TIDMEQLS

RNS Number : 6372L

Equals Group PLC

14 September 2021

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS DEFINED IN ARTICLE 7 OF THE MARKET ABUSE REGULATION NO. 596/2014 ("MAR")

 
   14 September 2021 
 

Equals Group plc

('Equals' or the 'Group')

Interim Results

Strong B2B growth underpins strategic move from both retail and travel FX.

Adjusted EBITDA significantly ahead of expectations and operationally cash generative.

Equals (AIM: EQLS) , the fintech payments group focused on the SME marketplace, announces its interim results for the six months ended 30 June 2021 (the 'period' or 'H1-2021').

H1-2021 Financial Highlights

 
 GBPmillions                        H1-2021   H1-2020   H2-2020 
 
 Underlying transaction values        2,308     1,560     1,933 
 - B2B                                1,996     1,209     1,633 
 - B2C                                  312       351       299 
 
 Revenue                               16.9      13.8      15.2 
 - B2B                                 11.6       9.2      11.0 
 - B2C                                  5.3       4.6       4.2 
 
 Gross profit                          10.2       8.7       9.6 
 
 Adjusted EBITDA*                       1.6       0.7       0.5 
 
 Operational cash in/(out) flows        0.8     (2.8)       0.4 
 
 Cash at bank                          10.1       7.9      10.0 
 

Totals may not sum due to rounding. Percentages are calculated on underlying figures before rounding. Where costs cannot be accurately attributed to each segment, they have been allocated on the basis of revenue.

 
 
   *    Group revenue increased by 23% to GBP16.9 million 
        (H1-2020: GBP13.8 million) 
 
   *    B2B revenue increased YoY by 25% to GBP11.6 million 
        as the Group continued its focus on SMEs 
 
   *    B2B in Q3-2021 represents over 80% of total revenue 
        up from 67% in H1-2020 
 
   *    Gross profit increased by 17% to 10.2 million, 
        broadly reflecting the YoY increase in revenue 
 
   *    Contribution increased by 24% to GBP9.8 million 
        (H1-2020: GBP7.9 million), and contribution margin 
        consistent at 58% 
 
   *    Gross operating expenditure lower by 14% on H2-2020 
        through strategic tight control of costs 
 
   *    Adjusted EBITDA(*) increased by 128% to GBP1.6 
        million (H1-2020: GBP0.7 million) 
 
   *    Non-Adjusted EBITDA of GBP0.8 million with GBP0.6 
        million of exceptional costs (H1-2020: GBP0.5 million 
        loss with GBP1.0 million of exceptional costs). 
 

Post period-end trading update ('Q3-2021' 1 July 2021 to 10 September 2021)

   --    Revenues of GBP9.2 million up 58% from GBP5.8 million on same period last year 
   --    Q3-2021 - already a record quarter with 14 business days remaining 
   --    B2B revenues continue to drive growth - now greater than 80% of overall book 

-- Equals Solutions, the new multicurrency product aimed at larger businesses, contributed GBP1.2 million of revenue, or 13% of total, in Q3-2021 to date

-- GBP12.3 million of Cash at bank and in hand with net liquidity of GBP10.2 million as at 10 September 2021.

Commenting on the Interim Results, Ian Strafford-Taylor, CEO of Equals Group plc, said: "The planned pivoting away from retail and travel towards B2B has paid-off spectacularly in H1-2021. This trading performance and momentum has sustained since the period end and is being supported by fast growing revenues amounting to GBP9.2 million in the period from 1 July to 10 September, making this a record quarter with 14 business days left to run, with numerous new first-rate customers, and strong take-up of our enlarged product suite. Whilst, like other businesses we have seen market-forces led cost pressures, particularly in staff and IT, we have contained these robustly, sought further efficiencies and have grown revenue at a much faster pace.

"Equals finds itself with a unique position in the FinTech sector as, not only are we generating operational cash, but we remain very well-funded for both re-investment in product and marketing to drive further profitable revenue growth."

Analyst meeting

A conference call for analysts hosted by Ian Strafford-Taylor (CEO) and Richard Cooper (CFO) will be held today at 0930am. A copy of the Interim Results presentation is available at the Group's website: http://www.equalsplc.com .

For retail investors, a n audio webcast of the conference call with analysts will be available after 12pm today: https://webcasting.buchanan.uk.com/broadcast/6114eb77c97de6636c2d8e9d

Notes

* Adjusted EBITDA is defined as operating profit before: depreciation, amortisation, impairment charges and share option charges and items of an exceptional nature. EBITDA is defined as operating profit before depreciation and amortisation.

- Ends -

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 (Broker) 
 Bobbie Hilliam                           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 
 

Chief Executive Officer's Report

The results for H1-2021 clearly demonstrate the success of the pivot of the Group from a B2C travel money business to a B2B focused operation. Recent years have seen significant investments into both the technology platforms and direct connectivity to payments networks. These initiatives form the essential building-blocks to move the Group from being product-led towards being more platform-led, with aim of providing simple-to-use solutions to the corporate sector. As evidenced by this set of results, the pay-back from these investments is now coming through and, encouragingly, is even more visible in the post period trading.

The investments made have allowed the Group to develop the capability for all customers to have a multi-currency account in their name defined by a unique IBAN; this being an internationally recognised standard to define an account. This capability underpins the Equals Money proposition for a range of products on one platform with simplicity of movement of money between products, targeted at the SME sector. In addition, the same infrastructure drives the Equals Solutions product which is aimed at larger corporates with significant international flows and high transaction volumes. Equals Solutions comprises a multi-currency account for collections and payments connected to SWIFT, International Payments platforms and UK domestic networks providing FX and payment capabilities combined with multiple levels approval protocols, all via one platform and login. Equals Solutions came on stream in June 2021 and is now contributing strongly in the third quarter, as can be seen in the post period end figures.

The 'own-name' multi-currency IBAN capability will drive sustainable and recurring platform-related revenues and growth through both Equals Money and Equals Solutions and thereby provide further growth to the individual product lines of International Payments, Cards and Banking services. The revenues from these platforms are both transactional and fee-based, thereby improving the earnings mix. Continual improvements to the functionality of the overall payment platform and direct connectivity to additional payments networks furthers the capabilities of the platform. Concurrently, more straight-through-processing ('STP') capabilities are being added which increases efficiency and processing capacity. The Group will also be enhancing the alignment of its service levels to its pricing and revenue generation and moving more transactions towards customer 'self-serve' where appropriate, further enhancing capacity and thereby operational gearing.

Operational improvements made by the Group in H1-2021 include:

- Significantly enhanced International Payments platform for self-serve customers 'Pay Platform'

   -      New internal dealing platform for International Payments - 'Exchange Platform' 
   -      Continued roll-out of HubSpot CRM system aided by 'Sales Enablement' team 
   -      New Equals Money website to better convert inbound B2B traffic 
   -      STP for onboarding for both B2B and B2C customers via TruNarrative platform 
   -      Joining the 'Confirmation of Payee' scheme for UK Payments 
   -      Launch of 'Linked Cards' for FairFX B2C cards platform 

- Implementation of automated reconciliations utilising Kani-payments platform, resulting in operational efficiencies and reducing credit risk

- Further upgrades to our compliance capabilities and personnel, enabling faster onboarding of new customers

Financial Overview for H1-2021

A summary of the Group's underlying transaction values is shown below:

Underlying transaction values

 
 
GBPmillions         International  Corporate  Cash & retail    Banking  Total 
                         Payments   Expenses          cards   Services 
B2B 
 H1-2021                    1,355        149              2        490  1,996 
 H1-2020                      818         93             12        286  1,209 
 % Change on year             66%        60%          (83)%        71%    65% 
 
B2C 
 H1-2021                      228          -              4         80    312 
 H1-2020                      237          -             36         78    351 
 % change on year            (4)%          -          (89)%         3%  (11)% 
 
TOTALS 
 H1-2021                    1,583        149              6        570  2,308 
 H1-2020                    1,055         93             48        364  1,560 
 % change on year             50%        60%          (88)%        57%    48% 
 

Overall transaction values were up 48% on H1-2020, driven by a 65% increase in the B2B sector as more customers were on boarded and more products were offered. Unsurprisingly, B2C volumes remained subdued due to travel impediments caused by the Covid-19 pandemic.

Revenues

 
 GBP000s        International   Corporate        Cash     Banking      Rebates    Total 
                     Payments    Expenses    & retail    Services    and other 
                                                cards                   income 
 H1-2021 
 B2B                    7,849       2,132          33       1,493           72   11,579 
 B2C                    2,275           -       1,409       1,366          276    5,326 
               --------------  ----------  ----------  ----------  -----------  ------- 
 H1-2021               10,124       2,132       1,442       2,859          348   16,905 
               --------------  ----------  ----------  ----------  -----------  ------- 
 B2B mix                  78%        100%          2%         52%          21%     *68% 
 
 H1-2020 
 B2B                    6,242       1,310         230       1,282          177    9,241 
 B2C                    1,991           -       1,229       1,222           89    4,531 
               --------------  ----------  ----------  ----------  -----------  ------- 
 H1-2020                8,233       1,310       1,459       2,504          266   13,772 
               --------------  ----------  ----------  ----------  -----------  ------- 
 B2B mix                  76%        100%         16%         51%          67%      67% 
 
 % change on 
  year 
 B2B                      26%         63%       (86)%         16%        (59)%      25% 
 B2C                      14%           -         15%         12%         210%      18% 
               --------------  ----------  ----------  ----------  -----------  ------- 
 Aggregate                23%         63%        (1)%         14%          31%      23% 
               --------------  ----------  ----------  ----------  -----------  ------- 
 
 

*Excluding fee sweeps in retail cards, underlying B2B:B2C revenue mix was 72%:28%

H1-2021 showed strong B2B growth in transaction volumes and revenues across all product lines of International Payments, the Corporate Spend platform and Banking Services. This growth has accelerated in July, August and September 2021 as the benefits of the own-name IBAN capabilities are feeding through to Equals Solutions. In contrast, whilst B2C volumes and revenues contracted somewhat, this was against the background of lockdown conditions where Q1-2020 was not affected in the same way.

For H1-2021 in more detail:

Group turnover - representing the quantum of underlying transactions through its platforms, grew by 48% overall and by 65% in the B2B segment.

Group revenues - GBP16.9 million up 23% (H1-2020: GBP13.8 million) and within that, the B2B segment grew by 25%. As Covid-19 travel impediments begin to ease, there remains considerable upside, for example in H1-2019, over GBP6.8 million revenue was earned at an aggregate margin of just over 50%.

When expressed as revenue over turnover, the Group's margin averaged 73 basis points ('bps') against 88 bps in H1-2020. The Board is comfortable with this change, as it had already anticipated the product shift would increase turnover but at a lower margin. This was more evidenced in Banking Services where the aggregate return reduced to 50 bps from 69 bps in H1-2020.

The Equals Spend B2B expense platform, whose customers are corporates, continues to recover strongly from the impact of the pandemic with revenues 63% higher than H1-2020 and 21% higher than H2-2020.

Gross profit - at GBP10.2 million was up 17% (H1-2020: GBP8.7 million).

Contribution - (gross profits less marketing expenditure) rose by 24% to GBP9.8 million (H1-2020: GBP7.9 million).

Operating expenditure above adjusted EBITDA was GBP8.2 million, 5% lower than H2-2020 (H2-2020: GBP8.7 million) reflecting the continued cost reduction programme, but 13% higher than the 'furlough-subsidised' H1-2020 (H1-2020: GBP7.3 million).

Current Developments

The trading period post H1-2021 to-date has shown further acceleration in revenues with B2B again the driving force and all product lines moving forward strongly. Equals Solutions, which produced GBP0.3 million of revenues in H1-2021 has contributed GBP1.2 million in the post H1-2021 period and is primed to grow further as the Group has a strong customer pipeline.

H2-2021 is anticipated to continue in the same strategic direction as the first half with continued investments, (albeit at much lower levels than the peak in 2019), in the technology platform and connectivity to payments networks focussed on the B2B customer. This will be augmented by increased resources applied to sales and marketing to drive new customers on to the platform and products.

Key functionality and platform enhancements are planned for both Equals Money and Equals Solutions as well as the underlying products of Payments, Cards and Banking Services. Operational improvements towards full STP will also be delivered, increasing efficiency, and creating more capacity.

Future plans and opportunities

The strategic direction of the Group remains clearly focussed on the B2B customer segment with Equals Money being targeted at the SME base and Equals Solutions at the larger corporate opportunities. The growth potential, now that we have 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 our capabilities.

The Group 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 consider further acquisition opportunities.

Board composition, senior executive changes and employees

On 9 April 2021 the Board was strengthened by the appointment of Christopher Bones as a Non-Executive Director of the Company and new Chair of the Remuneration Committee. Three senior members of the executive team left the Group during the period and I thank them for their time whilst at Equals. The Group took on a leading Head of Compliance to complement the already strong operational team, and the CFO, Richard Cooper, recruited a new deputy to enable him to work even more closely with myself on corporate opportunities.

The Group's employees continue to be its greatest strength. The loyalty, commitment, and hard work the Group has seen 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 Company. We are proud to train and promote from within as well as seeking fresh talent from elsewhere.

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 and the Group is actively implementing enhanced employee retention measures including share ownership and LTIP schemes.

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 and this is a key objective for all Executive Committee members and forms part of their appraisal.

Outlook

Equals has a strong outlook as a consequence of the investments it has made in preceding years 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 and we look forward to the future with confidence.

Ian Strafford-Taylor

Chief Executive Officer

14 September 2021

Chief Financial Officer's Report

The Group continues to present extracts from the primary statements in an alternative format and explain the major movements to the prior periods or year along with issues of accounting impact and judgement. The periods most relevant to the primary statements have been presented. Full period disclosures are made in the Consolidated Interim Financial Statements. The report is in three sections:

A - Income and Expenditure Account

B - Balance Sheet

C - Cash Flow

Transactions with business customers are reported as 'B2B' and transactions with retail customers reported as 'B2C'.

Totals may not sum due to rounding. Percentages are calculating on underlying figures before rounding. Where costs cannot be accurately attributed to each segment, they have been allocated on the basis of revenue.

A: Income and Expenditure account and notes

The table presented here shows both the underlying expenditure and that which is reported in the Income and Expenditure account. For example, staff costs are shown both gross and net of software capitalised.

Table 1: Income and Expenditure account

 
 GBP000's                            H1-2021   H1-2020   H2-2020    FY-2020 
 Revenue                              16,905    13,772    15,188     28,960 
 Less: Variable costs                (6,685)   (5,034)   (5,636)   (10,670) 
                                    --------  --------  --------  --------- 
 Gross profit                         10,220     8,738     9,552     18,290 
 
 Marketing costs                       (392)     (799)     (407)    (1,206) 
 
 Contribution                          9,828     7,939     9,145     17,084 
                                    --------  --------  --------  --------- 
 
 Other operating costs 
 Staff costs incurred                (7,943)   (8,366)   (9,159)   (17,525) 
 Furlough credit                          34       324       222        546 
                                    --------  --------  --------  --------- 
 Net staff costs incurred            (7,909)   (8,042)   (8,937)   (16,979) 
 Separately reported items (table 
  4)                                     613       343       990      1,333 
 Acquisition costs                         -         -        83         83 
 Capitalised internal software         1,191     2,241     1,761      4,002 
                                    --------  --------  --------  --------- 
 Net staff costs                     (6,105)   (5,458)   (6,103)   (11,561) 
                                    --------  --------  --------  --------- 
 
 Property & office costs incurred    (1,076)     (997)   (1,104)    (2,101) 
 Capitalised internal software             -        45         -         45 
 IFRS16 adjustment                       586       515       548      1,063 
                                    --------  --------  --------  --------- 
 Net property & office costs           (490)     (437)     (556)      (993) 
                                    --------  --------  --------  --------- 
 
 IT & telephone costs incurred       (1,022)     (759)     (959)    (1,718) 
 Capitalised internal software           148       210       209        419 
                                    --------  --------  --------  --------- 
 Net IT & telephone costs              (874)     (549)     (750)    (1,299) 
                                    --------  --------  --------  --------- 
 
 Professional fees incurred            (712)     (743)     (949)    (1,692) 
 Acquisition costs                         -         -        48         48 
 Separately reported items                 3       102       114        216 
                                    --------  --------  --------  --------- 
 Net professional fees                 (709)     (641)     (788)    (1,429) 
                                    --------  --------  --------  --------- 
 
 Travel                                 (50)     (157)      (76)      (233) 
 Bad debt provisions                       -         -     (357)      (357) 
 Other costs                             (1)      (25)      (23)       (48) 
 
 Net other operating costs           (8,229)   (7,267)   (8,653)   (15,920) 
                                    --------  --------  --------  --------- 
 
 Adjusted EBITDA*                      1,599       672       492      1,164 
                                    --------  --------  --------  --------- 
 
 
 Separately reported items: 
 Senior management restructuring    (616)       -         -         - 
 Covid-19 related costs                 -   (445)   (1,119)   (1,564) 
 Wirecard related costs                 -   (530)     (540)   (1,070) 
 Separately reported items          (616)   (975)   (1,659)   (2,634) 
                                   ------  ------  --------  -------- 
 
 Acquisition costs                      -       -     (130)     (130) 
 Share option charges               (217)   (195)     (249)     (444) 
 
 EBITDA                               766   (498)   (1,546)   (2,044) 
                                   ------  ------  --------  -------- 
 

* Adjusted EBITDA and EBITDA

Adjusted EBITDA is defined as operating profit before: depreciation, amortisation, impairment charges, share option charges and items of an exceptional nature. EBITDA is defined as operating profit before depreciation and amortisation.

Revenue

Revenues have already been analysed and explained in the CEO report and it is not proposed to repeat the analysis here. It is however worth noting some split within international payments:

Table 2: International Payments - spot and forward transaction analysis

 
 GBPmillions                              Spot   Forward   Total 
 H1-2021        Transaction values       1,174       405   1,579 
  % mix                                    74%       26% 
 
  Revenue                                  6.0       4.1    10.1 
  % mix                                    59%       41% 
 
 H1-2020        Transaction values         766       297   1,063 
  % mix                                    72%       28% 
 
  Revenue                                  5.7       2.6     8.3 
  % mix                                    69%       31% 
 
 % change       Transaction values         53%       36%     49% 
  Revenue                                   4%       58%     20% 
 

The rise in both the percentage of the total revenue from forward FX deals and the absolute rise in such revenue is attributable to a commercial drive for more B2B business and the high-quality of our dealing offer for SMEs.

Gross costs

Costs (including capital expenditure, exceptional items and before any furlough subsidies, but excluding marketing costs), were GBP10.8 million, 2% lower than H1-2020 (H1-2020: GBP11.0. million) and 14% lower than H2-2020 (H2-2020: GBP12.6 million).

Table 3: Gross costs

 
 GBP000's              H1-2021   H1-2020   H2-2020   FY-2020 
 Staff                   7,943     8,366     9,159    17,525 
 Property                1,076       997     1,104     2,101 
 IT & telephone          1,022       759       959     1,718 
 Professional fees         712       743       949     1,692 
 Other costs                51       182       456       638 
                      --------  --------  --------  -------- 
                        10,804    11,047    12,627    23,674 
                      --------  --------  --------  -------- 
 

Staff costs

Gross staff costs were GBP7.9 million in H1-2021 against GBP8.4 million in H1-2020, and GBP9.2 million in H2-2020. These costs were offset by:

- Capitalised software: GBP1.2 million (H1-2020: GBP2.2 million, H2-2020: GBP1.8 million)

    - Exceptional costs:        GBP0.6 million (H1-2020: 0.3 million, H2-2020: GBP1.0 million) 
    - Acquisition costs:         GBPnil (H1-2020: GBPnil, H2-2020: GBP0.1 million) 

Costs in H1-2020 included salary cost savings after employees and directors agreed to temporary salary cuts at the height of the pandemic. The reduction in costs in H1-2021 is largely a result of controlled headcount reductions in 2020 continuing into 2021, as development staff cost spend decreased and more product was rolled-out.

Amounts capitalised have significantly reduced to GBP1.2 million representing 15% of gross staff costs, (H1-2020: 27%) as the Group investment strategy matures and moves to a focus on new and enhanced product design.

Headcount numbers have fallen from 314 as at 30 June 2020 to 258 as at 30 June 2021 and 248 at 31 August 2021. It is anticipated that these numbers will rise by around 5% within H2-2021.

Professional fees

Professional fees have remained broadly consistent on H1-2020 at GBP0.7 million (H1-2020: GBP0.7 million), and include considerable investment in regulatory compliance initiatives to provide additional control assurance to customers and the Group.

Property and office costs

The Group has property commitments in London for both offices and retail outlets. The Group has reduced its London office space in H1-2021 with a net gain of GBP16k on termination of lease contracts, and is reviewing its remaining commitments

Separately reported items

Separately reported items are large, non-recurring items identified by management.

Table 4: Separately reported items

 
 GBP000's                           H1-2021   H1-2020   H2-2020   FY-2020 
 
 Senior management restructuring        616         -         -         - 
 COVID-19                                 -       445     1,119     1,564 
 Wirecard                                 -         -       418       418 
 
 Cash based costs                       616       445     1,537     1,982 
                                   --------  --------  --------  -------- 
 
 Provisions and write-offs 
 Wirecard card stocks written 
  off                                     -       530       122       652 
 
                                        616       975     1,659     2,634 
                                   --------  --------  --------  -------- 
 

The Group structure has been flattened and this led to a number of senior staff departing the business. The settlement costs, notice periods and associated legal expenses are reflected above. There were no other separately reported items in the period.

Adjusted EBITDA

Adjusted EBITDA for the period was a profit of GBP1.6 million (H1-2020: GBP0.7 million), an increase of GBP0.9 million arising from the increase in gross profit for the period.

Table 5a: Reconciliation of adjusted EBITDA to loss before tax H1-2021

 
 GBP000's                 Adjusted   Separately      Share    Result 
                            EBITDA     reported    options    before 
                                          items                  tax 
 
 Revenue                    16,905            -          -    16,905 
 Direct costs              (6,685)            -          -   (6,685) 
                         ---------  -----------  ---------  -------- 
 Gross profits              10,220            -          -    10,220 
 Marketing                   (392)            -          -     (392) 
                         ---------  -----------  ---------  -------- 
 Contribution                9,828            -          -     9,828 
 Staff costs               (6,105)        (613)      (217)   (6,935) 
 Property                    (490)            -          -     (490) 
 IT and Telephone            (874)            -          -     (874) 
 Professional fees           (709)          (3)          -     (712) 
 Travel and subsidence        (50)            -          -      (50) 
 Other expenditure             (1)            -          -       (1) 
                         ---------  -----------  ---------  -------- 
                             1,599        (616)      (217)       766 
                         ---------  -----------  ---------  -------- 
 FX differences                                                 (52) 
 Depreciation                                                  (733) 
 Amortisation                                                (2,135) 
 Finance cost                                                   (93) 
                                                            -------- 
 Loss before taxation                                        (2,247) 
                                                            -------- 
 

Table 5b: Reconciliation of adjusted EBITDA to loss before tax H1-2020

 
 GBP000's                 Adjusted   Separately      Share    Result 
                            EBITDA     reported    options    before 
                                          items                  tax 
 
 Revenue                    13,772            -          -    13,772 
 Direct costs              (5,034)            -          -   (5,034) 
                         ---------  -----------  ---------  -------- 
 Gross profits               8,738            -          -     8,738 
 Marketing                   (799)            -          -     (799) 
                         ---------  -----------  ---------  -------- 
 Contribution                7,939            -          -     7,939 
 Staff costs               (5,458)        (343)      (195)   (5,996) 
 Property                    (437)            -          -     (437) 
 IT and Telephone            (549)            -          -     (549) 
 Professional fees           (641)        (102)          -     (743) 
 Travel and subsidence       (157)            -          -     (157) 
 Bad debt provisions             -        (530)          -     (530) 
 Other expenditure            (25)            -          -      (25) 
                         ---------  -----------  ---------  -------- 
                               672        (975)      (195)     (498) 
                         ---------  -----------  ---------  -------- 
 FX differences                                                 (13) 
 Depreciation                                                  (668) 
 Amortisation                                                (2,058) 
 Finance cost                                                  (110) 
                                                            -------- 
 Loss before taxation                                        (3,347) 
                                                            -------- 
 

Impairment review

Given the improvement in results during H1-2021 and in the wider economic environment management are not envisaging any impairment under IAS 36 Impairment of assets for the full year based on the current balance sheet and cash generating units. A full review will be carried out for the full year.

Amortisation and depreciation

Amortisation and depreciation for the period remains relatively consistent at GBP2.1 million (H1-2020: GBP2.1 million) and GBP0.7 million (H1-2020: GBP0.7 million) respectively.

Operating result

The Group made a loss before taxation of GBP2.2 million for the period, compared to a loss of GBP9.0 million for the whole of 2020.

Taxation, incorporating R&D credits

The Group has recognised a net tax credit of GBP1.1 million (H1-2020: GBP0.2 million) of which GBP0.3 million (H1-2020: GBP0.7 million) relates to an R&D tax credit for the six months to 30 June 2021.

R&D project spend eligible for R&D tax relief decreased during the period, however this is not the only component behind the estimated R&D tax credit for the period, and, is not the only factor that will eventually drive the total claim for the year.

All valid R&D expenditure gives rise to tax advantages, either in the form of a tax credit receivable, or as an enhanced allowable expense deduction increasing the taxable loss for the year. Legislation places a cap on the amount a company can claim as a repayment and therefore, as the Group results improve, the amount it can claim in the form of a repayment decreases. The GBP0.3 million credit recognised is an estimation of the maximum amount the Group can claim in the form of a cash repayment, based on the results for the period.

B: Balance sheet

At 30 June 2021, the Group considers some of the key items on the balance sheet to be:

   --    GBP10.1 million of cash at bank (30 June 2020: GBP 7.9 million) 
   --    GBP2.0 million CBIL loan (30 June 2020: GBPnil) 

-- GBP1.5 million of deferred consideration payable until October 2023 period, (30 June 2020: GBP0.7 million). The GBP1.5 million referred to above is net of discounting accounted for under IFRS 3.

   --    GBP1.7 million of accrued R&D credits of which GBP1.4 million was received in August 2021 

-- Within the working capital was GBP4.0 million of funds with regulated liquidity providers and card programs (outside of banks) (30 June 2020: GBP3.4 million).

Table 6: Balance sheet

 
                                              As at        As at         As at 
GBP000's                                30 Jun 2021  31 Dec 2020   30 Jun 2020 
                                                     Restated(1)      Restated 
                                                                           (1) 
Gross Cash resources                         10,082       10,032         7,908 
Balances with liquidity providers             2,553        2,776         1,955 
Gross liquidity position                     12,635       12,808         9,863 
Customer balances not subject to 
 safeguarding (Note 2)                      (4,755)      (4,059)       (1,908) 
Net liquidity position (Note 3)               7,880        8,749         7,955 
                                        -----------  -----------  ------------ 
 
Other current assets and liabilities* 
Card stock and other inventories                217          194           199 
Accrued income (Note 3)                         447          419         1,914 
Trade debtors, including profits 
 on forward contracts                         3,090        2,443           811 
Balances pre-funded at card providers         1,435        2,078         1,431 
Other debtors                                   495          168         1,336 
Prepayments                                   1,076          860         1,079 
Accrued R&D credit (Note 4)                   1,687        1,367         3,064 
                                        -----------  -----------  ------------ 
                                              8,447        7,529         9,834 
                                        -----------  -----------  ------------ 
 
Retention and deferred consideration        (1,485)      (1,662)         (703) 
Accrued affiliate commissions               (1,303)        (343)         (271) 
Accrued expenses                            (2,422)      (1,928)       (1,499) 
Trade and other creditors                   (2,107)      (2,510)       (1,143) 
PAYE and VAT (Note 5)                         (629)        (766)       (2,017) 
Other creditors                                 (1)            -           (1) 
                                            (7,947)      (7,209)       (5,634) 
                                        -----------  -----------  ------------ 
 
Borrowings                                  (2,000)      (2,000)             - 
 
Cash resources, less other current 
 assets and liabilities                       6,380        7,069        12,155 
 
Fixed Assets (other than "right 
 to use")                                    35,519       36,496        35,700 
 
Net lease liabilities (Right to 
 use assets less lease liabilities)           (364)        (346)         (292) 
Net derivative financial assets                (31)         (30)           324 
Net deferred tax                                230        (547)       (1,758) 
 
Shareholders' funds                          41,734       42,642        46,129 
                                        -----------  -----------  ------------ 
 

* Other current assets and liabilities excluding net derivative financial assets and current net lease liabilities

1) Certain balance sheet lines have been restated to show separately balances with card providers and to better reflect where there is both a legal right and an intention to settle net.

2) Customer balances not defined as client monies subject to regulated safeguarding requirements, which are held off balance sheet . These balances represent the margins called by the Group from customers for forward FX trading. The Group is subject to margin positions imposed on it by liquidity providers, including banks that act in that capacity. Where customer margins are lower than margins requested by liquidity providers, this infers that the Group has taken a risk-assessment of the client's credit worthiness and not called the customer for margin but has been called itself. Where margins imposed by liquidity providers is lower than margins called from customers, this infers that Group's customers have off-setting currency positions in the eyes of the liquidity providers.

3) The net liquidity position is the internal measure of available resource, but subject to certain balances being held for regulatory capital reasons. At 30 June 2021 these balances were GBP352k (30 June 2020: GBP352k).

4) Accrued income at 30 June 2020 included GBP1.0 million due from Wirecard. Following its demise, the Group became a direct issuer of its own cards rather than relying solely on third party issuers, with a corresponding decrease in accrued income due from such third parties.

5) Accrued R&D credit includes GBP1.4 million accrued in respect of 2020 and prior years. This was received in August 2021.

6) To manage the Group's working capital through the early stages of the Covid-19 pandemic, the Group availed itself of a postponement of PAYE liabilities to HMRC, pending the receipt from HMRC of the R&D tax credit. At 30 June 2021 the outstanding balance of historic PAYE was insignificant.

Internally capitalised software

The Group continues its investment in product development and has capitalised a further GBP1.3 million, including GBP1.2 million staff costs.

Other balance sheet items

The Group has accrued a further GBP0.3 million for R&D credits. GBP1.4 million in relation to previous periods was outstanding as at 30 June 2021 but was received in August 2021.

Non-Controlling Interest

The loss for the period includes GBP90k profit in respect of the Non-Controlling Interest of the Equals Connect business acquired in 2019.

Off balance sheet items: client monies

Client monies held by the Group, but not included on the balance sheet, represent monies held on behalf of clients, and where the risks and rewards of ownership are not transferred to the Group, and the Group does not have control over how those monies are used. Such accounts are subject to stringent regulatory controls.

As at 30 June the Group held client monies of GBP170.4 million in off balance sheet bank accounts (H1-2020: GBP96.1 million). The increase year-on-year arises from the acquisition of new clients, and a further general increase consistent with the uptake in B2B revenue in H1-2021.

C. Cash flow

Table 7 Cash flow

 
GBP000's                            H1-2021  H1-2020  H2-2020  FY-2020 
 
Adjusted EBITDA (table 1)             1,599      672      492    1,164 
 
Add: R&D tax receipts relating 
 to qualifying expenditure 
 in prior periods                                  -    2,539    2,539 
Less: 
 - IFRS 16 excess of cash 
  cost over accounting cost           (586)    (514)    (549)  (1,063) 
 - Acquisition costs                      -        -    (130)    (130) 
 - Cash incurred separately 
  reported items                      (616)    (445)  (1,537)  (1,982) 
 - Internally capitalised 
  software                          (1,340)  (2,496)  (1,969)  (4,465) 
 - Purchase of other intangibles       (27)     (50)     (15)     (65) 
 - Purchase of property, 
  plant, equipment                     (40)    (119)     (41)    (160) 
 
(Less) / add: Working capital 
 movement*                            1,817      103    1,651    1,754 
 
Net cashflow before acquisitions, 
 earn-outs and external fundings        807  (2,849)      441  (2,408) 
 
Cash for acquisitions/ earn-outs      (803)    (508)    (317)    (825) 
 
External funding 
 CBIL loan from UK Government             -        -    2,000    2,000 
 Cash raised from issue of 
  equity                                 46        -        -        - 
 
 
NET CASH FLOWS                           50  (3,357)    2,124  (1,233) 
 
Balance at start of period           10,032   11,265    7,908   11,265 
 
Balance at end of period             10,082    7,908   10,032   10,032 
                                    =======  =======  =======  ======= 
 
 
 

Richard Cooper

Chief Financial Officer

14 September 2021

INTERIM CONSOLIDATED statement OF COMPREHENSIVE INCOME

FOR THE six month periodED 30 june 2021

 
                                                                           Year end 
                                                Period end   Period end          31 
                                                   30 June      30 June    December 
                                                      2021         2020        2020 
                                                 Unaudited    Unaudited     Audited 
                                         Note       GBP000       GBP000      GBP000 
 
 Gross value of currency transactions 
  sold*(1)                                       1,738,215    1,196,192   2,671,245 
 Gross value of banking deposit 
  transactions                                     570,343      363,546     821,426 
                                               -----------  -----------  ---------- 
 
 Revenue on currency transactions                   14,046       11,268      23,850 
 Banking revenue                                     2,859        2,504       5,110 
                                               -----------  -----------  ---------- 
 Revenue                                 2          16,905       13,772      28,960 
 Direct costs                            2         (6,685)      (5,033)    (10,671) 
                                               -----------  -----------  ---------- 
 Gross profit                                       10,220        8,739      18,289 
 
 Administrative expenses                 3        (10,239)      (9,917)    (22,467) 
 Amortisation charge                               (2,135)      (2,058)     (4,347) 
 Credit impairment charge                4               -            -       (261) 
 Acquisition expenses                                    -            -       (130) 
                                               -----------  -----------  ---------- 
 Total operating expenses                         (12,374)     (11,975)    (26,944) 
 
 Operating loss                                    (2,154)      (3,236)     (8,655) 
 
 Finance costs                           8            (93)        (110)       (391) 
                                               -----------  -----------  ---------- 
 Loss before tax                                   (2,247)      (3,346)     (9,046) 
 
 Tax credit                              5           1,075          177       2,109 
                                               -----------  -----------  ---------- 
 Loss after tax                                    (1,172)      (3,169)     (6,937) 
                                               ===========  ===========  ========== 
 Memo: Loss is attributable 
  to: 
                                               -----------  -----------  ---------- 
 Owners of Equals Group Plc                        (1,251)      (3,086)     (6,919) 
 Non-controlling interest                               79         (83)        (18) 
                                               -----------  -----------  ---------- 
 
 Other comprehensive income: 
 Exchange differences arising 
  on translation of foreign 
  operations                                             -            -           6 
                                                   (1,172)      (3,169)     (6,931) 
                                               ===========  ===========  ========== 
 Loss per share 
 Basic                                               (70)p      (1.73)p     (3.87)p 
 Diluted                                             (70)p      (1.69)p     (3.87)p 
                                               ===========  ===========  ========== 
 

*(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.

All income and expenses arise from continuing operations.

INTERIM CONSOLIDATED statement OF FINANCIAL POSITION

FOR THE six month periodED 30 june 2021

 
                                                                 As at          As at 
                                                    As at      30 June    31 December 
                                             30 June 2021         2020           2020 
                                                Unaudited    Restated*      Restated* 
                                     Note          GBP000       GBP000         GBP000 
 ASSETS 
 Non-current assets 
 Property, plant and equipment                      1,439        1,887          1,646 
 Right of use assets                                5,247        6,487          6,061 
 Intangible assets and goodwill                    34,082       33,813         34,850 
 Deferred tax assets                                4,057        2,095          3,193 
                                                   44,825       44,282         45,750 
                                           --------------  -----------  ------------- 
 Current assets 
 Inventories                                          217          199            194 
 Trade and other receivables                       10,783       11,699         10,112 
 Derivative financial assets                        3,019        2,476          3,019 
 Cash and cash equivalents                         10,082        7,909         10,032 
                                           --------------  -----------  ------------- 
                                                   24,101       22,283         23,357 
                                           --------------  -----------  ------------- 
 TOTAL ASSETS                                      68,926       66,565         69,107 
                                           ==============  ===========  ============= 
 
 EQUITY AND LIABILITIES 
 Equity attributable to equity 
  holders 
 Share capital                        6             1,787        1,786          1,786 
 Share premium                        6            53,049       53,003         53,003 
 Share based payment reserve                        1,619        1,126          1,402 
 Other reserves                                     8,609        8,603          8,609 
 Retained deficit                                (23,510)     (18,425)       (22,259) 
                                           --------------  -----------  ------------- 
 Equity attributable to owners 
  of Equals Group Plc                              41,554       46,093         42,541 
 Non-controlling interest                             180           36            101 
                                           --------------  -----------  ------------- 
                                                   41,734       46,129         42,642 
                                           --------------  -----------  ------------- 
 
   Non-current liabilities 
 Borrowings                           7             2,000            -          2,000 
 Lease liabilities                                  5,164        6,120          5,509 
 Deferred tax liabilities                           3,827        3,854          3,740 
                                           --------------  -----------  ------------- 
                                                   10,991        9,974         11,249 
                                           --------------  -----------  ------------- 
 
   Current liabilities 
 Trade and other payables                          12,704        7,652         11,269 
 Lease liabilities                                    447          659            897 
 Derivative financial liabilities                   3,050        2,151          3,050 
                                           --------------  -----------  ------------- 
                                                   16,201       10,462         15,216 
                                           --------------  -----------  ------------- 
 TOTAL EQUITY AND LIABILITIES                      68,926       66,565         69,107 
                                           ==============  ===========  ============= 
 

* Certain balance sheet lines have been restated to better reflect where there is both a legal right and an intention to settle net .

INTERIM CONSOLIDATEd STATEMENT OF changes in equity

For the SIX MONTH period ended 30 june 2021

 
Group                                                                     Total attributable 
                                              Share                                to owners 
                          Share     Share     based  Retained      Other           of Equals  Non-controlling 
                        capital   premium   payment   deficit   reserves           Group Plc         interest    Total 
                         GBP000    GBP000    GBP000    GBP000     GBP000              GBP000           GBP000   GBP000 
 
At 1 January 2020         1,786    53,003     1,345  (15,339)      8,603              49,398              119   49,517 
 
(Loss) for the period 
 and total 
 comprehensive 
 loss                         -         -         -   (3,086)          -             (3,086)             (83)  (3,169) 
Other items 
Share based payment 
 charge                       -         -       195         -          -                 195                -      195 
Movement in deferred 
 tax on share-based 
 payment charge               -         -     (414)         -          -               (414)                -    (414) 
                       --------  --------  --------  --------  ---------  ------------------  ---------------  ------- 
At 30 June 2020           1,786    53,003     1,126  (18,425)      8,603              46,093               36   46,129 
 
(Loss) / income for 
 the period                   -         -         -   (3,834)          -             (3,834)               65  (3,769) 
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                       -         -       249         -          -                 249                -      249 
Movement in deferred 
 tax on share-based 
 payment charge               -         -        27         -          -                  27                -       27 
 
At 31 December 2020       1,786    53,003     1,402  (22,259)      8,609              42,541              101   42,642 
 
(Loss) / income for 
 the period and total 
 comprehensive (loss) 
 / income                     -         -         -   (1,251)          -             (1,251)               79  (1,172) 
Other items 
Share based payment 
 charge                       -         -       217         -          -                 217                -      217 
Movement in deferred          -         -         -         -          -                   -                -        - 
 tax on share-based 
 payment charge 
New shares issued             1        46         -         -          -                  47                -       47 
                       --------  --------  --------  --------  ---------  ------------------  ---------------  ------- 
At 30 June 2021           1,787    53,049     1,619  (23,510)      8,609              41,554              180   41,734 
                       ========  ========  ========  ========  =========  ==================  ===============  ======= 
 
 
 
 Other reserves comprise: 
 Merger reserve              Arising on reverse acquisition from Group 
                              reorganisation. 
 Contingent consideration    Arising on equity based contingent consideration 
  reserve                     on acquisition of subsidiaries. 
  Foreign currency reserve    Arising on translation of foreign operations 
 

INTERIM Consolidated statement of cash flows

FOR THE SIX MONTH PERIODED 30 JUNE 2021

 
 
                                              Six month       Six month       Six month 
                                           period ended    period ended    period ended 
                                                30 June         30 June     31 December 
                                                   2021            2020            2020 
                                              Unaudited       Unaudited         Audited 
                                                 GBP000          GBP000          GBP000 
 Operating Activities 
 Loss for the period                            (2,154)         (3,236)         (5,419) 
 Adjustments for: 
 Depreciation                                       733             668             759 
 Amortisation                                     2,135           2,058           2,289 
 Impairment                                           -               -             261 
 Share based payment charge                         217             195             249 
 Decrease / (increase) in trade 
  and other receivables                           (351)             382           (203) 
 Decrease / (increase) in net 
  derivative financial assets / 
  liabilities                                         -           2,085           (543) 
 Increase / (decrease) in trade 
  and other payables                              2,210           (296)           2,506 
 (Decrease) / increase in derivative 
  financial liabilities                               -         (2,037)             526 
 (Increase) / decrease in inventories              (23)              65               5 
                                         --------------  --------------  -------------- 
 Net cash inflow / (outflow)                      2,767           (116)             430 
 
 Tax receipts                                         -               -           2,539 
                                         --------------  --------------  -------------- 
 
 Net cash inflow / (outflow) from 
  operating activities                            2,767           (116)           2,969 
 
 Cash flows from investing activities 
 Acquisition of property, plant 
  and equipment                                    (40)           (120)            (40) 
 Acquisition of intangibles                     (1,367)         (2,546)         (1,984) 
 Deferred consideration on acquisition            (803)               -               - 
  of subsidiary 
 Acquisition of subsidiary, net 
  of cash acquired                                    -               -           (256) 
 Net cash used in investing activities          (2,210)         (2,666)         (2,280) 
 
 Cash flows from financing activities 
 Borrowings                                           -               -           2,000 
 Principal elements of lease payments             (446)           (464)           (427) 
 Interest paid on finance lease                    (97)           (110)           (112) 
 Interest paid                                     (10)               -            (27) 
 Proceeds from issuance of ordinary                  46               -               - 
  shares 
 Net cash (used in) / from financing 
  activities                                      (507)           (574)           1,434 
                                                                      - 
 Net increase / (decrease) in 
  cash and cash equivalents                          50         (3,356)           2,123 
 Cash and cash equivalents at 
  the beginning of the period                    10,032          11,265           7,909 
                                         --------------  --------------  -------------- 
 Cash and cash equivalents at 
  end of the period                              10,082           7,909          10,032 
                                         ==============  ==============  ============== 
 

CONSOLIDATED NOTES TO THE INTERIM FINANCIAL STATEMENTS

FOR THE SIX MONTH PERIODED 30 JUNE 2021

   1.            Basis of preparation 

The principal accounting policies applied in the preparation of the Group and Interim Consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements have been prepared on a historical cost basis with the exception of derivative financial instruments which are measured at fair value through profit or loss.

These financial statements are prepared in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006. The financial statements are presented in sterling, the Group's presentational currency.

The unaudited consolidated Interim financial statements have been prepared in accordance with the AIM rules and consistently with the basis of preparation and accounting policies set out in the accounts of the Group for the year ended 31 December 2020. The information set out herein is abbreviated and does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. These interim consolidated financial statements do not include all disclosures which would be required in a complete set of financial statements and should be read in conjunction with the 2020 Annual Report.

The Company is a limited liability company incorporated and domiciled in England and Wales and whose shares are quoted on AIM, a market operated by The London Stock Exchange.

a) Critical judgements and estimates

IFRS requires management to make estimates, judgements and assumptions that affect the application of the Group's accounting policies and the reported amounts of assets, liabilities, income and expenses. These estimates are based on the Directors best knowledge and past experience. The existing critical judgements and estimates set out in note 3.26 of the Group's annual report for the year ended 31 December 2020 have been reviewed in preparing these Interim consolidated financial statements, and in particular surrounding the current Covid-19 situation, and the Directors believe they remain relevant.

b) Going concern

The Board continues to closely monitor its performance, and considers a range of risks that could affect the future performance and position of the Group, including the on-going risks to the business arising from the Covid-19 pandemic. The Board considers it has a reasonable expectation that it has adequate resources to continue to operate for the foreseeable future and therefore the financial statements are prepared on a going concern basis.

   2.            Segmental Analysis 

The segmental results were as follows:

 
 Unaudited                  International   Currency   Travel   Banking    Central      Total 
                                 Payments      Cards     Cash 
 6 months ended 30                 GBP000     GBP000   GBP000    GBP000     GBP000     GBP000 
  June 2021 
 
 Segment revenue                   10,124      3,853       69     2,859          -     16,905 
 Direct costs                     (5,837)       (27)     (21)     (800)          -    (6,685) 
                           --------------  ---------  -------  --------  ---------  --------- 
 Gross profit                       4,287      3,826       48     2,059          -     10,220 
 Administrative expenses                                                  (10,239)   (10,239) 
 Amortisation                                                              (2,135)    (2,135) 
 Finance costs                                                                (93)       (93) 
                           --------------  ---------  -------  --------  ---------  --------- 
 Profit / (loss) before 
  tax                               4,287      3,826       48     2,059   (12,467)    (2,247) 
                           ==============  =========  =======  ========  =========  ========= 
 
 Total assets                                                     4,976     63,950     68,926 
 Total liabilities                                              (1,996)   (25,196)   (27,192) 
                           --------------  ---------  -------  --------  ---------  --------- 
 Total net assets                       -          -        -     2,980     38,754     41,734 
                           ==============  =========  =======  ========  =========  ========= 
 
 
 Unaudited                  International   Currency   Travel   Banking    Central      Total 
                                 Payments      Cards     Cash 
 6 months ended 30                 GBP000     GBP000   GBP000    GBP000     GBP000     GBP000 
  June 2020 
 
 Segment revenue                    8,233      2,642      393     2,504          -     13,772 
 Direct costs                     (2,899)    (1,341)    (151)     (643)          -    (5,034) 
                           --------------  ---------  -------  --------  ---------  --------- 
 Gross profit                       5,334      1,301      242     1,861          -      8,738 
 Administrative expenses                -          -        -         -    (9,916)    (9,916) 
 Amortisation                           -          -        -         -    (2,058)    (2,058) 
 Finance costs                          -          -        -         -      (110)      (110) 
                           --------------  ---------  -------  --------  ---------  --------- 
 Profit / (loss) before 
  tax                               5,334      1,301      242     1,861   (12,084)    (3,346) 
                           ==============  =========  =======  ========  =========  ========= 
 
 Total assets                           -          -        -     5,714     60,851     66,565 
 Total liabilities                      -          -        -   (2,087)   (18,350)   (20,437) 
                           --------------  ---------  -------  --------  ---------  --------- 
 Total net assets                       -          -        -     3,627     42,501     46,128 
                           ==============  =========  =======  ========  =========  ========= 
 
 
 Audited                    International   Currency   Travel   Banking    Central      Total 
                                 Payments      Cards     Cash 
 6 months ended 31                 GBP000     GBP000   GBP000    GBP000     GBP000     GBP000 
  December 2020* 
 
 Segment revenue                    9,009      3,336      237     2,606          -     15,188 
 Direct costs                     (3,277)    (1,523)    (123)     (713)          -    (5,636) 
                           --------------  ---------  -------  --------  ---------  --------- 
 Gross profit                       5,732      1,813      114     1,893          -      9,552 
 Administrative expenses                -          -        -         -   (13,526)   (13,526) 
 Amortisation                           -          -        -         -    (2,289)    (2,289) 
 Impairment charge                      -          -        -         -        845        845 
 Finance costs                          -          -        -         -      (282)      (282) 
                           --------------  ---------  -------  --------  ---------  --------- 
 Profit / (loss) before 
  tax                               5,732      1,813      114     1,893   (15,252)    (5,700) 
                           ==============  =========  =======  ========  =========  ========= 
 
 Total assets                           -          -        -     4,399     64,708     69,107 
 Total liabilities                      -          -        -   (1,755)   (24,710)   (26,465) 
                           --------------  ---------  -------  --------  ---------  --------- 
 Total net assets                       -          -        -     2,644     39,998     42,642 
                           ==============  =========  =======  ========  =========  ========= 
 

*A review of the underlying data has led to some minor re-profiling of H1-2020 and H2-2020 disclosures.

   3.            Loss before tax 

Loss before tax is stated after charging the following operating costs:

 
                                                        6 months   12 months ended 
                                     6 months ended     ended 30       31 December 
                                       30 June 2021    June 2020              2020 
                                          Unaudited    Unaudited           Audited 
                                             GBP000       GBP000            GBP000 
 
  Marketing costs                               392          799             1,206 
  Staff costs                                 6,718        5,799            12,894 
  Property and office costs                     490          500               993 
  Audit fees                                    188          192               375 
  Other professional fees                       524          552             1,270 
  IT and telephone cost                         874          552             1,299 
  Travel and similar                             50          157               233 
  Foreign exchange loss                          52         (38)               199 
  Share option charge                           217          195               444 
  Write-off of card stocks                        -            -               575 
  Contingent consideration                        -            -               637 
  Bad debt provisions                             -          530               513 
  Depreciation of right of use 
   assets                                       486          465               940 
  Depreciation of property, plant 
   and equipment                                247          203               487 
  Other costs                                     1           11               402 
                                    ---------------  -----------  ---------------- 
  Administrative costs                       10,239        9,917            22,467 
                                    ===============  ===========  ================ 
 

Staff costs include GBP0.6 million costs relating to a number of senior staff departing the business. This includes settlement costs, notice period costs and associated legal expenses.

   4.            Credit impairment charge 

Credit impairment charge represents the movement for the period in expected credit loss under IFRS 9 Financial Instruments.

   5.            Taxation 
 
                                                6 months     6 months            12 months 
                                                   ended     ended 30    ended 31 December 
                                            30 June 2021    June 2020                 2020 
                                               Unaudited    Unaudited              Audited 
                                                  GBP000       GBP000               GBP000 
 Current year R&D credit                           (319)        (734)              (1,347) 
 Change in R&D credit estimates 
  relating to prior years                              -            -                 (24) 
 Current year corporation tax                         20            -                    - 
  charge 
                                          --------------  -----------  ------------------- 
 Current tax credit                                (299)        (734)              (1,371) 
                                          --------------  -----------  ------------------- 
 
 Origination and reversal of temporary 
  differences                                      (762)          458                (564) 
 Recognition of previously unrecognised 
  deductible temporary differences                  (14)           99                (174) 
                                          --------------  -----------  ------------------- 
 Deferred tax expense                              (776)          557                (738) 
                                          --------------  -----------  ------------------- 
 
 Total tax credit                                (1,075)        (177)              (2,109) 
                                          ==============  ===========  =================== 
 
   6.            Share capital 
 
                              6 months    6 months    6 months           12 months 
                              ended 30    ended 30    ended 30   ended 31 December 
                             June 2021   June 2021   June 2020                2020 
                             Unaudited   Unaudited   Unaudited             Audited 
                                    No      GBP000      GBP000              GBP000 
Authorised, issued and 
 fully paid-up ordinary 
 shares of GBP0.01 each 
As at start of period      178,602,918       1,786       1,786               1,786 
Issued during the period       138,889           1           -                   - 
 
As at end of period        178,741,807       1,787       1,786               1,786 
                           -----------  ----------  ----------  ------------------ 
 

Equals Group Plc issued 138,889 1p ordinary shares on 20 April 2021 for total consideration of GBP46,875, of which GBP45,486 was allocated to the Share Premium reserve, in order to satisfy the exercise of share options by a former Director of the Group.

   7.            Borrowings 
 
                        2021     2020 
                      GBP000   GBP000 
 Loan debenture        2,000    2,000 
                     =======  ======= 
 

Under the Coronavirus Business Interruption Loan Scheme (CBILS) to further support working capital, on 23 December 2020 the main trading subsidiary of the Company, FairFX plc, entered into a GBP2,000,000 loan agreement with the Royal Bank of Scotland (RBS).

Under the terms of the loan, there is an initial twelve month capital repayment holiday and the UK Government will pay the first 12 months of interest due. This is being recognised as a government grant, with interest grant income received being offset against the loan interest due. At the current Bank Base rate, the estimated grant income receivable by the Group for the period 1 July 2021 to 31 December 2021 representing six months repayment holiday will be GBP26k. The estimated interest payment for the year ended 31 December 2022 is GBP48k. The loan is for a six year period, maturing on December 2026, at the Bank Base rate + 2.53% and may be repaid early at any point without penalty.

The loan agreement required that by 31 March 2021, Equals Group plc issued a guarantee to FairFX plc as security on the loan and that FairFX plc provides a debenture to the RBS for the value of the loan. Both of these requirements have been met.

   8.            Finance costs 

Finance costs comprise the unwind of discount on the lease liability under IFRS 16; the unwind of discount on deferred consideration in respect of business and company acquisitions made by the Group and other financing interest costs.

   9.            Post balance sheet events 

On 23 July 2021, Equals Group Plc issued 550,000 1p ordinary shares for total consideration of GBP153,875, of which GBP148,375 was allocated to the share premium reserve, in order to satisfy the exercise of share options by former Director of the Group and a former senior employee.

- ENDS -

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(END) Dow Jones Newswires

September 14, 2021 02:00 ET (06:00 GMT)

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