Cornerstone FS posts rise in 2022 revenue
Cornerstone FS Plc (LON:CSFS), a foreign exchange and payments company offering multi-currency accounts to businesses and individuals, today announced its final results for the year ended 31 December 2022.
For the year under review, Cornerstone delivered another twelve months of significant growth in revenue to £4.8m (2021: £2.3m). This reflects a substantial increase in revenue generated by clients that are served directly. The proportion of total revenue that was accounted for by direct clients increased to 78%, compared with 56% for the previous year, being £3.8m (2021: £1.3m). Revenue generated through the Group’s introducer network accounted for 22% of total revenue (2021: 44%) and was £1.1m (2021: £1.0m).
By client type, there was an increase in revenue generated by both corporate accounts and HNWIs. This includes particularly strong growth in revenue from HNWIs, which was primarily due to the addition of the Asia team.
Revenue continued to be generated from the provision of foreign exchange and payments services in the form of spot and forward transactions, accounting for 92% and 8% of revenue respectively (2021: 89% and 11%).
During 2022, transactions were conducted between 58 different currency pairs (2021: 42), with 86% of transactions being between various combinations of Sterling, Euros and US Dollars (2021: 91%), reflecting an expansion of the Group’s payment capabilities.
During 2022, the Group transacted payments totalling £584m compared with £363m in the previous year.
Operating expenses were £8.6m in 2022 compared with £5.4m for the previous year. This primarily reflects movements of:
- £1.9m increase in share-based (non-cash) compensation to £4.3m (2021: £2.3m), which predominantly relates to share-based incentivisation for the Asia team and the General Manager APAC and Middle East;
- £1.6m increase in other administrative expenses to £4.2m (2021: £2.6m); and partly offset by
- £0.3m decline in transaction costs related to the Company’s IPO and its acquisition strategy.
Loss before tax was £5.8m for 2022 (2021: £4.2m loss), which primarily reflects the greater operating expenses. Loss per ordinary share on a basic and diluted basis was 17.26 pence (2021: 21.24 pence loss), which reflects an increase in the weighted average number of ordinary shares in issue to 32,506,335 (2021: 19,317,407).
Excluding share-based compensation, transaction costs and depreciation & amortisation charges, the Group’s adjusted operating expenses (consisting of administrative expenses) as a proportion of revenue improved to 79% (2021: 107%). As a result, the Group’s adjusted EBITDA loss was reduced to £0.9m (2021: £1.3m).
As at 31 December 2022, the Group had cash and cash equivalents of £682k (31 December 2021: £348k). This followed the raising, during the year, of:
- gross proceeds of £870k via the placing of, and subscription for, new ordinary shares, which was partly used to fund the initial £586k cash consideration for the acquisition of Capital Currencies; and
- a total of approximately £1.1m through the placing of new ordinary shares (£860k) and the issue of a convertible loan note (£225k).
The loan note was issued to one investor who also took shares up to the maximum amount allowed before obtaining FCA approval (9.9% of the Company’s issued share capital). Application for FCA approval was made during the year and the loan note was converted automatically into shares on approval being received in February 2023.
The strong trading momentum experienced in 2022 has been sustained into the current year and increased during Q1 2023 resulting in a better-than-expected revenue performance for the first quarter. This also included Cornerstone achieving its first, unaudited, quarter of being EBITDA positive (on an adjusted basis).
While trading in Q2 2023 has reverted from exceptionally high to the originally budgeted levels of growth, the Group remains on track for a significant increase in revenue for full year 2023 over 2022 and is optimistic in terms of adjusted EBITDA positivity. This reflects the advancement being made across the business and as the Group realises the benefits of the enhancements made to its operations and offer towards the end of 2022 and to date in 2023.
The Board notes the completion of the sale of Avila, which, along with the licensing agreement with Aspire, will support the Group’s cash position.
In addition, post year end certain incentivisation and settlement arrangements were varied with Robert O’Brien, General Manager APAC and Middle East, and Craig Strong, Director of Capital Currencies, which has also been immediately beneficial to the business.
As a result, and as Cornerstone continues to broaden its partnership network and offer, the Board remains confident in the future and looks forward to reporting on the Group’s progress.
James Hickman, CEO of Cornerstone, said:
“During 2022, Cornerstone continued to deliver on its strategy, improved operationally and achieved a strong financial performance with revenues more than doubling and an increase in gross margin. This growth was accelerated by two acquisitions during the year, which also supported the completion of our transition to a business that services customers directly. Through the expansion of our offer, enhancement of our platform and strengthening of our team, we took important actions to position Cornerstone for an even greater 2023.
“The strong trading momentum experienced in 2022 has been sustained into the current year, and we remain on track for a significant increase in revenue for full year 2023 and are optimistic in terms of adjusted EBITDA positivity. As a result, and as we continue to broaden our partnership network and offer, we remain confident in the future and look forward to reporting on our progress.”