----------
Total, from currency
trades 3,922.8 122,989 28.4 72.4
-------------- -------------- -------------- ----------
FY-2020 Turnover Number of Revenue Margin Gross profit
GBP millions transactions GBP millions (in bp*) %
Core 2,088.7 84,069 15.0 71.8 69%
White label 279.0 10,624 2.4 86.0 29%
Material trade - - - -
Solutions - - - -
-------------- -------------- -------------- ---------- -------------
TOTALS 2,367.7 94,693 17.4 73.5 64%
-------------- -------------- -------------- ---------- -------------
- B2B 1,975.0 60,953 13.7 69.4
- B2C 392.7 33,740 3.7 94.2
-------------- -------------- -------------- ----------
- Spot 1,716.3 86,015 11.5 67.0
- Forward 651.4 8,678 5.9 90.6
-------------- -------------- -------------- ----------
*bp = Basis Points representing 100(th) of 1%.
B2B continued to grow, and of the total of revenues from
International Payments, represented:
- 91% of total turnover (FY-2020: 83%),
- 89% of total revenue (FY-2020: 79%), and
- 77% of total transactions (FY-2020: 64%).
Part of the growth driver for this was the White-label offering,
Equals Connect which trades exclusively through affiliates, and
therefore at a lower gross return.
Of the total revenues from International Payments, Spot
transactions represented:
- 82% of turnover (FY-2020: 72%),
- 82% of revenue (FY-2020: 66%), and
- 93% of transactions (FY-2020: 91%).
Forward margins fell slightly in the aggregate caused mainly by
customers taking shorter-dated forwards through Brexit and COVID-19
uncertainty.
Average transaction values from the core and white label books
and composition between B2B/B2C and Spot/Forward were:
TABLE 4a - International Payments, transaction sizes , FY-2021
and FY-2020
FY-2021 FY-2020
GBP'000s GBP'000s
Transaction Transaction
size size
Core 28.1 20.2
White-label 32.1 26.3
- B2B 34.2 32.4
- B2C 12.8 11.6
------------ --------------
- Spot 25.0 20.0
- Forward 84.2 75.0
------------ --------------
Spend platform: This is a card-loaded expenses platform
delivered via mobile phone or other devices. Extensively used in
the film production industry, it enables tight control of corporate
expenses but gives companies great flexibility to be agile in their
requirement to commit funds. This segment is regarded as B2B.
TABLE 5 - SP PLATFORM
FY-2021 FY-2020
Card loads (GBP
millions) 333.9 203.3
Number of loads 448k 330k
Number of transactions 3,131k 1,872k
Revenue (GBP millions) 6.3 3.7
Average revenue/transaction 201p 200p
FY-2021 saw a strong rebound from the COVID-19 impact in FY-2020
- particularly in the final quarter. A greater number of customers
(and their employees) were signed-up and able to benefit from
advanced product features.
Personal cards The origin of the Group in 2007 was a pre-paid
web and mobile-enabled card for affluent individuals, often with
family financing needs to be served through our 'linked-cards'
option. This segment is categorised as B2C.
TABLE 6 - PERSONAL CARDS
FY-2021 FY-2020
Card loads (GBP
millions) 61.4 64.4
Number of loads 250k 340k
Number of transactions 1,106k 938k
Revenue (GBP millions) 2.4 2.1
Average revenue/transaction 212p 225p
This business saw a modest increase over 2020, but since
December 2021 as COVID-19 restrictions have eased, the Group has
witnessed an upturn in usage and revenues. The card product is
often used by the owners of the SMEs served by our Spend platform,
so it remains a useful but not core product. Given the
uncertainties posed by COVID-19, the Group limited its marketing
expenditure in this segment in FY-2021.
Banking services A suite of bank-style accounts for emerging
corporates, established trusts and personal individuals who want a
way to control their expenditure. The B2B segment of this income is
marginally more than 50% of its total.
TABLE 7 - BANKING SERVICES
FY-2021 FY-2020
Deposits (GBP millions) GBP1,331 GBP821
Transactions 5,458k 3,715k
Number of accounts 14.5k 14.2k
Revenue (GBP millions) GBP5.6 GBP5.1
Revenue per account GBP392 GBP354
Bureau de change A legacy of the City Forex acquisition in 2018,
the Group retains two branches in the City of London, mainly
serving corporates in the insurance and other professional services
sector, along with walk-in traffic from workers in the City. Thus,
there is a mix of B2B and B2C revenues. Owing to the impact of
COVID-19, a decision was made to impair the goodwill of this
business in FY-2021 and the corresponding impairment is
GBP1,638k
Variable costs: There are three main categories of variable cost:
(a) Transaction costs - these are third party costs applying to
all the above, and range from banking fees to MasterCard costs, and
variable KYC and KYB costs.
(b) Affiliate commissions (or introducer fees); mainly a revenue
sharing model applying to International Payments.
(c) Staff commissions; revenue related commissions payable,
through the payroll, to a cohort of highly motivated professionals
who may earn monthly, quarterly and annual commissions based on
their own success.
The table below shows which business units have the various cost
components:
TABLE 8 - VARIABLE COSTS BY BUSINESS LINE
GBP millions International Cards Banking
payments
Transaction costs 1.7 2.7 1.6
Affiliate Commissions 5.0 - -
White label commissions 6.3
Staff commissions 2.8 - -
-------------- ------ --------
Totals FY-2021 15.8 2.7 1.6
-------------- ------ --------
Marketing costs These include costs relating to the Equals
brand, along with specific marketing programmes, relating more to
Spend and Banking than other product sets.
Overheads As with many 'fintechs', the Group has as its largest
cost, staff, followed by IT expenditure, premises, professional
fees (many relating to our position on AIM), and modest other
expenses.
Staff costs include employment taxes, employee benefits and
contractor fees - mainly in our Engineering team. With just over
255 staff, the split of staff is more heavily weighted towards
revenue earning/maintaining staff along with product development
personnel.
Revenue per employee increased 80% to GBP172k, up from GBP96k in
2020. Base cost (meaning, salary, ERs NIC and employers pension
contribution) rose from GBP50k per employee to GBP52k per employee
during the year. Value added per employee rose 160% from GBP46k to
GBP120k in the year.
Expenditure that meets the obligations and criteria of IAS 38
are capitalised and amortised over the anticipated useful life with
a maximum of 60 months from inception.
TABLE 9 - COMPONENTS OF EXPITURE
GBP millions FY-2021 FY-2020
Staff costs 15.7 16.9
- Less capitalised (3.0) (4.0)
- Less: exceptional
items (0.7) (1.4)
- Less IFRS 16 (vehicles) (0.1) -
-------- --------
Net staff costs 11.9 11.5
-------- --------
IT and telephone 2.1 1.7
- Less capitalised (0.3) (0.4)
-------- --------
Net IT costs 1.8 1.3
-------- --------
Premises costs 1.8 2.0
- Less IFRS 16 (1.0) (1.0)
-------- --------
Net premises costs 0.8 1.0
-------- --------
Professional and compliance
fees 1.3 1.4
Travel and entertainment 0.3 0.4
Bad debts and similar - 0.4
-------- --------
16.1 16.0
======== ========
Analysed between :
Gross expenditure 21.2 22.8
Taken to the balance
sheet (4.4) (5.4)
Below adjusted EBITDA (0.7) (1.4)
-------- --------
Totals per Table 1 16.1 16.0
-------- --------
Year-end number of
staff 255 270
-------- --------
Exceptional items As announced in the interim results on 14
September 2021, the Group carried out some restructuring of a layer
of senior management, and the termination and similar costs for
that layer have been taken as an exceptional item being GBP0.7
million.
In 2020 exceptional items were higher at GBP2.7 million with
GBP1.6 million against COVID-19 and GBP1.1 million against the
migration away from Wirecard, a previous card programme manager for
the Group. Of the 2020 costs, GBP2.0 million was cash incurred, and
the balance was related to write-offs.
There were no acquisitions in the year and therefore no
expenditure was incurred. (FY-2020: GBP130k was incurred in
connection with the purchase of Effective FX).
Depreciation Tangible fixed assets are depreciated over the
anticipated useful life with a maximum of 60 months (other than
leasehold improvements which is a maximum of 120 months). Assets
(principally property and similar leases) are also depreciated over
the shorter of the useful life of the asset and the lease term.
TABLE 10 - DEPRECIATION
FY-2021 FY-2020
GBP'000s GBP'000s
IFRS 16 depreciation 931 940
Other depreciation 467 487
--------- ---------
1,398 1,427
--------- ---------
Guidance: Based upon the expenditure incurred to 31 December
2021, the depreciation charges for those assets in FY-2022 will
be:
GBP millions
IFRS 16 depreciation 0.8
Other depreciation 0.5
1.3
-------------
Amortisation Intangible assets acquired on acquisition are
amortised over their estimated useful lives, with a maximum of 60
months for Brands and a maximum of 108 months for Customer
Relationships. The charge to amortisation for the year can be
analysed as follows:
TABLE 11 - COMPONENTS OF AMORTISATION CHARGES
FY-2021 FY-2020
GBP'000s GBP'000s
Amortisation charge arising
from the capitalisation of
internally developed software
in the following years:
2018 and earlier 1,303 899
2019 1,661 1,382
2020 893 451
2021 287 -
---------- ----------
4,144 2,733
Amortisation charge for other
intangibles 357 404
---------- ----------
4,501 3,137
Amortisation of acquired intangibles 1,311 1,210
---------- ----------
Total amortisation charge 5,812 4,347
---------- ----------
Guidance: Based upon expenditure to 31 December 2021, the
amortisation charges for FY-2022 are expected to be:
GBP millions
Internally developed software 4.3
Other intangible assets 0.3
Acquired intangibles 1.3
-------------
5.9
-------------
Finance and other IFRS 16 financial charges have been calculated
using the lessee's incremental borrowing rate on the NPV of total
lease payments, this is released over the lease period to the
P&L.
TABLE 12 - COMPONENTS OF FINANCE AND OTHER CHARGES
FY-2021 FY-2020
GBP'000s GBP'000s
Increase in assessment of
contingent consideration (liability)
for acquisition of Casco 46 793
Adjustment to discount on 278 -
valuation of Effective
IFRS 16 lease interest expense 188 222
CBILS interest 1 -
Other interest payable 23 18
--------- ---------
536 1,033
--------- ---------
Split as follows:
Included in Finance Charges 490 391
Included in Administrative
expenses 46 642
Impairment Revenues from the bureau-de-change business acquired
with City Forex in 2018 have declined significantly owing to
prolonged COVID-19 restrictions and thus the Group concluded it
should be impaired to a carrying value of GBP579k.
Taxation The Group has GBP17.2 million of tax losses available.
The Group has been able to receive funds directly from HMRC in
relation to claims made for software development. As the Group
moves into taxable profits, such claims cease to be paid but offset
against future taxable profits. The Group anticipates receiving
GBP0.4 million in relation to the claim for 2021, but possibly no
further into the future.
TABLE 13- BALANCE SHEET
This table shows a compressed 'balance sheet' for the Group.
31.12.2021 31.12.2020
GBP'000s GBP'000s
IFRS 16 assets, less IFRS 16 liabilities (388) (345)
Other non-current assets (other than
deferred tax) 32,217 36,495
----------- -----------
31,829 36,150
----------- -----------
Liquidity (per Table 14) 10,739 8,827
Trade debtors and accrued income (see
note below) 3,638 2,314
R&D rebates 398 1,367
Prepayments 998 860
Deposits and sundry debtors 329 643
Inventory of card stock 168 194
Accounts payable (1,549) (1,556)
Affiliate commissions (1,945) (343)
PAYE, staff commissions etc. (1,884) (1,701)
Other accruals and other creditors (1,349) (1,130)
----------- -----------
9,543 9,475
----------- -----------
Earn-out balances due (Table 16) (1,683) (2,746)
Implied interest thereon 63 341
----------- -----------
(1,620) (2,405)
Net corporation and deferred tax 888 (547)
Net value of forward contracts 511 (31)
----------- -----------
(221) (2,983)
----------- -----------
NET SHAREHOLDER FUNDS 41,151 42,642
----------- -----------
Retained earnings at 1 January (22,259) (15,340)
Earnings for the year (2,424) (6,919)
Amount attributable to the exercise 93 -
of share options
----------- -----------
Retained earnings at 31 December (24,590) (22,259)
----------- -----------
Non-Controlling interest at 1 January 101 119
Earnings for year 162 (18)
----------- -----------
Non-Controlling interest at 31 December 263 101
----------- -----------
Share capital, share premium 55,011 54,789
Other reserves 10,467 10,011
----------- -----------
65,478 64,800
CAPITAL AND RESERVES 41,151 42,642
----------- -----------
TABLE 14 - LIQUIDITY FY-2021 FY-2020
GBP000'S GBP000'S
Cash at bank (see Table 15) 13,104 10,032
Balances with liquidity providers 1,675 2,776
Pre-funded balances with card provider 1,615 2,078
--------- ---------
Gross liquid resources 16,394 14,886
--------- ---------
Customer balances not subject to safeguarding (3,655) (4,059)
CBILS loan (see below) (2,000) (2,000)
--------- ---------
(5,655) (6,059)
--------- ---------
Net position 10,739 8,827
--------- ---------
Exposures to banks and liquidity providers
The Group maintains strong relationships with a number of banks
and counterparties for spot and forward foreign exchange
transactions. The Group has recurring obligations to safeguard
customer funds under the rules of the FCA, who are the prime
regulator for the Group.
The balances held at 31 December were as follows:
TABLE 15 - BANK AND SIMILAR BALANCES
GBP millions Safeguarded Not required Totals
to be safeguarded
BANKS
Barclays Bank PLC 47.7 7.1 54.8
NatWest/RBS Group 106.9 3.8 110.7
Bank of England 30.9 - 30.9
Citibank N.A. 26.0 0.1 26.1
Blackrock* - 2.0 2.0
Others 0.1 0.1
------------ ------------------- -------
31 December 2021 211.5 13.1 224.6
------------ ------------------- -------
31 December 2020 96.1 10.0 106.1
------------ ------------------- -------
LIQUIDITY PROVIDERS
Barclays Bank PLC 0.4 0.4
Velocity Trade International
Ltd 0.1 0.1
Sucden Financial Ltd 1.2 1.2
------------------- -------
31 December 2021 1.7 1.7
------------------- -------
31 December 2020 2.8 2.8
------------------- -------
*Blackrock is the manager, the legal entity is Institutional
Cash Series PLC.
There exist tight controls over forward contracts with daily
monitoring and reporting to the Executive Directors. The
out-of-the-money position at 31 December 2021 was GBP0.2
million.
There were, in addition, GBP212.0 million of customer funds
safeguarded at 31 December 2021 (31 December 2020: GBP96.0
million).
Balances with liquidity providers and customer balances not
subject to safeguarding are typically margin calls on forward
contracts. Pre-funded balances are required in anticipation of
customers loading their cards. Should the Group move to
self-issuing, such pre-funding will dissipate.
Trade debtors and accrued income
In common with market practice, revenue is recognised on forward
transactions on the execution of the transaction. There was one
particularly large forward transaction with an investment fund
client generating profits of GBP0.9 million and which settled in
January 2022.
Affiliate commissions
The growth in the payable relates to the increase in white label
business and introducers for the Solutions business.
Earn-outs
Equals Connect (previously Casco Connect)
As announced on 19 November 2019, the Group acquired Casco
Financial Services Limited for a maximum consideration of
GBP3,725,000.
Effective FX
As announced on 15 October 2020, the Group acquired the trade
and assets of Effective FX Limited for a maximum consideration of
GBP1,575,000.
Whilst IFRS-3 requires an interest discount factor to be
applied, the table below shows the 'real cash' aspects of the
acquisitions. The accounting standard requires an annual
revaluation of contingent consideration based on historic
performance.
The table below shows the financial position relating to these
acquisitions
TABLE 16 - EARNOUTS
Hermex Casco Effective Total
Acquisition date 09.08.2019 19.11.2019 15.10.2020
GBP'000s GBP'000s GBP'000s GBP'000s
Acquisition price booked
at acquisition 2,000 2,236 1,575 5,811
Earn outs paid by 31.12.2020 (2,000) (1,733) (125) (3,858)
Revaluation of asset based
on performance - 793 - 793
----------- ----------- ----------- ---------
Gross outstanding at 31.12.2020 - 1,296 1,450 2,746
Paid during 2021 - (741) (368) (1,109)
Further change in consideration - 46 - 46
----------- ----------- ----------- ---------
Gross Outstanding at 31.12.2021 - 601 1,082 1,683
----------- ----------- ----------- ---------
Paid during Q1-2022 - 601 282 833
----------- ----------- ----------- ---------
Due in remainder of 2022 - - 800 800
----------- ----------- ----------- ---------
Maximum consideration 2,000 3,725 1,575 7,300
Total consideration 2,000 3,075 1,575 6,650
----------- ----------- ----------- ---------
CBILS loan
On 23 December 2020, the Group drew-down GBP2,000,000 from
NatWest Group under the Government's Coronavirus Business
Interruption Loan Scheme ('CBILS'). The loan carries a coupon of
Bank base rate plus 2.53%. The loan is repayable at any time, but
over 60 equal instalments of GBP33,333 with the first instalment
paid on 21 January 2022.
The interest chargeable in 2021 amounted to GBP1k.
Share capital, share premium and share options
The number of shares in issue at 1 January 2021 was 178,602,918.
This increased in the year through the exercise of 738,889 share
options from former employees (Table 17 below), thus the number of
shares outstanding at 31 December 2021 was 179,341,807. A further
704,000 shares at nominal value were issued pursuant to the SIP and
admitted to trading on AIM on 16 March 2022, resulting in a total
number of shares in issue at the date of signing of the Financial
Statements of 180,045,807.
At 31 December 2020, the Company had 9,838,356 options
outstanding. 738,889 of these were exercised in 2021, and 376,667
lapsed.
Earnings per share are reported/calculated in accordance with
IAS 33. For non-diluted, the result after tax is divided by the
average number of shares in issue in the year. The average number
of shares were 178,959,402 (2020: 178,602,918).
The calculation of diluted EPS is based on the result after tax
divided by the number of actual shares in issue (above) plus the
number of options where the fair value exceeds the weighted average
share price in the year. The fair value of options is measured
using Black-Scholes and Monte-Carlo. It should be noted that this
calculation is based on fair value, not the difference between the
market price at the end of the year or the weighted average price
and the exercise price. The weighted average price was 43p (2020:
34p), the number of options exceeding the fair value was 3,553,681
(2020: Nil).
On 18 October 2021, the Company announced Discretionary Share
Incentive Plans over 4,535,000 shares. The final awards were lower,
at 4,369,000. Thus, at the date of signing of these financial
statements, there were 13,091,800 options, representing 7.3% of the
issued share capital and 6.8% of the enlarged share capital.
The cost of external advice for these schemes amounted to GBP84k
in the year (FY-2020: GBPNil)
At 31 December 2021, the Company had distributable reserves of
GBP931,411. At the date of signing of these accounts, this was
equivalent to 0.520 pence per share.
TABLE 17 - OPTIONS EXERCISED IN THE YEAR
Date exercised Number of Grant price
options
20 April 2021 88,889 36.00 pence
20 April 2021 50,000 29.75 pence
21 July 2021 300,000 26.50 pence
21 July 2021 250,000 29.75 pence
26 September 50,000 43.50 pence
2021
----------
738,889
----------
CASH STATEMENT
The movement in the cash position is shown in the table
below:
TABLE 18 - CASHFLOW FY-2021 FY-2020
GBP'000s GBP'000s
Adjusted EBITDA 6,713 1,164
R&D tax credits received (see note below) 1,367 2,539
Lease payments (principal and interest) (1,080) (1,140)
Exceptional items (671) (1,982)
Internally developed software capitalised
(see note below) (3,028) (4,044)
Purchase of other intangible assets (532) (484)
Purchase of other non-current assets (78) (160)
Acquisition costs - (130)
Movement in working capital 1,269 1,829
---------- ----------
3,960 (2,408)
Earn-outs and acquisitions (1,108) (825)
Funds from exercise of share options 220 -
External funding (CBILS) - 2,000
---------- ----------
NET CASHFLOWS 3,072 (1,233)
Balance at 1(st) January 10,032 11,265
---------- ----------
Balance at 31(st) December 13,104 10,032
---------- ----------
Amount per share 7.3 pence 5.6 pence
R&D credits received
These are earned based on a strict set of criteria set by HMRC
and broadly based on new internally generated software development.
In 2021, GBP0.4 million was accrued (FY-2020: GBP1.4 million) and
GBP1.4 million was received relating to claims made for 2020
(FY-2019: GBP2.5 million). Whilst future claims may be paid, these
are unlikely to be receivable in cash.
Internally developed software capitalised
As a fintech, constantly looking to provide a series of products
and platforms, the Group continues to invest and develop. The
emergence and rapid growth of the Solutions capability is one
tangible deliverable. Equals Money is another product well advanced
for which investment is taking place.
Richard Cooper
Chief Financial Officer
29 March 2022
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31 DECEMBER 2021
Note FY-2021 FY-2020
GBP'000s GBP'000s
Gross value of all transactions *(1) 6,529,034 3,492,671
----------
Revenue from currency transactions 38,424 23,849
Revenue from banking transactions 5,667 5,110
---------- ----------
Revenue 44,091 28,959
Transaction and commission costs (20,071) (10,670)
---------- ----------
Gross Profit 24,020 18,289
---------- ----------
Administrative expenses (18,499) (21,040)
Depreciation charge (1,398) (1,427)
Amortisation charge (5,812) (4,347)
Impairment charge (1,638) -
Acquisition expenses - (130)
---------- ----------
Total operating expenses (27,347) (26,944)
---------- ----------
Memo: Adjusted EBITDA *(2) 6,713 1,164
----------------------------------------------------- ---------- ----------
Operating loss A (3,327) (8,655)
Finance cost (490) (391)
---------- ----------
Loss before tax (3,817) (9,046)
Tax credit B 1,555 2,109
---------- ----------
Loss after tax (2,262) (6,931)
========== ==========
Attributable to:
Owners of Equals Group PLC (2,424) (6,919)
Non-controlling interest 162 (18)
Other comprehensive income:
Items that may be reclassified to profit
or loss
Exchange differences arising on translation
of foreign operations - 6
---------- ----------
Total comprehensive loss for the year (2,262) (6,931)
========== ==========
Attributable to:
Owners of Equals Group PLC (2,424) (6,913)
Non-controlling interest 162 (18)
---------- ----------
(2,262) (6,931)
========== ==========
Loss per share C
Basic (1.35)p (3.87)p
Diluted (1.35)p (3.87)p
Notes:
Adjusted EBITDA is Operating loss before: Depreciation,
Amortisation, Impairments, Share option charges, and Separately
identifiable items. All income and expenses arise from continuing
operations.
*(1) Gross value of currency transactions sold and banking
deposit transactions are a non-GAAP measure and represent the gross
value of currency transactions sold to customers and banking
deposits made by customers.
*(2) Adjusted EBITDA is not a GAAP measure and represents
operating loss before share option charges, depreciation,
amortisation and separately identifiable items (exceptional
items).
CONSOLIDATED AND COMPANY STATEMENTS OF FINANCIAL POSITION
AS AT 31 DECEMBER
2021 2021 2020 2020
Group Company Group Company
GBP'000s GBP'000s GBP'000s GBP'000s
ASSETS
Non-current assets
Property, plant
and equipment 1,257 - 1,646 -
Right of use
assets 4,874 - 6,061 -
Intangible assets
(note F) 17,492 - 19,744 -
Goodwill 13,468 - 15,106 -
Deferred tax
assets 949 1,163 3,193 744
Investments - 61,978 - 61,707
-------------------- -------------------- -------------------- --------------------
38,040 63,141 45,750 62,451
-------------------- -------------------- -------------------- --------------------
Current assets
Inventories 168 - 194 -
Trade and other
receivables 8,256 339 9,586 274
Current tax assets
(R&D reclaimable) 397 - 1,367 -
Derivative
financial assets
(note G) 2,593 - 3,019 -
Cash and cash
equivalents 13,104 - 10,032 -
-------------------- -------------------- -------------------- --------------------
24,518 339 24,198 274
-------------------- -------------------- -------------------- --------------------
TOTAL ASSETS 62,258 63,480 69,948 62,725
==================== ==================== ==================== ====================
EQUITY, AND
LIABILITIES
Equity attributable
to equity
holders
Share capital 1,793 1,793 1,786 1,786
Share premium 53,218 53,218 53,003 53,003
Share-based
payment reserve 1,858 1,580 1,402 1,402
Other reserves 8,609 3,187 8,609 3,187
Accumulated
(losses) /
retained
earnings (24,590) 1,623 (22,259) (1,625)
Company profit /
(loss) in the
year - (692) - 3,155
-------------------- -------------------- -------------------- --------------------
Equity attributable
to owners
of Equals Group
PLC 40,888 60,709 42,541 60,908
Non-controlling
interest 263 - 101 -
-------------------- -------------------- -------------------- --------------------
41,151 60,709 42,642 60,908
-------------------- -------------------- -------------------- --------------------
Non-current
liabilities
Borrowings 1,600 - 2,000 -
Lease liabilities 4,484 - 5,509 -
Deferred tax - - 3,740 -
liabilities
-------------------- -------------------- -------------------- --------------------
6,084 - 11,249 -
-------------------- -------------------- -------------------- --------------------
Current liabilities
Borrowings 400 - - -
Trade and other
payables 12,002 2,771 12,110 1,817
Current tax 61 - - -
liabilities
Lease liabilities 778 - 897 -
Derivative
financial
liabilities
(note G) 2,082 - 3,050 -
-------------------- -------------------- -------------------- --------------------
15,323 2,771 16,057 1,817
-------------------- -------------------- -------------------- --------------------
TOTAL EQUITY AND
LIABILITIES 62,258 63,480 69,948 62,725
==================== ==================== ==================== ====================
CONSOLIDATED AND COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 DECEMBER
GROUP Called Share Share- Accumulated Other Total Non-controlling Total
up share premium based losses / reserves attributable interest equity
capital payment retained to owners of
earnings Equals Group
PLC
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
At 1 January
2020 1,786 53,003 1,345 (15,340) 8,603 49,397 119 49,516
Loss for the
year - - - (6,919) - (6,919) (18) (6,937)
Other
comprehensive
income:
Items that
will not
be
reclassified
subsequently
to profit or
loss:
Exchange
differences
arising on
translation
of foreign
operations - - - - 6 6 - 6
Other items:
Share-based
payment
charge - - 444 - - 444 - 444
Movement in
deferred
tax on
share-based
payment
reserve - - (387) - - (387) - (387)
At 31 December
2020 1,786 53,003 1,402 (22,259) 8,609 42,541 101 42,642
(Loss) /
profit for
the year - - - (2,424) - (2,424) 162 (2,262)
Share-based
payment
charge - - 271 - - 272 - 272
Share options
exercised
in year - - (93) 93 - - - -
Shares issued
in year 7 215 - - - 222 - 222
Movement in
deferred
tax on
share-based
payment
reserve - - 278 - - 277 - 277
At 31 December
2021 1,793 53,218 1,858 (24,590) 8,609 40,888 263 41,151
======== ======== ======== =========== ======== ============ ================ ========
COMPANY Called Share premium Share- Accumulated Other reserves Total equity
up share based payment losses /
capital retained
earnings
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
At 1 January
2020 1,786 53,003 958 (1,625) 3,187 57,309
Profit for the
year
and total
comprehensive
income - - - 3,155 - 3,155
Share-based
payment
charge - - 444 - - 444
At 31 December
2020 1,786 53,003 1,402 1,530 3,187 60,908
Loss for the
year - - - (692) - (692)
Share-based
payment
charge - - 271 - - 271
Share options
exercised
in year - - (93) 93 - -
Shares issued
in year 7 215 - - - 222
At 31 December
2021 1,793 53,218 1,580 931 3,187 60,709
========= ============= ============== ============== ============== ============
The following describes the nature and purpose of each reserve
within owners' equity:
Share capital Amount subscribed for shares at nominal value.
Share premium Amount subscribed for shares in excess of nominal
value, less directly attributable costs.
Share-based payment reserve Proportion of the fair value of
share options granted relating to services rendered up to the
balance sheet date.
Retained deficit Cumulative profit and losses attributable to
equity shareholders.
Other reserves comprise:
Merger reserve Arising on reverse acquisition from Group
reorganisation.
Contingent consideration reserve Arising on equity based contingent consideration on acquisition of subsidiaries.
Foreign currency reserve Arising on translation of foreign operation.
CONSOLIDATED STATEMENT OF CASHFLOWS
FOR THE YEARED 31 DECEMBER 2021
FY-2021 FY-2021 FY-2020 FY-2020
Group Company Group Company
GBP'000s GBP'000s GBP'000s GBP'000s
Loss before tax (3,817) (1,111) (9,045) 2,650
Add: Cashflows
from operating
activities:
Adjustments for:
Depreciation 1,398 - 1,427 -
Amortisation 5,812 - 4,347 -
Impairment 1,638 - - -
Share-based
payment
charges 272 - 444 -
Decrease /
(increase) in
trade
and other
receivables
*(1) 3,614 (63) (401) (2,507)
(Decrease) /
increase in
trade
and other
payables *(2) (2,688) 954 3,050 (143)
Decrease /
(increase) in
derivative
financial
assets 426 - 1,542 -
(Decrease) /
increase in
derivative
financial
liabilities (968) - (1,511) -
Decrease in
inventories 26 - 70 -
Finance costs 490 6 391 -
10,020 897 9,359 (2,650)
-------------------- -------------------- -------------------- --------------------
Net cash inflow
/ (outflow) 6,203 (214) 314 -
Tax receipts 1,367 - 2,539 -
NET CASHFLOWS
FROM OPERATING
ACTIVITIES 7,570 (214) 2,853 -
-------------------- -------------------- -------------------- --------------------
Cashflows from
investing
activities
Acquisition of
property plant
and
equipment (78) - (160) -
Acquisition of
intangibles (3,560) - (4,531) -
Acquisition of - - (255) -
subsidiary, net
of cash
acquired
-------------------- -------------------- -------------------- --------------------
Net cash used in
investing
activities (3,638) - (4,946) -
-------------------- -------------------- -------------------- --------------------
Cashflows from
financing
activities
New Borrowings - - 2,000 -
Principal
elements of
lease payments (872) - (891) -
Interest on
financial
leases (194) - (222) -
Other interest
paid (14) (6) (27) -
Proceeds from
issuance of
ordinary
shares 220 220
-------------------- -------------------- -------------------- --------------------
Net cash
(outflow) /
Inflow from
financing
activities (860) 214 860 -
-------------------- -------------------- -------------------- --------------------
NET INCREASE/
(DECREASE) IN
CASH
AND CASH
EQUIVALENTS 3,072 - (1,233) -
Cash, and cash
equivalents at
1
January 10,032 - 11,265 -
-------------------- -------------------- -------------------- --------------------
Cash, and cash
equivalent at
31
December 13,104 - 10,032 -
==================== ==================== ==================== ====================
*(1) The movement in the deferred and current tax assets and the
right-of use asset balances (excluding the depreciation charge) is
included within the movement in trade and other receivables .
*(2) The movement in the deferred and current tax liabilities
and the lease liability balances is included within the movement in
trade and other payables.
ABBREVIATED NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2021
A - OPERATING LOSS IS STATED AFTER CHARGING:
FY-2021 FY-2020
GBP'000s GBP'000s
Staff costs:
Commissions 3,152 2,499
Other pay and benefit elements* 14,613 15,987
Training, recruitment, 309 221
Vehicle leasing costs 138 42
Contractors 656 651
------------- ---------
Costs gross of exceptional items 18,868 19,400
Less: incorporated in Transaction
and commission costs (3,152) (2,499)
Less: amounts capitalised (3,028) (4,002)
Less: IFRS 16 (138) (42)
Included in administrative expenses 12,550 12,857
------------- ---------
IT, and telephone costs 2,101 1,718
Less: amounts capitalised (301) (419)
------------- ---------
Included in administrative expenses 1,800 1,299
------------- ---------
Professional fees
Statutory audit costs 303 375
Other professional fees 1,029 1,270
------------- ---------
Included in administrative expenses 1,332 1,645
------------- ---------
Property costs
Rents 986 1,067
Other property costs 837 1,035
------------- ---------
1,823 2,102
Less: IFRS 16 (1,001) (1,021)
Less: amounts capitalised - (45)
------------- ---------
included in administrative expenses 822 1,036
------------- ---------
Travel and subsistence 300 233
Marketing 1,171 1,206
Other costs, including SIP and
LTIP advisory fees 87 26
Included in administrative expenses 1,558 1,465
------------- ---------
Sub-total, cash based expenditure 18,062 18,302
--------------------------------------- ------------- ---------
Share option charge 272 444
Foreign exchange loss 114 199
Contingent consideration charge 51 642
Write-off of card stocks - 575
Write-off of old debtors balances - 878
--------------------------------------- ------------- ---------
Sub-total, non-cash based costs 437 2,738
--------------------------------------- ------------- ---------
Total, administrative expenses 18,499 21,040
Add:
Depreciation - right to use assets 931 940
Depreciation - property, plant,
equipment 467 487
Amortisation charge (see table 11,
and note F) 5,812 4,347
Impairment charge 1,638 -
Acquisition costs - 130
------------- ---------
TOTAL OPERATING EXPENSES 27,347 26,944
============= =========
*includes separately reported items. 671 1,333
------------- ---------
B. TAXATION
The Group's taxation charge or credit is the composite of:
1. Corporation tax credit arising on losses in the financial year,
2. R&D tax credits received or receivable on development
expenditure (which is debited to the Balance Sheet),
3. Deferred taxation arising on temporary and permanent timing
differences and losses carried forward, to the extent that the
Company believes these to be recoverable from future taxable
profits.
FY-2021 FY-2020
GBP'000s GBP'000s
R&D credit - current year (398) (1,347)
R&D credit - prior year - (24)
Corporation tax charge 61 -
--------- ---------
Current tax credit (337) (1,371)
--------- ---------
Origination and reversal of temporary differences (997) (564)
Recognition of previously unrecognised deductible
temporary differences (221) (174)
--------- ---------
Deferred tax credit (1,218) (738)
--------- ---------
Total tax credit (1,555) (2,109)
========= =========
At 31 December 2021, the Group had tax losses available to be
offset against future taxable profits of GBP17,186k (FY-2020:
GBP16,880k). The losses can be carried forward indefinitely and
have no expiry date.
Additional to corporate taxation, the Group paid GBP2,851k in
taxation during the year as follows:
a. Employers National Insurance contributions - GBP1,724k
(FY-2020: GBP1,752k),
b. irrecoverable VAT - GBP1,127k (FY-2020: GBP1,053k)
Factors affecting tax credit for the year
The credit for the year can be reconciled to the loss per the
consolidated statement of comprehensive income as follows:
FY-2021 FY-2020
GBP'000s GBP'000s
Loss before taxation: continuing operations (3,817) (9,046)
--------- ---------
Taxation at the UK corporation tax rate of 19.0% (725) (1,719)
Net permanent differences between tax and accounting 112 380
Adjustments to R&D tax credits in respect of
previous accounting period - (24)
Net taxation impact of R&D tax credit claim (535) (658)
Remeasure of deferred tax asset on carry-forward
losses (221) (174)
Effect of change in tax rates (121) 98
Utilisation of tax losses (65) (12)
--------- ---------
(1,555) (2,109)
--------- ---------
C. LOSS PER SHARE
Basic earnings per share
The calculation of basic profit or loss per share has been based
on the profit or loss attributable to ordinary shareholders and
weighted average number of ordinary shares outstanding. The loss
after tax attributable to ordinary shareholders of the Group is
GBP2,424k (FY-2020: GBP6,919k) and the weighted average number of
shares for the period was 178,959,402 (FY-2020: 178,602,918).
Diluted earnings per share
The calculation of diluted earnings per share has been based on
the loss attributable to ordinary shareholders and weighted average
number of ordinary shares outstanding, after adjustment for the
effects of all dilutive potential ordinary shares. The weighted
average number of dilutive shares is 178,959,402 (FY-2020:
178,602,918).
Basic Diluted Basic Diluted
FY-2021 FY-2021 FY-2020 FY-2020
Loss per share (1.35)p (1.35)p (3.87)p (3.87)p
Adjusted loss per share
(note D) (0.73)p (0.73)p (2.33)p (2.33)p
D. ADJUSTED LOSS PER SHARE
Adjusted loss per share is Operating loss after taxation before
Separately identified items and amortisation of acquired
intangibles and impairment charges.
E. IMPAIRMENT
The bureau de change business acquired with City Forex in 2018
has languished under COVID-19 restrictions and thus the Group
concluded it should be impaired to a carrying value of GBP579k.
F. INTANGIBLE ASSETS OTHER THAN GOODWILL
Intangible assets comprise:
Intangible Intangible Other intangible Total, 31 Total,
assets assets acquired assets December 31 December
All in GBP'000s recognised through 2021 2020
through internal
acquisitions capitalisation
Cost at 31.12.2020 8,946 18,073 1,442 28,461 28,461
-------------
Additions in year - 3,329 231 3,560
-------------- ----------------- ----------------- ----------
Cost at 31.12.2021 8,946 21,402 1,673 32,021
-------------- ----------------- ----------------- ----------
Amortisation at
31.12.2020 (3,229) (4,832) (656) (8,717) (8,717)
-------------
Amortisation in
the year (1,311) (4,144) (357) (5,812)
-------------- ----------------- ----------------- ----------
Amortisation at
31.12.2021 (4,540) (8,976) (1,013) (14,529)
-------------- ----------------- ----------------- ----------
Net Book Value at
31.12.2021 4,406 12,426 660 17,492
============== ================= ================= ==========
Net book value at
31.12.2020 7,355 13,241 786 19,744
============== ================= ================= =============
G. DERIVATIVE FINANCIAL ASSETS AND LIABILITIES
The Group does not take house positions on foreign exchange
contracts. Each contract with a customer is contemporaneously
booked with a bank or liquidity provider. Under accounting
standards however, the contracts need to be valued as both a
'purchase' and a 'sale'. The valuation of these contracts is done
by a third party using information sourced from Bloomberg.
H. RECONCILIATION FROM OPERATING LOSS TO ADJUSTED EBITDA
FY-2021 FY-2020
GBP'000s GBP'000s
Operating loss before taxation (3,327) (8,655)
Add back:
Depreciation 1,397 1,427
Amortisation 5,812 4,347
Impairment charge 1,638 -
Acquisition expenses - 130
Separately reported items 671 2,630
FX differences 115 199
Share Option charges 272 444
Other Share Option charges 84 -
Contingent Consideration 51 642
---------- ----------
Adjusted EBITDA 6,713 1,164
========== ==========
- ENDS -
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FR JLMLTMTTTBJT
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March 30, 2022 02:00 ET (06:00 GMT)
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