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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Fairfx Group Plc | LSE:FFX | London | Ordinary Share | GB00BLS0XX25 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 124.50 | 124.00 | 125.00 | 0.00 | 00:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Nov 2022 to Nov 2024
TIDMEQLS
RNS Number : 2323U
Equals Group PLC
27 March 2023
27 March 2023
Equals Group PLC
('Equals' or the 'Group')
Final Results
'Well-invested platform delivering rapid growth, significant cash generation and enhanced profitability'
Equals (AIM:EQLS), the fast-growing payments group focused on the SME marketplace, announces its final results for the year-ended 31 December 2022 (the 'year' or 'FY-2022') and an update on trading for the period from 1 January 2023 to 24 March 2023.
FY-2022: Financial Summary
Hot Features
Premium
FY-2022 FY-2021 Change(1)
GBP millions GBP millions
Underlying transaction values
* FX 5,470 4,352 + 26%
* Banking 1,741 1,331 + 31%
* Solutions Platform 2,005 846 + 137%
------------- -------------
* Total 9,216 6,529 + 41%
------------- -------------
Revenue 69.7 44.1 + 58%
% of revenue from B2B(2) 80% 81%
Adjusted EBITDA (3) 12.1 6.7 + 81%
EBITDA 11.0 5.7 + 94%
Profit / (Loss) after taxation 3.6 (2.3)
Memo:
Capitalised staff costs 4.2 3.0 + 38%
Separately reported items (below
Adjusted EBITDA) 0.2 0.7 - 76%
R&D credits received 0.4 1.4 - 71%
Impairment of travel cash business - 1.6
Cash per share (at balance sheet
date) 8.3p 7.3p + 14%
Basic EPS 1.80p (1.35)p
Adjusted Diluted EPS(4) 3.03p 0.02p
Adjusted Basic EPS(4) 3.15p 0.02p
Diluted EPS 1.73p (1.35)p
FY-2022 Financial Highlights
-- Transaction flow increased 41% to GBP9.2 billion (FY-2021: GBP6.5 billion) -- Revenue increased by 58% to GBP69.7 million (FY-2021: GBP44.1 million) -- Adjusted EBITDA(3) increased 81% to GBP12.1 million (FY-2021: GBP6.7 million) -- Year-end cash increased 15% to GBP15.0 million (FY-2021: GBP13.1 million)
Q1 FY-2023 Trading update and Outlook
-- Revenue in Q1-2023 up to 24 March 2023 reached GBP20.2 million, up from GBP13.2 million in the same period in 2022, an increase of 54%.
-- Revenues per working day so far in Q1-2023 were GBP342k, an increase of 52% over GBP225k per day in Q1-2022 and 13% higher than GBP302k per day achieved in Q4-2022
-- Share purchase agreement entered into for Oonex SA, Belgian regulated payment processor, conditional on regulatory approval
-- Acquisition of Hamer & Hamer, UK regulated FX broker, conditional on regulatory approval
-- Cash position has increased to GBP18.0 million, equal to 10 pence per share, as at 21 March 2023
-- Management now expect trading for FY-2023 to be ahead of current expectations
Commenting on the Results, Ian Strafford-Taylor, CEO of Equals Group PLC, said: "The traction that we gained in 2022, resulting in rapid growth, significant cash generation and enhanced profitability, and the trading momentum that we possess today is a direct result of the sustained investment that we have made into our platform and proposition over several years. In developing a platform with superior and wide-ranging capabilities, securely backed by bank-grade functionality, the Group's proposition is being utilised at significantly greater levels and we are attracting larger volumes from a broader array of businesses, including large corporates.
"We will further invest in the platform and our broader operations to enable us to continue to capture the very clear market opportunity and, as seen with our FY-2022 results, the benefits of scale can be seen in operational leverage and enhanced profitability."
"Our rapid growth has continued into 2023, which is particularly pleasing when measured on top of the growth achieved in FY-2022. The Group remains entirely focused on achieving further profitable growth, and, with our Q1-2023 results being ahead of expectations, we look forward with much confidence."
Analyst meeting
There will be an in-person presentation for analysts hosted by Ian Strafford-Taylor (CEO) and Richard Cooper (CFO) at the offices of Buchanan at 09.30 today, 27 March 2023. A copy of the presentation will be available after midday on the Equals website. A copy of the Final Results presentation is also available at the Group's website: https://equalsplc.com .
For retail investors, an audiocast of the conference call with analysts will be available after midday today:
https://webcasting.buchanan.uk.com/broadcast/640f4ab0e57d7909a3e206e3
Notes
(1) Based on underlying, not rounded, figures.
(2) Transactions with business customers are reported as 'B2B' and transactions with retail customers are reported as 'B2C'.
(3) Adjusted EBITDA is defined as: earnings before; depreciation, amortisation, impairment charges, share option charges, foreign exchange differences and separately reported items. Separately reported items are of a material nature, non-recurring items.
(4) The measure of profit for this ratio has been adjusted to form Adjusted EPS. The add-back adjustments consist of share option charges, amortisation of acquired intangibles, exceptional items, acquisition costs and tax impacts on these items thereon.
The financial statements were approved for release at 07:00 hours on 27 March 2023 to the London Stock Exchange via RNS after being approved by the Board after stock market hours on 24 March 2023.
For more information, please contact:
Equals Group PLC
Ian Strafford-Taylor, CEO Tel: +44 (0) 20 7778
Richard Cooper, CFO 9308
www.equalsplc.com
Canaccord Genuity (Nominated Advisor
/ Broker)
Max Hartley / Harry Rees Tel: +44 (0) 20 7523
8150
Buchanan (Financial Communications)
Henry Harrison-Topham / Toto Berger Tel: +44 (0) 20 7466
equals@buchanan.uk.com 5000
www.buchanan.uk.com
Notes to Editors:
Equals Group is a technology-led international payments group augmented by highly personalised service for the payment needs of SME's whether these be FX, card payments or via Faster Payments. Founded in 2007, the Group listed on AIM in 2014. For more information, please visit www.equalsplc.com .
Chief Executive Officer's Report
Management's objective for FY-2022 was to continue its trajectory of strong growth of transaction volumes, revenues, and profits, focused on the B2B customer segment with Equals Money being targeted at the SME base and Equals Solutions at larger corporate opportunities.
We significantly surpassed our expectations in the year by continuing to invest in our technology platform, payments infrastructure, licences and connectivity whilst concurrently delivering our growth agenda.
The headline financial performance in the full year included:
-- Transactions executed on the Group's platforms increased 41% to GBP9.2 billion (FY-2021: GBP6.5 billion)
-- Revenue increased 58% to GBP69.7 million (FY-2021: GBP44.1 million) -- Adjusted EBITDA increased 81% to GBP12.1 million (FY-2021: GBP6.7 million)
A detailed financial analysis is presented in the Report of the Chief Financial Officer which follows this statement.
Summary of FY-2022 performance
The financial results reflect significant investments made over several years in creating a robust platform comprising international and domestic payments, card payments and banking services underpinned by exceptional technology and direct connections to multiple payment networks. Further investments were made in FY-2022 in compliance, onboarding and user experience such that the rich functionality of the platform is easily accessible to current and potential customers.
Successful pivot resulting in operational gearing
The results reflect two concurrent pivots: from B2C to B2B and, from being a product-led business to becoming more platform driven. The breakdown of revenues from different customer groupings reflects the B2B shift with the percentage of revenues coming from consumers and small businesses falling from 28% in FY-2021 to 24% in FY-2022. Concurrently, the percentage of revenues derived from large corporates increased from 12% in FY-2021 to 23% in FY-2022, reflecting the growth and potential of the Equals Solutions offering.
Processed transaction volumes grew 41% to GBP9.2 billion (FY-2021: GBP6.5 billion), reflecting the Group's successful growth strategy and the scalability of the platform we have built,, which has ample capacity to process even higher volumes. Over the year, revenues grew faster than transaction volumes, up 58% to GBP69.7 million (FY-2021: GBP44.1 million), which demonstrates the success of the Group's focus on high-margin business lines.
Breaking down growth trends further, the 'core' products within Equals Money grew strongly and were augmented by a very strong uptake of Equals Solutions. Within the 'core' category, International Payments grew 33% to GBP34.4 million (FY-2021: GBP25.9 million) and Card-based revenues grew 45% to GBP12.5 million (FY-2021: GBP8.6 million). Equals Solutions revenues grew by 333% to GBP15.6 million (FY-2021: GBP3.6 million).
This growth resulted in rapid profit growth, with Adjusted EBITDA up 81% to GBP12.1 million (FY-2021: GBP6.7 million) and demonstrated the operational gearing. In addition, the Group's operations are strongly cash generative, opening up opportunities to add scale via acquisitions as we look to further broaden functionalities and/or regulatory licences. In October 2022, for example, the Group acquired the remaining minority interest in Equals Connect for GBP3.3 million (over three years), the white-label international payments platform to smaller Foreign Exchange Brokers, enabling Equals to broaden its reach and homogenise it with our existing platform.
Growth with control
The overall strategy of the Group is to grow revenues and profits by increasing the volumes of transactions processed via its platform whilst concurrently minimising risk. Accordingly, investment into finance, operations, compliance, and risk functions is a key focus.
Whilst payments businesses in general will always incur some operational risk, especially in 'daylight exposure' before transactions are settled, the Group seeks to minimise or mitigate risks wherever possible. Therefore, all foreign exchange transactions with customers are automatically matched with a liquidity provider and funds are never released until inbound funds have been received. Further, although the Group does offer forward contracts to its customers, its deposit and mark-to-market policies ensure that Equals runs immaterial risk in this area.
Recent times have seen an increased focus from Regulators and Banks on anti-money laundering ('AML') and compliance standards. Equals welcomes the raising of standards in this area as we view our compliance controls and governance, backed up by a Group-wide emphasis on compliance culture facilitated by regular training for all employees, to be a competitive advantage. The Group has continued to invest in this area both in terms of headcount, with over 10% of the workforce focused on compliance and risk, and in technology using outsourced platforms to automate compliance tasks such as 'know your customer' and other checks. In addition, given increasing transaction volumes, the Group invested into a new transaction monitoring system, called Featurespace, which is a state-of-the-art real-time machine-learning platform used by many leading banks and financial institutions. The first phase of the deployment is already live, and the platform will be rolled-out across the Group during FY-2023.
In product and engineering, the Group's customer-facing product developments are built with the involvement of all areas of the business to ensure Equals creates end-to-end applications that support internal operational efficiency. Further, the technical roadmaps for FY-2022 and FY-2023 both include many workstreams that improve internal efficiency and control, not just outward facing product rollouts. In addition, Equals will look to use external tooling and software, where appropriate, so the Group's engineering teams can focus on building in the areas where we can add value.
The engineering, product and design teams achieved a very high cadence in FY-2022 with multiple code releases per week and significant progress in the platform. Highlights included:
- Equals Money - new web and mobile applications, customer interface to configure people and teams, flexible account settings and multiple accounts on a single login;
- Equals Solutions - significant improvements in reporting and statements. Customer-facing API integrations made available. Direct payments into sub-accounts;
- Card Platform - delivery of self-issued cards supporting 20 currencies, both prepaid and debit. Physical or virtual cards usable on Apple Pay, Google Pay and Samsung Pay;
- Connectivity - SEPA CT and SEPA Instant. Automated fund management with Bank of England settlement account;
- Infrastructure - database migrations to the cloud via Amazon Web Services ('AWS'), significant advances in internal tooling; and
- Reconciliation - automation of inbound funds reconciliation, advances in auto-reconciliation via Kani, automated profit sell-backs to GBP.
Sustained investment in people
The Group's employees continue to be its greatest strength and we are delighted to have a diverse workforce and are proud to train and promote from within as well as seek fresh talent from elsewhere. We continue to invest in our people function and have implemented a much-enhanced appraisal programme during the year which forms the basis for salary reviews and compensation. The Group has had a high level of retention amongst key employees. Implementation of a Company-wide share ownership plan ('SIP') combined with an LTIP for management has been well received. Revenue per employee reached GBP260k; an increase of 50% over the prior year.
The Group appointed Tom Kiddle as its Chief Commercial Officer in June 2022 and has made significant further investment in its growth agenda by upgrading our teams in sales, sales operations, and marketing.
Highlights include: -:
- Sales - appointed a Group Sales Director, implemented forecast and opportunity pipeline measurement and cadence, increased regional sales, increased experience and expertise across sales functions, hired three Equals Solutions sales specialists with technical payments backgrounds and commenced a regular sales training process.
- Partnership sales - appointed Head of Partnerships, expanded team, implemented new process and procedure for onboarding partners, refined strategy to focus on wider partnerships in key verticals of wealth management, estate agents and IFAs and introduced white label option for partners.
- Marketing - refined KPIs, systems and measurement processes, appointed new Head of Digital, refreshed PR agency, radically improved digital lead quality, refined website and introduced dynamic split testing, improved SEO scoring, and introduced customer lifecycle analysis to identify key intervention points.
- Sales operations - appointed sales operations lead and a HubSpot expert, implemented a QA team to smooth the path of leads through the wider organisation, delivered significant changes to HubSpot reporting capabilities giving real time access to marketing and sales performance.
While the Group continues to seek efficiencies and has a strong cost-control culture, the Group is growing rapidly and has opportunities to continue this trajectory. Accordingly, the total headcount of the Group is now more than 300 people, and we are continuing to hire talent, mainly into growth areas of sales, marketing, onboarding and compliance.
Marketplace and competitive landscape
Global payments is a multi-trillion dollar market that remains a complex and constantly evolving space, comprising various payment mechanisms from cash, cards, account-to-account transfers, and other methodologies across physical, internet and mobile interfaces. Against this background, many of the settlement rails, particularly on a cross-border basis, are antiquated with little investment. The advent of crypto currencies brought with it the concept of settlement via blockchain technologies, and this has been a factor in ushering more focus on existing payment infrastructures and working to improve the speed and reliability of settlements in fiat currencies.
This is the backdrop to the Group's sustained investment over several years that has enabled Equals to develop a unique proposition; the Group provides both account-to-account transfers and card payment capabilities, overlaid on infrastructure giving bank-grade connectivity and security on superior customer interfaces that can be consumed by customers directly via the platform, on a white-label basis, or via an API technical interface. The flexibility the Group can support and the channels by which this can be consumed by customers is a key differentiator. Within Equals B2B focus, the Group targets two major segments, SMEs, via Equals Money, and larger corporates, via Equals Solutions. Both offer a single platform comprising own-name, multi-currency IBAN current accounts, account-to-account transfers, and card products for both domestic and international transactions.
Competition and differentiation
Competition falls into two major categories, the incumbent banks and the fintech 'disruptors'. The majority of payment volumes flow through the former, therefore targeting its customer base is key focus for the Group's product development and its sales and marketing activities. Fintechs tend to market one silo of what Equals provides as an overall platform (e.g. current accounts, cards, and international payments) and are often B2C focused. Further, they typically operate 'self-serve' platforms in contrast to the Group's provision of human assistance in supporting customers navigate the complexities of payments via dedicated account management teams.
The Group therefore differentiates itself by harnessing the best of these two competitor groups, namely the trust and heritage of the incumbent banks combined with the technological innovation of the Fintechs. Accordingly, Equals will continue to invest in its platform, connectivity, and payment rails to remain one step ahead and its success to-date in doing so is reflected in the Group's FY-2022 results.
Looking forward - from product to platform
Management anticipates that FY-2023 will be the year where the various strands of investment into engineering and connectivity come together into the overall platform offering. At the centre of the Group is Equals Core, the division that holds all the technology, payment rails, direct connections, operations, compliance, and regulatory licences. Equals Core powers everything that the Group does via one technology stack which serves all customers via the same API's and is built for scale.
Equals Core ultimately has four distribution channels:
1. Equals Group itself via its product offering - Equals Money, Equals Solutions, FairFX & CardOne Money;
2. Customers who consume Equals Core via API;
3. White-label customers who consume Equals Core with their own brand being shown to their end customers, who they acquire via their own sales and marketing; and
4. Those who consume some but not all of Equals Core's services via API.
Equals currently has customers utilising the first three levels outlined above and will be able to offer the fourth level during the course of FY-2023. The direction of travel for the Group is to further build out the capabilities of all four of these distribution channels in the current financial year and beyond.
Further differentiation
The Group is constantly looking to add functionality that can further differentiate Equals. The current platforms allow B2B customers to have global collection accounts and to pay out funds locally in over 40 countries but lack the full range of capabilities to assist customers in receiving payments from their customers, both B2B and B2C. In January 2023, Equals completed its acquisition of Roqqett Limited ('Roqqett'), an open banking platform. Roqqett will enable Equals' customers to acquire payments from its customers using open banking rather than traditional methods of debit or credit cards. The Roqqett platform fits perfectly with the Equals Core technology and the first integration milestone of putting Roqqett in the process flow for FairFX was completed in Q1-2023. This acquisition allows Equals to offer an 'end-to-end' solution to its B2B customers from the point at which their customer transacts all the way through to disbursements internationally or domestically. In a similar vein, the Group is looking at the ability to accept card-based payments for its customers, so-called merchant acquiring.
M&A
The Group continues to assess M&A opportunities in three main areas, which are not mutually exclusive. Firstly, to acquire profitable businesses that can easily be added to the platform and provide scale. Secondly, to acquire value-add functionality complementary to our offering. Lastly, to expand in a regulatory sense via the acquisition of licences and access to overseas markets.
Accordingly, the product and development roadmap for FY-2023 reflects our continued investment into Equals Core with key deliverables being: -
- Implementation of new transaction monitoring platform - Featurespace
- Multi-currency corporate cards in USA (first-mover advantage)
- Further integration of Roqqett
- Further investment into information security and becoming ISO27001 compliant
- Automation of outbound payments via SWIFT, FasterPayments, SEPA
- Full white-label of Equals Money
- Final migration of legacy products to Equals Core
- Automated bulk payments
- Straight-through-processing ('STP')
ESG
Equals wholeheartedly embraces ESG initiatives and takes Equality, Diversity, and Inclusivity ('EDI') extremely seriously. Our EDI strategy, which covers not only employees but also customers, includes an internal EDI network populated with elected representatives and regular employee surveys. This is a key objective for all Executive Committee members and forms part of their appraisals.
Q1-2023 Trading and Outlook
FY-2023 has started exceptionally well with revenue in Q1-2023 up to 24 March 2023 reaching GBP20.2 million, up from GBP13.2 million in the same period in 2022, an increase of 54%. Revenues per working day so far in Q1-2023 were GBP342k, an increase of 52% over GBP225k per day in Q1-2022 and 13% higher than GBP302k per day achieved in Q4-2022.
Strong B2B revenue growth continues with all product lines progressing well. Equals Solutions, which contributed GBP15.6 million of revenues in FY-2022, has already contributed GBP6.0 million in FY-2023 to-date and is expected to continue to grow strongly as the Group adds new functionality to its payments platform during the year.
Other notable achievements in Q1-2023 to-date include:
- Completion of the acquisition of Roqqett following FCA approval and completing a key technical milestone by having the platform live on the FairFX platform for inbound payments.
- Sale of the legacy travel-cash banknote business and accompanying Bureau-de-Change. This enables the Group to focus more on its core B2B activity.
- Acquisition, subject to FCA approval, of Hamer & Hamer, a B2B International Payments business with revenues of approximately GBP1.5 million per annum.
- Acquisition, subject to approval by National Bank of Belgium ('NBB') of Oonex, a Brussels-based merchant acquiring business. This gives the Group access to customers across Europe as well as new banking partners and Belgium prefixed IBANs to augment the Group's current GB-prefixed IBANs, which widens the use cases for our Equals Money and Equals Solutions platforms .
The outlook for the business, as a result of our sustained and continuing investments, is strong and the Group's addressable market is now significantly greater. Equals has created a payments platform comprising international and domestic payments, card payments and banking services underpinned by exceptional technology and direct connections to multiple payment networks.
Finally, given the current customer base is largely within the UK, the growth opportunities of geographical expansion are considerable. Accordingly, the Board looks forward to the future with much confidence and management now expect trading for FY-2023 to be ahead of current expectations.
Ian Strafford-Taylor
Chief Executive Officer
24 March 2023
Chief Financial Officer's Report
I present my review and financial analysis for the year ended 31 December 2022.
TABLE 1: INCOME AND EXPENSE ACCOUNT
FY-2022 FY-2021
GBP millions GBP millions
------------- -------------
Revenue (table 3) 69.7 44.1
------------- -------------
Gross Profits (table 3) 33.7 24.2*
Less: Marketing (1.9) (1.3)
------------- -------------
Contribution 31.8 22.9
Staff costs (14.4) (11.9)
Property and office cost (0.9) (0.8)
IT and telephone costs (2.0) (1.7)
Professional Fees (1.2) (1.2)
Compliance Fees (0.7) (0.4)*
Travel and other expenses (0.4) (0.2)
Adjusted EBITDA 12.1 6.7
------------- -------------
Less: Share option expense (0.9) (0.3)
Less: Acquisition costs and exceptional
items (0.2) (0.7)
------------- -------------
EBITDA 11.0 5.7
------------- -------------
IFRS 16 Depreciation (0.8) (0.9)
Other depreciation (0.4) (0.5)
Amortisation of acquired intangibles (1.3) (1.3)
Other amortisation (4.4) (4.5)
Contingent consideration cost (0.3) (0.1)
Impairment of the Bureau operations - (1.6)
------------- -------------
(7.2) (8.9)
------------- -------------
EBIT 3.8 (3.2)
Lease interest (0.2) (0.2)
Foreign exchange differences (0.1) (0.1)
Contingent consideration finance
charges (0.1) (0.3)
(0.4) (0.6)
------------- -------------
PROFIT / (LOSS) BEFORE TAXATION 3.4 (3.8)
Corporate and deferred taxation 0.1 1.1
R&D tax credits receivable - 0.4
------------- -------------
0.1 1.5
------------- -------------
PROFIT / (LOSS) FOR THE YEAR 3.6 (2.3)
============= =============
* With effect from 1 January 2021, certain compliance and onboarding costs which had been included in cost of sales, are now shown within compliance costs. For 2021, which has not been restated, these costs amounted to GBP255k.
When the changes are presented as a bridge, the standout facts are the increase in revenue leading to increased contribution (gross profits less marketing costs), offset by higher labour costs, both through planned increases in staff resources and responding to labour market pressures. Other cost increases were also a mix of inflation pressures, but also decisions taken to upskill and upscale resources for a rapidly growing business.
TABLE 2 - ADJUSTED EBITDA BRIDGE FROM FY-2021 TO FY-2022 (in GBP'000s)
FY-2021 Adjusted
EBITDA 6,713
Add: 39% uplift in contribution FY-2022 8,873
21% increase in staff costs, reflecting
higher planned headcount along
with pay adjustments averaging
Less: 8% (2,488)
19% increase in IT and communications,
taking into account of increased
web hosting charges.
18% increase in professional and (324)
compliance costs, much of which
is attributable to increased compliance
investment (296)
Increase in travel and entertaining
costs (247)
Increase in property utility and
insurance costs and with taking
back legacy office lease (111)
----------
FY-2022 Adjusted
EBITDA 12,120
----------
Uplift over FY-2021 5,407
----------
% uplift over
FY-2021 81%
----------
TABLE 3: REVENUE AND GROSS PROFITS
A. Revenue By Customer Type
Revenue in Consumer Corporates Large Sub-total White-label TOTAL TOTAL % change
GBP millions and small enterprises FY-2022 FY-2021
business
---------------- ----------- ----------- ----------
International
payments 4.5 14.9 - 19.4 15.0 34.4 25.9 32.8%
Cards 5.1 7.5 - 12.5 - 12.5 8.7 43.7%
Banking 6.1 - - 6.1 - 6.1 5.6 9.0%
Solutions - - 15.7 15.7 - 15.7 3.6 336.1%
Travel cash 1.0 - - 1.0 - 1.0 0.3 233%
---------------- ----------- ----------- ------------- ---------- ------------ --------- --------- ---------
Total, FY-2022 16.7 22.4 15.7 54.7 15.0 69.7 44.1 58.0%
---------------- ----------- ----------- ------------- ---------- ------------ --------- --------- ---------
Total, FY-2021 12.5 18.7 5.1 36.4 7.7 44.1
---------------- ----------- ----------- ------------- ---------- ------------ --------- --------- ---------
% Change*
FY-2022 to
FY-2021 +33% +20% >207% +51% +94% +58% +58%
*based on underlying figures
Continuing the analysis which was presented at the 2022 interims, we disclose below, revenue per half year period. The well publicised political uncertainty saw many clients "bring-forward" activity into Q3 from the usual Q4 trading.
B. Revenue By Half-Year
Revenue Solutions White-Label Other International Cards Banking Bureau TOTAL Revenue
in GBP Payments (Retail per
millions and Corporate) day
in
GBP'000s
H1-2021 0.3 2.4 7.5 3.9 2.8 0.1 16.9 136.3
H2-2021 3.3 5.4 10.7 4.8 2.7 0.3 27.2 210.7
FY-2021 3.6 7.7 18.2 8.6 5.6 0.3 44.1 174.3
========== ============ ==================== ================ ======== ======= ====== ==========
% of
total 8% 18% 41% 20% 13% 1% 100%
H1-2022 6.2 7.2 9.1 5.6 2.8 0.5 31.4 255.1
H2-2022 9.4 7.8 10.3 6.9 3.3 0.5 38.3 301.4
------- ------
FY-2022 15.6 15.0 19.4 12.5 6.1 1.0 69.7 278.7
========== ============ ==================== ================ ======== ======= ====== ==========
% of
total 22% 22% 28% 18% 9% 1% 100%
2022 vs
2021 333% 95% 7% 45% 9% 233% 58% 60%
Gross profits
The gross profit margins have also improved - and continue to improve. These, over the last four half-year periods are shown below:
C. Gross Profit Margin By Half-Year
Solutions White-Label Other International Cards (retail Banking Bureau TOTAL
Payments and corporate)
H1-2021 37% 16% 65% 71% 75% 72% 61%
H2-2021 47% 12% 58% 69% 76% 68% 51%
---------- ------------ -------------------- ---------------- -------- ------- ------
FY-2021 46% 14% 61% 70% 76% 69% 55%
H1-2022 46% 12% 59% 61% 76% 48% 47%
H2-2022 50% 14% 56% 65% 78% 42% 59%
---------- ------------ -------------------- ---------------- -------- ------- ------
FY-2022 48% 13% 57% 63% 77% 45% 48%
---------- ------------ -------------------- ---------------- -------- ------- ------
Marketing, branding
and contribution The Group has accelerated its marketing plans after pausing this during FY-2020 and FY-2021 when Covid posed greater uncertainties. Expenditure has been incurred on additional ad campaigns, pay-per-click, exhibitions and similar events including those in the USA where the Group noticed considerable interest in it's Spend platform and the Group's ability to sell this through its partnership with Metropolitan Commercial Bank.
Staff costs Staff costs, gross of capitalisation and exceptional items, were GBP18.6 million in FY-2022 against GBP16.6 million in FY-2021. These costs were offset by GBP4.2 million of capitalised internal software (FY-2021: GBP3.0 million), which included GBP1.4 million on contractors (FY-2021: GBP0.5 million). The amounts capitalised represent 22% of gross staff costs, increased from 19% in 2021 largely due to inflation impacting contractor costs. Headcount numbers have moved from 255 as at 31 December 2021 to 285 as at 31 December 2022.
Professional fees and
Compliance costs Owing to an increasing cross-industry compliance burden, the Group has chosen to report compliance and similar costs separate to other professional fees. Such costs, including onboarding systems, have risen due to a combination of greater business activity and the Group's desire to fast-track business applications but not at the expense of quality. Professional fees have risen in line with trends widely reported in the national press, most notably the cost of the audit.
Property, insurance
and office costs Renegotiation of office leases has led to lower passing rents which benefit the Group's cashflows but not the EBITDA as such rents are accounted for under IFRS-16. Utility, rates and insurance charges have however risen by an aggregate of 35% from FY-2021 to FY-2022, although much of this is associated with re-occupying a floor in Vintners Place which had previously been vacated during the Covid pandemic.
Exceptional items There were no exceptional costs in FY-2022. In FY-2021, GBP0.7 million had been incurred in the restructuring of a layer of senior management.
Acquisition costs The Group acquired the remainder of the Non-Controlling Interest of Equals Connect Ltd on 30 September 2022. On 28 November the Group announced that it was acquiring an open banking platform through the acquisition of Roqqett Limited. Professional fees incurred in FY-2022 on acquisitions amounted to GBP164k.
Depreciation Tangible fixed assets are depreciated over the anticipated useful life with a maximum of 60 months (other than leasehold improvements which is a maximum of 120 months).
TABLE 4 - DEPRECIATION
FY-2022 FY-2021
GBP'000s GBP'000s
IFRS 16 depreciation 822 931
Other depreciation 389 467
--------- ---------
1,211 1,398
--------- ---------
Guidance: Based upon the expenditure incurred to 31 December 2022, the depreciation charges for those assets in FY-2023 will be:
GBP'000s
IFRS 16 depreciation 668
Other depreciation 375
1,043
---------
Amortisation Intangible assets acquired on acquisition are amortised over their estimated useful lives, with a maximum of 60 months for brands and a maximum of 108 months for customer relationships. The charge to amortisation for the year can be analysed as follows:
TABLE 5 - COMPONENTS OF AMORTISATION CHARGES
FY-2022 FY-2021
GBP'000s GBP'000s
Amortisation charge arising
from the capitalisation of
internally developed software
in the following years:
2018 and earlier 916 1,303
2019 1,661 1,661
2020 893 893
2021 576 287
2022 388 -
---------- ----------
4,435 4,144
Amortisation charge for other
intangibles 291 357
---------- ----------
4,726 4,501
Amortisation of acquired intangibles 1,282 1,311
---------- ----------
Total amortisation charge 6,008 5,812
---------- ----------
Guidance: Based upon expenditure to 31 December 2022, the amortisation charges for FY-2023 are expected to be:
GBP millions
Internally developed software 5.0
Other intangible assets 0.2
Acquired intangibles 1.0
-------------
6.2
-------------
Operating result The Group made a profit before taxation of GBP3.4 million for the year, compared to a loss of GBP3.8 million for FY-2021.
Taxation, incorporating
R&D credits The Group has recognised a net tax credit of GBP135k (FY-2021: GBP1,555k) of which GBPnil (H1-2021: GBP398k) relates to an R&D tax credit repayment. 2021 R&D tax credit repayment was received in full in H2-2022.
TABLE 6- BALANCE SHEET
This table shows a compressed 'balance sheet' for the Group.
31.12.2022 31.12.2021
GBP'000s GBP'000s
Internally generated software - cost 26,001 21,402
Internally generated software - accumulated
amortisation (13,411) (8,976)
----------- -----------
12,590 12,426
Other non-current assets (other than
deferred tax) 18,558 19,791
IFRS 16 assets, less IFRS 16 liabilities (830) (388)
----------- -----------
30,318 31,829
----------- -----------
Liquidity (per Table 9) 14,321 10,739
Trade debtors and accrued income 4,244 3,638
R&D rebates - 398
Prepayments 1,345 998
Deposits and sundry debtors 1,019 329
Inventory of card stock 292 168
Accounts payable (2,069) (1,549)
Affiliate commissions (2,563) (1,945)
PAYE, staff commissions etc. (2,506) (1,884)
Other accruals and other creditors (1,938) (1,349)
----------- -----------
12,145 9,543
----------- -----------
Earn-out balances due (Table 7) (2,025) (1,683)
Implied interest thereon - 63
----------- -----------
(2,025) (1,620)
Net corporation and deferred tax 1,639 888
Net value of forward contracts* 827 511
----------- -----------
441 (221)
----------- -----------
NET SHAREHOLDER FUNDS 42,904 41,151
----------- -----------
At the date of signing of these financial statements, the Company has distributable reserves of GBP1,411k This is equivalent to GBP0.0078 per share.
*The gross value of the forwards book at 31(st) December 2022 was GBP253.3 million (31(st) December 2021: GBP170.1 million)
Earn-outs
The table below shows the financial position relating to acquisitions in and after 2019, including Roqqett Ltd which was completed before the signing of these financial statements but does not appear on the FY-2022 Balance Sheet. However, post the signing of the Share Purchase Agreement, funds were advanced to Roqqett Ltd to ensure they were able to meet their regulatory obligations.
The table below shows the financial position relating to these acquisitions.
TABLE 7 - EARNOUTS
Hermex Casco Effective Roqqett Total
Acquisition date 09.08.2019 19.11.2019 15.10.2020 06.01.2023
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
Acquisition price booked
at acquisition 2,000 2,236 1,575 - 5,811
Earn outs paid by 31.12.2020 (2,000) (1,733) (125) - (3,858)
Revaluation of asset based
on performance - 793 - 793
----------- ----------- ----------- ----------- ---------
Gross outstanding at 31.12.2020 - 1,296 1,450 - 2,746
Paid during 2021 - (741) (368) - (1,109)
Further change in consideration - 46 - - 46
----------- ----------- ----------- ----------- ---------
Gross Outstanding at 31.12.2021 - 601 1,082 - 1,683
Paid during 2022 - (601) (1,082) - (1,683)
Purchase of the remainder
of the NCI - 2,955 - - 2,955
Initial consideration paid
by 31.12.2022 - (930) - - (930)
Gross Outstanding at 31.12.2022 - 2,025 - - 2,025
Loan in advance of acquisition
(FY-2022) - - - 830 830
Paid during Q1-2023 - - - 170 170
----------- ----------- ----------- ----------- ---------
Due in remainder of FY-2023 - 1,560 - 1,250 2,810
----------- ----------- ----------- ----------- ---------
Due in FY-2024 - 465 - 465
----------- ----------- ----------- ----------- ---------
Maximum consideration 2,000 6,655 1,575 2,250 12,480
=========== =========== =========== =========== =========
Total consideration 2,000 6,075 1,575 2,250 11,900
=========== =========== =========== =========== =========
Share capital
The number of shares in issue at 1 January 2022 was 179,341,807. This increased in the year through the exercise of 666,666 share options and 704,000 shares at nominal value were issued pursuant to the 2021 SIP, thus the number of shares outstanding at 31 December 2022 was 180,712,473. A further 747,488 shares at nominal value were issued pursuant to the 2022 SIP and admitted to trading on AIM on 25 January 2023, resulting in a total number of shares in issue at the date of signing of the Financial Statements of 181,459,961.
Share options
At 1 January 2022, the Company had 13,107,800 options outstanding. 666,666 of these were exercised in 2022, 16,000 were cancelled and 250,576 lapsed. On 14 December 2022, the Company announced Discretionary Share Incentive Plans over 3,966,500 shares. Thus, at the date of signing of these financial statements, there were 16,141,058 options, representing 8.5% of the issued share capital and 8.2% of the enlarged share capital.
The cost of external advice for these schemes amounted to GBP46k in the year (FY-2021: GBP84k)
Earnings per share
Earnings per share are reported/calculated in accordance with IAS 33. For non-diluted, the result after tax is divided by the average number of shares in issue in the year. The average number of shares were 180,304,802 (FY-2021: 178,959,402).
The calculation of diluted EPS is based on the result after tax divided by the number of actual shares in issue (above) plus the number of options where the fair value exceeds the weighted average share price in the year. The fair value of options is measured using Black-Scholes and Monte-Carlo. It should be noted that in accordance with Accounting Standards, this calculation is based on fair value, not the difference between the market price at the end of the year or the weighted average price and the exercise price. The weighted average price was 84 pence (FY-2021: 49 pence), the number of options exceeding the fair value was 7,278,986 (FY-2021: 3,553,681).
The basic and diluted EPS are shown below:.
Basic Basic Diluted Diluted
FY-2022 FY-2021 FY-2022 FY-2021
Profit / (loss) per share
(in pence) 1.80 (1.35) 1.73 (1.35)
Adjusted earnings and adjusted EPS
We have observed that the analyst community prepares EPS calculations on a number of different bases. To try and harmonise these we have prepared below a basis which hopefully offers consistency:
FY-2022 FY-2021
GBP'000s GBP'000s
P&L YTD Attributable to owners of Equals Group
PLC 3,236 (2,425)
Add back:
* Share option charges 970 356
* Amortisation of acquired intangibles. 1,282 1,302
- Exceptional items - 671
164 -
* Acquisition costs
* Tax impacts thereon * 31 128
--------- ---------
Adjusted earnings 5,683 32
========= =========
*Tax impacts thereon are associated to Exceptional items and Acquisition costs.
The resulting earnings per share are shown below
Basic Basic Diluted Diluted
FY-2022 FY-2021 FY-2022 FY-2021
Adjusted profit per share
(in pence) 3.15 0.02 3.03 0.02
CASH STATEMENT
The movement in the cash position is shown in the table below:
TABLE 8 - CASHFLOW FY-2022 FY-2021
GBP'000s GBP'000s
Adjusted EBITDA 12,120 6,713
R&D tax credits received 400 1,367
Lease payments (principal and interest) (969) (1,080)
Acquisition costs and Exceptional items (164) (671)
Internally developed software capitalised
for R&D
- Staff (4,191) (3,028)
- IT Costs (408) (301)
Purchase of other intangible assets
less disposals (Non R&D) (445) (532)
Purchase of other non-current assets (271) (78)
Movement in working capital 1,147 1,571
---------- ----------
7,219 3,960
Funds from exercise of share options 193 220
Earn-outs and acquisitions (2,614) (1,108)
Loan made to of acquisition of Roqqett (830) -
Ltd
External funding (CBILS) (2,028) -
---------- ----------
NET CASHFLOWS 1,940 3,072
Balance at 1(st) January 13,104 10,032
---------- ----------
Balance at 31(st) December 15,044 13,104
---------- ----------
Cash per share 8.3 pence 7.3 pence
TABLE 9 - LIQUIDITY FY-2022 FY-2021
GBP000'S GBP000'S
Cash at bank 15,044 13,104
Balances with liquidity providers 1,950 1,675
Pre-funded balances with card provider 1,491 1,615
--------- ---------
Gross liquid resources 18,485 16,394
--------- ---------
Customer balances not subject to safeguarding (4,165) (3,655)
CBILS loan - (2,000)
--------- ---------
(4,165) (5,655)
--------- ---------
Net position 14,320 10,739
--------- ---------
The Group has its principal banking and deposit arrangements with Barclays, NatWest, Citibank and Blackrock.
Richard Cooper
Chief Financial Officer
24 March 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31 DECEMBER 2022
Note FY-2022 FY-2021
GBP'000s GBP'000s
Revenue from currency transactions 63,541 38,424
Revenue from banking transactions 6,141 5,667
--------- ---------
Revenue 69,682 44,091
Transaction and commission costs (36,027) (20,071)
--------- ---------
Gross Profit 33,655 24,020
--------- ---------
Administrative expenses (22,576) (18,499)
Depreciation charge (1,211) (1,398)
Amortisation charge (6,008) (5,812)
Impairment charge E - (1,638)
Acquisition expenses*(1) (164) -
Total operating expenses (29,959) (27,347)
--------- ---------
Memo: Adjusted EBITDA *(2) H 12,120 6,713
--------------------------------------------- ------ --------- ---------
Operating profit / (loss) A 3,696 (3,327)
Finance cost (280) (490)
--------- ---------
Profit / (Loss) before tax 3,416 (3,817)
Tax credit B 135 1,555
--------- ---------
Profit / (Loss) after tax 3,551 (2,262)
========= =========
Attributable to:
Owners of Equals Group PLC 3,237 (2,424)
Non-controlling interest 314 162
Exchange differences arising on translation - -
of foreign operations
--------- ---------
Total comprehensive profit / (loss)
for the year 3,551 (2,262)
========= =========
Attributable to:
Owners of Equals Group PLC 3,237 (2,424)
Non-controlling interest 314 162
--------- ---------
3,551 (2,262)
========= =========
Profit / (Loss) per share C
Basic 1.80p (1.35)p
Diluted 1.73p (1.35)p
Notes:
Adjusted EBITDA is Operating profit or loss before: Depreciation, Amortisation, Impairments, Share option charges, and Separately identifiable items. All income and expenses arise from continuing operations.
*(1) Acquisition costs represents and includes costs pursuant to acquisitions.
*(2) Adjusted EBITDA is not a GAAP measure and represents operating profit or loss before share option charges, depreciation, amortisation and separately identifiable items (exceptional items).
CONSOLIDATED AND COMPANY STATEMENTS OF FINANCIAL POSITION
AS AT 31 DECEMBER
2022 2022 2021 2021
Group Company Group Company
GBP'000s GBP'000s GBP'000s GBP'000s
ASSETS
Non-current assets
Property, plant
and equipment 1,139 - 1,257 -
Right of use
assets 3,367 - 4,874 -
Intangible assets
(note F) 16,540 - 17,492 -
Goodwill 13,468 - 13,468 -
Deferred tax
assets 1,831 1,368 949 1,163
Investments - 62,902 - 61,978
-------------------- -------------------- -------------------- --------------------
36,345 64,270 38,040 63,141
-------------------- -------------------- -------------------- --------------------
Current assets
Inventories 292 - 168 -
Trade and other
receivables 10,274 1,159 8,256 339
Current tax assets - - 397 -
(R&D reclaimable)
Derivative
financial assets
(note G) 5,616 - 2,593 -
Cash and cash
equivalents 15,044 - 13,104 -
-------------------- -------------------- -------------------- --------------------
31,226 1,159 24,518 339
-------------------- -------------------- -------------------- --------------------
TOTAL ASSETS 67,571 65,429 62,558 63,480
==================== ==================== ==================== ====================
EQUITY, AND
LIABILITIES
Equity attributable
to equity
holders
Share capital 1,807 1,807 1,793 1,793
Share premium 53,405 53,405 53,218 53,218
Share-based
payment reserve 3,231 2,397 1,858 1,580
Other reserves 8,609 3,187 8,609 3,187
Accumulated
(losses) /
retained
earnings (24,148) 1,038 (24,590) 1,623
Company loss in
the year - (1,127) - (692)
-------------------- -------------------- -------------------- --------------------
Equity attributable
to owners
of Equals Group
PLC 42,904 60,707 40,888 60,709
Non-controlling - - 263 -
interest
-------------------- -------------------- -------------------- --------------------
42,904 60,707 41,151 60,709
-------------------- -------------------- -------------------- --------------------
Non-current
liabilities
Borrowings - - 1,600 -
Lease liabilities 3,417 - 4,484 -
Deferred tax - - - -
liabilities
-------------------- -------------------- -------------------- --------------------
3,417 - 6,084 -
-------------------- -------------------- -------------------- --------------------
Current liabilities
Borrowings - - 400 -
Trade and other
payables 15,489 4,722 12,002 2,771
Current tax
liabilities 192 - 61 -
Lease liabilities 780 - 778 -
Derivative
financial
liabilities
(note G) 4,789 - 2,082 -
-------------------- -------------------- -------------------- --------------------
21,250 4,722 15,323 2,771
-------------------- -------------------- -------------------- --------------------
TOTAL EQUITY AND
LIABILITIES 67,571 65,429 62,558 63,480
==================== ==================== ==================== ====================
CONSOLIDATED AND COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 DECEMBER
GROUP Called Share Share- Accumulated Other Total Non-controlling Total
up share premium based profit reserves attributable interest equity
capital payment /(losses) to owners of
/ retained Equals Group
earnings PLC
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
At 1 January 2021 1,786 53,003 1,402 (22,259) 8,609 42,541 101 42,642
Loss for the year - - - (2,424) - (2,424) 162 (2,262)
Share-based payment
charge - - 271 - - 271 - 271
Share options
exercised
in year - - (93) 93 - - - -
Shares issued in year 7 215 - - - 222 - 222
Movement in deferred
tax on share-based
payment
reserve - - 278 - - 278 - 278
At 31 December 2021 1,793 53,218 1,858 (24,590) 8,609 40,888 263 41,151
Profit for the year - - - 3,237 - 3,237 314 3,551
Acquisition of the
remaining
NCI - - - (2,902) - (2,902) (577) (3,479)
Share-based payment
charge - - 924 - - 924 - 924
Share options
exercised
in year - - (107) 107 - - - -
Shares issued in year 14 187 - - - 201 - 201
Movement in deferred
tax on share-based
payment
reserve - - 556 - - 556 - 556
At 31 December 2022 1,807 53,405 3,231 (24,148) 8,609 42,904 - 42,904
======== ============ =========== ============= ======== =============== ================= ========
COMPANY Called Share premium Share- Accumulated Other reserves Total equity
up share based losses / retained
capital payment earnings
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
At 1 January 2021 1,786 53,003 1,402 1,530 3,187 60,908
Loss for the year - - - (692) - (692)
Share-based payment
charge - - 271 - - 271
Share options
exercised
in year - - (93) 93 - -
Shares issued in year 7 215 - - - 222
At 31 December 2021 1,793 53,218 1,580 931 3,187 60,709
Loss for the year - - - (1,127) - (1,127)
Share-based payment
charge - - 924 - - 924
Share options
exercised
in year - - (107) 107 - -
Shares issued in year 14 187 - - - 201
At 31 December 2022 1,807 53,405 2,397 (89) 3,187 60,707
=============== =============== ============ ================== ============== =====================
The following describes the nature and purpose of each reserve within owners' equity:
Share capital Amount subscribed for shares at nominal value.
Share premium Amount subscribed for shares in excess of nominal value, less directly attributable costs.
Share-based payment reserve Proportion of the fair value of share options granted relating to services rendered up to the balance sheet date.
Retained deficit Cumulative profit and losses attributable to equity shareholders.
Other reserves comprise:
Merger reserve Arising on reverse acquisition from Group reorganisation.
Contingent consideration reserve Arising on equity based contingent consideration on acquisition of subsidiaries.
Foreign currency reserve Arising on translation of foreign operation.
CONSOLIDATED STATEMENT OF CASHFLOWS
FOR THE YEARED 31 DECEMBER 2022
FY-2022 FY-2022 FY-2021 FY-2021
Group Company Group Company
GBP'000s GBP'000s GBP'000s GBP'000s
Profit / (Loss)
before tax 3,416 (1,332) (3,817) (1,111)
Add: Cashflows
from operating
activities:
Adjustments for:
Depreciation 1,211 - 1,398 -
Amortisation 6,008 - 5,812 -
Impairment - - 1,638 -
Share-based
payment charges 924 - 272 -
Decrease /
(increase) in
trade
and other
receivables
*(1) (9,920) (1,024) 3,614 (63)
(Decrease) /
increase in
trade
and other
payables *(2) 9,707 3,086 (2,688) 954
Decrease /
(increase) in
derivative
financial
assets (3,023) - 426 -
(Decrease) /
increase in
derivative
financial
liabilities 2,707 - (968) -
(Increase) /
decrease in
inventories (124) - 26 -
Finance costs 280 3 490 6
11,186 733 6,203 (214)
-------------------- -------------------- -------------------- --------------------
Net cash inflow /
(outflow) 11,186 733 6,203 (214)
Tax receipts 400 - 1,367 -
Tax paid (61) - - -
NET CASHFLOWS
FROM OPERATING
ACTIVITIES 11,525 733 7,570 (214)
-------------------- -------------------- -------------------- --------------------
Cashflows from
investing
activities
Acquisition of
property plant
and
equipment (271) - (78) -
Acquisition of
intangibles (5,056) - (3,560) -
Acquisition of - - - -
subsidiary, net
of cash acquired
-------------------- -------------------- -------------------- --------------------
Net cash used in
investing
activities (5,327) - (3,638) -
-------------------- -------------------- -------------------- --------------------
Cashflows from
financing
activities
Repayment of (2,000) - - -
borrowings
Principal
elements of
lease payments (837) - (872) -
Interest on
financial
leases (169) - (194) -
Other interest
paid (47) (3) (14) (6)
Acquisition of
the remaining
non-controlling
interest (1,405) (930) - -
Proceeds from
issuance of
ordinary
shares 200 200 220 220
-------------------- -------------------- -------------------- --------------------
Net cash
(outflow) /
Inflow from
financing
activities (4,258) (733) (860) 214
-------------------- -------------------- -------------------- --------------------
NET INCREASE/
(DECREASE) IN
CASH
AND CASH
EQUIVALENTS 1,940 - 3,072 -
Cash, and cash
equivalents at 1
January 13,104 - 10,032 -
-------------------- -------------------- -------------------- --------------------
Cash, and cash
equivalent at 31
December 15,044 - 13,104 -
==================== ==================== ==================== ====================
*(1) The movement in the deferred and current tax assets and the right-of use asset balances (excluding the depreciation charge) is included within the movement in trade and other receivables .
*(2) The movement in the deferred and current tax liabilities and the lease liability balances is included within the movement in trade and other payables.
ABBREVIATED NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2022
A - OPERATING PROFT / (LOSS) IS STATED AFTER CHARGING:
FY-2022 FY-2021
GBP'000s GBP'000s
Staff costs:
Commissions 3,633 3,152
Other pay and benefit elements* 16,464 14,613
Training, recruitment, 662 309
Vehicle leasing costs 154 138
Contractors 1,471 656
----------- ---------
Costs gross of exceptional items 22,384 18,868
Less: incorporated in Transaction
and commission costs (3,633) (3,152)
Less: amounts capitalised (4,191) (3,028)
Less: IFRS 16 (154) (138)
Included in administrative expenses 14,406 12,550
----------- ---------
IT, and telephone costs 2,420 2,101
Less: amounts capitalised (408) (301)
----------- ---------
Included in administrative expenses 2,012 1,800
----------- ---------
Professional and compliance fees
Statutory audit costs 420 303
Other professional and compliance
fees 1,464 1,029
----------- ---------
Included in administrative expenses 1,884 1,332
----------- ---------
Property costs
Rents 785 986
Other property costs 911 837
----------- ---------
1,696 1,823
Less: IFRS 16 (763) (1,001)
included in administrative expenses 933 822
----------- ---------
Travel and subsistence 442 300
Marketing 1,858 1,171
Other costs, including SIP and
LTIP advisory fees 46 87
Included in administrative expenses 2,346 1,558
----------- ---------
Sub-total, cash based expenditure 21,581 18,062
--------------------------------------- ----------- ---------
Share option charge 924 272
Foreign exchange loss 71 114
Contingent consideration charge - 51
Sub-total, non-cash based costs 995 437
-----------
Total, administrative expenses 22,576 18,499
Add:
Depreciation - right to use assets 822 931
Depreciation - property, plant,
equipment 389 467
Amortisation charge (see table 5,) 6,008 5,812
Impairment charge - 1,638
Acquisition costs 164 -
----------- ---------
TOTAL OPERATING EXPENSES 29,959 27,347
=========== =========
*includes separately reported items. - 671
----------- ---------
B. TAXATION
The Group's taxation charge or credit is the composite of:
1. Corporation tax credit arising on losses in the financial year,
2. R&D tax credits received or receivable on development expenditure (which is debited to the Balance Sheet),
3. Deferred taxation arising on temporary and permanent timing differences and losses carried forward, to the extent that the Company believes these to be recoverable from future taxable profits.
FY-2022 FY-2021
GBP'000s GBP'000s
R&D credit - current year - (398)
Corporation tax charge 192 61
--------- ---------
Current tax credit 192 (337)
--------- ---------
Origination and reversal of temporary differences (203) (997)
Recognition of previously unrecognised deductible
temporary differences (124) (221)
--------- ---------
Deferred tax credit (327) (1,218)
--------- ---------
Total tax credit (135) (1,555)
========= =========
At 31 December 2022, the Group had tax losses available to be offset against future taxable profits of GBP17,632k (FY-2021: GBP17,186k). The losses can be carried forward indefinitely and have no expiry date.
Additional to corporate taxation, the Group paid GBP3,729k in taxation during the year as follows:
a. Employers National Insurance contributions - GBP2,145k (FY-2021: GBP1,724k),
b. irrecoverable VAT - GBP1,584k (FY-2021: GBP1,127k)
Factors affecting tax credit for the year
The credit for the year can be reconciled to the loss per the consolidated statement of comprehensive income as follows:
FY-2022 FY-2021
GBP'000s GBP'000s
Profit / (Loss) before taxation: continuing
operations 3,416 (3,817)
--------- ---------
Taxation at the UK corporation tax rate of 19.0% 649 (725)
Net permanent differences between tax and accounting 78 112
Adjustments to R&D tax credits in respect of - -
previous accounting period
Net taxation impact of R&D tax credit claim (655) (535)
Remeasure of deferred tax asset on carry-forward
losses (124) (221)
Effect of change in tax rates - (121)
Utilisation of tax losses (83) (65)
--------- ---------
(135) (1,555)
--------- ---------
C. PROFIT / (LOSS) PER SHARE
Basic earnings per share
The calculation of basic profit or loss per share has been based on the profit or loss attributable to ordinary shareholders and weighted average number of ordinary shares outstanding. The profit or loss after tax attributable to ordinary shareholders of the Group is GBP3,236k (FY-2021: GBP2,424k Loss) and the weighted average number of shares for the period was 180,304,802 (FY-2021: 178,959,402).
Diluted earnings per share
The calculation of diluted earnings per share has been based on the profit / 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 187,583,788 (FY-2021: 178,959,402).
Basic Diluted Basic Diluted
FY-2022 FY-2022 FY-2021 FY-2021
Profit / (Loss) per share 1.80p 1.73p (1.35)p (1.35)p
Adjusted profit / (loss)
per share (note D) 3.15p 3.03p 0.02p 0.02p
D. ADJUSTED PROFIT / (LOSS) PER SHARE
The calculation of adjusted earnings per share has been based on the analyst community calculations, which takes profit or loss attributable to ordinary shareholders and excludes share option charges, amortisation on acquired intangibles, exceptional items, acquisition costs and tax on these items, and weighted average number of ordinary shares. The adjusted earnings after tax to ordinary shareholders of the Group is GBP5,683k* (FY-2021: GBP32k) and the weighted average number of shares and diluted shares are as above.
E. IMPAIRMENT
The bureau de change business acquired with City Forex in 2018 has languished under COVID-19 restrictions and thus the Group concluded in 2021 that it should be impaired to a carrying value of GBP579k. On 14 March 2023, the Group sold the Travel Cash CGU for an initial GBP250k with a further GBP100k subject to certain conditions being met to Currency Exchange Corporation Ltd. The carrying value of the assets disposed off were GBP128k shown in note 4 and consisted of right of use and intangible assets.
F. INTANGIBLE ASSETS OTHER THAN GOODWILL
Intangible assets comprise:
Intangible Intangible Other intangible Total, Total,
assets assets acquired assets 31 December 31 December
All in GBP'000s recognised through 2022 2021
through internal
acquisitions capitalisation
Cost at 31.12.2021 8,946 21,402 1,673 32,021 32,021
-------------
Additions in year - 4,599 445 5,044
Cost at 31.12.2022 8,946 26,001 2,118 37,065
-------------- ----------------- ----------------- -------------
Amortisation at
31.12.2021 (4,540) (8,976) (1,013) (14,529) (14,529)
-------------
Amortisation in
the year (1,282) (4,435) (279) (5,996)
Amortisation at
31.12.2022 (5,822) (13,411) (1,292) (20,525)
-------------- ----------------- ----------------- -------------
Net Book Value
at 31.12.2022 3,124 12,590 826 16,540
============== ================= ================= =============
Net book value at
31.12.2021 4,406 12,426 660 17,492
============== ================= ================= =============
G. DERIVATIVE FINANCIAL ASSETS AND LIABILITIES
The Group does not take house positions on foreign exchange contracts. Each contract with a customer is contemporaneously booked with a bank or liquidity provider. Under accounting standards however, the contracts need to be valued as both a 'purchase' and a 'sale'. The valuation of these contracts is done by a third party using information sourced from Bloomberg.
H. RECONCILIATION FROM OPERATING PROFT / (LOSS) TO ADJUSTED EBITDA
FY-2022 FY-2021
GBP'000s GBP'000s
Operating profit / (loss) before taxation 3,696 (3,327)
Add back:
Depreciation 1,211 1,397
Amortisation 6,008 5,812
Impairment charge - 1,638
Acquisition expenses 164 -
Separately reported items - 671
FX differences 71 115
Share Option charges 924 272
Other Share Option charges 46 84
Contingent Consideration - 51
--------- ----------
Adjusted EBITDA 12,120 6,713
========= ==========
- ENDS -
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March 27, 2023 02:00 ET (06:00 GMT)
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