REG - Equals Group PLC - Replacement: Interim Results
27/09/2019 07:05
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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 £1.261 billion (H1 2018: £1.067
billion), an increase of 18.1%
· Group revenue of £14.6 million (H1 2018: £12.0 million), an
increase of 21.4%
· Gross profit of £12.1 million (H1 2018: £9.7 million), an
increase of 24.4%
· Adjusted EBITDA((2)) of £4.7 million (H1 2018: £2.7 million),
an increase of 78.0%
· Adjusted PBT((3)) of £3.3 million (H1 2018: £2.6 million), an
increase of 15.4%
(1) Turnover is measured by gross value of currency transactions sold of
£902.8 million plus gross value of deposits into bank accounts of £358.7
million for a total of £1,261.5 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 £106.6 million (2018:
£75.6 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
£14.3m 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 +44 (0) 20 7778 9308
Ian Strafford-Taylor, CEO
Cenkos Securities plc +44 (0) 20 7397 8900
Max Hartley/Callum Davidson
Nick Searle
Canaccord Genuity +44 (0) 20 7523 8150
Bobbie Hilliam / David Tyrrell
Alex Aylen
Yellow Jersey
Charles Goodwin +44 (0) 7747 788 221
Joe Burgess +44 (0) 7946 424 651
Annabel Atkins
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 £1.261.5 billion
(2018: £1.067.4 billion), in line with management's expectations with strong
performances from corporate expenses, international payments and banking.
Group revenue increased by 21.4% to £14.6m (2018: £12.0m) 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 £6.1 million (2018: £4.1 million) due to increased
volumes and improved terms with the supply chain. International Payments also
performed strongly with a 22% increase in revenue to £4.8 million (£3.9
million), demonstrating the Group's ability to grow the International Payments
book both organically and through acquisition.
Gross profit was £12.1 million (2018: £9.7 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 £9.9 million (2018:
£7.4 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 £9.1
million (2018 £7.4 million). The increased operating costs include the full
year effect of the City Forex acquisition and an increased depreciation and
amortisation charge of £1.7 million (2018: £0.4 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
£4.7 million (2018: £2.7 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 £3.3 million (H1 2018: £2.6 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 £ 2018 H1 £ 2018 FY £
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 charge 148,247 - -
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 charge (148,247) - -
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 £9.3 million and so
does not expect to pay any tax in the near term.
The Adjusted PAT was only slightly ahead at £2.7 million (2018: £2.6
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 £41.9 million
(H1 2018: £37.1 million), whilst cash and cash equivalents (excluding client
money) totalled £4.8 million (H1 2018: £10.7 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 £722 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 £2
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
£14.3m 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 £ £ £
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 as at Audited as at
30-Jun-19 30-Jun-18 31-Dec-18
(Restated*)
£ £ £
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 Capital Share Premium Share Based Payment Retained Deficit Merger Reserve Contingent consideration reserve Total Equity Attributable to Shareholders
£ £ £ £ £ £ £
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 reserve Arising on equity based contingent consideration 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
Unaudited Unaudited Audited as at
6 months ended 6 months ended Year ended
(Restated*)
30-Jun-19 30-Jun-18 31-Dec-18
£ £ £
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 financial 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 financial 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 financial statements for
the year ended 31 December 2018.
The interim financial 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 financial statements do not include all disclosures which would
be required in a complete set of financial 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 financial statements of the Group. There were audited and
reported upon without
qualification 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
financial 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 of restatement Restated
Group £ £ £
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 financial statements incorporate the financial 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 Offering
("IPO") the Group was restructured. The restructure impacted a number of the
prior year and comparative primary financial statements and notes. The
effect 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 financial
information and cash flows reflect those of the "former" FairFX (UK)
Limited group.
3. Going concern basis
The financial 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.
Jun-19 Currency Cards International Payments Travel Cash Banking Central Total
£ £ £ £ £ £
Segment revenue 6,087,609 4,822,079 1,147,693 2,538,317 14,595,698
-
Direct costs - (1,939,252) (2,534,403)
- - (595,151)
Administrative expenses - (8,717,733) (10,048,412)
- - (1,330,679)
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
61,195,696 61,195,696
-
Total assets
Total liabilities (19,321,510) (19,321,510)
-
Total net assets 41,874,186 41,874,186
- - - -
Dec-18 Currency Cards International Payments Travel Cash Banking Central Total
£ £ £ £ £ £
Segment revenue 9,996,890 8,389,851 2,076,904 5,628,747 26,092,392
-
Direct costs - (4,348,060) (5,605,961)
- - (1,257,901)
Administrative expenses - (14,977,621) (18,109,624)
- - (3,132,003)
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
- - - -
Jun-18 Currency Cards International Payments Travel Cash Banking Central Total
£ £ £ £ £ £
Segment revenue 4,087,205 3,745,975 3,057,739 12,023,297
932,558 -
Direct costs (1,729,710) (2,328,410)
- - - (598,700)
Administrative expenses (5,814,600) (7,442,495)
- - - (1,627,895)
Acquisition costs
- - - - (227,752) (227,752)
Profit /(loss) before tax and from operations 4,087,205 3,945,975 831,144 (7,772,061) 2,024,640
932,558
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 as at Year ended
6 months ended 6 months ended
30-Jun-19 30-Jun-18 31-Dec-18
£ £ £
Changes in tax estimates related to prior years (10,488) - 32,544
Changes in tax estimates in pre-acquisition accounts of businesses acquired - - 384,966
during the year
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 £10,488 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 £760,923 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 £78,842. 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 £399,272 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 £215,896
deferred tax expense in relation to deferred research and development tax
credits recognised during the period.
The Group has estimated tax losses of £9,268,652 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
£1,607,394 in relation to carry forward losses expected to be used by 2021.
The Group has an unrecognised deferred tax asset of Nil (2017: £1,761,611) 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 30 June 2019 6 months ended 30 June 2018 Year ended 31 December 2018
£ £ £
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 £ Number £ Number £
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 £2 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
(http://www.fairfxplc.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 (mailto:rns@lseg.com)
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.
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