TIDMEQLS
RNS Number : 8170T
Equals Group PLC
23 July 2020
23 July 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)
Trading Update
'Robust current trading against Covid-19 headwinds'
Equals (AIM:EQLS) , the fast-growing B2B focused e-banking and
international payments group, is pleased to provide the following
update on the Group's trading for the six month period ended 30
June 2020 ('H1-2020' or the 'period') and also for the 14 working
days up to 20 July 2020.
Revenues
Against the challenging background of the Covid-19 pandemic, the
Group managed to achieve further growth in H1-2020, with total
revenues of GBP13.7 million (H1-2019: GBP13.6 million*).
Excluding B2C Travel Money (cards and cash), revenues of GBP12.3
million were 23% ahead of H1-2019 (GBP10.0 million). The Group's
strategic focus on B2B revenue streams over its legacy travel money
focus has enabled the business to trade well throughout H1-2020.
B2B represented 66% of total revenue in the period versus 51% in
H1-2019.
Overall, B2B revenues at GBP9.0 million were 30% higher than in
H1-2019 (GBP6.9 million), while B2C revenues were 29% lower at
GBP4.7 million (H1-2019: GBP6.7 million), principally owing to the
Covid-19 pandemic.
International Payments was the Group's strongest performing
segment, supported by the acquisitions of Hermex and Casco last
year, as well as strong organic growth. Revenue of GBP8.2 million
was up by GBP3.4 million or 71%, of which GBP0.6 million is
attributable to organic growth. International Payments now
represents 60% of Group revenue, compared to 35% in H1-2019.
Banking revenues were flat overall, although B2B banking began
to increase in the latest quarter, benefitting from the FY-2019
investment in the Group's technology infrastructure.
Revenue from the Corporate Expenses platform, the Group's B2B
card product, fell by 40% to GBP1.4 million reflecting the
radically reduced corporate activity from late-March 2020 due to
the Covid-19 pandemic. However, revenues from this platform have
started to recover in recent months.
B2C Travel Money (cards and cash) revenue of GBP1.4 million
(down 59%) reflects the Group's strategic focus on B2B revenue
streams and the effects of the Covid-19 pandemic hitting volumes in
historically strong seasonal months for travel. Travel Money
continues to represent a smaller proportion of total revenues, it
now being 11% in H1-2020 versus 26% in H1-2019.
Further detail on segmental revenue for H1-2020 versus H1-2019
as well as the percentage changes can be viewed in Appendix 1
below.
Inevitably there was a slowdown in Q2-2020 across all segments
but there has been resilience particularly in International
Payments. Revenue per working day by segment across the last six
quarters can be viewed below in Appendix 2.
Trading in June 2020, and in the 14 working days to 20 July 2020
was encouraging with average revenues being GBP111k per day.
Travel cash business via both Bureaux and B2C retail cards has
begun to pick up gradually and it is anticipated that corporate
card revenues will continue to increase from current levels. The
Board remains optimistic for revenue growth, particularly in
International Payments, in the current financial year and
beyond.
Employee numbers and cost management
After the considerable investment in development over the last
24 months, and the product and infrastructure improvements which
have been made, the Board had already commenced the process of
re-sizing the Group accordingly.
In addition, the change in economic conditions driven by the
Covid-19 pandemic, especially in the travel markets, has led the
Board to conclude that a number of staff will now be at risk of
redundancy.
The combined consequences of these actions will reduce the
headcount from its high point of 341 in December 2019 (as reported
in the results for that year) by 15-20% net of a few new hires in
revenue generating roles. The financial impact to the Group is that
there will be a one-off redundancy cost of circa GBP0.5 million but
offset by a cash saving to the Group of circa GBP2.5 million per
annum.
A further examination by the Board of the Group's real-estate
expense, the second highest cost category is continuing, and
naturally all other costs are constantly under review.
Outlook
The Group's employees have transitioned to remote working well,
with the investment in improved technical infrastructure
benefitting the Group's operations.
The decision to strategically focus on both International
Payments and B2B markets has greatly helped the Group to trade
robustly not only against the headwinds of Covid-19, but also the
uncertain pattern of Brexit transition trading and the disruption
caused by the FCA's intervention in Wirecard's UK business in late
June.
Whilst the Covid-19 pandemic has naturally affected the Group,
revenues are returning to more normalised levels in most B2B
business segments since the initial impact in late March. The Board
is pleased that overall trading continues to perform in line with
management expectations. The Group intends to provide a full update
on trading and to reinstate financial guidance to analysts and
investors for the twelve months ended 31 December 2020 ('FY-2020')
at the Interim Results, to be reported in September 2020
The Board believes that the Group remains financially stable and
well placed to grow and capitalise on opportunities that may arise
alongside the wider global recovery.
Notes
*Revenues from card rebates and similar in 2019 had been
reported as 'one-off' revenues in the month they were recognised.
H1-2019 has been restated to spread these revenues over the
accounting period to which it relates. The impact of this change in
recognition has been to restate H1-2019 revenue from GBP14.6
million to GBP13.6 million.
- 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.
Appendix 1
H1-2020 H1-2019
GBP000's B2B B2C Total B2B B2C Total
International Payments 6,269 1,976 8,245 3,186 1,632 4,818
Banking & Group
treasury 1,326 1,264 2,590 1,326 1,275 2,601
Cards 1,416 1,097 2,513 2,372 2,638 5,010
Bureaux 11 383 394 33 1,115 1,148
------ ------ ------- ------ ------ -------
Total 9,022 4,720 13,742 6,916 6,660 13,576
------ ------ ------- ------ ------ -------
% of total 66% 34% 100% 51% 49% 100%
Memo: Travel Money 10 1,438 1,448 33 3,523 3,555
------ ------ ------- ------ ------ -------
As % of total revenue 0% 30% 11% 0% 53% 26%
Period on period percentage changes:
B2B B2C Total
International Payments +97% +21% +71%
Banking & Group treasury 0% -1% 0%
Cards -40% -58% -50%
Bureaux -69% -66% -66%
----- ----- ------
Total +30% -29% +1%
----- ----- ------
Memo: Travel Money -69% -59% -59%
Appendix 2
Revenue per working day by segment across the last six quarters
was as below:
GBP000's Q1-2019 Q2-2019 Q3-2019 Q4-2019 Q1-2020 Q2-2020
International Payments 24 27 48 65 54 46
Banking and Group treasury 20 22 21 24 21 21
Cards 33 47 55 45 27 13
Bureaux 9 10 12 8 6 1
-------- -------- -------- -------- -------- --------
Total 86 106 136 142 107 81
-------- -------- -------- -------- -------- --------
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END
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