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 0.0% 124.50 124.00 125.00 0.00 0.00 0.00 0.00 00:00:00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
General Retailers 26.1 2.1 1.7 74.1 205

Equals Group PLC Interim Results

26/09/2019 7:01am

UK Regulatory (RNS & others)


Fairfx (LSE:FFX)
Historical Stock Chart

2 Months : From Sep 2019 to Nov 2019

Click Here for more Fairfx Charts.

TIDMEQLS

RNS Number : 7060N

Equals Group PLC

26 September 2019

26 September 2019

Equals Group plc

("Equals" or "the Group" or "the Company")

Interim Results for the six months ended 30 June 2019

Strong Half Year performance, continuing into second half.

Equals, the e-banking and international payments group, announces its interim results for the six months ended 30 June 2019.

Financial highlights:

   --      Group turnover(1) of GBP1.261 billion (H1 2018: GBP1.067 billion), an increase of 18.1% 
   --      Group revenue of GBP14.6 million (H1 2018: GBP12.0 million), an increase of 21.4% 
   --      Gross profit of GBP12.1 million (H1 2018: GBP9.7 million), an increase of 24.4% 
   --      Adjusted EBITDA(2) of GBP4.7 million (H1 2018: GBP2.7 million), an increase of 78.0% 
   --      Adjusted PBT(3) of GBP3.3 million (H1 2018: GBP2.6 million), an increase of 15.4% 

(1) Turnover is measured by gross value of currency transactions sold of GBP902.8 million plus gross value of deposits into bank accounts of GBP358.7 million for a total of GBP1,261.5 million

   (2)   Adjusted EBITDA is earnings before interest, tax, depreciation and amortisation charges, acquisition-related expenses, share-based payments and foreign exchange gains and losses 

(3) Adjusted PBT is profit before tax, acquisition-related expenses, amortisation of acquisition intangibles, share-based payments and exchange rate gains or losses

Operational highlights:

-- Rebranding of Group from FairFX to Equals to reflect diversified business and greater range of products

   --      Real-time Gross Settlement (RTGS) accounts opened at Bank of England 
   --      Direct Membership of the UK Faster Payment Scheme 
   --      Corporate expense platform up 41.0% to GBP106.6 million (2018: GBP75.6 million) 
   --      Percentage of H1 Turnover from Corporate Customers rose to 68% from 52% in H1 2018 

-- Gained FCA Credit Broker Licence, allowing Group to offer loan products to customers via a broker model

-- Continued focus on supply chain rationalisation and direct connectivity, driving better unit economics

-- 123,392 new customers added to the business, bringing the total number of customers to 1,167,893

Post-Period End:

   --      Strong start to H2 with turnover up 18%* year on year 
   --      Continued growth in Corporate Expense platform and International Payments 

-- Global banking partnership with Citi Commercial Bank providing improved payment speed and reduced cost

   --      Acquisition of international payments business HermexFX 

-- Completed successful share placing, raising gross proceeds of GBP14.3m to accelerate corporate offering and facilitate market consolidation through bolt-on acquisitions

   --      International Payments live in the USA with domestic settlement via partnership with MCB 

-- Five-year agreement with Mastercard to grow cards-based businesses on improved economic terms

*for H2 period to 23(rd) September 2019

Commenting on the results and outlook, Chief Executive Officer of Equals, Ian Strafford-Taylor, said:

"The business has delivered an excellent first half performance, continuing into the second half, both operationally and financially. Our strategic focus on rationalising supply chain through direct connectivity to payment schemes and other measures are proving successful, as demonstrated by our improving margins as we pay away less direct costs.

"The increasing diversity of our product range, adding non-FX products to our heritage revenue streams, has helped the Group achieve this against a less than benign macro-economic environment and weaker Sterling.

"With the steps we have achieved already and new revenue streams coming in during the rest of the year, the outlook for the Group's full financial year remains positive.

"Against this background, we remain confident that the full year results will be in line with expectations."

Contact:

 
 Equals Group plc 
  Ian Strafford-Taylor, CEO         +44 (0) 20 7778 9308 
 Cenkos Securities plc 
  Max Hartley/Callum Davidson 
  Nick Searle                       +44 (0) 20 7397 8900 
 Canaccord Genuity 
  Bobbie Hilliam / David Tyrrell 
  Alex Aylen                        +44 (0) 20 7523 8150 
 Yellow Jersey 
  Charles Goodwin 
  Joe Burgess                         +44 (0) 7747 788 221 
  Annabel Atkins                      +44 (0) 7946 424 651 
 

H1 Operational Summary

The excellent growth of the Equals Group in the first six months of 2019 was achieved in an operating environment dominated by the continuing lack of clarity over Brexit, which continues to impact consumer and business confidence. This performance emphasises the success of reducing the Group's reliance on FX revenues with 37% of turnover deriving from non-FX activities in H1 2019 compared with 32% in the same period last year and 14% in the same period in 2017. The success of the Group's strategy to increase its focus on the Corporate customer space was also shown as the turnover through the Corporate Expense platform grew by 41.0%. The overall percentage of Group turnover from corporate clients rose to 68% in the period compared to 52% in H1 2018.

In April 2019, the Group consolidated its London-based staff into the refurbished Group headquarters, greatly aiding internal efficiency demonstrated by more rapid product iteration and improved cross-selling.

Within the Banking division, the Group gained Real-Time Gross Settlement (RTGS) Accounts at the Bank of England. Through this the Group became a Direct Member of the UK Faster Payment Scheme, allowing the Group to offer immediate, same day UK domestic payments. These two achievements were the culmination of a year-long initiative and demonstrate the Group's strategy of direct connection to payment schemes rather than going via third parties. The benefit of this strategy is four-fold: yielding vastly near instantaneous movement of money for customers, quicker resolution of payment issues, reduced point-of-failure in the supply chain and significant cost reductions for the Group.

Also within Banking, in June 2019 the Group was granted permission by the FCA to offer Credit products to customers on a Broker-basis, thus enabling a wide range of loan products to be offered to both its business and retail customers. The Group will be acting as a broker with the loans provided by FCA authorised third party lenders, so there will be no credit risk to the Group and the loans will not appear on the Group's balance sheet.

In the currency card division, we continued to rationalise the supply chain, resulting in improved financial terms with existing partners combined with moving business to more favourable relationships where possible. In addition, in keeping with our strategy of direct connectivity to payment schemes, the process of issuing our cards directly under licence with Mastercard, rather than using third-parties, was accelerated and will yield significant future benefits. The Group yesterday announced that it had entered into a new five year agreement with Mastercard, whereby they will provide assistance to grow Equals' various card-based businesses through improved economic terms and also assist in the process of Equals becoming an issuer of all its cards.

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 will move towards a monolithic brand architecture with a suite of product brands underneath with a consistent identity. The Group has moved beyond its heritage foreign exchange business into integrated money management solutions for consumers and business. The unification of the brand away from the inhouse and acquired brands will simplify the marketing messaging, optimise customer acquisition, retention and engagement whilst facilitating improved cross-selling between the family of products.

Financial Review

The Group has enjoyed a strong first half of trading with excellent top line growth, translating into increased revenue and EBITDA in line with expectations. Against this background, strong margins have been maintained and rationalisation of the supply chain is delivering results.

Turnover for the first half was up 18.1% year on year to GBP1.261.5 billion (2018: GBP1.067.4 billion), in line with management's expectations with strong performances from corporate expenses, international payments and banking.

Group revenue increased by 21.4% to GBP14.6m (2018: GBP12.0m) with the revenue margin (revenue over turnover) slightly improved in the period to 1.16% (2018: 1.13%) A major part of the revenue growth is due to currency cards which grew by 48.9% to GBP6.1 million (2018: GBP4.1 million) due to increased volumes and improved terms with the supply chain. International Payments also performed strongly with a 22% increase in revenue to GBP4.8 million (GBP3.9 million), demonstrating the Group's ability to grow the International Payments book both organically and through acquisition.

Gross profit was GBP12.1 million (2018: GBP9.7 million), an increase of 24.4% on prior year and ahead of revenue growth. This was due to the cost focus on the supply chain.

The Group's operating expenses increased by 33.0% to GBP9.9 million (2018: GBP7.4 million) on the same period last year. Adjusting for non-recurring costs such as the marketing re-brand, the adjusted costs are 21.9% ahead at GBP9.1 million (2018 GBP7.4 million). The increased operating costs include the full year effect of the City Forex acquisition and an increased depreciation and amortisation charge of GBP1.7 million (2018: GBP0.4 million). The increase in the depreciation and amortisation charge is primarily to the implementation of the new accounting treatment for leases (IFRS16) which requires property leases to be capitalised and amortised over the period of the lease and the amortisation of the internally generated intangible fixed assets. The Group has also invested further in people in areas such as cross sales, data analytics, product and design, which is expected to have a positive effect on revenue in future periods.

As illustrated in the table below, the Company achieved adjusted EBITDA of GBP4.7 million (2018: GBP2.7 million) for the period, an increase of 78%. This is a result of strong top line organic growth increasingly converting to profitability by maintaining product margins and a stable cost base. The Group has proved it can assimilate acquired companies efficiently and extract revenue and cost synergies.

The adjusted PBT in the first half of GBP3.3 million (H1 2018: GBP2.6 million), up 27% in the period, demonstrates the Group's success in executing its strategy of top line growth whilst maintaining revenue margins and controlling costs.

 
 Adjusted EBITDA/PBT Calculation    2019 H1 GBP   2018 H1 GBP   2018 FY GBP 
 Statutory Net Profit                 1,464,079     2,083,559     2,617,666 
 Amortisation of acquisition 
  intangibles                           414,956       310,100       794,959 
 Other amortisation charges             702,469             -       523,690 
 Depreciation costs                     614,663        86,011       200,123 
 Right of use asset - Interest          148,247             -             - 
  charge 
 Tax expense / (credit)                 525,838      (58,919)     (538,343) 
                                   ------------  ------------  ------------ 
 EBITDA                               3,870,252     2,420,750     3,598,095 
 Acquisition-related costs               22,966       227,752       297,484 
 Marketing rebrand costs                725,558             -       590,034 
 Development costs                            -             -     1,404,962 
 Restructuring costs                          -             -     1,048,119 
 Recruitment costs                            -             -       499,617 
 Other                                  116,540        13,627        74,039 
 Adjusted EBITDA                      4,735,316     2,662,129     7,512,350 
 Depreciation costs                   (614,663)      (86,011)     (523,690) 
 Other amortisation charges           (702,469)             -     (200,123) 
 Right of use asset interest          (148,247)             -             - 
  charge 
 Adjusted PBT                         3,269,938     2,576,118     6,788,537 
 Tax expense / (credit)                 525,838      (58,919)     (538,343) 
                                   ------------  ------------  ------------ 
 Adjusted PAT                         2,744,100     2,635,038     7,326,880 
                                   ------------  ------------  ------------ 
 

The tax expense in the period is due to an increase in the deferred tax liability driven by the increase in the intangible assets. The deferred tax expense is purely an accounting entry with no cash impact and the deferred tax liability will unwind in future years as the asset is amortised. The Group reported tax losses brought forward at the end of 2018 of GBP9.3 million and so does not expect to pay any tax in the near term.

The Adjusted PAT was only slightly ahead at GBP2.7 million (2018: GBP2.6 million) on the previous period due to the higher depreciation and amortisation charges and the tax charge in the period.

The Company's balance sheet remains healthy with net assets of GBP41.9 million (H1 2018: GBP37.1 million), whilst cash and cash equivalents (excluding client money) totalled GBP4.8 million (H1 2018: GBP10.7 million).

The adjusted statutory EPS was slightly down at 1.72p (2018: 1.79p) due to the higher depreciation and amortisation and tax charges in 2019 compared to the prior period and the increased average number of shares in issue - 159.6 million (2018: 147.6 million).

Current Trading and Outlook

In the second half of the year, Equals continues to build on the significant growth achieved, with total turnover for the 2 and a half-month period to 23(rd) September 2019 of GBP722 million, up 18% on the same period last year. Growth continues to be strongest in International Payments and Corporate Expenses product lines, up 19% and 30% respectively in the post period.

The Group has entered into a global relationship with Citi Commercial Bank, allowing it to leverage Citi's extensive global footprint to enhance its current product offering and bring even more efficiencies to current processes. Citi has local settlement and clearance capabilities for payments in over 90 countries, which together will improve the customer experience through faster settlement and deliver improved economics for Equals in terms of reduced transaction costs. The partnership will also significantly increase the number of currencies Equals is able to offer clients, with more than 135 being available on Citi's WorldLink platform.

Following the attainment of the credit broker licence, an online revolving credit facility is currently in live beta testing. The credit offering is in partnership with iwoca and will allow SME's to apply and receive a decision in minutes and immediately receive funds. Business customers will be able to choose to receive funds directly into their account or onto prepaid card, either virtual or physical, which will be issued by the Group under its Mastercard membership. With the benefit of the Group's membership of Faster Payments, funds could be spent directly and immediately; for instance, in cases where stock needs to be purchased or an urgent invoice be settled.

In early August 2019, the Group acquired the international payments business of Hermex International Limited ("Hermex FX") for total consideration of GBP2 million cash. HermexFX offers international payment services to a predominantly corporate client base through a personalised service offering. The Acquisition will complement the Group's strategy to develop its fast-growing corporate segment, providing additional corporate clients and cross-selling opportunities for the expanding range of products through their existing sales channels. The Group continues to monitor attractive acquisition opportunities and intends to make further acquisitions in line with its stated growth strategy.

In the second half of August 2019, the Group announced that it has raised GBP14.3m in equity which will used to accelerate the corporate offering, facilitate market consolidation through bolt-on acquisitions and provide growth working.

Accordingly, the Board of Equals continues to be confident of meeting market expectations for the full year.

EQUALS group PLC (formerly knowN as fairfx Group plc)

consolidated statement of COMPREHENSIVE INCOME

 
                                                 Unaudited       Unaudited           Audited 
                                                  6 Months        6 Months              Year 
                                                     Ended           Ended             Ended 
                                                 30-Jun-19       30-Jun-18         31-Dec-18 
                                     Notes             GBP             GBP               GBP 
 
 Gross value of currency 
  transactions sold                            902,837,168     805,293,495     1,783,710,215 
 Gross value of currency 
  transactions purchased                     (890,779,786)   (796,327,938)   (1,763,246,570) 
 Revenue on currency transactions               12,057,382       8,965,557        20,463,645 
 Banking revenue                                 2,538,317       3,057,739         5,628,747 
 Revenue                                 4      14,595,699      12,023,296        26,092,392 
 Direct costs                                  (2,534,403)     (2,328,410)       (5,605,961) 
 Gross profit                                   12,061,296       9,694,886        20,486,431 
 Administrative expenses                       (9,900,166)     (7,442,495)      (18,109,624) 
 Acquisition expenses                             (22,966)       (227,752)         (297,484) 
 Operating profit                                2,138,164       2,024,639         2,079,323 
 Lease finance costs                             (148,247)               -                 - 
 Profit before tax                               1,989,917       2,024,639         2,079,323 
 Tax credit / (expense)                5         (525,838)          58,919           538,343 
 Profit and total comprehensive 
  income for the period 
  / year                                         1,464,079       2,083,558         2,617,666 
 
 
 Earnings per share 
 Basic                                 6             0.92p           1.41p             1.68p 
 Diluted                               6             0.89p           1.38p             1.64p 
 
 
 
 
 
 

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.

The below notes to the financial statements form an integral part of these financial statements.

*Refer to note 1

The below notes to the financial statements form an integral part of these financial statements.

 
  EQUALS group PLC (formerly knowN as fairfx Group plc) 
 
    consolidated statement of FInancial POSITION 
                                             Unaudited as at    Unaudited     Audited as 
                                                                    as at           at 
                                                    30-Jun-19      30-Jun-18     31-Dec-18 
                                                                 (Restated*) 
                                                    GBP             GBP            GBP 
     ASSETS 
     Non-current assets 
     Property, plant and equipment                  1,705,336        603,246       941,826 
     Right of use assets                            6,619,677              -             - 
     Intangible assets and goodwill                30,817,014     24,622,318    27,107,873 
     Deferred tax asset                             2,679,747        511,912     2,035,728 
                                              41,821,774        25,737,476     30,085,427 
     Current assets 
     Inventories                                      285,569        239,763       286,713 
     Trade and other receivables                   11,638,788      4,252,944     7,150,750 
     Deferred tax asset                                     -              -       859,914 
     Derivative financial assets                    2,600,695        279,522     1,181,892 
     Cash and cash equivalents                      4,848,870     10,734,011     7,860,368 
                                                   19,373,922     15,506,240    17,339,637 
 
     TOTAL ASSETS                                  61,195,696     41,243,716    47,425,064 
 
     EQUITY AND LIABILITIES 
     Equity attributable to Equity holders 
     Share capital                                  1,643,176      1,553,682     1,553,682 
     Share premium                                 38,239,668     35,858,770    35,858,770 
     Share based payment reserve                    1,757,519      1,168,832     1,748,105 
     Merger reserve                                 8,395,521      8,395,521     8,395,521 
     Contingent consideration reserve                 207,100        543,172       543,172 
     Retained deficit                             (8,368,798)   (10,366,986)   (9,832,880) 
                                                   41,874,186     37,152,991    38,266,370 
 
 
     Non-Current liabilities 
     Deferred tax liability                         2,221,037        261,206     1,543,894 
     Lease liability                                6,673,019              -             - 
                                                    8,894,056        261,206     1,543,894 
     Current liabilities 
     Trade and other payables                       7,617,240      3,588,979     6,679,131 
     Deferred tax liability                                 -        117,838       356,713 
     Derivative financial liabilities               2,601,035        122,702       578,956 
     Lease liability                                  209,180 
                                                   10,427,455      3,829,519     7,614,800 
 
     TOTAL EQUITY AND LIABILITIES                  61,195,696     41,243,716    47,425,064 
 

*Refer to note 1

The below notes to the financial statements form an integral part of these financial statements.

EQUALS group PLC (formerly knowN as fairfx Group plc)

consolidated statement of CHANGES IN EQUITY

 
                        Share        Share       Share       Retained      Merger       Contingent       Total Equity 
                      Capital      Premium       Based         De cit     Reserve    consideration       Attributable 
                                               Payment                                     reserve    to Shareholders 
 
                          GBP          GBP         GBP            GBP         GBP              GBP                GBP 
 
 Balance as 
  at 1 January 
  2018              1,553,682   35,858,770   1,144,832   (12,450,546)   8,395,521          543,172         35,045,431 
 Profit for 
  the period                -            -           -      2,083,559           -                -          2,083,559 
 Share based 
  payment charge            -            -      24,001              -           -                -             24,001 
 Balance as 
  at 30 June 
  2018              1,553,682   35,858,770   1,168,832   (10,366,986)   8,395,521          543,172         37,152,991 
 
 Balance as 
  at 1 January 
  2018              1,553,682   35,858,770   1,144,832   (12,450,546)   8,395,521          543,172         35,045,431 
 Profit for 
  the period                -            -           -      2,617,666           -                -          2,617,666 
 Share based 
  payment charge            -            -     603,273              -           -                -            603,273 
 Balance as 
  at 31 December 
  2018              1,553,682   35,858,770   1,748,105    (9,832,880)   8,395,521          543,172         38,266,370 
 
 Profit for 
  the year                  -            -           -      1,464,080           -                -          1,464,080 
 Shares issued 
  in the period        89,494    2,380,898           -              -           -        (336,072)          2,134,320 
 Share based 
  payment charge            -            -       9,414              -           -                -              9,414 
 Balance as 
  at 30 June 
  2019              1,643,176   38,239,668   1,757,519    (8,368,798)   8,395,521          207,100         41,874,186 
 

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        Fair value of share options granted to both directors 
                             and employees. 
 Retained deficit           Cumulative profit and losses are attributable 
                             to equity shareholders. 
 Merger reserve             Arising on reverse acquisition from Group reorganisation. 
 Contingent consideration   Arising on equity based contingent consideration 
  reserve                    on acquisition of subsidiaries 
 

Under the principles of reverse acquisition accounting, the Group is presented as if Equals Group PLC had always owned the FairFX (UK) Limited Group. The comparative and current period consolidated reserves of the Group are adjusted to reflect the statutory share capital and merger reserve of Equals Group PLC as if it had always existed.

The below notes to the financial statements form an integral part of these financial statements.

EQUALS group PLC (formerly knowN as fairfx Group plc)

CONSOLIDATED STATEMENT OF CASH FLOWS

 
                                                                            Audited as 
                                           Unaudited      Unaudited                 at 
                                            6 months       6 months 
                                               ended          ended         Year ended 
                                                        (Restated*) 
                                           30-Jun-19      30-Jun-18          31-Dec-18 
 
                                                 GBP            GBP                GBP 
 
 Profit for the period / year              1,464,080      2,083,559          2,617,666 
 
 Cash flow from operating activities 
 
 Adjustments for: 
 Depreciation                                614,663         71,082            200,123 
 Amortisation                              1,117,424        325,029          1,318,649 
 Interest paid on lease liabilities        (148,247)              -                  - 
 Share based payment charge                    9,414         24,000             53,765 
 Increase in deferred tax asset 
  on share-based payment                           -              -            549,508 
 Decrease / (increase) in trade 
  and other receivables                  (4,488,038)      1,146,761        (1,551,213) 
 Decrease / (increase) in derivative 
  financial assets                       (1,418,803)         24,253          (878,117) 
 Decrease / (increase) in deferred 
  tax asset                                  215,896              -        (2,383,730) 
 Decrease / (increase) in inventories          1,144       (40,016)           (86,966) 
 Increase in trade and other 
  payables                                   938,110        942,164          1,899,118 
 Increase / (decrease) in deferred 
  tax liabilities                            320,430       (58,919)            878,369 
 Increase / (decrease) in derivative 
  financial liabilities                    2,022,079       (22,503)            433,751 
 Net cash generated from operating 
  activities                                 648,152      4,495,410          3,050,923 
 
 Cash flows from investing 
  activities 
 Acquisition of property, plant 
  and equipment                            (946,826)      (203,205)          (670,827) 
 Acquisition of intangibles              (4,826,565)              -        (5,758,957) 
 Acquisition of subsidiary, 
  net of cash acquired                             -    (6,963,834)        (6,563,834) 
 Investment in subsidiary undertaking              -    (4,397,423)                  - 
 Deferred contingent consideration 
  on acquisition of subsidiary             (336,072)              -                  - 
 Net cash used in investing 
  activities                             (6,109,463)   (11,564,462)       (12,993,618) 
 
 Cash flows from financing 
  activities 
 Proceeds from issuance of 
  ordinary shares                          2,470,392              -                  - 
 Principal elements of lease 
  payments                                  (20,578)              -                  - 
 Net cash from financing activities        2,449,814              -                  - 
 
 Net increase / (decrease) 
  in cash and cash equivalents           (3,011,497)    (7,069,052)        (9,942,695) 
 Cash and cash equivalents 
  at the beginning of the period 
  / year                                   7,860,368     17,803,063         17,803,063 
 Cash and cash equivalents 
  at the end of the period / 
  year                                     4,848,871     10,734,011          7,860,368 
 

*Refer to note 1

The below notes to the financial statements form an integral part of these financial statements.

EQUALS group PLC (formerly knowN as fairfx Group plc)

Notes to the unaudited Consolidated Interim FINANCIAL STATEMENTS for the six months ending 30 June 2019

   1.     Basis of preparation and accounting policies 

The consolidated interim nancial statements have been prepared in accordance with the AIM rules and the basis of accounting policies set out in the accounts of the Group for the year ended 31 December 2018, except in relation to IFRS 16 Leases. The consolidated interim nancial statements have been prepared using recognition and measurement principles of IFRS as adopted for use in the European Union. The IASB has issued a number of IFRS and IFRIC amendments or interpretations since the last annual report was published. It is not expected that any of these will have a material impact on the Group and therefore accounting policies applied are consistent with those disclosed in the annual nancial statements for the year ended 31 December 2018.

The interim nancial statements are unaudited and were approved by the Board of Directors for issue on 26 September 2018. The information set out herein is abbreviated and does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. These interim consolidated nancial statements do not include all disclosures which would be required in a complete set of nancial statements and should be read in conjunction with the 2018 Annual Report. The results for the year ended 31 December 2018 are in abbreviated form and have been extracted from the published nancial statements of the Group. There were audited and reported upon without quali cation by KPMG LLP and did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006.

The Group has not applied IAS 34 "Interim Financial Reporting" (which is not mandatory for UK Groups) in the preparation of this interim report.

The Company is a limited liability company incorporated and domiciled in England and Wales and whose shares are quoted on AIM, a market operated by The London Stock Exchange. The Group nancial statements are presented in pounds Sterling, which is the Group's presentational currency.

Changes in significant accounting policies

IFRS 16 Leases: IFRS 16 has replaced the existing IFRS guidance on leases. IFRS 16 has removed the distinction for lessees between an operating lease and a finance lease, and considers all leases to be treated in the same way. The lease liability for all leases is required to be recognised, with a right-of-use asset being recognised. A right-of-use asset represents the right to use the underlying asset for the period of the lease. The right-of-use asset is a non-current asset, and can be either an item of property, plant and equipment, investment property or an intangible asset.

Initial adoption: The Group has initially applied IFRS 16 at 1 January 2019, using the modified approach, right of use assets equals to total lease liabilities. Under this approach, comparative information is not restated and there is no cumulative effect of initial adoption.

Prior year adjustment

Customer cash is held in the Group's bank accounts and principally represents funds held in CardOne payment accounts or funds credited for the purposes of International Payments. The Group has considered the accounting for cash held on behalf of customers. In previous periods, cash held on behalf of customers has been recognised on balance sheet, with an equal liability to the customer.

During the year ended 31 December 2018, the Directors received legal advice in connection with the risks and rewards to the Group that arise from the holding of customer money and has concluded that the risks and rewards are principally vested with the customer. As a result, the Group no longer accounts for customer cash as an asset and, similarly, no longer holds a liability to the customer. The Directors also concluded that the risks and rewards were substantially the same in prior periods and have adjusted the prior year financial statements of the Group accordingly. The impact on the Group's financial statements in the prior period was as follows:

 
 6 months to 30 June 2018              As Stated            Effect      Restated 
                                                    of restatement 
 Group                                       GBP               GBP           GBP 
 Statement of financial position 
 Cash and cash equivalents            57,809,546      (47,075,535)    10,734,011 
 Trade and other payables           (50,664,514)        47,075,535   (3,588,979) 
 Statement of cash flows 
 (Decrease) / increase in 
  trade and other payables            13,870,033      (12,927,869)       942,164 
 Net cash (outflow) / inflow 
  from operating activities           17,423,279      (12,927,869)     4,495,410 
 Net increase / (decrease) 
  in cash and cash equivalents         5,858,817      (12,927,869)   (7,069,052) 
 Cash and cash equivalents 
  at the beginning of the 
  period                              51,950,729      (34,147,666)    17,803,063 
 Cash and cash equivalents 
  at end of the period                57,809,546      (47,075,535)    10,734,011 
 
   2.     Basis of consolidation 

The consolidated nancial statements incorporate the nancial statements of the Company and its subsidiary undertakings. The company did not undertake any transactions prior to 30 June 2014.

On 5 August 2014, Equals Group PLC listed its shares on AIM, a market operated by The London Stock Exchange. In preparation for the Initial Public O ering ("IPO") the Group was restructured. The restructure impacted a number of the prior year and comparative primary nancial statements and notes. The e ect of this reorganisation was to insert one new company into the Group, a new ultimate holding company, Equals Group PLC.

Equals Group PLC acquired the entire share capital of FairFX (UK) Limited on 22 July 2014 through a share for share exchange. For the consolidated financial statements of the Group, prepared under IFRS, the principles of reverse acquisition under IFRS 3 "Business Combinations" have been applied. The steps to restructure the group had the effect of Equals Group PLC Group Plc being inserted above FairFX (UK) Limited. The holders of the share capital of FairFX (UK) Limited were issued fifty shares in Equals Group Plc for one share held in FairFX (UK) Limited.

By applying the principles of reverse acquisition accounting, the Group is presented as if Equals Group PLC had always owned and controlled the Equals group. Comparatives have also been prepared on this basis. Accordingly, the assets and liabilities of Equals Group PLC have been recognised at their historical carrying amounts, the results for the periods prior to the date the Company legally obtained control have been recognised and the nancial information and cash ows re ect those of the "former" FairFX (UK) Limited group.

   3.      Going concern basis 

The nancial statements have been prepared on a going concern basis. In determining the appropriate basis of preparation of the interim statements, the Directors are required to consider whether the Group can continue in operational existence for the foreseeable future. The Directors are of the opinion that the Group and Company have adequate resources to continue in operational existence for the foreseeable future and feel it is appropriate to adopt the going concern basis in the preparation of the interim statements.

   4.      Segmental analysis 

Segment results are reported to the Board of Directors (being the chief operating decision maker) to assess both performance and support strategic decisions. The Board review financial information on revenue for the following segments: Currency Cards, International Payments, Travel Cash, Banking and Central (which includes overheads and corporate costs). Revenue is wholly derived from UK based customers.

IFRS 15 requires the presentation of disaggregated revenue from contracts with customers into categories that depict how the nature, amount, timing and uncertainty of revenue and cash flows are affects by economic factors. The Group has assessed that the disaggregation of revenue by operating segments is appropriate in meeting this disclosure requirement as this is the information regularly reviewed by the Board, to evaluate the financial performance of the Group.

 
                                    Currency                                  International                                       Travel 
 Jun-19                               Cards                                      Payments                                          Cash                                               Banking                                               Central                                               Total 
 
                                                          GBP                                          GBP                                                GBP                                                    GBP                                                  GBP                                                 GBP 
----------------  -------------------------------------------  -------------------------------------------  -------------------------------------------------  -----------------------------------------------------  ---------------------------------------------------  -------------------------------------------------- 
 Segment revenue                                    6,087,609                                    4,822,079                                          1,147,693                                              2,538,317                                                    -                                          14,595,698 
 Direct costs                                               -                                            -                                                  -                                              (595,151)                                          (1,939,252)                                         (2,534,403) 
 Administrative 
  expenses                                                  -                                            -                                                  -                                            (1,330,679)                                          (8,717,733)                                        (10,048,412) 
 Acquisition 
  costs                                                     -                                            -                                                  -                                                      -                                             (22,966)                                            (22,966) 
 Profit /(loss) 
  before tax 
  and from 
  operations                                        6,087,609                                    4,822,079                                          1,147,693                                                612,487                                         (10,679,951)                                           1,989,918 
================  ===========================================  ===========================================  =================================================  =====================================================  ===================================================  ================================================== 
 
 
   Total assets                                                                                                                                                                                                    -                                           61,195,696                                          61,195,696 
 Total 
  liabilities                                                                                                                                                                                                      -                                         (19,321,510)                                        (19,321,510) 
 Total net 
  assets                                                    -                                            -                                                  -                                                      -                                           41,874,186                                          41,874,186 
================  ===========================================  ===========================================  =================================================  =====================================================  ===================================================  ================================================== 
 
 
                                    Currency                                  International                                       Travel 
 Dec-18                               Cards                                      Payments                                          Cash                                               Banking                                               Central                                               Total 
 
                                                          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                                               -                                            -                                                  -                                            (1,257,901)                                          (4,348,060)                                         (5,605,961) 
 Administrative 
  expenses                                                  -                                            -                                                  -                                            (3,132,003)                                         (14,977,621)                                        (18,109,624) 
 Acquisition 
  costs                                                     -                                            -                                                  -                                                      -                                            (297,484)                                           (297,484) 
 Profit /(loss) 
  before tax 
  and from 
  operations                                        9,996,890                                    8,389,851                                          2,076,904                                              1,238,843                                         (19,623,165)                                           2,079,323 
================  ===========================================  ===========================================  =================================================  =====================================================  ===================================================  ================================================== 
 
 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 
================  ===========================================  ===========================================  =================================================  =====================================================  ===================================================  ================================================== 
 
                                    Currency                                  International                                       Travel 
 Jun-18                               Cards                                      Payments                                          Cash                                               Banking                                               Central                                               Total 
 
                                                          GBP                                          GBP                                                GBP                                                    GBP                                                  GBP                                                 GBP 
----------------  -------------------------------------------  -------------------------------------------  -------------------------------------------------  -----------------------------------------------------  ---------------------------------------------------  -------------------------------------------------- 
 Segment revenue                                    4,087,205                                    3,945,975                                            932,558                                              3,057,739                                                    -                                          12,023,297 
 Direct costs                                               -                                            -                                                  -                                              (598,700)                                          (1,729,710)                                         (2,328,410) 
 Administrative 
  expenses                                                  -                                            -                                                  -                                            (1,627,895)                                          (5,814,600)                                         (7,442,495) 
 Acquisition 
  costs                                                     -                                            -                                                  -                                                      -                                            (227,752)                                           (227,752) 
 Profit /(loss) 
 before tax 
 and from 
 operations                                         4,087,205                                    3,945,975                                            932,558                                                831,144                                          (7,772,061)                                           2,024,640 
================  ===========================================  ===========================================  =================================================  =====================================================  ===================================================  ================================================== 
 
 Total assets                                                                                                                                                                                                      -                                           88,319,251                                          88,319,251 
 Total 
  liabilities                                                                                                                                                                                                      -                                         (51,166,260)                                        (51,166,260) 
 Total net 
  assets                                                    -                                            -                                                  -                                                      -                                           37,152,991                                          37,152,991 
================  ===========================================  ===========================================  =================================================  =====================================================  ===================================================  ================================================== 
 
   5.      Taxation 
 
 Group                                           Unaudited   Unaudited       Audited 
                                                  6 months    6 months    as at Year 
                                                     ended       ended         ended 
                                                 30-Jun-19   30-Jun-18     31-Dec-18 
                                                       GBP         GBP           GBP 
 Changes in tax estimates related 
  to prior years                                  (10,488)           -        32,544 
 Changes in tax estimates in pre-acquisition 
  accounts of businesses acquired 
  during the year                                        -           -       384,966 
 Current tax expense / (credit)                   (10,488)           -       417,510 
                                                ----------  ----------  ------------ 
 
 Origination and reversal of temporary 
  differences                                      536,326    (58,919)   (1,063,420) 
 Recognition of previously unrecognised 
  deductible temporary differences                       -           -       107,567 
 Deferred tax expense / (credit)                   536,326    (58,919)     (955,853) 
                                                ----------  ----------  ------------ 
 
 Total tax expense / (credit)                      525,838    (58,919)     (538,343) 
                                                ==========  ==========  ============ 
 

The Group estimates that no tax is payable for the 6 months ended 30 June 2019.

The Group recognised a current tax credit of GBP10,488 in relation to the release of a historical tax liability reported in a subsidiary acquired in 2018, which has since been proven not to be due.

Based on valuation of acquisition of intangibles an enacted UK corporation tax rates the Group has acquired deferred tax liabilities of GBP760,923 as at 30 June 2019, in relation to its acquisition of Q Money Limited, Spectrum Financial Group Limited and City Forex Limited. The deferred tax will be released to the income statement as the underlying intangible assets are amortised or otherwise recognised in the profit and loss. The deferred tax liability released to the income statement for the period was GBP78,842. Future changes in the standard rate of corporation tax have been reflected in the carrying value of the deferred tax liability.

In the 6 months to 30 June 2019, the Group recognised a GBP399,272 deferred tax liability in relation to internally generated intangibles assets, which are subject to claims made under the Small or Medium-sized Enterprise (SME) R&D tax relief scheme. In addition, the Group recognised a GBP215,896 deferred tax expense in relation to deferred research and development tax credits recognised during the period.

The Group has estimated tax losses of GBP9,268,652 available for carry-forward against future trading profits. Deferred tax assets are recognised for tax losses carried forward to the extent that the realisation of the related tax benefit through future taxable profits is considered more likely than not. The decision to recognise any asset is taken at such point recovery is reasonably certain, which the Group considered on a three-year forecast horizon. During the year ended 31 December 2018, the Group recognised a deferred tax asset of GBP1,607,394 in relation to carry forward losses expected to be used by 2021. The Group has an unrecognised deferred tax asset of Nil (2017: GBP1,761,611) in respect of the tax losses that can be carried forward against future taxable income for the period between one year and an indefinite period of time.

During the year ended 31 December 2015, the Government announced provisions further reducing the rate of corporation tax to 19.0% with effect from 1 April 2017 and to 18.0% from 1 April 2020, which were substantially enacted during the year. The tax rate applying from 1 April 2020 was further reduced to 17% during a later year. Therefore, the standard rate of corporation tax applicable to the Group for the year ended 31 December 2018 was 19.0%. The rate in the year ending 31 December 2019 is expected to be 19.0%, the rate in the year ending 31 December 2020 is expected to be 17.5% and the rate in subsequent years is expected to be 17.0%.

   6.      Profit / Loss per share 

The profit or loss per share is based on the profit or loss attributable to ordinary shareholders of the parent company and the weighted average number of ordinary shares outstanding.

 
                                          Unaudited             Unaudited               Audited 
                                     6 months ended        6 months ended         Year ended 31 
                                       30 June 2019          30 June 2018         December 2018 
                                                GBP                   GBP                   GBP 
 
 
Profit after tax attributable 
 to ordinary shareholders                 1,464,080             2,083,559             2,617,666 
 Basic shares: 
 Weighted average number 
  of ordinary shares 
  for the purpose of 
  basic earnings per 
  share                                 159,635,522           147,603,753           155,368,259 
 Diluted shares: 
 Weighted average number 
  of ordinary shares 
  for the purpose of 
  diluted earnings per 
  share                                 164,048,337           150,445,309           159,916.115 
 

The calculation of diluted earnings per share has been based on the profit / loss attributable to ordinary shareholders and a weighted average number of shares outstanding, after adjustments for the effects of all dilutive potential ordinary shares.

   7.     Dividends 

The Board does not recommend the payment of a dividend, since our capital allocation strategy at this stage is focused entirely on investing in the business to achieve our growth and efficiency objectives. However, the Board will continue to keep this under review.

   8.     Share capital and merger reserve 
 
                           As at                     As at                    As at 
                        30 June 2019              30 June 2018           31 December 2018 
                     Number        GBP       Number        GBP       Number        GBP 
 Authorised, 
  issued and 
  fully paid 
 Ordinary shares 
  of 1p each       164,317,683  1,643,177  155,368,259  1,553,683  155,368,259  1,553,683 
 

Under the principles of reverse acquisition accounting, the Group is presented as if Equals Group PLC had always owned the FairFX (UK) Limited Group. The comparative and current period consolidated reserves of the Group are adjusted to reflect the statutory share capital and merger reserve of Equals Group PLC as if it had always existed.

In accordance with IAS 32 Financial Instruments: Presentation, costs incurred which are directly applicable to the raising of finance, are offset against the share premium created upon the share issue. The holders of the ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company.

   9.      Events after the reporting date 

On the 9 August 2019, a subsidiary within the Group, FairFX Plc, acquired the International Payments business of Hermex International Limited ("HermexFX"), part of the FXPro Group, for a total consideration of GBP2 million, payable in cash.

On 16 August 2019, the Group issued 12,727,000 ordinary shares as part of a placing with new and existing institutional investors. On 5 September 2019, the Group issued 246,176 of ordinary shares via an open offer with existing qualifying shareholders.

   10.     Interim announcement 

The interim report was approved by the Board of Director for issue on 26 September 2019. A copy will be posted on the Investor section of the Company's website at www.Equalsplc.com.

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

IR UVORRKWAKUUR

(END) Dow Jones Newswires

September 26, 2019 02:01 ET (06:01 GMT)

1 Year Fairfx Chart

1 Year Fairfx Chart

1 Month Fairfx Chart

1 Month Fairfx Chart
Your Recent History
LSE
FFX
Fairfx
Register now to watch these stocks streaming on the ADVFN Monitor.

Monitor lets you view up to 110 of your favourite stocks at once and is completely free to use.

By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions

P: V:gb D:20191118 01:43:14