TIDMEQLS
RNS Number : 5394E
Equals Group PLC
08 July 2021
For immediate release 8 July 2021
Equals Group plc
('Equals' or the 'Group')
H1-2021 Trading Update
"21% Y-on-Y revenue growth; record quarter in Q2-2021;
benefits of cost restructuring now coming through in cash
returns."
Equals (AIM:EQLS) , the technology-led international payments
group focused on the SME marketplace, is pleased to provide the
following trading update for the six months ended 30 June 2021
('H1-2021').
Revenues in H1-2021 were GBP16.7 million, a 21% increase over
H1-2020 (GBP13.8 million) and this was despite the continued
absence of meaningful travel-related activity. Revenues in H1-2021
also rose 11% relative to H2-2020.
Travel-related activity represented less than 5% of revenue in
Q2-2021 compared to 31% in Q3-2019, showing the differential
between pre Covid levels and therefore the potential for increased
travel money revenues as Covid restrictions are relaxed.
The engine of growth continues to be the Group's B2B
initiatives, encompassed in the Equals Money product suite for
corporate customers. Within B2B, growth has been broad-based with
International Payments seeing strong demand for its 'own-name
multi-currency IBAN' offering and white-label platform and the
Corporate Expenses platform achieving record results.
Revenues by identifiable market segment over the last eight
quarters were:
GBP millions Total Travel related All other
Q3-2019 8.5 2.5 6.0
------ --------------- ----------
Q4-2019 8.4 1.6 6.8
------ --------------- ----------
Q1-2020 8.1 1.1 7.0
------ --------------- ----------
Q2-2020 5.8 0.3 5.5
------ --------------- ----------
Q3-2020 7.2 0.7 6.5
------ --------------- ----------
Q4-2020 7.8 0.2 7.6
------ --------------- ----------
Q1-2021 8.1 0.5 7.6
------ --------------- ----------
Q2-2021 8.7 0.4 8.3
------ --------------- ----------
Q2-2021 was a record quarter for the Group, driven by record
levels of International Payment transactions, record activity on
the Spend platform and buoyant revenues from banking-style
products.
International Payments
The strategic push to direct sales towards more sophisticated
B2B customers is starting to bear fruit for the Group with an
increase in dealing in forward contracts, which typically yield a
higher margin. The number of forward transactions rose by over 200%
and the average order size rose from GBP90k to GBP114k. Revenues
from forward contracts now represents 45% of the total
International Payments' revenue stream.
In addition, the Group saw strong demand for its 'own-name
multi-currency IBAN' capability combined with its settlement and
clearance capabilities and user-friendly platforms - Equals
Solutions. This resulted in GBP0.3 million of revenues in Q2-2021
as clients came on stream in June 2021, and the pipeline for
H2-2021 looks strong.
The success of the CasCo acquisition in November 2019, and its
performance since, led to a slightly higher earn-out payment than
previously anticipated in Q1-2021 (GBP0.8 million), but with no
material effect to the Group's cashflows or cash position. The
ex-CasCo white-label business - Equals Connect - continued to grow,
gaining a further 32 white label customers in H1-2021 taking its
total to 58. This was coupled with the gain of over 1,100 new
business customers and over 1,600 High Net Worth Individual
('HNWI') customers in the main International Payments offering.
Banking
Through its traditional channels the Group has opened just under
1,600 new B2B accounts in H1-2021. A further 1,600 new B2B
customers were added through the new Equals Money portal,
demonstrating the demand the Group will be accessing for this
platform in H2-2021. Deposits from B2B customers, an indication of
revenues to be earned when the funds are spent, also grew strongly,
up 60% year-on-year in H1-2021 at GBP337 million.
Spend platform
This is another area where the Group has seen business
confidence return as the Spend platform is now achieving record
levels of loads accelerating towards the end of Q2-2021 with June
2021 being an all-time high. This growth is set to accelerate
further if travel restrictions are relaxed, widening the use case
for the Group's customers. New customer acquisition was strong with
574 new business customers being added bringing the active customer
total on the platform to 5,644.
Equals B2B Solutions
Larger companies with complicated and high-volume international
flows are increasingly being attracted to Equals as the Group can
combine leading edge FX capabilities with outstanding clearance and
settlements capabilities. This capability - called Equals Solutions
- yields revenues across the Group, typically in International
Payments and Banking but in addition within Card-based products.
The first company to use these capabilities was Homesend, which the
Group announced back in November 2020. Since that time, Equals has
enhanced the proposition by adding the 'own-name multi-currency
IBAN' capability in Q2-2021 and further enhancements to the UX of
the platform. Strong revenues in Equals Solutions were recorded in
June 2021 and the pipeline looks robust going forward.
Cost Base
The Group has continued to drive-down headcount and reshape its
cost base throughout 2021. Headcount remains around 250 but with a
significantly lower cost footprint, with this now being around
GBP0.9 million of base pay per month compared to GBP0.96 million in
June 2020, and GBP1.2 million in January 2020.
Equals continues to invest its increased revenues in additional
product development and marketing to drive further growth. In
addition, the Group has further strengthened its internal control
environment and provisioned for a greater frequency of external
audit requirements in the highly regulated space which Equals
occupies. For these reasons, whilst the Board is delighted with the
Group's revenue growth, it is not currently anticipating any
meaningful change in the Group's clean EBITDA which the market has
forecast in either 2021 or 2022 at this stage. However, the Group
will provide more guidance at the publication of the Group's
interims in early September 2021.
Cash position
The Group became operationally cash break-even in Q4-2020 and
has remained so since. Equals incurred GBP0.8 million of legacy
earn-outs, and has incurred further exceptional redundancy costs as
it continues to change the staffing composition. Equals is also
filing a claim for GBP1.3 million of R&D credits for 2020, and
at 30 June 2021 the Group had GBP9.2 million of cash at bank.
Increased trading activity can mean additional collateral may
have to be posted and therefore approximately GBP1.2 million is
currently used for card pre-funding, regulatory deposits and
funding margins with liquidity providers. The Group expects the
composition of this funding requirement to change which should
allow approximately GBP0.5 million to become more freely available
over the remainder of FY-2021.
Ian Strafford Taylor, CEO of Equals, said: "The hard work
undertaken on both product development and cost restructuring over
the last twelve months has really paid off as can be seen from
these excellent revenues for H1-2021. Given the growth trajectory,
we remain highly confident about the revenue prospects for second
half of the year."
- Ends -
This announcement contains inside information.
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)
Emma Gabriel / Bobbie Hilliam / Georgina Tel: +44 (0) 20 7523
McCooke 8150
Alex Aylen (Sales)
Buchanan (Financial Communications)
Henry Harrison-Topham / Steph Watson 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 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 .
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END
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