Equals Gp Regulatory News (EQLS)

27 January 2020

Equals Group plc

("Equals" or "the Group" or "the Company")

Full Year Trading Update

Strong Growth focused on Corporate customers and platform for rapid expansion in 2020

Equals Group plc, the e-banking and international payments group, announces the following trading update related to the full year 2019.

Full year turnover for the Group was £2.91 billion, an increase of 23% on the prior year (2018: £2.36 billion). Revenues for the full year 2019 were up approximately 20% over 2018, with revenues in the second half of the year comfortably exceeding the first half, reflecting the continued underlying growth of the business. Despite significant investment in branding, marketing and senior organisational hires to support future growth, adjusted EBITDA is expected to be 30% higher than 2018 and therefore increasing by a greater percentage than revenue. Cash at bank and liquidity providers, less customer liabilities, amounted to £16.4 million at 31st December 2019, putting the Group in a strong position to pursue further growth opportunities in 2020. These results have been achieved against a backdrop of challenging market conditions, caused by political and economic uncertainties which resulted in record-low currency volatilities.

The Group's stated strategy to focus on Corporate/B2B customers, which represent more profitable relationships with greater longevity than retail consumers, was successfully delivered with 52% of Group revenue generated from B2B during the year, compared to 37% in 2018. Furthermore, approximately 71% of Group turnover was derived from Corporate/B2B in 2019, up from 57% in 2018, which points to stronger B2B revenue growth in 2020. This shift towards B2B has been driven by investments into the Group, providing Equals with substantial product advantages over its competitors. These include the Equals Spend corporate expenses platform, which integrates bank-grade capabilities and connectivity to payments networks both in the UK and overseas. The assembled product suite increasingly enables Equals to access a greater share of B2B customer wallets and to service larger corporate customers as well as SME size businesses.

Acquisitions completed during the year have performed in-line with management expectations and have now been fully integrated, yet there are further costs to be removed via efficiency gains during 2020. Indeed, through the budget planning process, the Group has identified significant cost saving opportunities by further utilising existing resources leading to annualised cost savings of approximately £1 million, which are expected to be realised during FY2020.

The high level of investment made into our products and systems in 2018 and 2019, including trade settlement infrastructure, compliance systems and digital security, now provides the business with an efficient and scalable platform to process increasing volumes, particularly with B2B customers, in 2020 and beyond. In addition, our technology platform places the Group in a strong position to complete and integrate further acquisitions more efficiently, enabling increased synergy potential.

A more encouraging political and economic backdrop combined with a strong pipeline of further product enhancement reinforces the Group's positive outlook for 2020, and trading for January to date has been encouraging. Steps taken in systems, connectivity and supply chain rationalisation in 2019 and previous years are expected to yield further growth in revenues and profits combined with positive cash generation in 2020. This growth will be underpinned by our focus on the B2B customer segment via the unified Equals suite of products, maximising cross-selling and increasing the number of products used per customer.

All figures contained in this announcement are subject to audit.

This announcement contains inside information.

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About Equals

Equals is a leading challenger brand in banking and payments that disintermediates the incumbent banks with a superior user experience and low-cost operating model. Our business enables personal and business customers to make easy, low-cost payments both domestically and in a broad range of currencies and across a range of products all via one integrated system. The Equals platform facilitates payments either direct to Bank Accounts or at 35 million merchants and over 1 million ATM's in a broad range of countries globally via Mobile apps, the Internet, SMS, wire transfer and MasterCard/VISA debit cards.

Equals provides money movement services to both personal and business customers through four channels: Currency Cards, Physical Currency, International Payments and Bank Accounts. The Currency Card and Physical Currency offerings facilitate multiple overseas payments at points of sale and ATM's whereas the International Payments channel supports wire transfer foreign exchange transactions direct to Bank Accounts. For Corporates, Equals has a market-leading business-expenses solution based around its corporate platform and prepaid card. This service can yield significant savings on a Corporate's expenses and procurement both domestically and overseas, through better controls and improved transparency. The platform also streamlines the downstream administrative processes and integrates into accounting software, thus saving costs. Equals offers retail and business bank accounts with all the functionality you would expect from a bank, namely faster payments, BACs, direct debits, international payments and a debit card.