TIDMEQLS
RNS Number : 2973R
Equals Group PLC
29 June 2020
29 June 2020
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS DEFINED IN
ARTICLE 7 OF THE MARKET ABUSE REGULATION NO. 596/2014 ("MAR")
Equals Group plc
('Equals' or the 'Group)
Preliminary Results
Positive financial progress driven by transition towards a B2B
facing,
integrated money management provider
Equals (AIM:EQLS) , the fast-growing B2B focused e-banking and
international payments group, announces its preliminary results for
the year ended 31 December 2019 (the 'period' or 'FY-2019') and an
update on the Group's trading in FY-2020.
FY-2019 Financial Summary
GBPmillion FY-2019 FY-2018 % Change
(restated) W
Underlying transaction
values 2,887 2,369 +21.8%
- B2B 2,088 1,187 +75.9%
- B2C 799 1,182 -32.4%
Revenue 30.9 26.1 +18.6%
- B2B 17.3 9.5 +81.2%
- B2C 13.6 16.6 -18.1%
Gross profit 20.6 17.5 +17.7%
Adjusted EBITDA* 9.1 7.5 +21.3%
(Loss)/profit after
taxation (5.4) 2.6
FY-2019 Group Highlights
-- Group revenues increased by 19% and have doubled over a two-year
period
-- Organic profit growth continued, 13% overall but 20% in international
payments, as the Group transitions and drives revenue generation
within the higher margin B2B division and away from legacy
B2C and retail FX
-- Strategic shift evidenced by improvement in revenue mix; B2B
represents 56% (2018: 37%)
-- Gross profit increased 17.7% to GBP20.6 million and margin
remained constant at 66%
-- Two accretive acquisitions successfully integrated, Hermex
in August and Casco in November
-- Through warrant and option exercises and further capital issuances,
raised additional capital of GBP15.6 million
-- GBP1.1 million R&D credits received in the year, further GBP2.3
million receivable at 29 June 2020
-- Group rebranded from FairFX to Equals Group to reflect diversification
from legacy FX business
-- Improved systems and focus on a strong regulatory backbone
delivering results
* Membership of the UK Faster Payments scheme attained
* Gained open Real-Time Gross Settlement ('RTGS')
accounts with the Bank of England
* Granted Credit Broking licence by FCA
* Negotiated a five-year extended deal with Mastercard
- allows self-issuance
FY-2020 Trading Update
-- Overall revenues in 2020 tracking close to prior-year levels,
despite Covid-19 impact, at GBP108k per day versus GBP111k
in 2019
-- Revenue streams in both the B2B segment and retail banking
remain robust whilst B2C travel money products particularly
hard hit by pandemic. Impact started in late March, was most
acute in April and slowly improving in May and June
-- Successful transition to remote working aided by improved
technical infrastructure
-- Decisive action taken to reduce cost base
-- House funds cash position at 26 June 2020 of GBP7.7 million.
No bank debt
-- A deep pool of active customers across all of business segments
with a clear strategy in place to focus on delivering exceptional
service and growing our customer base
-- Unfolding situation at Wirecard UK has limited impact on revenues
due to supply chain measures taken in previous years
-- The Board remains optimistic about the Group's outlook
Commenting on the Preliminary Results, Ian Strafford-Taylor, CEO
of Equals Group plc, said:
"I am pleased to report that 2019 was a positive year of revenue
and profit growth for Equals, and, crucially, our strategy to
refocus the business on higher margin B2B customers with a diverse
range of integrated money management products is paying off as our
revenue mix moves away from our legacy FX business and B2C
customers.
"The Covid-19 pandemic has affected the business, but revenues
have returned to more normalised levels in most business lines
since the initial impact in late March, April and May. Our teams
have transitioned to remote working well, with the investment in
improved technical infrastructure benefitting our operations.
"Supported by our recent fundraise, we look forward to the
future with confidence as we continue to expand our product range
and make selective acquisitions when opportunity presents. Equals
is well positioned in the current market with a deep pool of active
customers driving progress across the business."
Analyst meeting
A conference call for analysts hosted by Ian Strafford-Taylor
(CEO) and Richard Cooper (CFO) will be held at 09.30am today, 29
June 2020. A copy of the Preliminary 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/5eec538f5e278421d06990c3
Notes
*Adjusted EBITDA is defined as Earnings before: depreciation,
amortisation, impairment charges, share option charges, but after
R&D tax credits. The Group changed its policy for accounting
for R&D tax credits from IAS20 to IAS 12. Whilst this has no
impact on the retained result, EBITDA has been adjusted to include
these amounts in line with accounting at the 2019 interims.
W Change in accounting policy
During the year, the Group changed its accounting policy for
research and development tax credits (R&D tax credit) which had
previously been accounted for under IAS 20 Accounting for
Government Grants and Disclosure of Government Assistance . The
Group believes that accounting for the R&D tax credit is more
appropriate under IAS 12 Income Taxes which better reflects the
substance and benefit of the credit. Under IAS 20 Accounting for
Government Grants and Disclosure of Government Assistance, the
R&D tax credit, was deducted from administration expenses on a
systemic basis. Under IAS 12 Income Taxes the R&D tax credit is
included within tax credit / expense in the year that the claim
relates to.
A change in accounting policy requires a retrospective
adjustment and consequently the comparatives amounts have been
restated. In 2018 an adjustment of GBP0.3 million has been deducted
from administrative costs and a corresponding amount included as a
tax credit. There is no adjustment to earnings per share or
retained earnings. In 2019, GBP3.4 million has been recognised as
tax credit. No periods prior to 2018 have been affected by the
change in accounting policy.
- 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
Cenkos Securities plc (Nominated Advisor
/ Joint Broker)
Max Hartley / Callum Davidson Tel: +44 (0) 20 7397
Nick Searle (Sales) 8900
Canaccord Genuity (Joint Broker)
Bobbie Hilliam / David Tyrell Tel: +44 (0) 20 7523
Alex Aylen (Sales) 8150
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 is a leading challenger brand in banking and payments
that disintermediates the incumbent banks with a superior user
experience and low-cost operating model. The Group enables its
personal and business customers to make easy, low-cost payments
both domestically and in a broad range of currencies across a range
of products all via one integrated system.
Equals provides money movement services to both business and
personal customers through five inter-connected channels -
International Payments, Corporate Expenses platform, Bank Accounts,
Travel Money (comprising currency cards and physical currency).
International Payments channel supports wire transfer foreign
exchange transactions direct to bank accounts. For corporates,
Equals has a market-leading business-expenses solution based around
its corporate platform and prepaid card which yields significant
cost savings via tighter control on expenses before they are
incurred coupled with eliminating inefficient processes. Equals
also offers business and retail bank accounts with all the
functionality offered by banks, namely faster payments, BACs,
direct debits, international payments and a debit card. The Travel
Money offerings (retail currency card and physical currency)
represent cost-effective and secure methods for travelers to spend
abroad.
Chairman's Statement
My statement this year focuses on three distinct themes: the
first looks back at the Group's achievements and its performance in
FY-2019; the second reports on how, post year-end, the Group has
faced-up to, and successfully dealt with, the challenges posed by
the Covid-19 pandemic; and the third, deals with the Group's
current trading and future prospects.
The Group has two distinct customer groupings; business
customers are referred to as "B2B," whereas retail customers are
referred to as "B2C."
FY-2019 was a highly successful year for the Group.
-- Revenues grew by 19% and successfully pivoted towards higher margin B2B customers;
-- Continued investment in product and technology, completed a
rebrand of the business away from the FX legacy into "Equals" being
an umbrella brand for all products;
-- Raised GBP15.6 million net of expenses for expansion; and,
-- Purchased, and integrated two significant and accretive acquisitions.
The Group continued to make significant investments to increase
the strength and resilience of its technical infrastructure along
with product improvements. The Corporate Expenditure management
product, Equals Spend, was responsive to the Group's planned focus
and investment, joining the UK Faster Payments scheme and the
upgrade of our risk evaluation methodology and resources resulting
in further opportunities for expansion. Customer facing roles and
technology were both enhanced and a clearer route to greater brand
awareness across our products has been achieved.
Inevitably these upgrades take more than one accounting period
to show their full benefit, but the Board is confident that the
right steps were taken at the right time and looks forward to these
upgrades reaching their full impact.
Covid-19 Response
2020 has seen global volatility caused by the Covid-19 pandemic.
Equals has not been immune to this but the technology improvements
made by the Group meant that all employees have been able to
successfully work from home. Currently there are around one fifth
of the staff under furlough but redundancies have been kept to a
minimum. All employees including the Board and senior management
agreed to a temporary 20% reduction in their remuneration over a
three month period until greater visibility of the market has been
possible.
The travel related products (bureau de change and retail
pre-load travel cards) were, impacted almost immediately with
revenues down 87% on the comparative period in 2019. To put this
into context, this represented 29% of revenue in 2019 and is now
only 4% of a significantly higher income base up to 26 June
2020.
The full financial consequences of Covid-19 are of course yet
unknown, but profound. However, with the steps already taken by the
Group together with further contingency planning, the board
believes the Group remains in a strong position to move quickly to
not only respond to market movements but look for emerging
opportunities.
The Group is in the fortunate position of having no bank
borrowing and thus has protected its cash position. At the time of
writing the Group's free cash resources stood at GBP7.7
million.
Current trading and Outlook
Revenue streams in both the B2B segment and retail banking
appear robust after the expected reduction in late March and April
2020. Revenue per day (excluding 'travel cash') rose to GBP103.4k
in Q1-2020 (Q1-2019: GBP72k) and were GBP91k per day in the period
1 April to 25 June 2020 (Q2-2019: GBP86k). Despite the continued
impact of Covid-19, in June 2020 revenues per day have averaged
GBP113k (June 2019, excluding travel cash, GBP111k per day).
The Board remains optimistic about the Group's outlook. The
Non-Executive Directors and I would like to thank the executive
team and all our staff who have worked so diligently to position
the Group so well.
Finally, following many years of growth, we are finalising the
next stage of our succession plan and tomorrow, at our Annual
General Meeting, I will welcome Alan Hughes to the Chair. Alan's
significant experience in the sector speaks for itself and I look
forward to working with him and continuing to serve Equals as a
Non-Executive Director.
John Pearson
Chairman
28 June 2020
Chief Executive Officer's Report
I am delighted to report that the initiatives and measures
implemented in FY-2018 produced such clear financial progress in
FY-2019:
- Revenues increased by 19% and grew by 100% over a two-year period;
- Revenue mix: B2B revenues rose 81%, comprising 56% of Group, up from 37% in FY-2018;
- Adjusted EBITDA* at GBP9.1 million up 21% despite very
challenging Brexit uncertainties and challenges.
- A loss after taxation of GBP5.4 million after an impairment
charge of GBP4.9 million, and separately reported items of GBP3.4
million, (2018: Profit GBP2.6 million separately report items of
GBP3.5 million)
*Adjusted EBITDA is defined as Earnings before: depreciation,
amortisation, impairment charges, share option charges, and
separately reported items, but after R&D tax credits
The growth of the Group with a number of different brands,
required consolidation both from the perspective of market
positioning and for corporate restructuring. Both were achieved in
the year. The costs of this have been reported as "separately
reported items" in the CFO report which follows.
The robustness of improved and regulatory compliant systems,
meant that the Group was able to become a member of the UK Faster
Payments scheme and open Real-Time Gross Settlement ('RTGS')
accounts with the Bank of England. The FCA granted a Credit Broker
Licence and the Group's relationship with US bank Metropolitan
Commercial Bank ('MCB') goes from strength to strength. This has
continued currently with banking facilities widened to now include
Citibank.
Through both acquisitions and organic growth, the Group has
achieved a pivot away from its legacy retail customer base ("B2C")
to a greater proportion of its revenues from business customers
("B2B"). Revenues from B2B customers rose to GBP17.3 million (2018:
GBP9.5 million) representing 56% of Group revenues (2018: 37%).
Rationalisation of the supply chains continued, and continues,
with direct connectivity to payment schemes and longer-term
commercial arrangements being reached with MasterCard and other
card providers. The importance of these initiatives is emphasised
by the current situation at Wirecard, which is addressed later in
this statement.
Expansion continued in FY-2019, both organically and through
acquisition, and two competing businesses, Hermex and Casco, were
added to the Group and are now fully integrated. Casco, now branded
Equals Connect, brings a white-label product enabling other FX and
payment companies to scale their businesses by utilising its
technology, banking, liquidity and compliance capabilities. Both
businesses have significantly added to the B2B client base and
contributed over GBP233.0 million of underlying transaction values
in 2019.
The acquisitions were in accordance with three of the Group's
stated strategies:
i. to consolidate smaller, attractive market participants;
ii. expand its product range; and,
iii. leverage its investment into deeper payments connectivity.
In June 2019, the Group announced the rebranding of the Group to
Equals to reflect the evolution of the product offering and
strategic direction. Following the name change, the Group has moved
towards a brand architecture on the B2B side with a suite of
product brands underneath the Equals brand with a consistent
identity. The Group has moved beyond its legacy, retail-focused
foreign exchange business into integrated money management
solutions for consumers and business. The unification of the brand
simplifies the marketing messaging, optimising customer
acquisition, retention and engagement whilst facilitating improved
cross-selling between the portfolio of products.
The key segments of the Group and brands are as follows:
International Payments Equals Pay
White label payments Equals Connect
Banking Equals Money
Corporate expense control platform Equals Spend
Travel cards and travel money Equals Go
The Group accelerated investment in FY-2019 to improve products,
infrastructure and security. A total of GBP8.3 million was invested
in the year (FY-2018: GBP5.2 million) yielding new platforms for
Equals Pay, Go and Spend and enhanced products for Equals Money.
Whilst the Group will continue to invest, the substantial
re-platforming work is now complete and hence investment costs will
reduce in 2020 and 2021.
To enable this investment and provide seed capital for future
acquisitions, the Group raised GBP15.7 million net of expenses
during the year. This placed the Group in a strong financial
position, which is so crucial as the Group continues to navigate
the ongoing impact of the Covid-19 pandemic.
The Group started FY-2019 with a headcount of 206 and ended it
with a headcount of 341, although this has since reduced to 322.
Greater integration and rationalisation across the two main office
sites (Chester and London) continues and further headcount
reductions are expected from increased efficiencies.
The Group now has a deep pool of active customers across all of
its business segments and its customer-facing objectives are to
deliver exceptional service and grow the customer base, and it is
well positioned to do so.
As reported on 17 March 2020, the current financial year started
strongly and revenues were 33% higher than the comparable period in
FY-2019. Understandably, Covid-19 has had a negative impact on many
customers served by the Group and competitors to it, and Equals has
not been immune to this. The Directors took immediate steps to
conserve cash, elevate its risk controls, and to temporarily shut
our City-based bureaux de change and furlough around one fifth of
the workforce.
The employees have been astonishing in this time; enhanced
technology investments paid off with all staff being able to work
remotely at very short notice, and alongside the Board, staff
voluntarily agreed to a temporary 20% reduction in salary, with the
unifying aim of protecting the business and their own jobs going
forward.
Financial reporting and the control environment
Under the leadership of Richard Cooper who was appointed as
Group CFO in October, the Group has made a step-change in its
financial reporting and control environment with a reorganised
finance function driving significant improvements to performance
data, and robust internal reporting.
Product development
The Group embarked on an ambitious programme to develop and
upgrade a host of its technology across all business lines. This
programme was undertaken, and resourced accordingly, to make a
significant upgrade in product capabilities. The most significant
projects worked on in FY-2019 were:
Infrastructure
-- A complete refresh of the Group's internal IT and Security
infrastructure was completed resulting in robust business
continuity once the Covid-19 crisis occurred;
-- Integration of the Group's reconciliation and international
payments processing Engine MTS into the backend of all the Group's
international payment and card products increased speed and reduced
risk;
-- A real-time cloud-based transaction monitoring platform was
developed for Group use across all its products, this is especially
important in the Faster Payments integration and the future
integration to Citi bank.
Banking
-- A step-change in domestic payment settlement was achieved by
entering the Faster Payment and Bank of England RTGS schemes
directly with the use of a proprietary built 'state-of-the-art'
faster payment gateway;
-- A bulk payments feature was designed and built to support
corporates and payroll companies to process large number of
payments at speed;
-- The user experience was refreshed across the CardOneMoney Apps;
-- A new cards-based loans product sitting alongside the banking
products in conjunction with iwoca was designed and built;
-- The integration of the Group's international payments
functionality directly to existing customers of the CardOneMoney
suite of products was completed.
Corporate Card Platform
-- Re-branding of the Corporate Card Platform to Equals Spend
with improved user experience and the inclusion of new
functionality such as a world class Rewards system;
-- New, cloud based, scalable, card-enabled, money-management
platform designed and built and launched in the USA.
Retail cards
-- A Web and Mobile App Single Multi Currency travel card with
freshly designed and build apps was built and delivered
International Payments
-- An entirely new cloud based international dealing platform
allowing end users to self-serve currency exchange was designed,
built and delivered
-- a multi-currency / multi-card banking product linking the
power of FairFX products with CardOneMoney was delivered
Looking to the future, the talented engineering team have
already made great progress in 2020 in upgrading the FX dealing
platform, and a direct API for customer access.
Current trading and Outlook
In the year up to 26 June 2020, revenues per day averaged
GBP108k (2019: GBP111k per day). Given the impacts of Covid-19,
especially on travel-related products, this is an exceptional
performance and reflects the underlying strength of the Group, its
people, and its products. Concurrently, during the pandemic the
Group has managed its cost base dynamically yielding a reduction of
around GBP250k per month, and payment terms have been renegotiated
with some key suppliers and landlords. We have participated in the
UK Government's furlough scheme along with deferring PAYE
settlements thus, at the date of this report the Group has GBP7.7
million of free cash resources, PAYE deferments of GBP1.5 million,
but a R&D receivable of GBP2.3 million.
On 26 June, a supplier to the Group, Wirecard Card Services
('WDCS') had its licences suspended by the FCA. WDCS is one of
three options the Group has for issuance of prepaid cards. This
suspension does not affect the Group's B2B activities and
disruption is mainly limited to B2C travel cards. The financial
impact to the Group is limited in terms of currently anticipated
results for 2020 and the Group has contingency plans in place
should the situation at WDCS persist.
Revenues have increased since their Covid-19 related lows in
April and I believe that the Group is now well-positioned for
future growth and to take advantage of economic opportunities that
may arise from the current unprecedented situation.
Ian Strafford-Taylor
Chief Executive Officer
28 June 2020
Chief Financial Officer's Report
To aid readers of these financial statements, the Group has
chosen to present the primary statements in an alternative format
and explain the major movements to the prior year along with issues
of accounting impact and judgement. Each principal line in the
P&L is explained. The report is in three sections:
A - Income and Expenditure Account
B - Balance Sheet
C - Cash Flow
The Group made two material acquisitions during the year, Hermex
and Casco. Both of these brought a broader base of revenue and
experienced revenue generating staff to the Equals team, and
without property commitments, which therefore added synergistically
to the Group.
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. A detailed review of the
accounting policies and recognitions have led to some minor
re-profiling between the first and second halves of the year. Where
costs cannot be accurately attributed to each segment, they have
been allocated on the basis of revenue.
A: Income and Expenditure account and its notes
Table 1
In GBPmillions Note 2019 2018
ref
Underlying transaction values
- FX A1 2,117.5 1,783.7
Underlying transaction values
- Banking 769.4 585.5
--------- ---------
2,886.9 2,369.2
--------- ---------
In GBP000's
Revenue A2 30,945 26,092
Less: Variable costs A3 (10,378) (8,551)
--------- ---------
Gross profits A4 20,567 17,541
Less: Marketing* A5 (2,037) (2,768)
--------- ---------
Contribution 18,530 14,773
--------- ---------
Gross expenditure A6 (21,261) (12,823)
Capitalised 8,307 5,251
--------- ---------
Net expenditure (12,954) (7,572)
--------- ---------
R&D credits 3,479 311
Adjusted EBITDA* 9,055 7,512
--------- ---------
*Adjusted EBITDA is defined as Earnings before: depreciation,
amortisation, impairment charges, share option charges, and
separately reported items, but after R&D tax credits
Underlying the results for the year were the following
additional expenditures:
-- Internally generated software (note B3) GBP8.3 million
-- Rebranding costs treated as an exceptional item (note A5)
GBP2.1 million
-- Separately reported items (note A7) GBP1.3 million
Tables 1a and 1b below show the reconciliation from Adjusted
EBITDA to Operating Loss after taxation:
Table 1a -Reconciliation of adjusted EBITDA to (loss)/ profit
after taxation, 2019
GBP000's Notes Operating Finance Taxation Loss after
loss charges
taxation,
2019
Adjusted EBITDA 9,055 - - 9,055
Separately reported
items (3,423) - - (3,423)
Other items:
IFRS 16 depreciation (918) - (918)
IFRS 16 finance
charges - (234) - (234)
Other Depreciation A8 (430) - - (430)
Amortisation A9 (2,831) - - (2,831)
Impairment A12 (4,859) - - (4,859)
Share option charges (123) - - (123)
FX and similar A11 (238) - - (238)
Acquisition costs (478) - - (478)
Deferred taxation - - (928) (928)
Other tax credits - - 35 35
R&D tax credits A13 (3,479) - 3,479 -
---------- --------- --------- -----------
(7,724) (234) 2,586 (5,372)
---------- --------- --------- -----------
Table 1b -Reconciliation of adjusted EBITDA to (loss)/ profit
after taxation, 2018
GBP000's Notes Operating Finance Taxation Profit
profit charges
after
taxation,
2018
Adjusted EBITDA 7,512 - - 7,512
Separately reported
items (3,543) - - (3,543)
Other items:
Depreciation A8 (200) - - (200)
Amortisation A9 (1,318) - - (1,318)
Impairment - - - -
Share option charges (54) - - (54)
FX and similar A11 (20) - - (20)
Acquisition costs (297) - - (297)
Deferred taxation - - 956 956
Other tax credits - - (417) (417)
R&D tax credits (312) - 312 -
---------- --------- --------- -----------
1,767 - 850 2,617
---------- --------- --------- -----------
Note A1 - Underlying transaction values
Underlying transaction values, a non-IFRS measure, increased by
24% to GBP2,887 million (2018: GBP2,369 million). Acquisitions made
in the year contributed 8% to the underlying transaction values,
being GBP233 million.
Underlying transaction values by business line is defined
below:
International payments: funds sold by customers to acquire currency
Cards: funds loaded by customers onto their cards
Cash: funds sold by customers to acquire another currency
Banking: funds deposited by customers
The split of Underlying transaction values by segment is as
below:
Table 2
GBPmillions International Cards Cash Total Banking TOTAL
Payments FX
B2B
2019 1,214 271 - 1,485 604 2,088
2018 766 173 8 947 240 1,187
% Change on year 58% 57% - 57% 152% 76%
B2C
2019 348 161 124 633 166 * 799
2018 482 219 135 836 346 * 1,182
% change on year -28% -26% -9% -24% -52% -32%
TOTALS
------------------ -------- ------- -------- ---------- --------
2019 1,562 432 124 2,117 770 2,887
2018 1,248 392 143 1,783 586 2,369
% change on year 25% 10% -14% 19% 31% 22%
-------------- -------- ------- -------- ---------- --------
Overall, underlying transaction values increased by 22% with B2B
up 76% and B2C down 32%. B2B comprised 72% of the transaction
values, up from 50% in 2018. The Group was putting more emphasis on
B2B before Covid-19 and this strategy has served it well in 2020.
As the retail market was part of the business most exposed to
financial risks posed by Brexit, it is useful to combine the retail
card transaction values with travel money transaction values as an
aide-memoire. The total combined transaction volumes decreased by
19% over 2018.
Payments - Underlying transaction values increased 25% from
GBP1,248 million to GBP1,562 million and included GBP233 million of
Underlying transaction values from acquisitions made in the year.
The organic focus was to de-emphasise lower margin retail
customers, thus, B2C Underlying transaction values decreased by 28%
but organic B2B Underlying transaction values increased by 26% to
GBP967 million (2018: GBP766 million).
Card Underlying transaction values increased by 10% to GBP432
million, with B2B growing by 56% and B2C decreasing by 26%. This
can be attributable to lower travel demands given the Brexit
uncertainties.
The total number of card loads were as follows:
Table 3
Card load data 2019 2018 % change
Total number of card loads in 000's
- B2B 545 403 35%
-B2C 409 487 -16%
------- ------- ---------
-Combined 954 890 7%
------- ------- ---------
Average load size (in GBP)
-B2B GBP484 GBP484 -
-B2C GBP384 GBP393 -2%
------- ------- ---------
- Overall GBP441 GBP434 +2%
------- ------- ---------
Travel Cash - Underlying transaction values decreased for three
principal reasons:
-- Equals exited partnerships that were marginal / loss making
-- The ongoing uncertainty regarding Brexit continued to have negative impact on travel
-- Footfall in one of the London bureaux was adversely impacted
by major roadworks in Q1-2019 preventing reasonable access.
Banking - Underlying transaction values increased by 31% to
GBP769 million (2018: GBP585 million) with B2B showing growth of
152% whilst B2C was down by 52%. B2B comprised 78% of banking
Underlying transaction values (2018: 41%). The increase in
underlying transaction values was largely attributable to the
growth in activity in high-volume merchant cash advances which
attracts a 'per-pence' charge.
Note A2 - Revenue
Overall, revenue grew by 19% to GBP30.9 million in 2019 (2018:
GBP26.1 million). Of this GBP4.9 million increase, GBP1.6 million
was attributable to the accretive acquisitions made in 2019 (Hermex
in August; Casco in November). The total generated from the Group's
focus on B2B grew by 81% to GBP17.3 million (2018: GBP9.5
million).
Table 4 - Revenue
GBP000's
International Cards Cash Total FX Banking TOTAL
Payments & Treasury
B2B
2019 9,000 5,584 - 14,584 2,712 17,295
2018 3,905 3,217 118 7,241 2,306 9,546
% Change on
year 130% 74% - 82% 18% 81%
B2C
2019 2,928 5,710 2,389 11,028 2,622 13,649
2018 4,484 6,780 1,959 13,223 3,323 16,546
% change on
year -35% -16% 22% -17% -21% -18%
TOTALS
2019 11,929 11,294 2,389 25,612 5,333 30,945
2018 8,390 9,997 2,077 20,464 5,629 26,092
% change on
year 42% 13% 15% 25% -5% 19%
International Payments (now rebranded 'Equals Pay')
Organic revenues grew 23% from GBP8.4 million to GBP10.3
million, augmented by a further GBP1.6 million of additional
revenue derived from acquisitions made in the year, thus total
reported revenue rose by 42%.
The acquisitions cemented the strategy to pivot away from B2C
business and thus B2B as a proportion of the total rose from 47% to
75% of the International Payments book.
During 2019, spot trading represented 72% of Underlying
transaction values and 64% of revenue in International Payments,
whilst forward trading represented 28% of Underlying transaction
values and 36% of revenue.
Excluding the white label business acquired through Casco, the
International Payments business averaged 1,000 deals a week from
6,524 customers, generating around 75 basis points per transaction.
This was an average deal just shy of GBP30k.
Cards
Despite a very challenging economic background, overall the
revenue from the card business rose 13% from GBP10.0 million to
GBP11.3 million. The card business has many income components, the
amounts for each are not disclosed for competitive reasons, but
comprise:
- load fees
- out of currency fees
- interchange
- ATM fees
- card interest and in certain cases,
- management fees.
In addition to these components, but, included in the GBP11.3
million (2018: GBP10.0 million), there are financial arrangements
with card issuers and card schemes which generate other income
streams. During 2019, these additional revenue streams amounted to
GBP0.6 million (2018: GBPnil) on a one-off basis and GBP0.9 million
(2018: GBP1.0 million) on a recurring basis (dependent on
underlying trading volumes).
B2B components (mainly 'Equals Spend', the Corporate expense
management product), rose by 74% to GBP5.6 million and now
comprises 49% of the book, up from 32% in 2018.
The retail card product declined in the year by 16% to GBP5.7
million and the business was clearly impacted by Brexit related
uncertainty and reduced leisure travel.
Over 120,000 B2C customers loaded an average of GBP1,300 with an
average load margin of 1.76%, whilst 52,000 B2B customers loaded an
average of GBP5,000 with a 0.39% margin.
Travel cash
Despite a fall in Underlying transaction values in the cash
business, revenues rose by 15% to GBP2.4 million through three main
initiatives:
-- Margins in-store were increased
-- The online pricing strategy changed, from being "top" of the
comparison websites to "competitive," resulting in lower volumes
but higher gross margins
-- The promotion of partnerships (on revenue share agreement) to
increase margins to become more profitable.
Combining retail card transactional revenue* with cash as
'travel money' then the total combined revenue fell 7% to GBP8.1
million (2018: GBP8.7 million).
*excluding rebate allocations
Banking (now rebranded 'Equals Money'), and Treasury
Revenues decreased in the year by 5% as the business pivoted
away from sub-prime retail to focus on corporates. Indeed, B2B
revenue rose by 17% and now exceeds revenue from retail
customers.
An average of 4,500 B2B customers generated a combined average
revenue per day of GBP10k, whilst the lower margin B2C segment had
around 10,000 customers generating a similar daily revenue.
Included in this segment is interest earned on house funds.
Given the low interest rates and certain regulatory restrictions
governing the deposits on which the Group can earn interest, the
Group earned a total of GBP150k in interest during the year (2018:
GBP145k). At 31 December 2019 the Group had fiduciary
responsibility for a total of GBP52.4 million in bank accounts not
included in the Group's consolidated balance sheet (31 December
2018: GBP48.0 million). Interest income has been included in the
segmental revenue where earned.
Note A3 - Variable costs
Variable costs include those of a transaction nature across all
business lines along with direct marketing costs or revenue shares
(CPA and affiliate commissions), and broker remuneration paid by
way of revenue related commissions plus associated employer
national insurance. In addition, the card business suffers
chargebacks and compensation payments arising from disputes, which,
for customer satisfaction, the Group might choose to shoulder
itself.
The principal components of the variable costs are shown
below:
Table 5
GBP000's International Cards Cash Banking TOTAL
Payments
2019
Transaction costs*, issuance
costs and bank charges 811 3,961 1,036 1,388 7,196
Direct marketing, affiliate
commissions 1,053 318 - 17 1,388
Sales commissions 1,674 113 7 - 1,794
-------------- ------ ------ -------- -------
3,538 4,392 1,043 1,405 10,378
-------------- ------ ------ -------- -------
*including chargebacks and
compensation payments .
2018
Transaction costs*, issuance
costs and bank charges 747 3,495 857 1,336 6,435
Direct marketing, affiliate
commissions 333 484 - 28 845
Sales commissions 1,200 71 - - 1,271
-------------- ------ ------ -------- -------
2,280 4,050 857 1,364 8,551
-------------- ------ ------ -------- -------
Note A4 - Gross profit and margin
Gross profits as measured by the Group are revenues, less
variable costs.
Table 6
GBP000's
International Cards Cash Banking TOTAL
Payments
2019
Gross profit 8,391 6,902 1,346 3,928 20,567
GP margin % 42% 61% 56% 74% 66%
2018
Gross profits 6,110 5,947 1,220 4,265 17,541
GP margin % 73% 60% 59% 76% 67%
Margins by vertical remained broadly the same across both years,
although the acquisition of Casco in November 2019 brought higher
international payment revenues at a lower aggregate margin owing to
its relationships with affiliates, particularly the white-label
business now rebranded 'Equals Connect'. Gross profits on the card
business was positively impacted by some of the non-transactional
revenue streams earned in the year.
Note A5 - Marketing and rebranding
Other than cost per acquisition expenditure ("CPA") and
affiliate marketing spend which has been shown within variable
costs, the Group has both rebranded (as Equals) in the year and
continued its other marketing initiatives. The total cost of this
expenditure, including that part which has been categorised as an
exceptional item below Clean EBITDA is shown below:
Table 7
GBP000's 2019 2018
Marketing 2,037 2,768
Rebranding 2,053 308
-------- ------
Total 4,090 3,076
Less: treated as Exceptional item (2,053) (308)
-------- ------
Net marketing cost 2,037 2,768
-------- ------
The split of marketing by business unit* was as follows:
Cards and travel cash 1,389 1,791
Banking 571 946
Corporate and central 76 31
------ ------
2,037 2,768
------ ------
*the International Payments business relies on affiliate
commissions which are included in variable costs.
As was well trailed during 2019, the Group embarked on a major
project to re-brand the businesses into one umbrella brand
'EQUALS'. Thus, resources were deployed and invested in this as
opposed to traditional marketing. The cost of this investment
project has been taken to Exceptional items. The project commenced
in Q4-2018.
Note A6 - Expenditure analysis (other than marketing)
The principal components of expenditure as appearing in the
accounts were as follows:
Table 8
GBP000's
Less Less Sub-total Less
2019 Gross Separately IFRS 16 Expenditure Net
reported transition Capitalised
items
Staff costs 18,497 (895) - 17,602 (7,801) 9,801
Property,
insurance
& office expenses 2,372 (151) (1,152) 1,069 (204) 865
Professional
fees 1,283 (324) - 959 - 959
IT & telephone 1,180 - - 1,180 (302) 878
Travel and
similar 451 - 451 - 451
TOTALS 23,783 (1,370) (1,152) 21,261 (8,307) 12,954
-------------------- ------- ----------- ------------ ---------- ------------- -------
Less: Less:
2018 Gross Separately Sub-total Expenditure Net
reported Capitalised
items
Staff costs 13,151 (2,856) 10,295 (5,251) 5,044
Property,
insurance
& office expenses 1,230 (76) 1,154 - 1,154
Professional
fees 709 (217) 492 - 492
IT & telephone 667 (37) 630 - 630
Travel and
similar 301 (49) 252 - 252
TOTALS 16,058 (3,235) 12,823 (5,251) 7,572
======= =========== ========== ============= ======
Staff costs comprise the largest gross expenditure with around
2/3(rd) based in the London properties and 1/3(rd) in Chester,
although the Group is consciously moving more transactional related
work to Chester.
Gross Staff costs (which include employees, contractors,
recruiting and training costs increased to GBP18.5 million with
GBP7.8 million capitalised and GBP0.9 million shown as a separately
reported item (see note A7). (2018: GBP13.2 million with GBP5.2
million capitalised and GBP2.9 million taken as shown as a
separately reported item. The increase in costs principally
reflects:
-- well-publicised initiatives to invest in new product, new technical capabilities and similar
-- further GBP1.3 million people on-boarded from the acquisitions made in the year
-- GBP895k treated as an exceptional item included
o GBP530k invested in the rebranding project
o GBP337k incurred on Group restructuring and the reduction of
the number of companies in the Group
GBP7,801k of these staff costs have been capitalised (2018:
GBP5,251k), being related to investment in internally capitalised
software projects, the most significant of which were:
Cost in GBP'000s Product line
Retail card web and mobile applications 1,172 Equals Go (retail card)
Serve-self payments application 863 Equals Pay (international
payments)
Web and mobile platform for corporate 724 Equals Spend (corporate
expenses expense platform)
Technical infrastructure 643 All products
Reconciliation and accounting 597 Equals Pay (international
payments)
The Group started 2019 with a total headcount of 206 (155 of
staff on its payroll and a further 51 contractors); the Group ended
the year with 341 (328 employees and 13 contractors) of which 29
staff joined from the businesses acquired during the year. At 29
June 2020, the number of employees on the June 2020 payroll was 315
of which 65 were furloughed. There were a further 7
contractors.
At 31 December 2019 the Group comprised:
-- five male Board members
-- senior managers of which nine were male and two were female
-- employees of which were 222 were male and 82 were female
Property costs increased during the year to a gross expense of
GBP2,194k (2018: GBP1,230k) reflecting the investment in new London
office leases in Vintners Place. The impact of IFRS 16 is a credit
of GBP1,152k, and expected to be GBP1.2 million in 2020.
Professional fees , totalled GBP1,283k (2018: GBP1,077k) before
exceptional items of GBP323k and includes the costs of being on AIM
in the public markets along with audit, legal etc. Taken to
exceptional items were:
-- GBP92k to anti client poaching litigation (successfully resolved);
-- GBP136k incurred on group restructuring costs; and,
-- GBP95k on the rebranding project.
IT & telephone costs rose to GBP1,180k before exceptional
items of GBP302k, (2018: GBP667k) reflecting the expansion of the
trading volumes and the preparation for Faster Payments which went
live in February 2019.
Travel costs - these were higher than in 2018 and reflected the
initiatives to prepare for the USA product launch, on our corporate
expense platform.
R&D credits -Of the GBP3,479k R&D credit, GBP2,330k
remains receivable.
Change in accounting policy
During the year, the Group changed its accounting policy for
research and development tax credits (R&D tax credit) which had
previously been accounted for under IAS 20 Accounting for
Government Grants and Disclosure of Government Assistance . The
Group believes that accounting for the R&D tax credit is more
appropriate under IAS 12 Income Taxes which better reflects the
substance and benefit of the credit. Under IAS 20 Accounting for
Government Grants and Disclosure of Government Assistance , the
R&D tax credit, was deducted from administration expenses on a
systemic basis. Under IAS 12 Income Taxes the R&D tax credit is
included within tax credit / expense in the year that the claim
relates to.
A change in accounting policy requires a retrospective
adjustment and consequently the comparatives amounts have been
restated. In 2018 an adjustment of GBP311k has been deducted from
administrative costs and a corresponding amount included within tax
credit. There is no adjustment to earnings per share or retained
earnings. In 2019, GBP3.4 million has been recognised as tax
income. No periods prior to 2018 have been affected by the change
in accounting policy.
Note A7 - Separately reported items
As the Group repositions itself from a B2C travel money operator
in cash and card form to a B2B focused payments group across card,
FX and banking, and as it increases its governance and corporate
reporting and control functions, it has been inevitable that
material 'change' costs have been incurred. A consolidated
statement of these is as below showing the source and destination
of costs across 2019 and 2018:
Table 9
GBP000's
2019 Rebranding Reorganisations Product Litigation Total
development & other
People 530 337 - 28 895
Property - 106 - - 106
Professional fees 96 136 - 92 324
IT & telephone - - - - -
Other costs 46 - - - 46
----------- ---------------- ------------- ----------- --------
672 579 - 120 1,371
Marketing 2,053 - - - 2,053
----------- ---------------- ------------- ----------- --------
Total, separately
reported items 2,725 579 - 120 3,423
----------- ---------------- ------------- ----------- --------
2018
People 282 1,169 1,405 - 2,856
Property - 76 - - 76
Professional fees - 217 - - 217
IT & telephone - 37 - - 37
Other costs - 49 - - 49
----------- ---------------- ------------- ------------- ------
282 1,548 1,405 - 3,235
Marketing 308 - - - 308
----------- ---------------- ------------- ------------- ------
Total, separately
reported items 590 1,548 1,405 - 3,543
----------- ---------------- ------------- ------------- ------
Note A8 - Depreciation of tangible fixed assets
Further investment in the technical hardware and infrastructure
of the Group amounting to GBP1.5 million (2018: GBP1.0 million,
including GBP300k acquired in business combinations) during the
year led to an increase in depreciation to GBP430k (2018: 200k).
Assets are depreciated over their expected useful lives:
Leasehold improvements 10 years
Fixtures and Fittings 3-5 years
Plant and Machinery 3-5 years
Note A9 - Amortisation of intangible assets
The further capitalisation of expenditure, mainly staff costs,
relating to product development and similar, was GBP8.3 million
during the year (2018: GBP5.3 million). This has led to
amortisation increasing to GBP2.8 million (2018: GBP1.3
million).
Intangibles assets are amortised over their expected useful
lives between 3 - 10 years.
Note A10 - Transition to IFRS 16
IFRS 16, Leases adopted from 1 January 2919, replaces operating
and finance leases with a single lessee accounting model. As a
result, the Group has brought operating lease assets and
liabilities onto the Balance Sheet, resulting in a depreciation
charge of GBP0.9 million and a finance charge of GBP0.2 million
being recorded in 2019. The 2018 comparatives have not been
restated.
Note A11 - Foreign Exchanges losses and central Interest
expense
The Group does not carry material foreign exchange risks,
however under IFRS9 the Group is required to fair-value foreign
exchange forward contracts entered into with customers but
backed-to-back with liquidity providers. The total of FX losses
reported were GBP230k (2018: GBP20k), which includes the fair-value
adjustment.
Interest expense of GBP10k arises from a negative interest
charge on Euro deposits which are kept to a minimum.
Note A12 - Impairment of cash generating units
CardOneBanking was acquired in 2017 for a total of GBP17.1
million and has undergone an impairment review in line with IAS
36.
For the updated 2019 forecast outlook, management took a more
conservative view on the future revenue growth rates for the
Banking CGU : 5% YoY (2018: 15% YoY), which resulted in the value
in use calculation (the discounted future cashflows) for the
Banking CGU being lower than carrying value, resulting in an
impairment of GBP4.9 million.
The more conservative forecast, was a result of the strategic
decision in early 2019 to pivot away from the sub prime retail book
(revenue down 21% in 2019 on prior year) to the corporate book
(revenue up 18% in 2019 on prior year) and the subsequent impact on
the short term revenue growth overall. Investments in the corporate
offering to date (lending, direct faster payments, improved UX) and
in the pipeline were not given as significant weight on the growth
rate as in the previous forecasts as a more conservative view was
taken. For example, B2B faster payment opportunities were not
factored in
Note A13 - Taxation
The Group recorded a tax expense of GBP1.1 million for the year
(2018 tax credit: GBP0.5 million). This tax charge arises from
accounting for deferred tax. At 31 December 2019 the Group retained
GBP10.9 million of tax losses which are capable of being utilised
going forward in future years. The Group does not anticipate paying
corporation tax for at least 24 months.
The Group makes claims for R&D tax credits. Given the
materiality of the qualifying expenditure, the Group has changed
its accounting policy for recognising this credit from:
-- IAS20 Accounting for Government Grants and Disclosure of Government Assistance, to
-- IAS12 Income Taxes
A change in accounting policy requires a retrospective
adjustment and consequently the comparative amounts have been
restated. In 2018 an adjustment of GBP311k has been deducted from
administrative costs and a corresponding amount included within tax
credit. There is no adjustment to earnings per share or retained
earnings. In 2019, the GBP3.4 million has been recognised as tax
income. No periods prior to 2018 have been affected by the change
in accounting policy.
B. Balance Sheet and its notes
The Balance Sheet as presented below is presented in an
alternative format than the Consolidated Statement of Financial
Position' in the financial statements.
Table 10
31 December 2019 31 December 2018
In GBP000's Notes On Balance Off balance On Balance Off Balance
sheet sheet sheet sheet
(memo (memo
only) only)
Non-current assets*
Net book value b.fwd 28,050 17,787
Additions - tangible fixed
assets 1,452 671
Additions - internally
capitalised software 8,307 5,251
Additions - other purchases
of intangibles 806 508
Additions - through business
combinations 4,801 5,352
Depreciation in the year (430) (200)
Amortisation in the year (2,831) (1,319)
Impairments in the year (4,859) -
----------- -----------
Net book value c.fwd 35,296 28,050
----------- -----------
Cash resources
Cash at bank and in hand
- free funds 10,913 - 7,509 -
Cash at bank and in hand
- regulatory deposits 352 52,441 351 48,026
----------- ------------ ----------- ------------
11,265 52,441 7,860 48,026
Regulatory deposits with
liquidity providers 3,717 - 1,457 -
----------- ------------ ----------- ------------
Sub-total, working liquid B5, Table
funds 13 14,982 52,441 9,317 48,026
----------- ------------ ----------- ------------
Other current assets and
liabilities*
Card stock and other inventories B6 264 - 287 -
Trade and other debtors B7 3,374 - 1,961 -
Accrued income B8 1,723 - 1,332 -
Net derivative financial
assets B9 372 - 603 -
Accrued R&D credit B10 2,535 - 1,261 -
Trade payables, other payables
and accruals B11 (5,667) - (5,543) -
Retention and deferred
consideration on acquisitions
Customer balances C3 (1,211) - -
(1,071) (52,441) (48,026)
----------- ------------ ----------- ------------
319 (52,441) (99) (48,026)
----------- ------------ ----------- ------------
IFRS 16 Leases net balance (294) - - -
Net deferred tax (liability)/asset
* (788) - 995 -
Shareholder funds 49,517 - 38,266 -
----------- ------------ ----------- ------------
*all components of deferred taxation are shown here as 'net
deferred tax (liability)/asset'
A bridge from 31 December 2018 to 31 December 2019 can be
explained as follows:
Table 11
GBP 000's 2019 2018
Shareholder funds at 1 January 38,266 35,045
Add: Capital raised during the 15,430 -
year for cash
Add: Shares issued in pursuance 1,318 -
of acquisitions
Add: Shares issued against deferred 130 -
consideration
Less: Result for the year (table
1a) (5,372) 2,618
Non-cash, share based payments
through reserves (403) 603
Non-controlling interest 118 -
Other movements in reserves 30 -
-------- -------
Shareholder funds at 31 December 49,517 38,266
======== =======
The funds attributable to customers are shown as memorandum
item. Consistent with 2018, these funds, held on behalf of
customers of both CardOneBanking and International Payments have
been excluded from the balance sheet following legal advice
received in connection with the risks and rewards to the Group.
Nevertheless, these funds remain within the fiduciary obligations
of the Directors and are included in the table above as an
'aide-memoire'. It is notable that these balances grew by 9.2% to
GBP52.4 million up from GBP48.0 million at 31 December 2018. This
reflects the growth of the underlying use of the Group's
platforms.
Note B1 - Tangible fixed assets
The Group incurred costs of GBP1.03 million as it upgraded both
the London and Chester sites. The London office was refurbished and
upgraded in the year resulting in GBP838k being invested and in
November, the Chester office was relocated resulting in GBP195k of
expenditure. A further GBP449k was spent on IT and office
equipment.
Note B2 - Intangibles acquired through acquisitions
Hermex was acquired for GBP2.0 million of which GBP1.18 million
has been recognised as goodwill. Casco was acquired for GBP2.2
million with GBP1.7 million paid at acquisition. Goodwill of GBP1.2
million has been recognised.
Note B3 - Internally capitalised software
The Group continued its high levels of investment at
substantially lower cost than would have been incurred if it had
outsourced the development. In Banking, the Group gained 'Faster
Payments' access in February, and the costs incurred on this
project were GBP132k (2018: GBP279k).
Other notable developments included:
Cost in GBP'000s Product line
Retail card web and mobile 1,172 Equals Go (retail card)
applications
Serve-self payments application 863 Equals Pay (international
payments)
Web and mobile platform for 724 Equals Spend (corporate
corporate expenses expense platform)
Technical infrastructure 643 All products
Reconciliation and accounting 597 Equals Pay (international
payments)
Note B4 - Externally purchased other intangible assets
GBP0.8 million was incurred on externally acquired assets in the
year (2018: GBP0.5 million) of which GBP0.3 million related to
trademarks and GBP0.5 million in relation to software development.
Principal suppliers include Comparison Works; UTSP; Vocalink and
Access System.
Note B5 - Liquid funds
Daily volatility of funds from customers and liquidity providers
makes it more meaningful to aggregate these balances with house
funds and regulatory deposits for the purpose of explanation here.
The combined total at 31 December 2019 was GBP15 million or GBP8.4
pence per share (208: GBP9.3 million, 6 pence per share). Greater
detail on the cash flows are included in section C to this
report.
Note B6 - Card stock
Card Stock refers to the cost of production of a prepaid debit
card, the costs principally being card plastic and the chips
contained within the card plastic. Card stock is ordered in bulk
quantities and the unit cost of a card is charged to the income
statement when a card is issued to a customer on successful
registration. The card stock is kept securely at the card
manufacturer.
Note B7 - Trade and other debtors
Debtors principally relate to amounts owed by card and cash
product financial service providers such as banks and other
financial institutions (GBP1.5 million; 2018: GBP1.7 million) and
supplier prepayments (GBP1.4 million; 2018: GBP1.6 million). Trade
debtors from the travel cash business corporate customers were
GBP0.9 million.
Note B8 - Accrued income
Accrued income was [GBP1.7] million (2018: GBP1.3 million) and
arises principally from card schemes.
Note B9 - Derivative financial assets and liabilities
These principally comprise the embedded profit value of forward
trades. At the balance sheet date there were 1,021 of forward
contracts with an aggregate gross value of GBP102 million and a net
value of GBP0.5 million (2018: GBP41.5 million gross, (GBP0.06
million net)).
Of the forward contracts, 45% by value were GBP/USD and 47% by
value were GBP/EUR.
Note B10 - Accrued R&D credits
The Group makes elections to HMRC to recover the portion of
expenditure entitled to be reclaimed. As a rule of thumb,
qualifying R&D expenditure is multiplied by 230% to create a
taxable expense and then that expense is surrendered, subject to
available tax losses in the year, at 14.5% to HMRC to create a
receivable R&D tax credit. The cash impact of this is normally
received within 12 months of the year end following submission of
the tax returns. Of the 2018 claim of GBP1.3 million, GBP1.1
million was received in 2019 with a further GBP0.2 million received
in January 2020.
Note B11 - Trade creditors and accruals
Trade creditors include costs relating to properties, office
equipment, software subscriptions, marketing, professional fees,
affiliate commissions and contractors. Other payables include PAYE
of GBP553k (2018: GBP429k), staff commissions of GBP255k (2018:
GBP120k) and affiliate commissions of GBP70k (2018: GBP28k).
Note B12 - Non-Controlling Interest
GBP119k has been recognised within Equity as a non-controlling
interest and GBP29k recognised in the Income and Expenditure
account (2018: GBP nil). This arises from the minority stake
retained by the shareholders of Casco Connect Limited (now renamed
Equals Connect Limited), the white-label International Payments
product.
Note B13 - Issued share capital
The table below shows the changes in issued share capital during
2019:
Table 12
Date Number Event Gross Net cash
of shares proceeds received
(GBP) (GBP)
1 January
2019 155,368,259
Shares issued to Crystal Amber
through warrant exercise following
their share subscription agreement
in 2016. Warrant price, 27.0 pence
27 March 2019 7,500,000 per share 2,025,000 2,025,000
Deferred consideration of Q Money
Limited issued at 43.5 pence per
16 May 2019 1,149,424 share 499,999 -
Share options exercised at 36.44
29 May 2019 300,000 pence 109,320 105,120
Subscription from founder of Hermex
9 August 2019 851,063 at 117.5 pence per share 1,000,000 -
Share options exercised at 29.75
9 August 2019 33,333 pence 9,917 9,917
20 August Share placing at 110.0 pence before
2019 12,727,000 expenses of GBP825,305 13,999,700 13,174,395
Shares issued on open offer under
Excess Application facility at
4 September 110.0 pence per share before expenses
2019 246,173 of GBP39,950 270,790 230,840
22 November Issue of shares following acquisition
2019 377,666 of Casco at 84.4 pence per share 318,750 318,750
11December Share options exercised at 29.75
2019 50,000 pence per share 14,875 14,875
------------- -----------
31 December
2019 178,602,918 18,248,350 15,878,897
------------- ----------- -----------
1 January
2019 155,3685,259
22,851,326 Cash raised from equity issues 15,748,985
383,333 Cash raised from share option exercise 129,912
------------- -----------
31 December
2019 178,602,918 15,878,897
------------- -----------
C. Cash flow and notes
The table below aggregates the movements across Bank and
Liquidity providers:
Table 13
GBP 000's 2019 2019 2018 2018
Adjusted EBITDA (Table 1) 9,055 7,513
Less: R&D rebate accrued for
current year (2,535) (1,261)
Less: IFRS 16 impact (1,152) -
Less: Exceptional items (Table
9) (3,903) (3,840)
Add / (Less): Working capital
absorption and similar 2,211 933
-------- --------
(5,379) (4,168)
Less: Internally capitalised
software (table 8) (8,307) (5,251)
Less: Purchase of other intangible
assets (806) (508)
-------- --------
(9,113) (5,759)
Less: Purchase of property,
plant and equipment (1,452) (671)
------------ ------------
(6,889) (3,085)
Add: Cash raised from equity 15,749 -
issues (Note C1)
Add: Cash raised from share 130 -
options (Note C2)
-------- --------
15,879 -
Less: Cash consideration for
acquisitions net of cash acquired
(Note C3) (3,325) (6,564)
NET CASH FLOWS 5,665 (9,649)
Balance at 1(st) January 9,317 *18,966
Balances at 31 December 14,982 9,317
------------ ------------
Comprising:
Cash at bank and in hand including
regulatory deposits 11,265 7,860
Balances with liquidity providers 3,717 1,457
14,982 9,317
------------ ------------
Shares in issue 178,602,918 155,368,259
Amount per share 8.4 pence 6.0 pence
------------ ------------
*The composition of balances at 31 December 2017 was:
Cash at bank and in hand including regulatory
deposits 17,803
Balances with liquidity providers 1,163
18,966
-------
Note C1 - Cash from equity raise
As shown in note B12, GBP15.8 million net of expenses, was
raised from the issue of shares other than from employee share
options exercised during the year.
Note C2 - Cash from the exercise of share options
A total of 383,333 of share options were exercised by employees
during the year generating gross funds of GBP134,112 and after
costs of GBP4,200 the net received was GBP129,912.
Note - C3 - Acquisitions during the year
The Group made two material acquisitions during the year:
- On 9 August 2019 it was announced that the Group would acquire
the trade and assets of Hermex International Limited and integrate
it into the Group's International Payments business. The initial
cash consideration paid was GBP0.7 million. A key executive who
joined the Group agreed to subscribe for 851,063 ordinary shares at
the prevailing price of 117.5 pence, a total subscription of
GBP1,000,000. At the balance sheet date, GBP300,000 of deferred
consideration was outstanding and this was settled in Q1-2020.
- On 19 November 2019 it was announced that the Group would
acquire Casco Financial Services Limited and integrate it into the
Group's International Payments business. The initial cash
consideration was GBP1.406 million (with GBP400k being subject to a
retention); augmented by the issue of 377,666 ordinary shares of 1
pence at 84.4 pence; and a further contingent consideration of
GBP510,626. At the balance sheet date GBP400,000 of deferred
consideration and GBP510,626 contingent consideration was
outstanding. As part of the acquisition, one company acquired has a
minority interest of 48.19%. The results from this shown within
non-controlling interests.
Historic acquisition
On 20 February 2018 the Group acquired City Forex Limited. The
total paid for the company was GBP9,216,552, but GBP2,652,718 of
cash was left on its balance sheet so the net cash outflow
(excluding professional fees) was GBP6,563,834.
Post Balance Sheet Event - Wirecard AG
The Group has a financial relationship with Wirecard Card
Solutions Limited ("WCSL"), a wholly owned subsidiary of Wirecard
AG. WCSL is regulated by the Financial Conduct Authority (FCA)
under its electronic money licence and provides card issuing
services to the Group.
Wirecard AG, the parent of WCSL filed for insolvency on 25 June
2020 and so subsequently the FCA took the step to freeze WCSL's
regulated trading activities on the 26 June 2020 in order to
protect customer funds held by WCSL in trust accounts with deposit
taking banks and as a consequence has temporarily paused its card
issuing services, including cards issued to the Group's customers.
The Group's receivables position as at 31 December 2019 was GBP665k
and at the date of this statement was GBP359k.
In preparing its going-concern models, the Group did extensive
scenario planning and included in this analysis a scenario where
significant trade receivables were not collected. Card deposits are
not on the Balance Sheet of Equals Group plc, they are held with
Wirecard Card Solutions and ring-fenced under the FCA rules with
Tier-1 banks.
Considering the above information, the Group has no reason to
believe that WCSL is insolvent and therefore there is no
requirement to impair the receivable outstanding.
Richard Cooper
Chief Financial Officer
28 June 2020
CONSOLIDATED statement OF COMPREHENSIVE INCOME
FOR THE YEARED 31 DECEMBER
2019 2018 2018
(Restated)
Note GBP GBP GBP
Gross value of currency
transactions sold 2,117,459,669 1,783,710,215 1,783,710,215
--------------
Revenue on currency
transactions 25,611,521 20,463,645 20,463,645
Banking revenue 5,333,203 5,628,747 5,628,747
-------------- -------------- --------------
Revenue 2 30,944,724 26,092,392 26,092,392
Direct costs 2 (10,378,265) (8,551,315) (5,605,691)
-------------- -------------- --------------
Gross profit 2 20,566,459 17,541,077 20,486,431
Administrative expenses (20,123,517) (14,156,777) (16,790,975)
Amortisation charge (2,830,587) (1,318,649) (1,318,649)
Impairment charge (4,858,898) - -
Acquisition expenses (478,476) (297,484) (297,484)
-------------- -------------- --------------
Total operating expenses (28,291,478) (15,772,910) (18,407,108)
-------------- -------------- --------------
Operating (loss) / profit (7,725,019) 1,768,167 2,079,323
Finance costs (233,564) - -
-------------- -------------- --------------
(Loss) / profit before tax 3 (7,958,583) 1,768,167 2,079,323
Tax credit 5 (2,586,885) 849,499 538,343
-------------- -------------- --------------
(Loss) / profit and total
comprehensive (expense)
/ income for the year (5,371,698) 2,617,666 2,617,666
============== ============== ==============
Loss is attributable to:
Owners of Equals Group PLC (5,342,074) 2,617,666 2,617,666
Non-controlling interest (29,624) - -
-------------- -------------- --------------
(Loss) / Earnings per share 4
Basic (3.20) 1.68 1.68
Diluted (3.12) 1.64 1.64
============== ============== ==============
All income and expenses arise from continuing operations. There
are no differences between the profit for the year and total
comprehensive income for the year, hence no Statement of Other
Comprehensive Income is presented.
During the year, the Group changed its accounting policy for
research and development tax credits (R&D tax credit) which had
previously been accounted for under IAS 20 Accounting for
Government Grants and Disclosure of Government Assistance . The
Group believes that accounting for the R&D tax credit is more
appropriate under IAS 12 Income Taxes which better reflects the
substance and benefit of the credit. Under IAS 20 Accounting for
Government Grants and Disclosure of Government Assistance , the
R&D tax credit, was deducted from administration expenses on a
systemic basis. Under IAS 12 Income Taxes the R&D tax credit is
included within tax credit / expense in the year that the claim
relates to. A change in accounting policy requires a retrospective
adjustment and consequently the comparatives amounts have been
restated. In 2018 an adjustment of GBP311,156 has been deducted
from administrative costs and a corresponding amount included as a
tax credit. There is no adjustment to earnings per share or
retained earnings. In 2019, the GBP3,478,997 has been recognised as
a tax credit. No periods prior to 2018 have been affected by the
change in accounting policy.
CONSOLIDATED and company statement of financial position
AS AT 31 December
Group Company
2019 2018 2019 2018
Note GBP GBP GBP GBP
ASSETS
Non-current assets
Property, plant and
equipment 1,972,818 941,826 - -
Right of use assets 6 6,948,876 - - -
Intangible assets and
goodwill 33,324,137 27,107,873 - -
Deferred tax assets 2,438,859 2,895,642 238,369 -
Investments - - 38,892,060 38,725,451
------------- ------------ ------------ -----------
44,684,690 30,945,341 39,130,429 38,725,451
------------- ------------ ------------ -----------
Current assets
Inventories 263,971 286,713 - -
Trade and other receivables 11,347,749 7,150,750 20,138,017 4,907,704
Derivative financial
assets 4,560,780 1,181,892 - -
Cash and cash equivalents 11,265,266 7,860,368 - -
------------- ------------ ------------ -----------
27,437,766 16,479,723 20,138,017 4,907,704
------------- ------------ ------------ -----------
TOTAL ASSETS 72,122,456 47,425,064 59,268,446 43,633,155
============= ============ ============ ===========
EQUITY AND LIABILITIES
Equity attributable
to equity holders
Share capital 1,786,029 1,553,682 1,786,029 1,553,682
Share premium 53,003,077 35,858,770 53,003,077 35,858,770
Share based payment
reserve 1,345,234 1,748,105 957,757 835,148
Merger reserve 8,395,521 8,395,521 2,979,438 2,979,438
Contingent consideration
reserve 207,100 543,172 207,100 543,172
Retained (deficit) /
earnings (15,338,881) (9,832,880) (1,624,991) 240,954
------------- ------------ ------------ -----------
Equity attributable
to owners of Equals
Group PLC 49,398,080 38,266,370 57,308,410 42,011,164
Non-controlling interest 118,826 - - -
------------- ------------ ------------ -----------
49,516,906 38,266,370 57,308,410 42,011,164
------------- ------------ ------------ -----------
Non-current liabilities
Lease liabilities 6 6,431,578 - - -
Deferred tax liabilities 3,226,586 1,900,607 - -
------------- ------------ ------------ -----------
9,658,164 1,900,607 - -
------------- ------------ ------------ -----------
Current liabilities
Trade and other payables 7,947,364 6,679,131 1,960,036 1,621,991
Lease liabilities 6 811,628 - - -
Derivative financial
liabilities 4,188,394 578,956 - -
------------- ------------ ------------ -----------
12,947,386 7,258,087 1,960,036 1,621,991
------------- ------------ ------------ -----------
TOTAL EQUITY AND LIABILITIES 72,122,456 47,425,064 59,268,446 43,633,155
============= ============ ============ ===========
CONSOLIDATEd and company STATEMENT OF changes in equity
For the year ended 31 December
Group Share Share Share Retained Merger Contingent Total Non-controlling Total
capital premium based (deficit) reserve consideration attributable interest
payment / earnings reserve to owners
of Equals
Group PLC
GBP GBP GBP GBP GBP GBP GBP GBP GBP
Attributable to the owners of Equals Group PLC
--------------------------------------------------------------------------------------
At 1 January
2018 1,553,682 35,858,770 1,144,832 (12,450,546) 8,395,521 543,172 35,045,431 - 35,045,431
Profit for the
year and total
comprehensive
income - - - 2,617,666 - - 2,617,666 - 2,617,666
Share based
payment
charge - - 603,273 - - - 603,273 - 603,273
--------- ---------- --------- ------------ --------- ------------- ------------ --------------- -----------
At 31 December
2018 1,553,682 35,858,770 1,748,105 (9,832,880) 8,395,521 543,172 38,266,370 - 38,266,370
Acquisition of
subsidiary with
non-controlling
interest - - - - - - - 148,450 148,450
Loss for the
year
and total
comprehensive
income - - - (5,342,074) - - (5,342,074) (29,624) (5,371,698)
Share based
payment
charge - - 122,609 - - - 122,609 - 122,609
Movement in
deferred
tax on
share-based
payment charge - - (525,480) - - - (525,480)
Share issues
in
year 232,347 17,144,307 - (163,927) - (336,072) 16,876,655 - 16,876,655
Capital reserve - - - - - - - - -
movement
At 31 December
2019 1,786,029 53,003,077 1,345,234 (15,338,881) 8,395,521 207,100 49,398,080 118,826 49,515,906
========= ========== ========= ============ ========= ============= ============ =============== ===========
CONSOLIDATEd and company STATEMENT OF changes in equity
For the year ended 31 December
Company Share Share Share Retained Merger Contingent Total Non-controlling Total
capital premium based (deficit) reserve consideration attributable interest
payment / earnings reserve to owners
of Equals
Group PLC
GBP GBP GBP GBP GBP GBP GBP GBP GBP
At 1 January
2018 1,553,682 35,858,770 781,383 (1,123,092) 2,979,438 543,172 40,593,353 - 40,593,353
Profit for the
year and
total
comprehensive
income - - - 1,364,046 - - 1,364,046 - 1,364,046
Share based
payment
charge (note
22) - - 53,765 - - - 53,765 - 53,765
--------- ---------- ------- ----------- --------- ------------- ------------ --------------- -----------
At 31 December
2018 1,553,682 35,858,770 835,148 240,954 2,979,438 543,172 42,011,164 - 42,011,164
Loss for the
year
and total
comprehensive
income - - - (1,702,018) - - (1,702,018) - (1,702,018)
Share issues
in
year 232,347 17,144,307 - (163,927) - (336,072) 16,876,655 - 16,876,655
Share based
payment
charge (note
22) - - 122,609 - - - 122,609 - 122,609
At 31 December
2019 1,786,029 53,003,077 957,757 (1,624,991) 2,979,438 207,100 57,308,410 - 57,308,410
========= ========== ======= =========== ========= ============= ============ =============== ===========
Consolidated statement of cash flows
Group
2019 2018
GBP GBP
(Loss) / profit for the year (5,371,698) 2,617,666
Cash flows from operating activities
Adjustments for:
Interest on finance lease 233,564 -
Depreciation 1,347,872 200,123
Amortisation 2,830,587 1,318,649
Impairment 4,858,898 -
Share based payment charge 122,609 53,765
(Increase) / decrease in deferred
tax asset on share-based payment (525,480) 549,508
Increase in trade and other receivables (4,203,756) (1,551,213)
Increase in derivative financial assets (3,378,888) (878,117)
Decrease / (increase) in deferred
tax asset 456,784 (2,383,730)
Increase in trade and other payables 1,443,563 1,899,118
Increase in deferred tax liabilities 1,325,978 878,369
Increase in derivative financial liabilities 3,609,438 433,751
Decrease / (increase) in inventories 22,742 (86,966)
------------- -------------
Net cash inflow from operating activities 2,773,213 3,050,923
Cash flows from investing activities
Acquisition of property, plant and
equipment (1,460,870) (670,827)
Acquisition of intangibles (11,679,597) (5,758,957)
Acquisition of subsidiary, net of
cash acquired (2,226,153) (6,563,834)
Net cash used in investing activities (15,366,620) (12,993,618)
Cash flows from financing activities
Principal elements of lease payments (643,786) -
Interest paid on finance lease (233,564) -
Proceeds from issuance of ordinary 17,748,353 -
shares
Costs directly attributable to share (871,698) -
issuance
Net cash from financing activities 15,999,305 -
Net increase / (decrease) in cash
and cash equivalents 3,404,898 (9,942,695)
Cash and cash equivalents at the beginning
of the year 7,860,368 17,803,063
------------- -------------
Cash and cash equivalents at end of
the year 11,265,266 7,860,368
============= =============
Consolidated statement of cash flows
Company
2019 2018
GBP GBP
(Loss) / profit for the year (1,702,018) 1,364,046
Cash flows from operating activities
Adjustments for:
Share based payment charge - 53,765
Increase in trade and other receivables (15,230,313) (965,517)
Increase / (decrease) in trade and
other payables 294,045 (452,294)
Increase in deferred tax asset (238,369) -
--------------- --------------
Net cash outflow from operating (16,876,655) -
activities
Cash flows from financing activities
Proceeds from issuance of shares 17,748,353 -
Costs directly attributable to share (871,698) -
issuance
Net cash from financing activities 16,876,655
Net increase in cash and cash - -
equivalents
Cash and cash equivalents at the - -
beginning
of the year
--------------- --------------
Cash and cash equivalents at end of - -
the year
=============== ==============
At 31 December the Company held no bank accounts.
NOTES TO THE CONSOLIDATED FINANCIAL statementS
FOR THE YEARED 31 DECEMBER
1. Basis of preparation and significant accounting policies
The principal accounting policies applied in the preparation of
the Group and Company 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.
Basis of preparation
These financial statements are prepared in accordance with
International Financial Reporting Standards, International
Accounting Standards and Interpretations (collectively IFRSs)
issued by the International Accounting Standards Board (IASB) as
adopted by the European Union ("adopted IFRSs") and AIM
Regulations. The financial statements are presented in sterling,
the Company and Group's presentational currency.
IFRS requires management to make certain accounting estimates
and to exercise judgement in the process of applying the Company
and Group's accounting policies. These estimates are based on the
Directors best knowledge and past experience and are explained
further in note 3.24.
Presentational adjustment
During the year, the Group performed an analysis of cost
drivers. This process resulted in management determining that
various costs disclosed as administrative expenses in the prior
year were directly linked to transactions generating revenues. As a
result, these costs have been restated as direct costs in the 2018
comparatives. Staff costs have been re-categorised from Admin costs
to Direct costs for commissions paid. Along with staff costs the
following have also been re-categorised bank charges, bad debts and
marketing costs for affiliate commissions paid and vouchers.
Change in accounting policy
During the year, the Group changed its accounting policy for
research and development tax credits (R&D tax credit) which had
previously been accounted for under IAS 20 Accounting for
Government Grants and Disclosure of Government Assistance. The
Group believes that accounting for the R&D tax credit is more
appropriate under IAS 12 Income Taxes which better reflects the
substance and benefit of the credit. Under IAS 20 Accounting for
Government Grants and Disclosure of Government Assistance, the
R&D tax credit, was deducted from administration expenses on a
systemic basis. Under IAS 12 Income Taxes the R&D tax credit is
included within tax credit / expense in the year that the claim
relates to.
A change in accounting policy requires a retrospective
adjustment and consequently the comparatives amounts have been
restated. In 2018 an adjustment of GBP311,156 has been deducted
from administrative costs and a corresponding amount included
within tax credit. There is no adjustment to earnings per share or
retained earnings. In 2019, the GBP3,478,997 has been recognised as
tax income. No periods prior to 2018 have been affected by the
change in accounting policy.
2018 As Stated Presentational Change in Restated
adjustment accounting
policy
GBP GBP GBP
Consolidated Statement
of Comprehensive Income
Revenue 26,092,392 - - 26,092,392
Direct Costs (5,605,961) (2,945,354) - (8,551,315)
------------- ------------ -------------
Gross Profit 20,486,431 (2,945,354) - 17,541,077
Administrative expenses (16,790,975) 2,945,354 (311,156) (14,156,777)
Amortisation charge (1,318,649) - - (1,318,649)
Acquisition Expenses (297,484) - - (297,484)
------------- ------------ ---------------
Operating profit 2,079,323 - (311,156) 1,768,167
Tax credit 538,343 - 311,156 849,499
------------- --------------- ------------ ---------------
Profit and total
comprehensive income
for the year 2,617,666 - - 2,617,666
------------- --------------- ------------ ---------------
Going concern
Details of the Group's business activities, results, cash flows
and resources, together with the risks it faces and other factors
likely to affect its future development, performance and position
are set out in the strategic report. Certain Group companies are
regulated by the Financial Conduct Authority and perform annual
capital adequacy assessments. Consideration was given to whether
there is sufficient liquidity and financing to support the
business, the post balance sheet trading of the Group, the
regulatory environment and the effectiveness of risk management
policies. The Board therefore has a reasonable expectation that the
Group has adequate resources to continue in operational existence
for the foreseeable future and therefore the financial statements
are prepared on a going concern basis.
2. Segmental Analysis
Group Currency International Banking Central Total
Cards Travel
Payments Cash
2019
GBP GBP GBP GBP GBP GBP
Segment revenue 11,293,815 11,928,662 2,389,044 5,333,203 - 30,944,724
Direct costs (4,391,599) (3,537,900) (1,043,047) (1,405,719) - (10,378,265)
------------ ------------ ------------ ------------ ------------- -------------
Gross profit 6,902,216 8,390,762 1,345,997 3,927,484 - 20,566,459
Administrative
expenses - - - - (20,123,517) (20,123,517)
Amortisation - - - - (2,830,587) (2,830,587)
Impairment
charge - - - (4,858,898) - (4,858,898)
Acquisition
costs - - - - (478,476) (478,476)
Finance costs - - - - (233,564) (233,564)
Profit / (loss)
before tax 6,902,216 8,390,762 1,345,997 (931,414) (23,666,144) (7,958,583)
============ ============ ============ ============ ============= =============
Total assets - - - 5,077,618 67,044,838 72,122,456
Total liabilities - - - (1,926,658) (20,678,892) (22,605,550)
------------ ------------ ------------ ------------ ------------- -------------
Total net assets - - - 3,150,960 46,365,946 49,516,906
============ ============ ============ ============ ============= =============
Group Currency International Banking Central Total
Cards Travel
Payments Cash
2018
GBP GBP GBP GBP GBP GBP
Segment revenue 9,996,890 8,389,851 2,076,904 5,628,747 - 26,092,392
Direct costs
(restated*) (4,049,852) (2,280,028) (857,416) (1,364,019) - (8,551,315)
------------ ------------ ---------- -------------- ----------------- -------------
Gross profit 5,947,038 6,109,823 1,219,488 4,264,728 - 17,541,077
Administrative
expenses
(restated*) - - - - (14,156,777) (14,156,777)
Amortisation - - - - (1,318,649) (1,318,649)
Acquisition
costs - - - - (297,484) (297,484)
------------ ------------ ---------- -------------- ----------------- -------------
Profit / (loss)
before tax
(restated*) 5,947,038 6,109,823 1,219,488 4,264,728 (15,772,910) 1,768,167
============ ============ ========== ============== ================= =============
Total assets - - - - 47,425,064 47,425,064
Total liabilities - - - - (9,158,694) (9,158,694)
------------ ------------ ---------- -------------- ----------------- -------------
Total net assets - - - - 38,266,370 38,266,370
============ ============ ========== ============== ================= =============
3. (Loss) / profit before tax
(Loss) / profit before tax is 2019 2018
stated after charging / (crediting)
the following operating costs:-
GBP GBP
Operating leases - property* - 910,947
Operating leases - vehicles* - 40,317
Marketing costs 4,089,772 3,076,015
Staff costs 10,695,174 7,589,132
Property and office costs 1,015,832 629,429
Audit fees 319,200 198,500
Other professional fees 963,966 510,103
IT and telephone cost 877,597 666,756
Travel and similar 452,041 261,416
Foreign exchange loss 229,710 20,274
Share option charge 122,609 53,765
Bank charges 9,744 -
Depreciation of right of use
assets* 917,993 -
Depreciation of property, plant
and equipment 429,879 200,123
============ ===========
20,123,517 14,156,777
============ ===========
4. (Loss) / earnings 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
GBP5,342,074 (2018 profit: GBP2,617,666) and the weighted average
number of shares in issue for the period is 167,096,081 (2018:
155,368,259).
Diluted earnings per share
The calculation of diluted earnings per share has been based on
the profit or 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
171,327,405 (2018: 159,916,115).
(Loss) / Earnings per share 2019 2018
Basic (3.20) 1.68
Diluted (3.12) 1.64
======== ======
5. Taxation
2019 2018
(restated*)
GBP GBP
Current year R&D credit (3,478,997) (311,156)
Changes in tax estimates related
to prior years (25,000) 32,544
Changes in tax estimates in
pre-acquisition accounts of
businesses acquired during
the year (10,487) 384,966
------------ -------------
Current tax (credit) / expense (3,514,484) 106,354
------------ -------------
Origination and reversal of
temporary differences 868,016 (1,063,420)
Recognition of previously
unrecognised deductible temporary
differences 59,583 107,567
------------ -------------
Deferred tax credit 927,599 (955,853)
------------ -------------
Total tax credit (2,586,885) (849,499)
============ =============
6. Leases
(i) Measurement of Group lease liabilities
2019
GBP
Operating lease commitments disclosed as disclosed
at 31 December 2018 under IAS 17 Leases 4,107,112
Operating lease commitments later than five years,
if extension options are exercised 4,722,397
--------------------------------------------------------- ----------
Total operating lease commitments under IAS 17 Leases,
including extension options 8,829,509
Discounted using the lessees' incremental borrowing
rate at the date of initial application* 7,524,124
--------------------------------------------------------- ----------
Of which are:
Not later than one year 546,168
Later than one year, including the extension periods 6,977,956
------------------------------------------------------- ----------
*The weighted average lessee's incremental borrowing rate
applied to the lease liabilities on 1 January 2019 was 3.06%.
There was no lease liability recognised in the Statement of
Financial Position immediately prior to adoption of IFRS 16 Leases
.
(ii) Measurement of Group right of use assets
The associated right of use assets were measured at the amount
equal to the lease liability, adjusted by the amount of any prepaid
or accrued lease payments relating to that lease recognised in the
balance sheet as at 31 December 2018.
(iii) Adjustments recognised in the consolidated statement of
financial position on 1 January 2019
1 Jan 2019
GBP
Right of use assets 7,494,970
Deferred tax assets -
Prepayments (49,546)
Accruals 78,700
Lease liabilities (7,524,124)
Retained earnings -
---------------------- ------------
(iv) Amounts recognised in the consolidated statement of
financial position
This note provides information for leases where the Group is a
lessee. The Group does not have any leases where it acts as a
lessor.
Group
Right of use assets Vehicles Property Total
GBP GBP GBP
At 1 January 2019 93,017 7,401,953 7,494,970
Additions to right of use assets - 1,007,981 1,007,981
Termination of right of use assets
* - (636,082) (636,082)
Depreciation charge for the year (39,642) (878,351) (917,993)
--------- ---------- -----------
At 31 December 2019 53,375 6,895,501 6,948,876
--------- ---------- -----------
Lease Liabilities Total
GBP
At 1 January 2019 7,524,124
Additions to lease liabilities 999,487
Termination of lease liabilities
* (636,082)
Lease finance expenses 228,438
Lease termination expense 5,126
Payments (877,887)
-----------
At 31 December 2019 7,243,206
===========
Current lease liabilities 811,628
Non-current lease liabilities 6,431,578
-----------
7,243,206
===========
* Termination of right of use assets and lease liabilities
relates to a property lease which ended during the year.
GBP
Net lease liability (294,330)
==========
(v) Amounts recognised in the consolidated statement of
comprehensive income
Group
Property Vehicles Total Total
2019 2018
GBP GBP GBP GBP
Depreciation charge for
right of use assets 878,351 39,642 917,993 -
Lease finance expenses 225,731 2,707 228,438 -
Lease termination expense 5,126 - 5,126 -
Expense relating to short-term
leases 67,201 - 67,201 -
Expense relating to leases
of low-value assets 66,310 - 66,310 -
---------- --------- ---------- ------
1,242,719 42,349 1,285,068 -
========== ========= ========== ======
Included within expenses relating to low value assets, which are
below the de-minimus level, are amounts relating to IT equipment
(printer and photocopiers etc.) and property costs (fridges,
microwaves etc.). Expense relating to short-term lease relates to
the Aldgate office which was vacated in the year.
The total cash outflow for leases in 2019 was GBP877,887
including for principal and interest.
- ENDS -
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR FVLLLBQLBBBD
(END) Dow Jones Newswires
June 29, 2020 02:00 ET (06:00 GMT)
Equals (LSE:EQLS)
Historical Stock Chart
From Jun 2024 to Jul 2024
Equals (LSE:EQLS)
Historical Stock Chart
From Jul 2023 to Jul 2024
