REG - Equals Group PLC - Final Results
16/04/2024 07:00
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RNS Number : 7083K Equals Group PLC 16 April 2024
16 April 2024
Equals Group PLC
('Equals' or the 'Group')
Final Results
"Fast growing, expanding internationally, increased profitability, dividend
paying"
Equals (AIM:EQLS), the fast-growing payments group focused on the SME
marketplace, announces its final results for the year ended 31 December 2023
(the 'year' or 'FY-2023') and an update on trading for the period from 1
January 2024 to 12 April 2024.
FY-2023: Financial Summary
FY-2023 FY-2022 Change(1)
£ millions £ millions
Underlying transaction values
- FX 5,866 5,470 + 7%
- Banking 2,178 1,741 + 25%
- Solutions Platform 4,368 2,005 + 118%
- Total 12,412 9,216 + 35%
Revenue 95.7 69.7 + 37%
% of revenue from B2B(2) 82% 76%
Adjusted EBITDA (3) 20.6 12.1 + 70%
EBITDA 17.1 11.0 + 56%
Profit after taxation 7.7 3.6 + 118%
EPS:
Basic 4.22p 1.80p + 134%
Diluted 4.00p 1.73p + 131%
Adjusted(4) Basic 7.16p 3.15p + 127%
Adjusted(4) Diluted 6.79p 3.03p + 124%
Memo:
Capitalised staff costs 5.7 4.2
Separately reported items (below Adjusted EBITDA) 2.1 0.2
Cash per share (at balance sheet date) 10.2p 8.3p
FY-2023 Financial Highlights
· 35% increase in transaction flow to £12.4 billion (FY-2022:
£9.2 billion)
· 37% increase in revenue to £95.7 million (FY-2022: £69.7
million)
· 70% increase in Adjusted EBITDA3 to £20.6 million (FY-2022:
£12.1 million)
· Completion of three strategically enhancing acquisitions in the
year at a cash cost of £6.0 million
· Payment in December of £0.9 million maiden interim dividend (0.5
pence per share)
· Robust Balance sheet with £18.7 million cash at bank at 31
December 2023
· Final dividend proposed of 1.0 pence per share bringing the total
dividends paid and proposed of 1.5 pence (FY-2022: Nil)
H1 FY-2024 Trading update
· Revenue in H1-2024 up to 12 April 2024 reached £31.9 million, up
from £24.5 million in the same period in 2023, an increase of 30%
· The revenue from Solutions in the same period was £13.2 million,
up 74% on the same period in 2023 of £7.6 million
· Revenues per working day up to 12 April 2024 were £443k, an
increase of 27% over £350k per day in Q1-2023 and 5% higher than £422k per
day achieved in Q4-2023
· Cash balances of £21.6 million as at 12 April 2024
Commenting on the Final Results, Ian Strafford-Taylor, CEO of Equals Group
PLC, said: "We continued to grow strongly in 2023, achieving record levels of
revenue, Adjusted EBITDA, and operational cash generation. This allowed us to
continue to invest in the business and declare a maiden dividend. We also
expanded internationally, broadened our product offering and hired greater
talent to take the Group forward. I am immensely proud of the workforce that
allowed us to reach these levels of performance, and I want to thank them all
for their efforts in achieving these results."
FY-2023 Annual Report
An electronic copy of the Annual Report and Financial Statements for the year
ended 31 December 2023 will be posted on the Group's website
(www.equalsplc.com) along with a copy of the FY-2023 Results presentation at
midday today. Printed versions of the FY-2023 Annual Report and Financial
Statements will be posted to shareholders this month along with a Notice of
Annual General Meeting.
Notes
(1) Based on underlying, not rounded, figures.
(2) Transactions with business customers are reported as 'B2B' and
transactions with retail customers are reported as 'B2C'.
(3) Adjusted EBITDA is defined as: earnings before; depreciation,
amortisation, impairment charges, share option charges, foreign exchange
differences and separately reported items. Separately reported items are of a
material nature, non-recurring items.
(4) The measure of profit for this ratio has been adjusted to form Adjusted
EPS. The add-back adjustments consist of share option charges, amortisation of
acquired intangibles, exceptional items, acquisition costs and tax impacts on
these items thereon.
The financial statements were approved for release at 07:00 hours on 16 April
2024 to the London Stock Exchange via RNS after being approved by the Board
after stock market hours on 15 April 2024.
For more information, please contact:
Equals Group PLC
Ian Strafford-Taylor, CEO Tel: +44 (0) 20 7778 9308
Richard Cooper, CFO www.equalsplc.com (http://www.equalsplc.com)
Canaccord Genuity (Nominated Advisor / Broker)
Max Hartley / Harry Rees Tel: +44 (0) 20 7523 8150
Buchanan (Financial Communications)
Henry Harrison- Topham / Steph Whitmore / Toto Berger Tel: +44 (0) 20 7466 5000
equals@buchanan.uk.com (mailto:equals@buchanan.uk.com) www.buchanan.uk.com (http://www.buchanan.uk.com)
Notes to Editors:
Equals Group is a technology-led international payments group augmented by
highly personalised service for the payment needs of SME's whether these be
FX, card payments or via Faster Payments. Founded in 2007, the Group listed on
AIM in 2014. For more information, please visit www.equalsplc.com
(http://www.equalsplc.com) .
Chief Executive Officer's Report
The vision for the Group continues to be the simplification of global money
movement for business customers. Equals achieves this through its B2B
platforms, Equals Money being targeted at SME customers and Equals Solutions
which targets larger corporate opportunities. The Group's growth potential is
particularly strong given that the core building blocks of its platforms,
namely own-name multi-currency IBANs and bank-grade connectivity and
clearance, are highly complex and time consuming to replicate. This 'first
mover' advantage was achieved by the investments made in previous years and
will be continuously enhanced by the developments planned in the Group's
technical roadmap combined with further investments into direct connectivity
to payment networks.
Against this vision, the Board's objective for FY-2023 was to leverage the
investments made into product, engineering, and connectivity to deliver a
unified platform offering to its B2B customers that could deliver further
growth to the Group as a whole.
Equals achieved these objectives with the roll-out of the Equals Money
platform to the SME customer base and Equals Solutions platform to larger
corporates. In addition, during FY-2023 the Group added the capability for
customers to consume our services via API integrations which considerably
increased our 'Total Addressable Market' ('TAM'). Accordingly, Equals can now
distribute its services directly to customers via its brands, integrate via
API, or white-label its platform so Equals customers can sell directly to
their own customers ('B2B2X').
The advances the Group made in its offering, combined with improved Sales and
Marketing capabilities, meant the Group significantly surpassed our
expectations in the year, delivering the following strong headline financial
performance:
· Transactions executed on the Group's platforms increased by 35%
to £12.4 billion (FY-2022: £9.2 billion)
· Revenue increased by 37% to £95.7 million (FY-2022: £69.7
million)
· Adjusted EBITDA increased by 70% to £20.6 million (FY-2022:
£12.1 million)
A detailed financial analysis is presented in the Report of the Chief
Financial Officer which follows this statement.
Summary of FY-2023 performance
The financial results demonstrate the success of our strategy of investment
into creating a robust, scalable platform comprising international and
domestic payments, card payments and current-account services underpinned by
exceptional technology and direct connections to multiple payment networks.
In addition to investments in creating the platform, the Group has continued
its strategy of focusing on distribution to the B2B customer segment and
augmented our capabilities in Sales and Marketing.
The combination of product advancements and improved distribution capabilities
produced strong financial performance in 2023 and this strategy and delivery
has continued into 2024.
Growth combined with operational gearing
Processed transaction volumes grew 35% to £12.4 billion (FY-2022: £9.2
billion), with increases across all payment channels, and reflects the
scalability of the platform that has been built, and the operational processes
that support it.
In keeping with the prior year, revenues grew faster than transaction volumes,
posting a 37% increase to £95.7 million (FY-2022: £69.7 million), which
demonstrates the success of focusing on higher-margin business lines.
The Group's focus on distribution to B2B customers is reflected in the
breakdown of revenues of which 82% were derived from B2B customers, up from
76% in FY-2022. Similarly, our success in attracting larger corporate
customers, especially via the Equals Solutions platform, is reflected in 33%
of revenues being derived from this category, compared to 23% in FY-2022.
Analysing growth trends further, in keeping with FY-2022, the core products
within Equals Money all grew and were augmented by a very strong uptake of
Equals Solutions. This translated to International Payments (including White
Labelled FX services) growing 14% to £39.4 million (FY-2022: £34.4 million).
This compares favourably to the results of many peers as macro-economic
headwinds dampened demand, particularly from B2C customers. Card-based
revenues grew 22% to £15.2 million (FY-2022: £12.5 million) despite the film
production vertical being affected by strikes in Hollywood. Equals Solutions
revenues grew by 99% to £31.0 million (FY-2022: £15.6 million) which
reflects the strong demand for the platform and the success of our sales and
marketing efforts in this market.
The increase in transaction volumes and revenues resulted in even stronger
profit growth, with Adjusted EBITDA up 70% to £20.6 million (FY-2022: £12.1
million) which clearly demonstrated continued operational gearing.
The Group's operations remain strongly cash generative which gives Equals the
flexibility to perform opportunistic M&A activity as illustrated by the
acquisition of Oonex S.A., which was completed on 4 July 2023. Oonex, now
renamed Equals Money Europe ('EMEU'), is a payment institution based in
Brussels and regulated by the National Bank of Belgium. The acquisition of
Oonex, together with its regulatory licences and banking relationships, allows
Equals to bring its payments, cards, and multi-currency account products to a
new suite of customers across Europe, thereby further increasing the Group's
TAM.
Growth with control
The Group remains committed to growing revenues and profits as rapidly as
possible by increasing the volumes of transactions processed via its platform
whilst concurrently minimising risk and retaining operational control.
Accordingly, investment into finance, operations, compliance, and risk
functions remains a key focus as Equals continues to grow.
The nature of the payments industry means that all companies that operate
within it will incur some operational risk, especially in terms of so-called
'daylight exposure' in the times between transactions being agreed and being
settled. The Group seeks to minimise and mitigate these risks wherever
possible. Therefore, all foreign exchange transactions with customers are
automatically matched with a liquidity provider and funds are never released
until inbound funds have been received. Additionally, although the Group does
offer forward contracts to its customers, its deposit and mark-to-market
policies ensure that Equals runs an immaterial risk in this area.
Regulators and banks across the globe are increasingly focused on anti-money
laundering ('AML') and compliance standards. Equals welcomes the higher levels
of supervision and auditing in this area as we view our compliance controls
and governance to be a competitive advantage. Equals instils a Group-wide
compliance culture facilitated by regular, compulsory, training for all
employees. The Group has continued its investment in this area with increased
headcount and expertise being added across onboarding, enhanced due-diligence,
transaction monitoring, risk, compliance and regulatory teams. In addition,
the Group has invested in compliance technology by deploying improved internal
tooling combined with outsourced platforms to automate tasks where possible.
Furthermore, given our growth in transaction volumes, in FY-2022 the Group
invested into a machine-learning transaction monitoring system, called
Featurespace, which we successfully rolled out in FY-2023.
The philosophy of 'growth with control' is also prevalent in our product and
engineering functions. All customer-facing product developments are built with
the involvement of all areas of the business to ensure Equals creates
end-to-end applications that support internal operational efficiency as well
as superior customer user experience ('UX'). Equally, the Group listens to our
customers when we design and build new products and all applications pass
through rigorous quality assurance and live testing before wider roll-out. In
addition to customer-facing developments, our technical roadmaps include many
workstreams that improve internal efficiency and control, not just outward
facing product rollouts. Concurrently, the Group will utilise external tooling
and software where appropriate, for instance in CRM, transaction monitoring
& KYC checks, so we can concentrate our resources on developing software
that enhances our products and competitive advantage.
The Group has also implemented strong governance over all aspects of our
Engineering and IT processes. A monthly Security Council, with membership
including Board members and all key departments, is required to sign off all
changes including new products, product changes, new software usage and vendor
approval. The Security Council also conducts a review of any security
incidents at each meeting and authorises any changes required. The robustness
of our governance allowed the Group to announce, on 4 December 2023, that it
had been awarded ISO/IEC 27001 status, the leading international standard
focused on Information Security Management. This independent accreditation
testifies to the strength of the technology platform that has been built as
well as the processes and controls that we operate.
The engineering, product and design teams continued to produce significant
improvements in our products and functionality in FY-2023 at a very high
cadence. Highlights included:
- Payments Sending Service (PSS) - this capability allows
automation of our 'payments out' rails, utilising SWIFT, and thereby direct
integrations to our major Banking partners
- Completion of Equals Money core functionality - Equals Money now
has the complete range of functionality required to sunset legacy platforms
and enable all our products to operate on one unified technology stack
- Equals Money API - full functionality of Equals Money now
available to customers over API, including a technical team dedicated to
customer onboarding and full sandbox
- FairFX re-platformed - FairFX B2C cards now operate as a pure
"white label" of Equals money, utilising the API suite described above
- White-Label of Equals Money - Similar to FairFX, The Equals
Money API suite was utilised to enable the first commercial white-label of
Equals Money
- Equals Money Europe - integration work completed on time to
bring EMEU into operational status with local IBAN capability by the end of
2023; and
- Roqqett integration - the GBP open-banking capabilities of
Roqqett were enhanced and made more robust before integration into the FairFX
checkout journey.
The developments above all fit within the Group's strategy of increasing its
total addressable markets by product and functionality innovation combined
with widening the geographic markets the Group can access.
Sustained investment in people
The success of the Group is attributable to its excellent employees who
consistently demonstrate all of the core values of Equals, namely: -
- Make it happen - own the outcome individually
- Succeed together - communicate and encourage each other to
deliver
- Be the customer - constantly seek to improve customer experience
- Go beyond - push ourselves to excel, individually and
collectively.
The Group has a bi-annual appraisal process, which also drives salary reviews
and incentive plans. The Group is proud to have a diverse workforce and it
strives to train and promote from within as well as seek fresh talent from
elsewhere.
Equals continues to invest in its employees and consistently looks to
implement measures to enhance the work environment for employees. The Group
utilises benchmarking to ensure it provides a strong benefits programme and it
continues to support a hybrid working policy. The health and wellbeing of
employees is taken very seriously, and the Group has implemented many
programmes to support this.
Overall, investment in People has resulted in the Group having a low level of
staff turnover amongst key employees. Implementation of a Company-wide share
incentive plan ('SIP') combined with a long-term incentive plan ('LTIP') for
management, continue to be strong retention tools in what continues to be a
difficult labour market in terms of attracting talent.
Average headcount increased to 341 in FY-2023, up from 268 in FY-2022. The
growth in headcount reflects the Group putting in place the resources needed
for our next phase of growth in 2024 and beyond, given the greater TAM and
distribution channels we can now access. The additional recruitment has been
in either direct revenue production areas or in revenue enablement areas.
Revenue production teams include sales, marketing, sales operations and
dealing. Revenue enablement encompasses onboarding, compliance, API
integration as well as broader operations capacity.
In addition, headcount increased by the expansion via acquisition into Europe
via EMEU, completed in July 2023, which will contribute to revenues more
strongly in 2024.
We expect headcount to remain broadly stable at current levels in 2024.
Accordingly, although revenue per head increased to £281k from £260k in the
prior year, we would expect a further increase in 2024 given the investments
we have made and the increased Target Addressable Market.
Equals position in the payments space
Global payments is a multi-trillion dollar market that remains a complex and
constantly evolving space. Whilst technology has seen radical changes in many
industries, payments had not evolved at the same pace until relatively
recently with legacy payment mechanisms of cash, cheques, account-to-account
transfers and more latterly cards dominating the landscape. Furthermore, the
settlement rails that supported these payment methodologies were frequently
decades old. The problems that this created were even more acute when making
international, or cross-border, payments as settlement rails in one country
frequently did not interface with those in another.
The 21(st) century has seen more investment into payments and more disruptive
technology being applied which has changed the long-standing status quo and
introduced new participants into the space, known as 'fintech' businesses. The
advent of crypto currencies, and concurrently blockchain, has further
accelerated the rate of change such that payments in general is now evolving
at a rapid pace.
This is the backdrop to the Group's sustained investment over several years to
carve out a specific niche for Equals, focused on the B2B customer space. The
Group has developed a unique proposition that provides its customers with both
account-to-account transfers and card payments in one multi-currency platform
built on infrastructure giving bank-grade connectivity and security on
superior customer interfaces. Equals customers can consume this platform
directly via the secure login, on a white-label basis, or via an API technical
interface. The flexibility the Group can support and the channels by which
this can be consumed by customers is a key differentiator. Within Equals B2B
focus, the Group targets two major segments, SMEs, via Equals Money, and
larger corporates, via Equals Solutions. Both offer a single platform
comprising own-name, multi-currency IBAN current accounts, account-to-account
transfers, and card products for both domestic and international transactions.
Competition and differentiation
The Group's competitors fall into two major categories, the incumbent banks
and the fintech 'disruptors'. Despite the recent growth of fintech companies,
the majority of payment volumes still flow through the incumbent banks, in
some part due to customer inertia and the difficulty of switching providers.
For Equals, the key is to target the customer base of the incumbent banks
whilst concurrently making it easy for those customers to consume the products
and services of the Group. These twin challenges have been the driving factors
behind the Group's product development and also its efforts to make onboarding
of new customers as rapid and seamless as possible for the customer.
In contrast to the incumbent banks, fintech competitors tend to focus on one
silo of what Equals provides as an overall platform (e.g. current accounts,
cards, or international payments) and are often B2C focused. In addition, they
typically operate 'self-serve' platforms. This is in contrast to Equals as it
provides leading technology allied with human assistance in supporting
customers to navigate the complexities of payments via dedicated account
management teams.
The Group therefore differentiates itself by harnessing the best of these two
competitor groups, namely the trust, security and heritage of the incumbent
banks combined with the technological innovation of the fintech community.
Accordingly, Equals will continue to invest in its platform, connectivity, and
payment rails to remain one step ahead and its success to date in doing so is
reflected in the Group's FY-2023 results.
M&A opportunities
The Group continues to assess M&A opportunities in three main areas, which
are not mutually exclusive. Firstly, to acquire profitable businesses that can
easily be added to the platform and provide scale. Secondly, to acquire
value-added functionality complementary to our offering. Lastly, to expand our
portfolio of regulatory licences and access to overseas markets. FY-2023 saw
Equals execute deals in all three categories and we continue to be alert for
further opportunities.
ESG
Equals wholeheartedly embraces ESG initiatives and takes Equality, Diversity,
and Inclusivity ('EDI') extremely seriously. Our EDI strategy, which covers
not only employees but also customers, includes an internal EDI network
populated with elected representatives and regular employee surveys. This is a
key objective for all Executive Committee members and forms part of their
appraisals.
H1-2024 Trading
FY-2024 has started strongly with revenue in H1-2024 up to 12 April 2024
reaching £31.9 million, up from £24.5 million in the same period in FY-2023,
an increase of 30%. The revenue from Solutions in the same period was £13.2
million, up 74% on the same period in 2023 of £7.6 million. Revenues per
working day up to 12 April 2024 were £443k, an increase of 27% over £350k
per day in the same period in H1-2023 and 5% higher than £422k per day
achieved in Q4-2023.
Strong B2B revenue growth continues with all product lines progressing well.
Equals Solutions, which contributed £31.0 million of revenues in FY-2023, is
expected to continue to grow strongly as the Group adds new functionality to
its payments platform during the year and widens its TAM.
In keeping with the strategy pursued in FY-2023, our product and development
roadmap for the rest of FY-2024 reflects our continued investment into our
platform capabilities. Key deliverables are: -
- Automated bulk payments capability, including over API
integration,
- Full straight-through-processing (STP),
- Further enhancement of Equals Money Europe capabilities,
- In-house integration with SWIFT,
- Improve complete onboarding UX and processes to improve speed,
- Support white-label scale up,
- Sunset remaining legacy platforms and minimise technical debt.
The outlook for the business, as a result of our sustained and continuing
investments combined with our excellent people, remains strong. In addition,
the Group's addressable market is now significantly greater with our expansion
into Europe and increased distribution channels. Equals has created a payments
platform comprising international and domestic payments, card payments and
current account services underpinned by exceptional technology and direct
connections to multiple payment networks.
Ian Strafford-Taylor
Chief Executive Officer
15 April 2024
Chief Financial Officer's Report
The FY-2023 results have been impacted by a number of significant events:
(a) The Company's decision to restructure its reserves thus
leading to an interim dividend of 0.5 pence per share paid on 7 December 2023
and the recommendation of a final dividend of 1 pence per share, giving a
total dividend paid and proposed of 1.5 pence for 2023.
(b) The launch of a Strategic Review, announced on 1 November
2023, aimed at evaluating whether greater value could be obtained through a
sale of the Company in light of the lacklustre performance of the UK equities
market as a whole.
(c) The disposal of the travel cash business and the completion
of three acquisitions:
(i) Roqqett Ltd (open banking platform);
(ii) Hamer and Hamer Ltd; and
(iii) Oonex S.A. (renamed Equals Money Europe S.A.).
More details on these events are reported below.
In summary, the FY-2023 results have been positively impacted by the success
of the Equals Solutions product: Group Revenue was up 37%; Gross Profits up
55%, Adjusted EBITDA up 70%, and Adjusted EPS up 127%.
I present my review and financial analysis for the year ended 31 December
2023.
TABLE 1: INCOME AND EXPENSE ACCOUNT
FY-2023 FY-2022
£ millions £ millions
Revenue (table 3, 4) 95.7 69.7
Gross Profits (table 5) 52.3 33.7
Less: Marketing (2.6) (1.9)
Contribution 49.8 31.8
Staff costs (20.3) (14.4)
Property and office cost (1.2) (0.9)
IT and telephone costs (3.2) (2.0)
Professional Fees (2.2) (1.2)
Compliance costs (1.5) (0.7)
Travel and other expenses (0.7) (0.5)
Adjusted EBITDA 20.6 12.1
Less: Share option expense (1.4) (0.9)
Less: Acquisition costs (table 6) (1.4) (0.2)
Less: Exceptional items (0.7) -
EBITDA 17.1 11.0
IFRS 16 Depreciation (table 7) (0.7) (0.8)
Other depreciation (table 7) (0.5) (0.4)
Amortisation of acquired intangibles (table 8) (1.7) (1.3)
Other amortisation (table 8) (5.4) (4.4)
Contingent consideration credit / (cost) 0.5 (0.3)
(7.8) (7.2)
Gain on Disposal of Cash CGU 0.4 -
EBIT 9.7 3.8
Lease interest (0.2) (0.2)
Foreign exchange differences (0.3) (0.1)
Contingent consideration finance charges (0.1) (0.1)
(0.6) (0.4)
PROFIT BEFORE TAXATION 9.1 3.4
Corporate and deferred taxation (1.4) 0.2
PROFIT FOR THE YEAR 7.7 3.6
When the changes are presented as a bridge, the standout facts are the
increase in revenue leading to increased contribution (gross profits less
marketing costs), offset by higher labour costs, both through planned
increases in staff resources and responding to labour market pressures. Other
cost increases were also a mix of inflation pressures, but also decisions
taken to upskill and upscale resources for a rapidly growing business.
TABLE 2 - ADJUSTED EBITDA BRIDGE FROM FY-2022 TO FY-2023 (in £'000s)
FY-2022 Adjusted EBITDA 12,120
Add: 56% uplift in contribution FY-2023 17,964
Less: 41% increase in staff costs, reflecting a higher planned headcount, (5,898)
particularly in compliance due to regulatory pressures.
60% increase in IT and communications, taking into account increased web
hosting charges and development tools in line with transaction growth.
(1,206)
96% increase in professional and compliance costs, much of which is (1,836)
attributable to increased professional and compliance including regulatory
fees in line with geographical expansion.
24% increase in property through geographical expansion
(228)
Increase in other costs including travel and entertaining costs incurred (279)
through ambassadorial initiatives and industry awareness events.
FY-2023 Adjusted EBITDA 20,637
Uplift over FY-2022 8,514
% uplift over FY-2022 70%
Revenue
All product lines and all verticals saw significant increases in revenue in
the year. The Group has concentrated on the corporate sector and has seen
strong growth in International Payments, White-Label and Solutions business
and modest growth in consumer and small businesses.
H1-2023 saw an increase of £13.6 million in revenue over H1-2022, and £6.7
million over H2-2022. The growth continued in the second half, with H2-2023
adding a further £12.4 million in revenue against the same period in H2-2022
and £5.7 million over H1-2023. Overall revenue in FY-2023 was 37% ahead of
FY-2022.
The table below shows the revenue by both CGU and customer types. The Europe
revenue segment is the acquisition of the European entity Equals Money Europe
in H2-2023, which represents £1.7 million of the Group's total revenue of
£95.7 million for FY-2023.
TABLE 3 - REVENUE BY CUSTOMER TYPE
Revenue in £ millions Consumer and small business Corporates Large Sub-total White-label TOTAL TOTAL % change
("B2C") enterprises FY-2023 FY-2022
International Payments 3.8 18.9 - 22.7 16.7 39.4 34.4 14%
Cards 5.0 10.2 - 15.2 - 15.2 12.5 22%
Banking 8.3 - - 8.3 - 8.3 6.1 36%
Solutions - - 31.0 31.0 - 31.0 15.7 97%
Travel cash 0.1 - - 0.1 - 0.1 1.0 -86%
Europe - 0.9 0.8 1.7 - 1.7 - -
Total, FY-2023 17.2 30.0 31.8 79.0 16.7 95.7 69.7 37%
Total, FY-2022 16.6 22.4 15.7 54.7 15.0 69.7
% Change*
FY-2023 to FY-2022 +3% +34% >103% +45% +11% +37% +37%
*based on underlying figures
Further analysis we disclose below, revenue per half-year period.
TABLE 4- REVENUE BY HALF-YEAR
Revenue in £ millions Solutions White-Label Other International Payments Cards (Retail and Corporate) Banking Bureau Europe TOTAL Revenue per day in
£'000s
H1-2022 6.2 7.2 9.1 5.6 2.8 0.5 - 31.4 255.1
H2-2022 9.5 7.8 10.3 6.9 3.3 0.5 - 38.3 301.4
FY-2022 15.7 15.0 19.4 12.5 6.1 1.0 - 69.7 278.7
% of total 22% 22% 28% 18% 9% 1% - 100%
H1-2023 13.6 8.9 11.0 7.4 4.0 0.1 - 45.0 362.9
H2-2023 17.4 7.8 11.7 7.8 4.3 - 1.7 50.7 397.6
FY-2023 31.0 16.7 22.7 15.2 8.3 0.1 1.7 95.7 380.5
% of total 32% 17% 24% 16% 9% 0% 2% 100%
2023 vs 2022 99% 11% 16% 22% 37% - 86% 37% 36.4%
Gross profits
Gross profits have improved both monetarily and in percentage terms. The
aggregate gross profits have steadily increased through tight management of
pay-aways and the changing mix of business. Gross profit percentage has
increased from 47% in H1-2022 to 49% in H2-2022, to 52% in H1-2023 and to 57%
in H2-2023. This ratio is expected to remain at this level.
White-label GP percentages have increased materially as the division becomes
less reliant on some underlying B2C trading.
The key components of cost of sales have not changed, being a mix of affiliate
(or introducer) commissions, transaction costs, and sales-related staff
commissions (which include employers National Insurance Contributions) to the
trading and sales teams:
TABLE 5 - GROSS PROFIT MARGIN BY HALF-YEAR
Solutions White-Label Other International Payments Cards (retail and corporate) Banking Bureau Europe TOTAL
H1-2022 46% 12% 59% 61% 76% 48% - 47%
H2-2022 50% 14% 56% 65% 78% 42% - 49%
FY-2022 48% 13% 57% 63% 77% 45% - 48%
H1-2023 54% 19% 59% 64% 84% 31% - 52%
H2-2023 60% 21% 60% 65% 84% 87% 56% 57%
FY-2023 57% 20% 60% 64% 84% 36% 56% 55%
Marketing, branding
and contribution The Group has actively managed its
marketing expenditure more closely having carried out a thorough review and a
constant assessment of 'Return on Spend'. Expenditure has been incurred on
digital marketing, marketing and hospitality events and exhibitions.
Marketing, as a percentage of Revenue has remained static at around 2.7%.
Staff costs Staff costs (gross of
capitalisation and exceptional items) were £25.9 million in FY-2023 against
£18.6 million in FY-2022. This increase was attributable to:
· Organic headcount increases (headcount numbers have moved from
285 as at 31 December 2022 to 367 as at 31 December 2023 and 400 at 31 March
2024). Recruitment costs were £969k in 2023 against £557k in 2022. 2023 saw
the recruitment of 90 new employees in the UK.
· Acquisitions added a further 30 to the Group's headcount offset
by five leavers following the sale of the FX bureau in March 2023.
· Wage pressures, where the aggregate increases were around 7.2%.
The composition of headcount is approximately: Commercial, 20%; Operations
(including compliance), 38%; Engineering, 16%; Product and Design, 5%; Europe
(all functions), 6%: Finance and HR, 8%; Other, 7%.
Professional fees and
Compliance costs Owing to an increasing cross-industry
compliance burden, the Group has chosen to report compliance and similar costs
separate to other professional fees. Such costs, including onboarding systems,
have risen due to a combination of greater business activity and the Group's
desire to fast-track business applications proactive with regulation.
Professional fees have risen in line with trends widely reported in the
national press, most notably the provision for the cost of the audit noting
increased acquisition activity and implementation of enhanced systems.
Exceptional items There were two significant corporate projects
undertaken in FY-2023 which led to exceptional costs of £0.7 million being
incurred: the restructuring of reserves to enable the payment of dividends,
and the decision to launch a strategic review in order to explore ways of
enhancing shareholder value. The former, which required Court consent, was
successfully concluded in Q4-2023 leading to the payment of 0.5 pence per
share dividend. The latter is a process which is continuing at the time of
this announcement.
Capital Reduction and
Maiden Interim
Dividend Payment With Court approval, on 1 November 2023, the
Group carried out a Capital Reduction moving £25 million to Distributable
Reserves from the Share Premium account. Following the reduction, the Group
declared and issued a maiden interim dividend of 0.5 pence per share to the
shareholders of Equals Group PLC and the Trust. The total number of shares
eligible for the dividend was 185,731,589 with a total cash payment of £928k
paid on 7 December 2023.
Acquisition and
disposals In FY-2023, the Group
incurred costs of £1.5 million (of which £1.4 million was taken to the
income statement) in relation to the completion of the three acquisitions and
one disposal.
· Roqqett Limited, an FCA-regulated open-banking platform provider,
was acquired on 6 January 2023. It has two key licenses: an AISP (Account
Information Service Provider) and a PISP (Payment Initiation Service
Provider).
· Hamer and Hamer Limited, acquisition completed following FCA
approval on 20 April 2023 of the entire ordinary share capital historically
focused on the provision of international payments.
· Oonex S.A., a Belgian company, an authorised payment institution
regulated by the National Bank of Belgium, was acquired on 4 July 2023. The
acquisition enables the provision of Equals products into the European
Economic Area (EEA). Oonex was subsequently renamed Equals Money Europe S.A.
Its board now comprises Ian Strafford-Taylor (CEO), Stephen Paul (Deputy CFO),
James Simcox (Chief Product Officer and MD of Europe) and Matthijs Boon (COO),
along with two independent directors as required under Belgian regulations.
· The FX bureau business, with a predominantly B2C customer base,
was sold on 14 March 2023 for an initial £250k with a further £100k subject
to certain conditions being met.
TABLE 6 - ACQUISITIONS
Total Roqqett Hamer & Hamer* Oonex S.A.
Acquisition date 06.01.2023 20.04.2023 04.07.2023
£'000s £'000s £'000s £'000s
Cash paid at acquisition 1,669 169 1,500 -
Cash paid at acquisition for acquired liabilities 2,461 - - 2,461
Cash paid post-acquisition 335 215 - 120
Total cash paid for acquisitions 4,465 384 1,500 2,581
Shares issued at acquisition 3,190 - - 3,190
Shares issued post-acquisition 500 500 - -
Total shares issued paid for acquisitions 3,690 500 - 3,190
Total cash paid and shares issued for acquisitions 8,155 884 1,500 5,771
Fair Value on shares issued 694 - - 694
Performance assessed consideration thereon 85 35 - 50
Capitalised incidental expenses 131 131 - -
Acquired liabilities payable in cash 1,524 - - 1,524
Deferred consideration payable in cash** 1,268 500 768 -
Deferred consideration payable in shares 810 - - 810
Total consideration transferred 12,667 1,550 2,268 8,849
Fair Value thereon 2,413 664 (30) 1,779
Deferred tax thereon 978 - 369 609
Total acquired 16,058 2,214 2,607 11,237
Goodwill 9,930 - 1,129 8,801
Other intangible assets:
Open Banking Technology 2,214 2,214 - -
Customer Relationships 3,914 - 1,478 2,436
Total intangibles acquired 16,058 2,214 2,607 11,237
Acquisition costs charged to P&L 1,377 212 149 1,016
*earn outs are payable on the 1(st), 2(nd) and 3(rd) anniversaries of the
acquisition if targets are met. The maximum earn out is £1.7 million over the
three-year period.
**the final earnout for Casco acquired on 19 November 2019 of £509k is
included in deferred consideration on the balance sheet date. This final
earnout and the £500k due for Roqqett was paid by 31 March 2024. The
remaining balance, which relates to Hamer & Hamer, has a gross value of
£1.7 million and a fair value of £0.8 million is payable over three years
from May 2024.
The transactions contributed to the Group's results as shown below:
FY-2023 FY-2023 FY-2023 FY-2023
Roqqett Hamer & Hamer Oonex S.A. Total
Date acquired/disposed 06.01.2023 20.04.2023 04.07.2023
£'000s £'000s £'000s £'000s
Revenue - 839 1,747 2,586
Gross Profits - 736 975 1,711
Adjusted EBITDA (495) 466 (368) (397)
Depreciation Tangible fixed assets are
depreciated over the anticipated useful life with a maximum of 60 months
(other than leasehold improvements which is a maximum of 120 months).
TABLE 7 - DEPRECIATION
FY-2023 FY-2022
£'000s £'000s
IFRS 16 depreciation 692 822
Other depreciation 536 389
1,228 1,211
Guidance: Based upon the expenditure incurred to 31 December 2023, the
depreciation charges for those assets in FY-2024 will be:
£'000s
IFRS 16 depreciation 662
Other depreciation 450
1,112
Amortisation Intangible assets
acquired on acquisition are amortised over their estimated useful lives, with
a maximum of 60 months for brands and a maximum of 108 months for customer
relationships. The charge to amortisation for the year can be analysed as
follows:
TABLE 8
- COMPONENTS OF AMORTISATION CHARGES
FY-2023 FY-2022
£'000s £'000s
Amortisation charge arising from the capitalisation of internally developed
software in the following years:
2018 and earlier 545 917
2019 1,661 1,661
2020 893 893
2021 599 576
2022 791 388
2023 506 -
4,995 4,435
Amortisation charge for other intangibles 381 291
5,376 4,726
Amortisation of acquired intangibles 1,672 1,282
Total amortisation charge 7,048 6,008
Guidance: Based upon expenditure to 31 December 2023, the amortisation charges
for FY-2024 are expected to be:
£'000s
Internally developed software 4,857
Other intangible assets 202
Acquired intangibles 1,718
6,777
Operating result The Group made a profit before taxation
of £9.1 million for the year, compared to £3.4 million for FY-2022.
Taxation, incorporating
R&D credits The Group has recognised a
net tax charge of £1.4 million (FY-2022: net tax credit £135k). At the
balance sheet date, the Group estimates it has usable tax losses of £12.4
million.
TABLE 9 - BALANCE SHEET
This table shows a compressed 'balance sheet' for the Group.
31.12.2023 31.12.2022
£'000s £'000s
Internally generated software - cost 32,207 26,001
Internally generated software - accumulated amortisation (18,407) (13,411)
13,800 12,590
Other non-current assets (other than deferred tax) 32,949 18,558
IFRS 16 assets, less IFRS 16 liabilities (599) (830)
46,150 30,318
Liquidity (per Table 11) 17,803 14,320
Trade debtors and accrued income 6,503 4,244
Prepayments 1,789 1,345
Deposits and sundry debtors 196 189
Working Capital Advances to Roqqett - 830
Deferred Consideration Receivable from the sale of FX bureau 100 -
Inventory of card stock 372 292
Accounts payable (2,831) (2,069)
Affiliate commissions (3,135) (2,563)
PAYE and pension (1,023) (816)
Staff commissions and accrued bonuses (2,391) (1,690)
Acquired liabilities for Oonex S.A. outstanding at 31 December (1,519) -
Other accruals and other creditors (3,700) (1,937)
12,164 12,145
Cash earn-out balances not paid* - (424)
Cash earn-out balances paid by 31.12.2023 - (1,092)
Cash earn-out balances paid between 31.12.2023 and 15.04.2024:
Casco (509) (509)
Roqqett (per Table 6) (500) -
Cash earn-out balances payable after 15 April 2024 attributable to Hamer &
Hamer:
- Gross amount which could be payable over 3 years (1,700)
- Fair value accounting adjustment 932
(768) -
Net corporation and deferred tax 849 1,639
Net value of forward contracts* 358 827
(569) 441
NET SHAREHOLDER FUNDS 57,744 42,904
At 31 December 2023, the Company has distributable reserves of £23,079k. This
is equivalent to £0.12 per share.
*The 2022 cash earn-out balances not paid where performance assessed and
subsequently credited back to the P&L in 2023
**The gross value of the forwards book at 31st December 2023 was £315.3
million (31st December 2022: £253.3 million)
Share capital
The number of shares in issue at 1 January 2023 was 180,712,473. This
increased in the year through the exercise of 352,758 share options and
1,051,176 shares at nominal value were issued pursuant to the 2021 SIP. In
addition, 3,938,294 shares were issued in pursuance to the acquisition of
Oonex S.A. and 573,197 shares in pursuance to the acquisition of Roqqett.
Thus, at the balance sheet date, there were 186,627,898 shares in issue. A
further 1,000,000 shares were issued on 4 January 2024 pursuant to the
acquisition of Oonex S.A.
The SIP held 1,719,296 shares at 31 December 2023.
Share options
At 1 January 2023, the Company had 16,141,058 options outstanding. 352,758 of
these were exercised in 2023, 536,512 were cancelled and 165,760 were lapsed.
On 6 November 2023, the Company announced Discretionary Share Incentive Plans
for over 2,600,000 shares and 459,448 shares under the Company SIP. Thus, at
the date of signing of these financial statements, there were 16,390,301
options, representing 8.74% of the issued share capital as at 15 April 2024.
At 15 April 2024, there were 16,390,301 share options yet to be exercised of
which 7,222,800 had fully vested.
Earnings per share
Earnings per share are reported/calculated in accordance with IAS 33. For
non-diluted, the result after tax is divided by the average number of shares
in issue in the year. The average number of shares was 183,624,192 (FY-2022:
180,304,802).
The calculation of diluted EPS is based on the result after tax divided by the
number of actual shares in issue (above) plus the number of options where the
fair value exceeds the weighted average share price in the year. The fair
value of options is measured using Black-Scholes and Monte-Carlo. It should be
noted that in accordance with Accounting Standards, this calculation is based
on fair value, not the difference between the market price at the end of the
year or the weighted average price and the exercise price. The weighted
average price was 99 pence (FY-2022: 84 pence), the number of options
exceeding the fair value was 9,820,535 (FY-2022: 7,278,986).
The basic and diluted EPS are shown below:
Basic Basic Diluted Diluted
FY-2023 FY-2022 FY-2023 FY-2022
Earnings per share (in pence) 4.22 1.80 4.00 1.73
Adjusted earnings and adjusted EPS
FY-2023 FY-2022
£'000s £'000s
P&L Attributable to owners of Equals Group PLC 7,746 3,236
Add back:
- Share option charges 1,447 970
- Amortisation of acquired intangibles 1,672 1,282
- Exceptional items 714 -
- Acquisition costs 1,377 164
- Tax impacts thereon* 183 31
Adjusted earnings 13,139 5,683
*Tax impacts thereon are associated to items not added back to the tax
computations relating to Exceptional items and Acquisition costs.
The resulting earnings per share are shown below:
Basic Basic Diluted Diluted
FY-2023 FY-2022 FY-2023 FY-2022
Adjusted earnings per share (in pence) 7.16 3.15 6.79 3.03
CASH STATEMENT
Exclusive of acquisitions and dividends, operational cash of £13.2 million
(2022: £7.2 million) was generated during the year, a cash conversion rate of
64% over Adjusted EBITDA, compared to 60% for FY-2022.
The movement in the cash position is shown in the table below:
TABLE 10 - CASHFLOW FY-2023 FY-2022
£'000s £'000s
Adjusted EBITDA 20,637 12,120
R&D tax credits received via Roqqett acquisition 232 -
R&D tax credits received in cash - 400
Lease payments (principal and interest) (929) (969)
Acquisition costs expensed through the income statement (1,377) (164)
Exceptional items (714) -
Internally developed software capitalised for R&D:
- Staff (5,653) (4,191)
- IT Costs (553) (408)
Purchase of other intangible assets less disposals (Non-R&D) (412) (445)
Purchase of other non-current assets (478) (271)
Movement in working capital (1,027) 1,147
"Operational cash inflows" 9,726 7,219
Funds from exercise of share options 97 193
Interim dividend payment (928) -
Net cash proceeds in Disposal of CGU 280 -
Earn-outs of acquisitions made in prior periods (1,092) (2,614)
Cash paid for acquisitions made in period (table 6) (4,465) -
Working capital loan made ahead of acquisition of Roqqett Limited - (830)
External funding repaid (CBILS) - (2,028)
NET CASHFLOWS 3,618 1,940
Balance at 1(st) January 15,044 13,104
Balance at 31(st) December 18,662 15,044
Cash per share 10.2 pence 8.3 pence
TABLE 11 - LIQUIDITY FY-2023 FY-2022
£'000s £'000s
Cash at bank 18,662 15,044
Balances with liquidity providers 2,758 1,950
Pre-funded balances with card provider 1,912 1,491
Gross liquid resources 23,332 18,485
Customer balances not subject to safeguarding (5,529) (4,165)
(5,529) (4,165)
Net position 17,803 14,320
The Group's principal banking and liquidity providers include Barclays,
NatWest, Citibank, Crown Agents Bank, Blackrock, Valitor, Sucden and Velocity
along with funds held at the Bank of England.
Richard Cooper
Chief Financial Officer
15 April 2024
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2023
Note FY-2023 FY-2022
£'000s £'000s
Revenue from currency transactions 85,614 63,541
Revenue from banking transactions 8,350 6,141
Revenue from Europe transactions 1,747 -
Revenue 95,711 69,682
Transaction and commission costs (43,385) (36,027)
Gross Profit 52,326 33,655
Administrative expenses (33,739) (22,576)
Depreciation charge (1,228) (1,211)
Amortisation charge (7,048) (6,008)
Acquisition expenses*(1) (1,377) (164)
Total operating expenses (43,392) (29,959)
Memo: Adjusted EBITDA*(2) H 20,637 12,120
Operating profit A 8,934 3,696
Gain on the sale of the Cash CGU E 380 -
Finance cost (166) (280)
Profit before tax 9,148 3,416
Tax (charge) / credit B (1,402) 135
Profit after tax 7,746 3,551
Attributable to:
Owners of Equals Group PLC 7,746 3,237
Non-controlling interest - 314
Other comprehensive income:
Exchange differences arising on translation of foreign operations 6 -
Total comprehensive income for the year 7,752 3,551
Earnings per share C
Basic 4.22p 1.80p
Diluted 4.00p 1.73p
Notes:
Adjusted EBITDA is Operating profit or loss before: Depreciation,
Amortisation, Impairments, Share option charges, and Separately reported
items. All income and expenses arise from continuing operations.
*(1) Acquisition costs represents and includes costs pursuant to acquisitions.
*(2) Adjusted EBITDA is not a GAAP measure and represents operating profit or
loss before share option charges, depreciation, amortisation and separately
reported items (exceptional items).
CONSOLIDATED AND COMPANY STATEMENTS OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023
2023 2023 2022 2022
Group Company Group Company
£'000s £'000s £'000s £'000s
ASSETS
Non-current assets
Property, plant and equipment 1,120 - 1,139 -
Right of use assets 2,881 - 3,367 -
Intangible assets (note F) 22,232 - 16,540 -
Goodwill 23,397 - 13,468 -
Deferred tax assets 956 814 1,831 1,368
Investments - 77,750 - 62,902
50,586 78,564 36,345 64,270
Current assets
Inventories 372 - 292 -
Trade and other receivables 13,431 1,398 10,274 1,159
Derivative financial assets (note G) 4,760 - 5,616 -
Cash and cash equivalents 18,662 509 15,044 -
37,225 1,907 31,226 1,159
TOTAL ASSETS 87,811 80,471 67,571 65,429
EQUITY AND LIABILITIES
Equity attributable to equity holders
Share capital 1,866 1,866 1,807 1,807
Share premium 28,498 28,498 53,405 53,405
Share-based payment reserve 5,564 3,483 3,231 2,397
Other reserves 13,556 8,128 8,609 3,187
Retained earnings / (accumulated losses) 8,260 24,574 (24,148) 1,038
Company loss in the year - (1,719) - (1,127)
57,744 64,830 42,904 60,707
Non-current liabilities
Lease liabilities 2,730 - 3,417 -
2,730 - 3,417 -
Current liabilities
Trade and other payables 22,079 15,641 15,489 4,722
Current tax liabilities 106 - 192 -
Lease liabilities 750 - 780 -
Derivative financial liabilities (note G) 4,402 - 4,789 -
27,337 15,641 21,250 4,722
TOTAL EQUITY AND LIABILITIES 87,811 80,471 67,571 65,429
CONSOLIDATED AND COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2023
GROUP Called up share capital Share premium Share- based payment Retained earnings / (accumulated losses) Other reserves Total attributable to owners of Equals Group PLC Non-controlling interest Total equity
£'000s £'000s £'000s £'000s £'000s £'000s £'000s £'000s
At 1 January 2022 1,793 53,218 1,858 (24,590) 8,609 40,888 263 41,151
Profit for the year - - - 3,237 - 3,237 314 3,551
Acquisition of the remaining NCI - - - (2,902) - (2,902) (577) (3,479)
Share-based payment charge - - 924 - - 924 - 924
Share options exercised in year - - (107) 107 - - - -
Shares issued in year 14 187 - - - 201 - 201
Movement in deferred tax on share-based payment reserve - - 556 - - 556 - 556
At 31 December 2022 1,807 53,405 3,231 (24,148) 8,609 42,904 - 42,904
Profit for the year - - - 7,746 - 7,746 - 7,746
Other comprehensive income:
Exchange differences arising on translation of foreign operations - - - - 6 6 - 6
Other items:
Share-based payment charge - - 1,419 - - 1,419 - 1,419
Share options exercised in year 3 - (333) 333 - 3 - 3
Shares issued in year 50 93 - - - 143 - 143
Shares issued in relation to Roqqett acquisition 6 - - - 494 500 - 500
Dividends paid in year - - - (928) - (928) - (928)
Share premium reduction scheme - (25,000) - 25,000 - - - -
Acquisition of Oonex fair value increase - - - - 3,844 3,844 - 3,844
Acquisition of Oonex deferred consideration - - - - 860 860 - 860
Oonex deferred consideration - non-payable - - - 50 (50) - - -
Transfer of Q-Money contingent liability - - - 207 (207) - - -
Movement in deferred tax on share-based payment - - 1,247 - - 1,247 - 1,247
At 31 December 2023 1,866 28,498 5,564 8,260 13,556 57,744 - 57,744
COMPANY Called up share capital Share premium Share- based payment Retained earnings / (accumulated losses) Other reserves Total equity
£'000s £'000s £'000s £'000s £'000s £'000s
At 1 January 2022 1,793 53,218 1,580 931 3,187 60,709
Loss for the year - - - (1,127) - (1,127)
Share-based payment charge - - 924 - - 924
Share options exercised in year - - (107) 107 - -
Shares issued in year 14 187 - - - 201
At 31 December 2022 1,807 53,405 2,397 (89) 3,187 60,707
Loss for the year - - - (1,718) - (1,718)
Share-based payment charge - - 1,419 - - 1,419
Share options exercised in year 3 - (333) 333 - 3
Shares issued in year 50 93 - - - 143
Shares issued in relation to Roqqett acquisition 6 - - - 494 500
Dividends paid in year - - - (928) - (928)
Share premium reduction scheme - (25,000) - 25,000 - -
Acquisition of Oonex fair value increase - - - - 3,844 3,844
Acquisition of Oonex deferred consideration - - - - 860 860
Oonex deferred consideration - non-payable - - - 50 (50) -
Transfer of Q-Money contingent liability - - - 207 (207) -
At 31 December 2023 1,866 28,498 3,483 22,855 8,128 64,830
The following describes the nature and purpose of each reserve within owners'
equity:
Share capital
Amount subscribed for shares at nominal value.
Share
premium
Amount subscribed for shares in excess of nominal value, less directly
attributable costs.
Share-based payment reserve Proportion of the fair
value of share options granted relating to services rendered up to the balance
sheet date.
Retained earnings / (accumulated losses) Cumulative profit and
losses attributable to equity shareholders.
Other reserves comprise:
Merger
reserve Arising
on reverse acquisition from Group reorganisation.
Contingent consideration reserve Arising on equity based
contingent consideration on acquisition of subsidiaries.
Foreign currency reserve Arising on
translation of foreign operation.
CONSOLIDATED STATEMENT OF CASHFLOWS
FOR THE YEAR ENDED 31 DECEMBER 2023
FY-2023 FY-2023 FY-2022 FY-2022
Group Company Group Company
£'000s £'000s £'000s £'000s
Profit / (Loss) before tax 9,148 (1,166) 3,416 (1,332)
Add: Cashflows from operating activities:
Adjustments for:
Depreciation 1,228 - 1,211 -
Amortisation 7,048 - 6,008 -
Impairment - - - -
Share-based payment charges 1,419 - 924 -
(Increase) / decrease in trade and other receivables*(1) (6,416) 1,867 (9,920) (1,024)
(Decrease) / Increase in trade and other payables*(2) (386) 3,604 9,707 3,086
Decrease / (Increase) in derivative financial assets 856 - (3,023) -
(Decrease) / increase in derivative financial liabilities (387) - 2,707 -
Increase in inventories (80) - (124) -
Finance costs 167 8 280 3
3,449 5,479 7,770 2,065
Net cash inflow 12,597 4,313 11,186 733
Tax receipts 232 - 400 -
Tax paid (345) - (61) -
NET CASHFLOWS FROM OPERATING ACTIVITIES 12,484 4,313 11,525 733
Cashflows from investing activities
Acquisition of property plant and equipment (479) - (271) -
Acquisition of intangibles (6,618) - (5,056) -
Acquisition of subsidiary, net of cash acquired - (2,976) - -
Net cash used in investing activities (7,097) (2,976) (5,327) -
Cashflows from financing activities
Repayment of borrowings - - (2,000) -
Principal elements of lease payments (786) - (837) -
Interest paid on finance lease (155) - (169) -
Other interest paid - - (47) (3)
Acquisition of the remaining non-controlling interest - - (1,405) (930)
Dividends paid (928) (928) - -
Proceeds from issuance of ordinary shares 100 100 200 200
Net cash outflow from financing activities (1,769) (828) (4,258) (733)
NET INCREASE IN CASH AND CASH EQUIVALENTS 3,618 509 1,940 -
Cash, and cash equivalents at 1 January 15,044 - 13,104 -
Cash, and cash equivalent at 31 December 18,662 509 15,044 -
*(1) The movement in the deferred and current tax assets and the right-of-use
asset balances (excluding the depreciation charge) is included within the
movement in trade and other receivables.
*(2) The movement in the deferred and current tax liabilities and the lease
liability balances is included within the movement in trade and other
payables.
ABBREVIATED NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
A - OPERATING PROFIT IS STATED AFTER CHARGING:
FY-2023 FY-2022
£'000s £'000s
Staff costs:
Commissions 4,141 3,864
Other pay and benefit elements 22,411 16,464
Training and recruitment 1,114 662
Vehicle leasing costs 160 154
Contractors 2,398 1,471
Costs gross of exceptional items 30,224 22,615
Less: incorporated in Transaction and commission costs (4,141) (3,864)
Less: amounts capitalised (5,653) (4,191)
Less: IFRS 16 (160) (154)
Included in administrative expenses 20,270 14,406
IT, and telephone costs 3,859 2,420
Less: amounts capitalised (553) (408)
Included in administrative expenses 3,306 2,012
Professional and compliance fees
Fees incurred on capital restructuring of the company* 58 -
Fees incurred on the strategic review* 656 -
Statutory audit costs 493 420
Other professional and compliance fees 3,175 1,464
Included in administrative expenses 4,382 1,884
Property costs
Rents 790 785
Other property costs 1,067 911
1,857 1,696
Less: IFRS 16 (697) (763)
Included in administrative expenses 1,160 933
Travel and subsistence 633 442
Marketing 2,565 1,858
Other costs, including SIP and LTIP advisory fees 117 46
Included in administrative expenses 3,315 2,346
Sub-total, cash based expenditure 32,433 21,581
Share option charge 1,419 924
Foreign exchange loss 346 71
Contingent consideration charge (459) -
Sub-total, non-cash based costs 1,306 995
Total, administrative expenses 33,739 22,576
Add:
Depreciation - right to use assets 692 822
Depreciation - property, plant, equipment 536 389
Amortisation charge (see table 5) 7,048 6,008
Acquisition costs 1,377 164
TOTAL OPERATING EXPENSES 43,392 29,959
*recorded as separately reported items. 714 -
B. TAXATION
The Group's taxation charge or credit is the composite of:
1. Corporation tax credit arising on losses in the financial year,
2. R&D tax credits received or receivable on development expenditure
(which is debited to the Balance Sheet),
3. Deferred taxation arising on temporary and permanent timing differences
and losses carried forward, to the extent that the Company believes these to
be recoverable from future taxable profits.
FY-2023 FY-2022
£'000s £'000s
Corporation tax charge* 259 192
Current tax charge 259 192
Origination and reversal of temporary differences 534 (203)
Recognition of previously unrecognised deductible temporary differences - 844 (124)
current year
Deferred tax - prior year adjustment (235) -
Deferred tax charge / (credit) 1,143 (327)
Total tax charge / (credit) 1,402 (135)
*Corporation tax charge is paid under quarterly instalments, £153k has been
paid up to 31 December 2023 with the remainder £106k payable in January 2024
and April 2024.
As at 31 December 2023, the Group had tax losses available to be offset
against future taxable profits of £12,384k (FY-2022: £17,632k). The losses
can be carried forward indefinitely and have no expiry date.
In addition to corporation tax, the Group paid £5,341k in taxation during the
year as follows:
a. Employers National Insurance contributions - £2,683k (FY-2022: £2,145k),
b. irrecoverable VAT - £2,658k (FY-2022: £1,584k)
Factors affecting tax credit for the year
The credit for the year can be reconciled to the loss per the consolidated
statement of comprehensive income as follows:
FY-2023 FY-2022
£'000s £'000s
Profit before taxation: continuing operations 9,148 3,416
Taxation at the UK corporation rate tax of 23.5% (2022: 19.0%) 2,150 649
Net permanent differences between tax and accounting 190 78
Net taxation impact of R&D tax credit claim (897) (655)
Remeasure of deferred tax asset on carry-forward losses -current year 844 (124)
Remeasure of deferred tax asset on carry forward losses - prior year (235) -
Effect of change in tax rates 194 -
Utilisation of tax losses (844) (83)
1,402 (135)
C. EARNINGS PER SHARE
Basic earnings per share
The calculation of basic earnings per share has been based on the profit
attributable to ordinary shareholders and weighted average number of ordinary
shares outstanding. The profit after tax attributable to ordinary shareholders
of the Group is £7,746k (2022: £3,236k) and the weighted average number of
shares for the period was 183,624,192 (2022: 180,304,802).
Diluted earnings per share
The calculation of diluted earnings per share has been based on the profit
attributable to ordinary shareholders and weighted average number of ordinary
shares outstanding, after adjustment for the effects of all dilutive potential
ordinary shares. The weighted average number of dilutive shares is 193,444,728
(2022: 187,583,788).
Basic Diluted Basic Diluted
FY-2023 FY-2023 FY-2022 FY-2022
Earnings per share 4.22p 4.00p 1.80p 1.73p
Adjusted earnings per share (note D) 7.16p 6.79p 3.15p 3.03p
D. ADJUSTED EARNINGS PER SHARE
The calculation of adjusted earnings per share has been based on the analyst
community calculations, which takes profit or loss attributable to ordinary
shareholders and excludes share option charges, amortisation on acquired
intangibles, exceptional items, acquisition costs and tax on these items, and
weighted average number of ordinary shares. The adjusted earnings after tax to
ordinary shareholders of the Group is £13,139k (FY-2022: £5,683k) and the
weighted average number of shares and diluted shares are as above.
E. GAIN ON THE SALE OF THE CASH CGU
On 14 March 2023, the Group sold the Travel Cash CGU for an initial £250k
with a further £100k subject to certain conditions being met to Currency
Exchange Corporation Ltd. The net gain has been recognised as follows:
Gain on the disposal of the Travel Cash CGU has been recognised as follows:
£'000s
Net IFRS 16 lease liabilities of the CGU 115
Proceeds from the disposal consideration 350
Less: associated legal and supplier termination costs (85)
Gain on disposal 380
F. INTANGIBLE ASSETS OTHER THAN GOODWILL
Intangible assets comprise:
Intangible assets recognised through acquisitions Intangible assets acquired through internal capitalisation Other intangible assets Total, 31 December 2023 Total, 31 December 2022
All in £'000s
Cost at 31.12.2022 8,946 26,001 2,118 37,065 37,065
Additions in year 6,128 6,206 412 12,746
Cost at 31.12.2023 15,074 32,207 2,530 49,811
Amortisation at 31.12.2022 (5,822) (13,411) (1,292) (20,525) (20,525)
Acquired through business combinations (7) - - (7)
Amortisation in the year (1,672) (4,995) (381) (7,048)
Amortisation at 31.12.2023 (7,501) (18,406) (1,673) (27,580)
Net Book Value at 31.12.2023 7,573 13,801 857 22,231
Net book value at 31.12.2022 3,124 15,590 826 19,540
G. DERIVATIVE FINANCIAL ASSETS AND LIABILITIES
The Group does not take house positions on foreign exchange contracts. Each
contract with a customer is contemporaneously booked with a bank or liquidity
provider. Under accounting standards however, the contracts need to be valued
as both a 'purchase' and a 'sale'. The valuation of these contracts is done
by a third party using information sourced from Hedgebook.
H. RECONCILIATION FROM OPERATING PROFT TO ADJUSTED EBITDA
FY-2023 FY-2022
£'000s £'000s
Operating profit 8,934 3,696
Add back:
Depreciation 1,228 1,211
Amortisation 7,048 6,008
Acquisition expenses 1,377 164
Separately reported items 714 -
FX differences 346 71
Share Option charges 1,419 924
Other Share Option charges 30 46
Contingent Consideration (459) -
Adjusted EBITDA 20,637 12,120
- ENDS -
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