LSE-AIM listed e-banking and international payments firm Equals Group plc has announced its preliminary results for the year ended 31 December 2019, indicating that revenues have increased by 19% (to £30.9 million) over 2018 and have doubled over a two-year period.

The company said that organic profit growth continued, 13% overall but 20% in international payments, as Equals transitions and drives revenue generation within the higher margin B2B division and away from legacy B2C and retail FX. The strategic shift is evidenced by a marked change in the company’s revenue mix, with B2B representing 56% of revenue in 2019 (2018: 37%).

Equals’ gross profit increased 17.7% to £20.6 million and margin remained constant at 66%.

Equals made two accretive acquisitions which were successfully integrated during the year, Hermex in August and Casco in November. On the financing side, through warrant and option exercises and further capital issuances, the company raised additional capital of £15.6 million during the year.

The group rebranded during 2019 from FairFX to Equals Group, to reflect diversification from legacy FX business.

The company said that improved systems and a focus on a strong regulatory backbone delivered desired results including membership in the UK Faster Payments scheme, gaining open Real-Time Gross Settlement (‘RTGS’) accounts with the Bank of England, the granting of a Credit Broking licence by the FCA, and the negotiating of a five-year extended deal with Mastercard, allowing self-issuance.

As far as Equals’ FY-2020 Trading Update goes looking forward, the company said that overall revenues in 2020 were so far tracking close to prior-year levels, despite the Covid-19 impact, at £108k per day versus £111k in 2019. Revenue streams in both the B2B segment and retail banking remain robust whilst B2C travel money products have been particularly hard hit by the pandemic.

Equals said that its House funds cash position at 26 June 2020 was £7.7 million, with no bank debt.

Interestingly, the company said that the unfolding situation at Wirecard UK has had limited impact on revenues due to supply chain measures taken in previous years.

Commenting on the Preliminary Results, Ian Strafford-Taylor, CEO of Equals Group plc, said:

“I am pleased to report that 2019 was a positive year of revenue and profit growth for Equals, and, crucially, our strategy to refocus the business on higher margin B2B customers with a diverse range of integrated money management products is paying off as our revenue mix moves away from our legacy FX business and B2C customers.

“The Covid-19 pandemic has affected the business, but revenues have returned to more normalised levels in most business lines since the initial impact in late March, April and May. Our teams have transitioned to remote working well, with the investment in improved technical infrastructure benefitting our operations.

“Supported by our recent fundraise, we look forward to the future with confidence as we continue to expand our product range and make selective acquisitions when opportunity presents. Equals is well positioned in the current market with a deep pool of active customers driving progress across the business.”

FY-2019 Financial Summary

 

 £million  FY-2019  FY-2018  % Change
 (restated)
 Underlying transaction values  2,887  2,369  +21.8%
 – B2B  2,088  1,187  +75.9%
 – B2C  799  1,182  -32.4%
 Revenue  30.9  26.1  +18.6%
 – B2B  17.3  9.5  +81.2%
 – B2C  13.6  16.6  -18.1%
 Gross profit  20.6  17.5  +17.7%
 Adjusted EBITDA*  9.1  7.5  +21.3%
 (Loss)/profit after taxation  (5.4)  2.6