TIDMEQLS
RNS Number : 0126H
Equals Group PLC
01 December 2020
For immediate release 1 December 2020
Equals Group plc
('Equals' or the 'Group')
Trading Update
'Continued financial and operational progress with increasing
client activity across the Group'
Equals (AIM:EQLS) , the technology-led international payments
group focused on the SME marketplace, is pleased to provide the
following trading update for the period up to 30 November 2020.
As previously reported, revenues in H1-2020 averaged GBP110k per
day (H1-2019: GBP108k). Revenues for the period from 1 July 2020 to
30 November 2020 averaged GBP114k per day despite revenues from
travel products averaging only GBP12k per day compared to GBP34k
per day in the same period in 2019.
The Group accelerated its resizing and its focus on SMEs
throughout the Covid-19 pandemic. Whilst the legacy retail travel
products have been significantly impacted by the pandemic, they
remain trading but now with a lower cost footprint. The Group
anticipates that these products (which provider feeder income to
the B2B channel) will rebound partially in 2021 before fully
recovering by 2022 but in both cases will make a positive
contribution to profitability.
The B2B channel, (comprising International Payments, our
proprietary Spend platform, Faster Payments, and business IBAN
products) has continued to grow despite the effects of Covid-19. In
the five months to 30 November 2020, B2B generated revenues of
around GBP82k per day, 9% ahead of the GBP75k per day in the same
period in 2019.
The Group's payroll run-rate will be less than GBP1.1 million
per month by January 2021, down from GBP1.5 million in January 2020
and will be further reduced by H2-2021. Capitalised software is
expected to be less than 50% of 2019 levels in 2020, around 40% in
2021 and one third in 2022.
Like many other firms across the financial services industry,
the Group is experiencing increasing regulatory costs, but is
mitigating this by continuing to move more resources into its
office in Chester.
Despite reductions in headcount, progress has been made with the
Group's product roadmap and this will lead to platform improvements
before the year-end and new product launches in 2021. As a result
of these actions, a further reduction in operating costs is
anticipated in H2-2021.
Cash resources have been tightly managed, with cash of GBP7.0
million (as at 30 November 2020), without any significant delay to
suppliers, and once again directors and staff took further salary
sacrifices in Q4-2020. In addition, the Group has the ability to
drawdown a further GBP2.0 million from the Government's CBILS
scheme.
The retail card product was further negatively impacted by the
wind-down of Wirecard and migration of the Group's card
infrastructure. This results in an exceptional charge of around
GBP1.0 million, 50% a write-down of Wirecard card stock and 50%
monies yet to be recovered from the supply chain. The Group has now
fully migrated all cards onto a new platform with an improved
product offering and better economics.
The exceptional charge incurred against the effects of the
Covid-19 pandemic was redundancy and severance costs incurred to
reduce the Group's workforce, and is expected to be GBP1.0 million
for the full year.
Both the acquisition of Effective FX on 15 October 2020, and the
previous acquisitions in 2019, particularly of Casco, have
performed well and widened the Group's SME footprint.
The Board is pleased with the performance to date and expects to
report adjusted EBIDTA for the twelve months to 31 December 2020 at
a similar level that it reported in the interim results . Beyond
that, the Board expects the Group to maintain a blended gross
profit ratio of 62% throughout 2021 but anticipates an improvement
across the Group's card products on its new platform. Our Group
contribution ratio (Gross Profits less marketing) is expected to
remain between 55% and 60% allowing Equals to scale up its
marketing to further grow profitable streams of revenue.
As the Group increasingly uses its infrastructure and products
across all of its revenue streams, there is less distinction
between the divisions as previously reported, and the Group will
therefore be reporting in two broad customer segments going
forward: Business (B2B), and Consumer (B2C), but will continue to
show underlying revenue aspects within these groupings.
The table below shows the revenue for the period to 30 November
2020 with a comparison to the prior year.
In GBP000's H1-2020 Jul-Nov 11 months 11 months
'20 to 30 to 30
Nov '20 Nov '19
International payments 6,242 5,967 12,209 7,429
Cards 1,487 1,619 3,106 4,510
Banking 1,282 1,150 2,432 2,459
Cash 230 137 366 1,129
B2B 9,241 8,873 19,915 15,527
B2C 4,531 3,434 7,965 11,716
------------------------- -------- -------- ---------- ----------
Total 13,772 12,308 26,080 27,243
------------------------- -------- -------- ---------- ----------
Revenues per working day:
In GBP000's H1-2020 Jul-Nov 11 months 11 months
'20 to 30 to 30
Nov '20 Nov '19
Days 125 108 233 233
------------------------- -------- -------- ---------- ----------
International payments 50 56 53 32
Cards 12 14 13 19
Banking 10 10 10 11
Cash 2 1 2 5
------------------------- -------- -------- ---------- ----------
B2B 74 82 78 67
B2C 38 32 34 50
------------------------- -------- -------- ---------- ----------
Total 110 114 112 117
------------------------- -------- -------- ---------- ----------
Ian Strafford Taylor, CEO of Equals, said: "Despite the economic
fallout from both Covid-19 pandemic and the collapse of Wirecard,
the level of activity we are experiencing from our customers,
particularly those in International Payments, but also now on the
Spend platform provides us with increasing confidence for a
recovery in 2021 and beyond. The sacrifices and hard work from our
employees during the pandemic has been outstanding and the progress
that the Group has made this year is testament to their
actions."
- Ends -
This announcement contains inside information.
For more information, please contact:
Equals Group plc
Ian Strafford-Taylor, CEO Tel: +44 (0) 20 7778
Richard Cooper, CFO 9308
www.equalsplc.com
Cenkos Securities plc (Nominated Advisor
/ Joint Broker)
Max Hartley / Callum Davidson Tel: +44 (0) 20 7397
Nick Searle (Sales) 8900
Canaccord Genuity (Joint Broker)
Bobbie Hilliam / Georgina McCooke Tel: +44 (0) 20 7523
Alex Aylen (Sales) 8150
Buchanan (Financial Communications)
Henry Harrison-Topham / Steph Watson Tel: +44 (0) 20 7466
/ Toto Berger 5000
equals@buchanan.uk.com www.buchanan.uk.com
Notes to Editors:
Equals 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 and currently
employs around 250 staff across sites in London and Chester. For
more information, please visit www.equalsplc.com .
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