TIDMEQLS
RNS Number : 8740N
Equals Group PLC
27 September 2019
The following amendments have been made to the 'Interim Results
for the six months ended 30 June 2019' announcement released on 26
September 2019 at 7.00 a.m. under RNS No 7060N.
Within the summary financials table within the paragraph
entitled 'Financial Review' the Company has corrected the
allocation of total depreciation & amortisation costs for FY
2018 and H1 2018. In the segmental analysis note, H1 2018, the
total assets and liabilities were corrected. No other figures have
been amended and all other details remain unchanged. The full
amended text is shown below.
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 14,928 523,690
Depreciation costs 614,663 71,082 200,123
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) (71,082) (200,123)
Other amortisation charges (702,469) (14,928) (523,690)
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 1,464,079 2,083,559 2,617,666
Cash flow from operating activities
Adjustments for:
Depreciation 614,663 71,082 200,123
Amortisation 1,117,425 325,028 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) 1,146,760 (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 3,745,975 932,558 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 - 41,243,716 41,243,716
Total
liabilities - (4,090,725) (4,090,725)
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 1,464,079 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 1,643,176 155,368,259 1,553,682 155,368,259 1,553,682
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 LLFEDAAIRFIA
(END) Dow Jones Newswires
September 27, 2019 02:00 ET (06:00 GMT)
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