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Annual Report 2021
EQUALS GROUP PLC
VINTNERS’ PLACE
68 UPPER THAMES STREET
LONDON
EC4V 3BJ
Equals Group PLC
Contents
COMPANY INFORMATION
About Equals Group
1
2
3
Directors and advisors
Financial summary and highlights
STRATEGIC REPORT
6
Chairman’s Statement
Chief Executive Officer’s Report
7
15 Chief Financial Officer’s Report
28 Statement on section 172, Companies Act 2006
GOVERNANCE
31 Report on Corporate Governance
36 ESG report
49 Report of the Audit Committee
52 Report of the Risk Committee
55 Directors’ Remuneration Report
60 Directors’ Report
63
64
Statement of Directors’ responsibilities in respect of the annual report and financial statements
Independent Auditors’ Report to the Members of Equals Group Plc
FINANCIAL STATEMENTS
71 Consolidated Statement of Comprehensive Income
72 Consolidated and Company Statements of Financial Position
73 Consolidated and Company Statements of Changes in Equity
74 Consolidated Statement of Cash Flows
75 Company Statement of Cash Flows
76 Notes to the Consolidated Financial Statements
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WWW.EQUALSPLC.COM
Equals Group PLC
About Equals Group
Equals develops and sells scalable payment platforms to enable organisations to move and easily manage their money
flows through its payment and card products.
Its core brands are:
Equals Money – an international, domestic and card payment platform comprising the “Spend” and “Pay” products for ‘just-in-
time” expenditure needs of our customers who range from Hollywood studios to dynamic start-ups and fast growing businesses.
Equals Money Solutions – an enterprise scale-up of the Equals Money platform serving large corporates and financial
institutions with complex payments needs.
Equals Connect - a white label platform serving smaller FX providers.
FairFX – a travel card and international payment product covering the needs of high-net-worth individuals, international
holidaymakers, and their families.
CardOneMoney - UK focused product to meet the needs of small business and individuals for everyday account processes,
allowing them to run their payments, direct debits, and cards via their account.
Equals Group PLC (the “Company”) is a public limited liability company incorporated in England and Wales and domiciled
in the UK whose shares are admitted to AIM, a market operated by The London Stock Exchange.
In addition to be regulated on AIM, various group companies are regulated by FCA and HMRC . Through one group company,
the Group has access to real-time settlement accounts with the Bank of England and is a member of the UK Faster Payments
Scheme, meaning customers can transfer and receive funds with immediate effect.
The European Payments Council has accepted a group company to belong to “SEPA” – the “instant” fund transfer mechanism
for the Euro zone. Membership of SEPA allows Equals customers to receive instant Euro credits to their own-name multi-
currency IBAN and instantly send Euro payments to other SEPA scheme members. These connections, complimented with
SWIFT, allow the group to provide a true multi-currency account to its customers.
These consolidated financial statements comprise the Company and its subsidiaries (together referred to as the ‘Group’).
They were approved by the Board after stock market trading hours on 29 March 2022.
Our Values:
Make it happen
Succeed together
Be the customer
Go beyond
Do the right things,
We are one team and
We walk in our
If we all went that extra
do them right and own
with common goals.
customers’ shoes and
mile, just think how far
the outcome
When we work together
we always strive to
we could go
we can achieve more
make our customers’
lives simpler
1
1
Directors and Advisors
Directors
A R F HUGHES
(Non-Executive Director and Chair)
I A I STRAFFORD–TAYLOR
(Chief Executive Officer)
R Q M COOPER
(Chief Financial Officer)
S A HERBERT
(Non-Executive Director and Chair of Audit and Risk Committee)
C J BONES
(Non-Executive Director and Chair of Remuneration Committee; appointed 9 April 2021)
Company Secretary
ONE ADVISORY LIMITED
(appointed 1 August 2021)
Advisors
Registered Number
08922461 (England and Wales)
Registered Office
3rd Floor Thames House
Vintners’ Place,
68 Upper Thames Street,
London, EC4V 3BJ,
England
Principal Bankers
Barclays Bank PLC
1 Church Hill Place,
Canary Wharf, E13 5BH,
England
Independent Auditors
PricewaterhouseCoopers LLP
No 1 Spinningfields,
1 Hardman Square,
Manchester M3 3EB,
England
Solicitors
Browne Jacobson LLP
6 Bevis Marks,
London, EC3A 7BA,
England
Nominated Advisor
and Broker
Canaccord Genuity Limited
88 Wood Street,
London, EC2V 7QR,
England
Investor Relations
Buchannan Communications
Limited
107 Cheapside,
London, EC2V 6DN,
England
Registrar
Link Group
Unit 10, Central Square,
29 Wellington Street,
Leeds, LS1 4DL,
England
Telephone 0871 664 0300
2
EQUALS GROUP PLC Financial summary and highlights
FY-2021 Financial Summary
Underlying transaction values
- FX
- Banking
- Solutions Platform
- Total
Revenue
% of revenue from B2B
Gross profits
Adjusted EBITDA
EBITDA
Loss after taxation
FY-2021
£ millions
FY-2020
£ millions
Change*
4,352
1,331
846
6,529
44.1
81%
24.0
6.7
5.7
(2.3)
2,672
821
–
3,493
29.0
70%
18.3
1.1
(2.0)
(6.9)
+63%
+62%
+87%
+52%
+31%
*based on underlying, not rounded, figures.
FY-2021 Financial Highlights
FY-2021 operational and
product highlights
• Total Revenue increased by 52% to £44.1 million
• Focus on B2B and non travel-related revenue streams
(FY-2020: £29.0 million), supported by:
successfully continued
✧ Like for like transactional values increasing by 63%
✧ Business customer revenue increased to represent
to £5.7 billion (FY-2020: £3.5 billion)
81% of total revenues (FY-2020: 70%)
✧ Immediate success in the Solutions Platform which
contributed £0.8 billion in transaction values and
£3.6 million in revenues
• Gross profits increased 31% to £24.0 million (FY-
2020: £18.3 million)
• Cash-based expenditure fell a further 7% (£1.6
✧ Non-travel revenue represented 94% of the total,
up from 91% in FY-2020
• Group continuing to attract larger corporates: won a
significant mandate to transact a single but complex
trade yielding £1.5 million of revenue and £0.8 million
of gross profits
million) to £21.2 million (FY-2020: £22.8 million)
• ‘Own-name’ multi-currency IBAN launched mid-year
• Adjusted EBITDA** increased to £6.7 million (FY-2020:
£1.1 million)
• Year-end cash increased 31% to £13.1 million (FY-
2020: £10.0 million)
• Improved sales and data focus through both staff
hires and CRM; a significant contributor to increased
revenues
• R&D continued throughout the year, with further
technical developments including ‘Confirmation of
Payee’ and Linked cards
• Operational
improvements
reconciliation automation and client onboarding
through
greater
3
3
STRATEGIC REPORTANNUAL REPORT 2021
EQUALS GROUP PLC
History
February 2022
Joins Single Euro Payment (SEPA) Network
May 2021
Launch of capability to offer own name Multi-Currency IBAN
October 2020
Acquisition of Effective FX
November 2019
Acquisition of Casco Financial Services Limited
September 2019
New five-year agreement with Mastercard
August / September 2019
Capital raise and share placing for acquisitions, raising £14.5m net of expenses for expansion
August 2019
Acquisition of Hermex FX
July 2019
Banking partnership with Citi Commercial Bank
June 2019
Rebrands group as Equals
February 2019
Becomes part of Bank of England’s Faster Payments Scheme
2018
Partnership with US bank Metropolitan Commercial Bank
February 2018
Acquisition of City Forex
August 2017
Acquisition of CardOneBanking
January 2017
e-Money licence obtained via acquisition of Q-Money
2014
IPO on AIM
2013
Customer milestone, over 500,000 registered customers
2012
Launch of expense platform
2010
Launch of international payments platform
2007
Foundation of travel cash business
4
4
Strategic report
August / September 2019
Capital raise and share placing for acquisitions, raising £14.5m net of expenses for expansion
February 2022
Joins Single Euro Payment (SEPA) Network
May 2021
Launch of capability to offer own name Multi-Currency IBAN
October 2020
Acquisition of Effective FX
November 2019
Acquisition of Casco Financial Services Limited
September 2019
New five-year agreement with Mastercard
August 2019
Acquisition of Hermex FX
July 2019
Banking partnership with Citi Commercial Bank
June 2019
Rebrands group as Equals
February 2019
Becomes part of Bank of England’s Faster Payments Scheme
2018
Partnership with US bank Metropolitan Commercial Bank
February 2018
Acquisition of City Forex
August 2017
Acquisition of CardOneBanking
January 2017
e-Money licence obtained via acquisition of Q-Money
2014
IPO on AIM
2013
Customer milestone, over 500,000 registered customers
2012
Launch of expense platform
2010
Launch of international payments platform
2007
Foundation of travel cash business
55
Chairman’s statement
I am pleased to report a record year for your company with like
for like transactions facilitated increasing by 63% to £5.7 billion
and revenues increasing 52% to £44.1 million.
The growth in services to businesses is the source of this.
ESG
Developments in the Group’s platform continued apace,
The Group has a diverse workforce and
remains
including the ability to offer customers direct links with all
highly conscious of its role as a responsible employer.
major international payments schemes.
Today Equals offers customers bank-level fast and simple
access to their payments combined with the benefit of a
tailored and highly competitive FX service. Additionally, the
hard work of our people to protect and streamline the business
during 2020 meant we entered 2021 with a more efficient
and more scalable operation. Benefits of these technological
developments, and the closer links we’ve established into
international payments platforms, are evident in our current
trading.
In 2021 the Group broadened its offer with its “Solutions”
product, a configurable service
for
larger businesses.
Revenues from this product started well with £1.7 million in
the final calendar quarter alone. A testament to these broader
capabilities of the Group, the tenacity and skill of our staff,
and the rigorous client onboarding procedures, was a highly
complex FX trade of £114 million, alone yielding £1.5 million
of revenue.
Our office-based service business, has a low environmental
footprint, but we remain mindful of improvements that can be
made. Like others, in the last two years we’ve learnt the value
of flexible remote working, for employees and for the Group.
We have produced an environmental, social and governance
(“ESG”) report which details the Group’s values and progress.
PEOPLE
Noting the demand for good people and our desire to retain the
excellent ones we have; the Group reviewed its remuneration
policies for all grades of employees and concluded that
longer-term incentives were appropriate. We implemented:
an HMRC approved all-employee share scheme; a key staff
share option scheme and an Executive Directors share option
scheme. All these schemes cannot pay-out for over four years,
linking rewards with financial success. Full details of these
schemes are described in the Report of the Remuneration
Committee and the key documents are available for review on
our website, Equalsplc.com.
All this marks a significant change in capabilities and custom
of Equals, proving the value and the potential of Group’s
The Board is grateful to, and appreciative of, our staff and
executive team for the considerable progress of the Group.
strategic shift and development since 2019.
BOARD
With an eye to this potential, the board was further enhanced
by the appointment, on 9 April 2021, of Professor Christopher
Bones who previously held senior executive positions at Diageo
and Cadbury and as the Dean of Henley Business School.
He co-founded Good Growth Ltd, a successful e-commerce
consulting business whose clients
include Kraft Heinz,
WHSmith, Pets at Home, ITV, Boohoo, and Channel 4. Chris
adds particular value to the sales and marketing functions at
Equals and chairs the Group’s Remuneration Committee.
Finally, I feel I must add that the Group has no physical footprint
in Russia or Ukraine and minimal historic trade with entities in
both countries.
ALAN HUGHES
Chairman
29 March 2022
6
STRATEGIC REPORTEQUALS GROUP PLC Chief Executive Officer’s Report
2021
Management’s objective for 2021 were to significantly increase
both the quantum and mix of revenues from B2B customers
and products. We achieved both by building on the payments
infrastructure and connectivity already assembled, and further
enhanced this by providing customers with ‘own-name multi-
currency IBAN’ accounts. Concurrently, the Group expanded
and refined its sales processes and go-to-market strategy.
SUMMARY OF FINANCIAL PERFORMANCE
I am delighted to report that:
Within the vast payments market, the Group remains
strongly focused on the B2B customer segment. Within
that, it has identified small and medium-sized enterprises
(SMEs) as the optimal target audience for its products and
services. The Group aims to deliver this via its ‘Equals Money’
proposition – a single platform comprising account-to-account
transfers and card products for both UK and international
transactions. The Group’s ‘target’ customer is an SME between
50-500 employees with UK and overseas payment needs.
Engineering, product, and design resources are focused
on providing solutions to this customer segment; however,
the Group’s products equally serve both smaller and larger
•
•
•
Like for like transactions executed on the Group’s platforms
rose 63% to £5.7 billion (FY-2020: £3.5 billion)
B2B customers.
Transactions from our new Solutions Platform were
£0.8 billion from a standing start (FY-2020: Nil)
Revenue rose 52% to £44.1 million, with £15.3 million in Q4-
2021 alone
•
Adjusted EBITDA rose from £1.1 million to £6.7 million
•
Year-end cash closed at £13.1 million
£10.0 million)
(FY-2020:
Despite the continuing growth of fintech within the wider
market, it remains the case that most payments activity
continues to flow through the incumbent banks and payment
networks. Therefore, winning business from these institutions
remains a key focus for the Group in terms of both product
development and sales and marketing activities. However,
investment into the fintech competitors of Equals also makes
it essential that the Group continues to innovate and invest
into its platform and connectivity to remain ahead of the
A full financial analysis is presented in the Chief Financial
competition in its chosen B2B payments space. The success
Officer’s Report which follows this statement.
of this strategy to-date is clear in the Group’s FY-2021 results.
COVID-19
PERFORMANCE IN 2021
2021 saw the world continue to struggle through Covid variants
A key milestone to achieving accelerated growth for the Group
and lockdowns. Despite this, the Group achieved rapid growth,
was passed in May 2021 when Equals launched its capability
benefiting from measures taken in 2020 to focus the Group on
to offer ‘own-name multi-currency IBAN’ accounts to its
a B2B customer base and thereby reducing any reliance on
customers. This enables the business customers of Equals
the legacy B2C travel-related products. In addition, the lessons
to pay and receive into a single account in their own name,
learned in 2020 in terms of hybrid working meant that the Group
and that account can process all currencies automatically.
could operate efficiently throughout the year during the various
Further, the Group can offer its customers the flexibility to
open multiple own-name IBAN accounts or multiple sub-
accounts within a single IBAN. This flexibility places Equals in
a position where it can solve many payment and reconciliation
problems for business customers, all delivered through one
unified platform.
phases of the pandemic.
MARKETPLACE AND COMPETITIVE LANDSCAPE
The global payments market is a complex space and can be
measured in many trillions of pounds, comprising all the various
payment mechanisms from cash, cards, account-to-account
transfers, and other methodologies across physical, internet and
mobile interfaces. Against this background, the Group remains
somewhat unique in that it spans both account-to-account
transfers and cards, overlaid on infrastructure providing bank-
grade connectivity and security on superior customer interfaces.
The flexibility in the payment methodology that the Group can
support from one unified platform is increasingly vital to business
customers, for example many e-commerce businesses only
accept card payments whereas other companies may typically
only accept bank transfers.
7
STRATEGIC REPORTANNUAL REPORT 2021 CHIEF EXECUTIVE OFFICER’S REPORT CONTINUED
Equals Solutions
The own-name multi-currency IBAN capability, and the flexibility
it offers, underpinned the creation of a new revenue stream:
Equals Solutions. Launched in June 2021, it contributed £0.3
million to revenues in the first half-year and £3.6 million for the
full year, with a significant £1.7 million contribution of which was
the fourth quarter showcasing its rapid growth and take-up by
business customers.
Equals Solutions is targeted at larger corporates and provides
a bespoke platform for each client. The flexibility in terms of
being able to onboard a complex B2B customer rapidly and
provide multiple own-name IBAN accounts and sub-accounts
combined with the ability to implement complex authorisation
hierarchies and protocols for the customer is a capability
that few companies can offer. Incumbent banks are unable
to compete given their operations remain on slow and often
outdated infrastructure, while a typical fintech competitor
concentrates on B2C not B2B customers and even may only
have some – and not all – of the capabilities needed. Equals are
therefore set apart given it provides a complete suite of services
and products with the latest tech proposition.
Equals Money
Equals Money combines account-to-account payments, card
payments and current accounts in one unified platform and is
targeted at SME customers.
Other achievements and product launches
•
•
•
•
•
•
•
•
Improved onboarding journey for all customers allied to
automated compliance checks to minimise new-customer
friction
Appointment of new Head of Sales and simplification of
commission structure
Implementation of Growth Team comprising marketing and
business development
Continued development of CRM (HubSpot) platform
yielding improved sales traction
Creation of Data Team and investment into data capabilities
and insights
Further upgrades to the Group’s compliance capabilities
and personnel
Joining
the
UK Payments
‘Confirmation of Payee’ scheme
for
Implementation of automated reconciliations utilising
Kani-payments platform, resulting in additional operational
efficiency
•
Launch of ‘Linked Cards’ for FairFX B2C cards platform
•
Banking platform re-branded
STRONG FINANCIAL PERFORMANCE – GROWTH
AND RESILIENCE THROUGHOUT THE YEAR
2021 was a year of significant growth for the Group in terms
Along with Equals Solutions, the ability to offer own-name
of transaction volumes, revenues and expanded product
IBAN accounts to customers has significantly enhanced the
suite delivering enhanced operational capacity. Growth was
capabilities of the Equals Money platform. In addition, during
broad-based across the B2B products, aided by the advent of
2021 the Group implemented additional developments to the
the Equals Solutions revenue stream in June. The growth in
Equals Money platform including a new customer interface via
revenues has flowed through to EBITDA as the Group became
website and app, batch payments and multi-tier configurable
increasingly operationally geared and also cash generative.
approval functionality.
Equals Pay and Equals Exchange
Equals Pay is the Group’s customer-facing international
The transaction table below shows how the volumes through
the Group’s platform have almost doubled since 2019 despite
the impacts of the Covid pandemic. Overall transaction
payments product. Numerous enhancements have been
volumes have increased by 97% over pre-pandemic 2019
made to this product, including the ability to make batch
levels and 63% over 2020 activity. Within these totals, currency
payments and improved forward contract functionality.
Equals Exchange is the Group’s internal dealing platform
which runs on the same infrastructure as Equals Pay. This was
launched during the year and is proving a very capable
platform and is well regarded by Equals’ dealers.
transactions have increased by 105% since 2019 and 63%
since 2020, whilst banking transactions have increased by
73% and 62% respectively.
8
STRATEGIC REPORTEQUALS GROUP PLC CHIEF EXECUTIVE OFFICER’S REPORT CONTINUED
Table A: Transaction amounts since January 2019
In £ millions
Q1-2019
Q2-2019
Q3-2019
Q4-2019
Total, FY-2019
Q1-2020
Q2-2020
Q3-2020
Q4-2020
Total, FY-2020
Increase on prior year
Q1-2021
Q2-2021
Q3-2021
Q4-2021
Total, FY-2021
Increase on prior year
Currency
Like for like
Solutions
Banking
sold
total
Platform Group total
171
189
202
209
771
194
169
221
237
821
230
340
374
387
1,331
451
448
575
643
622
637
777
852
2,117
2,888
664
533
660
815
2,672
829
909
1,199
1,415
4,352
858
702
881
1,052
3,493
+21%
1,059
1,249
1,573
1,802
5,683
+63%
–
–
–
–
–
–
–
–
–
–
–
143
313
391
846
622
637
777
852
2,888
858
702
881
1,052
3,493
+21%
1,059
1,392
1,886
2,193
6,529
+87%
The ability to process a doubling of activity in two years demonstrates the resilience of the platform the Group has built, the value
of the investment in infrastructure which was commenced in 2018, along with the acquisition of Casco in 2019. Furthermore, the
acceleration in transactions in the 3rd and 4th quarters of FY-2021 shows the effect of the own-name IBAN roll-out combined with
Equals Solutions driving increased activity.
The revenue table below tells a similar story with strong revenue growth compared to both 2019 pre-pandemic levels and the
2020 performance. Overall revenues grew 43% over 2019 levels and 52% over the Covid-impacted 2020 result. Within the revenue
performance, the shift towards B2B is clear to see. FY-2021 revenues were split 81% B2B and 19% B2C compared to a 55/45 split
in FY-2019 and a 70/30 split in FY-2020.
9
STRATEGIC REPORTANNUAL REPORT 2021 CHIEF EXECUTIVE OFFICER’S REPORT CONTINUED
Table B: Revenues since January 2019
In £’000s
Q1-2019
Q2-2019
Q3-2019
Q4-2019
Total, FY-2019
Mix
Q1-2020
Q2-2020
Q3-2020
Q4-2020
Total, FY-2020
Change on prior year
Mix
Q1-2021
Q2-2021
Q3-2021
Q4-2021
Total, FY-2021
Change on prior year
Mix
B2B
3,831
4,069
4,164
5,231
B2C
3,087
3,636
3,847
3,080
Total
6,918
7,705
8,011
8,311
17,295
13,650
30,945
56%
5,354
3,928
5,273
5,797
20,352
+18%
70%
5,626
7,179
9,925
12,873
35,603
+75%
81%
44%
2,672
1,819
2,033
2,084
8,608
-37%
30%
2,438
1,662
1,980
2,408
8,488
-1%
19%
8,026
5,747
7,306
7,881
28,960
-6%
8,064
8,841
11,905
15,281
44,091
+52%
Revenue
margin
Revenue
per day*
1.1%
1.2%
1.0%
1.0%
1.1%
0.9%
0.8%
0.8%
0.7%
0.8%
0.8%
0.7%
0.8%
0.8%
0.8%
110
124
123
128
121
125
94
112
123
114
128
145
183
239
174
* based on underlying, not rounded, figures and expressed as revenue divided by the number of working days in each quarter.
In terms of growth and productivity, revenue per employee rose by 80% to £172k per employee (FY 2020: £96k), a testament both
to productivity, incentives and strong headcount control.
Product outlook
Unified platform – Equals Money & Equals Solutions
Great strides were made during 2021 in the development of ‘Equals Money’, which incorporates the payments, cards and current
account solutions that the Group can offer in one unified platform and ties directly into the strategic vision for the Group to simplify
money movement for business customers.
The investment made in prior years to assemble infrastructure providing bank-grade security and connectivity, including the
integration into the Faster Payments network and the implementation of the Citibank partnership to provide ‘local’ settlement in
over 40 countries, form the underlying platform for clearing payments efficiently. The scalability of this platform is evidenced by
the doubling of transaction volumes processed in the last two years.
To optimise revenues from this assembled infrastructure, it is essential to make it simple both to become a customer and then to
use the platform. For the customer acquisition journey, investment has been made into further refining the onboarding journey,
utilising automated compliance checks overlaid with additional compliance personnel to fast-track non-standard cases. For
the ease-of-use of the platform the Group has applied extensive resources into refining the User Experience (UX) utilising both
extensive research into customer needs and the inhouse product and design expertise at Equals.
In 2022 the Group will continue to invest in platform capabilities, on-boarding efficiency and UX to constantly improve both the
platform functionality and usability. This will translate into increased revenues from existing customers whilst improving sales
success and conversion of leads into new customers. Further, the Group will integrate the platforms with major accountancy
software providers thereby providing another sales channel and expanding the pool of customers who can access Equals’
products and services.
10
STRATEGIC REPORTEQUALS GROUP PLC CHIEF EXECUTIVE OFFICER’S REPORT CONTINUED
Payment infrastructure, “Boxes”
2021 saw major advances in the Group’s capabilities to
deliver enhanced account services to its customers. The
most significant advance was the ability to give a customer
an ‘own name multi-currency IBAN’ – an account in their own
name denoted by a unique IBAN (‘International Bank Account
Number’) which supports multiple currencies. As the account
is in the name of the customer, a so-called ‘first party’ account,
this allows more use-cases than payments into a ‘pooled
account’ from a compliance perspective. Further, having one
IBAN for all currencies enables a customer to provide one
single account identifier to all of its customers and suppliers,
thereby simplifying both sales and procurement processes.
To offer own-name multi-currency accounts, many third-party
integrations were needed, including partner banks and SWIFT.
However, the key framework to support the flexible platform
we require is referred to as ‘Boxes’. A Box is our internal title for
a single currency container in which you can store an asset.
Hence, each own-name multi-currency IBAN has one Box per
currency. Further flexibility is gained by the fact that a Box can
support sub-Boxes so a customer can pay directly into their
IBAN or directly to a sub-Box. This sub-Box capability allows
us to offer customers an own-name IBAN with unlimited
sub-accounts if they require it.
The Boxes infrastructure also provides the capability for an
Equals Customer to create own-name IBAN accounts for
its own customers – subject to Equals compliance checks.
This capability can resolve complex reconciliation issues for
companies that have multiple parties paying into one bank
account per currency. Each party can have a unique IBAN to
pay into, in any currency, and therefore the Equals customer
knows at point of receipt of funds who has remitted them.
Supporting this configuration is the Boxes service which
automatically creates a Box on receipt of funds and auto-
processes funds into and out of a Box via SWIFT, BACS, Faster
Payments and SEPA.
Further development of the Boxes infrastructure is planned
for 2022, enabling us to deliver key additional functionality
for both Equals Money and Equals Platforms including real-
time running balances, statements and enhanced reporting for
customers, bulk payments and the recently announced direct
integration into the SEPA (Single European Payments Area)
network. In addition, the Group will build out its capability to
offer its IBAN and Boxes functionality via API – thereby allowing
more sophisticated customers to directly integrate with the
Equals platform and support white-label opportunities.
11
STRATEGIC REPORTANNUAL REPORT 2021 CHIEF EXECUTIVE OFFICER’S REPORT CONTINUED
Card Products
Similar to the account-to-account payment infrastructure that Equals has assembled, 2021 saw significant progress in the
development of the Group’s card platform that underpins a strong pipeline of customer-facing features to be deployed in 2022.
The new infrastructure can power the Group’s card products for the medium term and allow Equals to run card schemes in
overseas locations. 2022 will see the launch of the new Equals Money card, replacing the Equals Spend cards which run on
legacy infrastructure. The new cards, which are multi-currency, can be both virtual and physical and have many more features and
capabilities. Equals are also moving towards being its own Issuer for its card products, thereby eliminating another party from the
supply chain and speeding up development cycles.
Sales and Marketing – a high growth agenda
The Group further enhanced its capabilities in Sales and Marketing in 2021. The roll-out of HubSpot, the new CRM system for
Equals, continued during the year, focusing on the B2B customer segment. Many activities previously performed in isolation are
now processed automatically via the HubSpot platform so that the Group has a single database on customers and a central hub
from which all customer interaction is performed and recorded. The focus for 2022 will be to harness this capability to drive new
customer acquisition and to further drive enhanced revenues from the existing client base.
Equals created a ‘Growth Team’ during the year which combined marketing with the overall growth agenda. This team is
responsible for HubSpot in terms of ensuring optimisation of how it is used across the Group and that the benefits derived from
it are maximised. The focus of the team is to enable growth by a combination of delivering increased revenue from existing
customers whilst driving new customer acquisition. The key for the success of the team is the interaction with the revenue teams
to support them in reaching their targets.
In keeping with the overall strategy of the Group, the focus for growth is on the B2B customer base. Unlike B2C customer
acquisition, where above-the-line (‘ATL’) marketing such as TV and billboard advertisements augmented by digital marketing is the
driving force, B2B customer acquisition relies more on the outbound sales function augmented by and integrated with a coherent
digital marketing strategy and content production. Accordingly, the Growth Team works very closely with the Sales functions
across the Group in defining campaigns and assisting the sales efficacy with targeted digital marketing and an in-house pay-per-
click (‘PPC’) team.
The challenge for Equals in 2022 in sales and growth is managing the transition from being a product-led business to a platform-led
business. Previously, the Group has sold its products – International Payments, Card Products and Current Account products –
using largely separate sales teams and marketing strategies. As Equals moves forward, it will be selling Equals Money to the SME
customer base and Equals Solutions to the larger B2B customers. The transition from product to platform differentiates Equals
from vanilla FX businesses, as the Group can compete not just on FX rates, but on platform capability and service. The Sales
skills required are also different and therefore the Group appointed a new Head of Sales during the year, revised the commission
structure and upgraded its sales teams.
The steps taken in 2021 position Equals well for the transition from product to the platform as it now has a stronger sales team,
a single-source-of-truth CRM platform and the Growth Team is established internally as the fulcrum around which will drive the
Group’s unified Sales approach.
Board composition
On 9 April 2021, we welcomed Christopher Bones as a Non-Executive Director of the Company with his background in both
Human Resources and Marketing. He has been invaluable in the formulation of a compensation strategy for the Group as well as
assisting in the development of a go-to-market strategy.
12
STRATEGIC REPORTEQUALS GROUP PLC CHIEF EXECUTIVE OFFICER’S REPORT CONTINUED
Employees
The Group has been focusing on enhancing ‘bench-strength’ to support the executive layer that sits just below the Board. Pursuant
to this, the Group took on a Head of Compliance to compliment the already strong operational team, and the CFO, Richard
Cooper, recruited a new Director of Finance to enable him to work even more closely with myself on corporate opportunities and
investor relations.
The Group’s employees continue to be its greatest strength. The loyalty, commitment, and hard work demonstrated in 2020 and
now in 2021 has been tremendous and deserves to be acknowledged. I would like to take this opportunity to personally thank
every colleague for everything they have done for the Group. We are delighted to have a diverse workforce and are proud to train
and promote from within as well as seek fresh talent from elsewhere.
Three senior members of the executive team left the Group during 2021 and I thank them for their time whilst at Equals.
Whilst the Group continues to seek efficiencies and has a strong cost-control culture, the Board intends to invest these gains in
further capacity for growth rather than reductions in staff numbers. This in turn will benefit investors as Equals will have strong
operational gearing as it grows, with its cost base increasing at a lower rate than transactions and revenues.
The labour market in the UK, particularly in the fintech space, is extremely competitive. Accordingly, in 2021 the Group introduced
a company-wide share-ownership scheme (‘SIP’) where all eligible employees received the same number of shares in Equals.
The Group will seek to make similar awards on an annual basis. In addition, Equals introduced a long-term incentive plan (‘LTIP’)
scheme for senior employees and a similar plan with performance conditions for Executive Directors. Both the SIP and the LTIP
schemes have lengthy vesting periods and thereby provide strong retention benefits for the Group.
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 appraisal.
Future plans and opportunities
The strategic direction of the Group remains clearly focused on the B2B customer segment with Equals Money being targeted at
the SME base and Equals Solutions at larger corporate opportunities. The growth potential, now that Equals has assembled the
core capabilities of own-name IBAN and bank-grade connectivity and clearance, is extremely strong due to the complexity and
time required to replicate the Group’s capabilities and will only be enhanced by the developments planned for 2022.
Equals will continue to look for growth opportunities and can do so with a strong balance sheet and cash position. The Group will
examine overseas expansion beyond its current predominantly UK-centric customer base and will also take a considerate and
opportunistic approach to acquisitions as they present themselves.
Recent geo-political events
The current uncertainty caused by the conflict from Russia to Ukraine does not have a material impact on Equals as the Group’s
direct exposure to the region is extremely limited. In addition, clearly, to the extent the situation affects global confidence and
trade volumes, this could impact general commercial activity levels during 2022. We have not seen any direct impact to date but
continue to monitor the situation closely.
13
STRATEGIC REPORTANNUAL REPORT 2021 CHIEF EXECUTIVE OFFICER’S REPORT CONTINUED
Q1-2022 trading
2022 has started exceptionally well with revenues to 28 March, 78% higher than the same period in 2021 at £13.6 million.
Strong revenue growth continues to come from B2B with all product lines progressing well. Equals Solutions, which contributed
£3.6 million of revenues in FY-2021, has already contributed £2.46 million in FY-2022 to-date and is expected to continue to grow
strongly as the Group adds new functionality to its payments platform during the year.
Equals, therefore, has a strong outlook resulting from the investments it has made to create a payments platform comprising
International and Domestic Payments, Card Payments and Banking Services underpinned by exceptional technology and direct
connections to multiple payment networks. Further investments made in compliance, onboarding and user experience mean that
the rich functionality of the platform is made easily accessible to current and potential customers. Finally, advances made in Sales,
Marketing and Data mean that Equals now sells its products and platform more efficiently. Accordingly, the Board looks forward
to the future with confidence.
IAN STRAFFORD-TAYLOR
Chief Executive Officer
29 March 2022
14
STRATEGIC REPORTEQUALS GROUP PLC Chief Financial Officer’s Report
I present my review and financial analysis for the year ended 31 December 2021.
Table 1: Income and Expense account
Revenue (table 3)
Gross Profits (table 3)
Less: Marketing
Contribution
Expenditure (table 9)
Adjusted EBITDA
Less: Share option expense
Less: Exceptional items and acquisition costs
EBITDA
IFRS 16 Depreciation
Other depreciation
Amortisation of acquired intangibles
Other amortisation
Contingent consideration cost
Impairment of the Bureau operations
EBIT
Lease interest
Foreign exchange differences
Contingent consideration finance charges
LOSS BEFORE TAXATION
Corporate and deferred taxation
R&D tax credits receivable
LOSS FOR THE YEAR
Table 2: Earnings per share
Basic
Diluted
FY-2021
FY-2020
£ millions
£ millions
44.1
29.0
24.0
(1.2)
22.8
(16.1)
18.3
(1.2)
17.1
(16.0)
6.7
(0.3)
(0.7)
5.7
(0.9)
(0.5)
(1.3)
(4.5)
(0.1)
(1.6)
(8.9)
(3.2)
(0.2)
(0.1)
(0.3)
(0.6)
(3.8)
1.1
0.4
1.5
(2.3)
1.1
(0.4)
(2.7)
(2.0)
(0.9)
(0.5)
(1.2)
(3.2)
(0.6)
–
(6.4)
(8.4)
(0.2)
(0.2)
(0.2)
(0.6)
(9.0)
0.7
1.4
2.1
(6.9)
2021
2020
2021
2020
Normal
Adjusted
(1.35)p
(3.87)p
(1.35)p
(3.87)p
(0.73)p
(2.33)p
(0.73)p
(2.33)p
15
STRATEGIC REPORTANNUAL REPORT 2021
CHIEF FINANCIAL OFFICER’S REPORT CONTINUED
Table 3: Revenue and gross profits
A. Revenue summary by business line
£ millions
International Payments (Table 4)
Spend Platform
Personal cards
Banking
Bureau operations and other
FY-2021
FY-2020
Revenues Gross profits
Revenues Gross profits
29.5
6.3
2.4
5.6
0.3
44.1
14.0
4.3
1.6
4.0
0.1
24.0
17.4
3.7
2.1
5.1
0.7
29.0
11.1
2.0
1.1
3.8
0.3
18.3
B. Revenue and gross profits by customer grouping and markets
£ millions
REVENUES
- 2021
- 2020
% change*
GROSS PROFITS
- 2021
- 2020
- 2021%
- 2020%
B2B v B2C
Non-travel v Travel
B2B
B2C
Total
Non-travel
Travel
Total
35.6
20.4
+75%
16.6
12.8
47%
63%
8.5
8.6
-1%
7.4
5.5
87%
64%
44.1
29.0
+52%
24.0
18.3
54%
63%
41.4
26.3
+58%
22.1
16.8
53%
64%
2.7
2.7
–
1.9
1.5
70%
56%
44.1
29.0
+52%
24.0
18.3
54%
63%
* based on underlying, not rounded, figures.
The Group has many individual revenue lines (and associated variable costs), but broadly these can be summarised as follows:
International payments:
This includes direct, affiliate and white-label foreign exchange for business customers and to a lesser extent, affluent private
customers.
It also includes the bulk of the “solutions” product, launched during the year, which leads with an own-name IBAN, facilitating both
same-to-same transactions and currency A to currency B transactions, as well as bulk payments using our “Faster Payments”
membership gateway.
The white-label business trading under the Equals Connect brand, allows smaller providers to “piggy-back” off our excellent
compliance processes and speed of delivery.
The white-label business acquired in 2019 had a stellar year growing its revenues from £2.4 million to £7.7 million, although at a
tighter gross profit margin of 14% due to both competitive pressures and one particularly large affiliate.
The Material trade (announced on 28 October 2021) was a “bonus” but took many weeks to see through a highly complicated
transaction and demonstrates the ability of the Group to deal with transactions of this size and complexity.
Solutions, as fully described in the CEO’s Report came on stream late in H1-2021 and ramped-up each month since.
16
STRATEGIC REPORTEQUALS GROUP PLC CHIEF FINANCIAL OFFICER’S REPORT CONTINUED
Table 4: International Payments, FY-2021 and FY-2020
FY-2021
Core
White label
Material trade
FX trades from Solutions clients
Sub-total, currency
Other flows from Solutions clients
Totals
- B2B
- B2C
Totals by segment
- Spot
- Forward
Total, from currency trades
FY-2020
Core
White label
Material trade
Solutions
TOTALS
- B2B
- B2C
- Spot
- Forward
Turnover
£ millions
Number of
transactions
Revenue
£ millions
Margin
(in bp*)
Gross profit
%
62%
14%
54%
24%
47%
89%
2,473.1
1,094.2
114.4
241.1
3,922.8
845.9
4,768.7
4,400.6
368.1
4,768.7
3,199.1
723.7
3,922.8
88,314
34,090
1
584
122,989
3,241
126,230
97,515
28,715
126,230
114,391
8,598
122,989
16.7
7.7
1.5
2.5
28.4
1.1
29.5
26.3
3.2
29.5
23.2
5.2
28.4
65.4
70.8
132.3
101.8
72.4
13.0
61.9
59.8
88.5
61.9
72.5
71.9
72.4
Turnover
£ millions
Number of
transactions
Revenue
£ millions
Margin
(in bp*)
Gross profit
%
2,088.7
279.0
–
–
84,069
10,624
–
–
2,367.7
94,693
1,975.0
392.7
1,716.3
651.4
60,953
33,740
86,015
8,678
15.0
2.4
–
–
17.4
13.7
3.7
11.5
5.9
71.8
86.0
69%
29%
–
–
73.5
64%
69.4
94.2
67.0
90.6
* bp = Basis Points representing 100th of 1%.
B2B continued to grow, and of the total of revenues from International Payments, represented:
• 91% of total turnover (FY-2020: 83%),
• 89% of total revenue (FY-2020: 79%), and
• 77% of total transactions (FY-2020: 64%).
Part of the growth driver for this was the White-label offering, Equals Connect which trades exclusively through affiliates, and
therefore at a lower gross return.
Of the total revenues from International Payments, Spot transactions represented:
• 82% of turnover (FY-2020: 72%),
• 82% of revenue (FY-2020: 66%), and
• 93% of transactions (FY-2020: 91%).
Forward margins fell slightly in the aggregate caused mainly by customers taking shorter-dated forwards through Brexit and covid
uncertainty.
17
STRATEGIC REPORTANNUAL REPORT 2021 CHIEF FINANCIAL OFFICER’S REPORT CONTINUED
Average transaction values from the core and white label books and composition between B2B/B2C and Spot/Forward were:
Table 4a: International Payments, Transaction Sizes, FY-2021 and FY-2020
Core
White-label
- B2B
- B2C
- Spot
- Forward
FY-2021
£’000s
Transaction
size
28.1
32.1
FY-2020
£’000s
Transaction
size
20.2
26.3
34.2
12.8
25.0
84.2
32.4
11.6
20.0
75.0
Spend platform:
This is a card-loaded expenses platform delivered via mobile phone or other devices. Extensively used in the film production
industry, it enables tight control of corporate expenses but gives companies great flexibility to be agile in their requirement to
commit funds. This segment is regarded as B2B.
Table 5: Spend platform
Card loads (£ millions)
Number of loads
Number of transactions
Revenue (£ millions)
Average revenue/transaction
FY-2021
333.9
448k
3,131k
6.3
201p
FY-2020
203.3
330k
1,872k
3.7
200p
FY-2021 saw a strong rebound from the Covid impact in FY-2020 – particularly in the final quarter. A greater number of customers
(and their employees) were signed-up and able to benefit from advanced product features.
Personal cards
The origin of the Group in 2007 was a pre-paid web and mobile-enabled card for affluent individuals, often with family financing
needs to be served through our “linked-cards option. This segment is categorised as B2C.
Table 6: Personal cards
Card loads (£ millions)
Number of loads
Number of transactions
Revenue (£ millions)
Average revenue/transaction
FY-2021
61.4
250k
1,106k
2.4
212p
FY-2020
64.4
340k
938k
2.1
225p
This business saw a modest increase over 2020, but since December 2021 as Covid restrictions have eased, the Group has
witnessed an upturn in usage and revenues. The card product is often used by the owners of the SMEs served by our Spend
platform, so it remains a useful but not core product. Given the uncertainties posed by Covid-19, the Group limited its marketing
expenditure in this segment in FY-2021.
18
STRATEGIC REPORTEQUALS GROUP PLC CHIEF FINANCIAL OFFICER’S REPORT CONTINUED
Banking services
A suite of bank-style accounts for emerging corporates, established trusts and personal individuals who want a way to control
their expenditure. The B2B segment of this income is marginally more than 50% of its total.
Table 7: Banking services
Deposits (£ millions)
Transactions
Number of accounts
Revenue (£ millions)
Revenue per account
FY-2021
FY-2020
£1,331
5,458k
14.5k
£5.6
£392
£821
3,715k
14.2k
£5.1
£354
Bureau de change
A legacy of the City Forex acquisition in 2018, the Group retains two branches in the City of London, mainly serving corporates in
the insurance and other professional services sector, along with walk-in traffic from workers in the City. Thus, there is a mix of B2B
and B2C revenues. Owing to the impact of Covid-19, a decision was made to impair the goodwill of this business in FY-2021 and
the corresponding impairment is £1,638k
Variable costs:
There are three main categories of variable cost:
(a) Transaction costs – these are third party costs applying to all the above, and range from banking fees to MasterCard costs, and
variable KYC and KYB costs.
(b) Affiliate commissions (or introducer fees); mainly a revenue sharing model applying to International Payments.
(c) Staff commissions; revenue related commissions payable, through the payroll, to a cohort of highly motivated professionals
who may earn monthly, quarterly and annual commissions based on their own success.
The table below shows which business units have the various cost components:
Table 8: Variable costs by business line
£ millions
Transaction costs
Affiliate Commissions
White label commissions
Staff commissions
Totals FY–2021
International
payments
1.7
5.0
6.3
2.8
15.8
Cards
2.7
Banking
1.6
–
–
–
2.7
–
–
–
1.6
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STRATEGIC REPORTANNUAL REPORT 2021 CHIEF FINANCIAL OFFICER’S REPORT CONTINUED
Marketing costs
These include costs relating to the Equals brand, along with specific marketing programmes, relating more to Spend and Banking
than other product sets.
Overheads
As with many “fintechs”, the Group has as its largest cost, staff, followed by IT expenditure, premises, professional fees (many
relating to our position on AIM), and modest other expenses.
Staff costs include employment taxes, employee benefits and contractor fees – mainly in our Engineering team. With just over 255 staff,
the split of staff is more heavily weighted towards revenue earning/maintaining staff along with product development personnel.
Revenue per employee increased 80% to £172k, up from £96k in 2020. Base cost (meaning, salary, ERs NIC and employers
pension contribution) rose from £50k per employee to £52k per employee during the year. Value added per employee rose 160%
from £46k to £120k in the year.
Expenditure that meets the obligations and criteria of IAS 38 are capitalised and amortised over the anticipated useful life with a
maximum of 60 months from inception.
Table 9: Components of expenditure
£ millions
Staff costs
- Less capitalised
- Less: exceptional items
- Less IFRS 16 (vehicles)
Net staff costs
IT and telephone
- Less capitalised
Net IT costs
Premises costs
- Less IFRS 16
Net premises costs
Professional and compliance fees
Travel and entertainment
Bad debts and similar
Analysed between:
Gross expenditure
Taken to the balance sheet
Below adjusted EBITDA
Totals per Table 1
Year-end number of staff
20
FY-2021
FY-2020
15.7
(3.0)
(0.7)
(0.1)
11.9
2.1
(0.3)
1.8
1.8
(1.0)
0.8
1.3
0.3
–
16.1
21.2
(4.4)
(0.7)
16.1
16.9
(4.0)
(1.4)
–
11.5
1.7
(0.4)
1.3
2.0
(1.0)
1.0
1.4
0.4
0.4
16.0
22.8
(5.4)
(1.4)
16.0
255
270
STRATEGIC REPORTEQUALS GROUP PLC CHIEF FINANCIAL OFFICER’S REPORT CONTINUED
Exceptional items
As announced in the interim results on 14 September 2021, the Group carried out some restructuring of a layer of senior
management, and the termination and similar costs for that layer have been taken as an exceptional item being £0.7 million.
Exceptional items in 2020 were £1.6 million against Covid-19 and £1.1 million against the migration away from Wirecard, a previous
card programme manager for the Group. Of the 2020 costs, £2.0 million was cash incurred, and the balance was related to write-
offs.
There were no acquisitions in the year and therefore no expenditure was incurred. (FY-2020: £130k was incurred in connection
with the purchase of Effective FX).
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). Assets (principally property and similar leases) are also depreciated over the
shorter of the useful life of the asset and the lease term.
Table 10: Depreciation
IFRS 16 depreciation
Other depreciation
FY-2021
£’000s
FY-2020
£’000s
931
467
1,398
940
487
1,427
Guidance: Based upon the expenditure incurred to 31 December 2021, the depreciation charges for those assets in FY-2022 will be:
IFRS 16 depreciation
Other depreciation
£ millions
0.8
0.5
1.3
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 11: Components of amortisation charges
Amortisation charge arising from the capitalisation of internally developed software in the following
years:
2018 and earlier
2019
2020
2021
Amortisation charge for other intangibles
Amortisation of acquired intangibles
Total amortisation charge
FY-2021
£’000s
FY-2020
£’000s
1,303
1,661
893
287
4,144
357
4,501
1,311
5,812
899
1,382
451
–
2,733
404
3,137
1,210
4,347
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STRATEGIC REPORTANNUAL REPORT 2021 CHIEF FINANCIAL OFFICER’S REPORT CONTINUED
Guidance: Based upon expenditure to 31 December 2021, the amortisation charges for FY-2022 are expected to be:
Internally developed software
Other intangible assets
Acquired intangibles
£ millions
4.3
0.3
1.3
5.9
Finance and other
IFRS 16 financial charges have been calculated using the lessee’s incremental borrowing rate on the NPV of total lease payments,
this is released over the lease period to the P&L.
Table 12: Components of finance and other charges
Increase in assessment of contingent consideration (liability) for acquisition of Casco
Adjustment to discount on valuation of Effective
IFRS 16 lease interest expense
CBILS interest
Other interest payable
Split as follows:
Included in Finance Charges
Included in Administrative expenses
FY-2021
£’000s
46
FY-2020
£’000s
793
278
188
1
23
536
490
46
–
222
–
18
1,033
391
642
Impairment
Revenues from the bureau-de-change business acquired with City Forex in 2018 have declined significantly owing to prolonged
Covid-19 restrictions and thus the Group concluded it should be impaired to a carrying value of £579k.
Taxation
The Group has £17.2 million of tax losses available.
The Group has been able to receive funds directly from HMRC in relation to claims made for software development. As the Group
moves into taxable profits, such claims cease to be paid but offset against future taxable profits. The Group anticipates receiving
£0.4 million in relation to the claim for 2021, but possibly no further into the future.
22
STRATEGIC REPORTEQUALS GROUP PLC CHIEF FINANCIAL OFFICER’S REPORT CONTINUED
Table 13: Balance sheet
This table shows a compressed “balance sheet” for the Group.
IFRS 16 assets, less IFRS 16 liabilities
Other non-current assets (other than deferred tax)
Liquidity (per Table 14)
Trade debtors and accrued income (see note below)
R&D rebates
Prepayments
Deposits and sundry debtors
Inventory of card stock
Accounts payable
Affiliate commissions
PAYE, staff commissions etc.
Other accruals and other creditors
Earn-out balances due (Table 16)
Implied interest thereon
Net corporation and deferred tax
Net value of forward contracts
NET SHAREHOLDER FUNDS
Retained earnings at 1 January
Earnings for the year
Amount attributable to the exercise of share options
Retained earnings at 31 December
Non-Controlling interest at 1 January
Earnings for year
Non-Controlling interest at 31 December
Share capital, share premium
Other Reserves
CAPITAL AND RESERVES
31.12.2021
£’000s
31.12.2020
£’000s
(388)
(345)
32,217
31,829
10,739
3,638
398
998
329
168
(1,549)
(1,945)
(1,884)
(1,349)
9,543
(1,683)
63
(1,620)
888
511
(221)
36,495
36,150
8,827
2,314
1,367
860
643
194
(1,556)
(343)
(1,701)
(1,130)
9,475
(2,746)
341
(2,405)
(547)
(31)
(2,983)
41,151
42,642
(22,259)
(2,424)
93
(15,340)
(6,919)
–
(24,590)
(22,259)
101
162
263
55,011
10,467
65,478
119
(18)
101
54,789
10,011
64,800
41,151
42,642
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STRATEGIC REPORTANNUAL REPORT 2021 CHIEF FINANCIAL OFFICER’S REPORT CONTINUED
Table 14: liquidity
Cash at bank (see Table 15)
Balances with liquidity providers
Pre-funded balances with card provider
Gross liquid resources
Customer balances not subject to safeguarding
CBILS loan (see below)
Net position
FY-2021
£’000s
13,104
1,675
1,615
16,394
(3,655)
(2,000)
(5,655)
FY-2020
£’000s
10,032
2,776
2,078
14,886
(4,059)
(2,000)
(6,059)
10,739
8,827
Exposures to banks and liquidity providers
The Group maintains strong relationships with a number of banks and counterparties for spot and forward foreign exchange
transactions. The Group has recurring obligations to safeguard customer funds under the rules of the FCA, who are the prime
regulator for the Group.
The balances held at 31 December were as follows:
Table 15: Bank and similar balances
£ millions
BANKS
Barclays Bank PLC
NatWest/RBS Group
Bank of England
Citibank N.A.
Blackrock*
Others
31 December 2021
31 December 2020
LIQUIDITY PROVIDERS
Barclays Bank PLC
Velocity Trade International Ltd
Sucden Financial Ltd
31 December 2021
31 December 2020
Not required
to be
safeguarded
Safeguarded
47.7
106.9
30.9
26.0
–
7.1
3.8
–
0.1
2.0
0.1
Totals
54.8
110.7
30.9
26.1
2.0
0.1
211.5
13.1
224.6
96.1
10.0
106.1
0.4
0.1
1.2
1.7
2.8
0.4
0.1
1.2
1.7
2.8
* Blackrock is the manager, the legal entity is Institutional Cash Series PLC.
There exist tight controls over forward contracts with daily monitoring and reporting to the Executive Directors. The out-of-the-money
position at 31 December 2021 was £0.2 million.
There were, in addition, £212.0 million of customer funds safeguarded at 31 December 2021 (31 December 2020: £96.0 million).
Balances with liquidity providers and customer balances not subject to safeguarding are typically margin calls on forward contracts.
24
STRATEGIC REPORTEQUALS GROUP PLC CHIEF FINANCIAL OFFICER’S REPORT CONTINUED
Pre-funded balances are required in anticipation of customers loading their cards. Should the Group move to self-issuing, such
pre-funding will dissipate.
Trade debtors and accrued income
In common with market practice, revenue is recognised on forward transactions on the execution of the transaction. There was
one particularly large forward transaction with an investment fund client generating profits of £0.9 million and which settled in
January 2022.
Affiliate commissions
The growth in the payable relates to the increase in white label business and introducers for the Solutions business.
Earn-outs
Equals Connect (previously Casco Connect)
As announced on 19 November 2019, the Group acquired Casco Financial Services Limited for a maximum consideration of
£3,725,000.
Effective FX
As announced on 15 October 2020, the Group acquired the trade and assets of Effective FX Limited for a maximum consideration
of £1,575,000.
Whilst IFRS-3 requires an interest discount factor to be applied, the table below shows the “real cash” aspects of the acquisitions.
The accounting standard requires an annual revaluation of contingent consideration based on historic performance.
The table below shows the financial position relating to these acquisitions
Table 16: Earnouts
Acquisition date
Acquisition price booked at acquisition
Earn outs paid by 31.12.2020
Revaluation of asset based on performance
Gross outstanding at 31.12.2020
Paid during 2021
Further change in consideration
Gross Outstanding at 31.12.2021
Paid during Q1-2022
Due in remainder of 2022
Maximum consideration
Total consideration
Hermex
Casco
Effective
09.08.2019
19.11.2019
15.10.2020
£’000s
2,000
(2,000)
–
–
–
–
–
–
–
£’000s
2,236
(1,733)
793
1,296
(741)
46
601
601
–
2,000
2,000
3,725
3,075
£’000s
1,575
(125)
–
1,450
(368)
–
1,082
282
800
1,575
1,575
Total
£’000s
5,811
(3,858)
793
2,746
(1,109)
46
1,683
833
800
7,300
6,650
CBILS loan
On 23 December 2020, the Group drew-down £2,000,000 from NatWest Group under the Government’s Coronavirus Business
Interruption Loan Scheme (‘CBILS’). The loan carries a coupon of Bank base rate plus 2.53%. The loan is repayable at any time, but
over 60 equal instalments of £33,333 with the first instalment paid on 21 January 2022.
The interest chargeable in 2021 amounted to £1k.
25
STRATEGIC REPORTANNUAL REPORT 2021 CHIEF FINANCIAL OFFICER’S REPORT CONTINUED
Share capital, share premium and share options
The number of shares in issue at 1 January 2021 was 178,602,918. This increased in the year through the exercise of 738,889 share
options from former employees (Table 17 below), thus the number of shares outstanding at 31 December 2021 was 179,341,807.
A further 704,000 shares at nominal value were issued pursuant to the SIP and admitted to trading on AIM on 16 March 2022,
resulting in a total number of shares in issue at the date of signing of the Financial Statements of 180,045,807.
At 31 December 2020, the Company had 9,838,356 options outstanding. 738,889 of these were exercised in 2021, and
376,667 lapsed.
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 were 178,959,402 (2020: 178,602,918).
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 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 43p
(2020: 34p), the number of options exceeding the fair value was 3,553,681 (2020: Nil).
On 18 October 2021, the Company announced Discretionary Share Incentive Plans over 4,535,000 shares. The final awards were
lower, at 4,369,000. Thus, at the date of signing of these financial statements, there were 13,091,800 options, representing 7.3% of
the issued share capital and 6.8% of the enlarged share capital.
The cost of external advice for these schemes amounted to £84k in the year (FY-2020: £Nil)
At 31 December 2021, the Company had distributable reserves of £931,411. At the date of signing of these accounts, this was
equivalent to 0.520 pence per share.
Table 17: Options exercised in the year
Date exercised
20 April 2021
20 April 2021
21 July 2021
21 July 2021
26 September 2021
Number of
options Grant price
88,889 36.00 pence
50,000 29.75 pence
300,000 26.50 pence
250,000 29.75 pence
50,000 43.50 pence
738,889
26
STRATEGIC REPORTEQUALS GROUP PLC CHIEF FINANCIAL OFFICER’S REPORT CONTINUED
CASH STATEMENT
The movement in the cash position is shown in the table below:
Table 18: Cashflow
Adjusted EBITDA
R&D tax credits received (see note below)
Lease payments (principal and interest)
Exceptional items
Internally developed software capitalised (see note below)
Purchase of other intangible assets
Purchase of other non-current assets
Acquisition costs
Movement in working capital
Earn-outs and acquisitions
Funds from exercise of share options
External funding (CBILS)
NET CASHFLOWS
Balance at 1st January
Balance at 31st December
Amount per share
FY-2021
£’000s
FY-2020
£’000s
6,713
1,367
(1,080)
(671)
(3,028)
(532)
(78)
–
1,269
3,960
(1,108)
220
–
3,072
10,032
13,104
1,164
2,539
(1,140)
(1,982)
(4,044)
(484)
(160)
(130)
1,829
(2,408)
(825)
–
2,000
(1,233)
11,265
10,032
7.3 pence
5.6 pence
R&D credits received
These are earned based on a strict set of criteria set by HMRC and broadly based on new internally generated software development.
In 2021, £0.4 million was accrued (FY-2020: £1.4 million) and £1.4 million was received relating to claims made for 2020 (FY-2019: £2.5
million). Whilst future claims may be paid, these are unlikely to be receivable in cash.
Internally developed software capitalised
As a fintech, constantly looking to provide a series of products and platforms, the Group continues to invest and develop.
The emergence and rapid growth of the Solutions capability is one tangible deliverable. Equals Money is another product well
advanced for which investment is taking place.
RICHARD COOPER
Chief Financial Officer
29 March 2022
27
STRATEGIC REPORTANNUAL REPORT 2021 Statement on Section 172 of the
Companies Acts 2006
COMPLIANCE WITH COMPANIES ACT 2006, SECTION 172 STATEMENT
Under Section 172 of the Companies Act 2006, a director of a company must act in the way they consider, in good faith, would
be most likely to promote the success of the company* for the benefit of its members as a whole, and in doing so have regard
(amongst other matters) to:
(a)
the likely consequences of any decision in the long term,
(b) the interests of the company’s employees,
(c)
the need to foster the company’s business relationships with suppliers, customers and others,
(d) the impact of the company’s operations on the community and the environment,
(e) the desirability of the company maintaining a reputation for high standards of business conduct, and
(f)
the need to act fairly as between members of the company.
*The directors consider that references to company extend to both the Company and the Group
The Group’s stakeholders include, but are not limited to, its employees; suppliers; customers; regulators; and investors.
The Board endeavours to achieve and maintain a reputation for high standards of conduct amongst its stakeholders which it
regards as crucial in its ability to successfully achieve its corporate objectives. During the development of the Group’s strategies
and decision making processes, the Board will consider its stakeholders and their interests. The differing interests of stakeholders
require the Board to assess and manage the impact of its policies in a fair and balanced manner to the benefit of its stakeholders
as a whole.
The Board considers below these different stakeholder groups, their material issues and how the Group engages with them.
Relevant board engagement with key stakeholders is detailed in the corporate governance report.
EMPLOYEES
The employees are one of the greatest assets to the Group. Their interests, which include training and development; a safe
environment to work; diversity and inclusion; fair pay and benefits; reward and recognition are a high priority. On a day-to-day
basis, Directors engage directly with employees promoting an open, non-hierarchical culture, in which employees have an
active contribution to the Group’s success. Fortnightly “All Hands” meetings, Group updates and staff feedback questionnaires
are performed, and the Board will actively reflect on these when making decisions. Regular management training, internship
programmes, personal development and performance reviews all contribute to the development of staff.
SUPPLIERS
Supplier interests include fair trading, payment terms and working towards building a successful relationship. The Group will
regularly review its supplier payments and performance alongside its monitoring of its performance. All suppliers, particularly
low value suppliers are paid promptly on their invoices being validated by the approved personnel in the Group. The Group has
processes in place in order to combat modern slavery in the business and its supply chains, and details of these can be found in
the published Modern Slavery Statement at https://www.equalsPLC.com/content/investors/corporate-governance
CUSTOMERS
Customers are interested in successful product availability, fair pricing and adherence to regulations. The Group wants to achieve
the highest level of customer service and will regularly review feedback and reviews it receives from its customers. The Group
operates under an open and transparent pricing model with its customers.
REGULATORS AND COMPLIANCE
The Group holds licences with the Financial Conduct Authority and HMRC and must adhere to the regulatory requirements of
these licences. The Group ensures that staff have sufficient knowledge and regular training if necessary to ensure that these
regulations are met.
All staff receive the relevant Anti-Bribery and Anti-Money Laundering training as the nature of the business may result in a higher
risk of money laundering. Procedures and communications are in place to ensure that staff are able to comply with Anti-Money
Laundering should there ever be a case.
28
STRATEGIC REPORTEQUALS GROUP PLC STATEMENT ON SECTION 172 OF THE COMPANIES ACTS 2006 CONTINUED
INVESTORS
Investors expect to be informed of the financial performance and developments of the Group. This is done by holding regular
trading updates; planned investor programmes; publication of the annual and interim reports and press releases. All shareholders
are invited to attend the Annual General Meeting where they are able to raise questions to the Board. The Executive Directors will
attend meetings with investors and analysts.
The Strategic Report on pages 5 to 29 was approved and authorised for issue by the Board on 29 March 2022, and was signed on
its behalf by:
IAN STRAFFORD-TAYLOR
Chief Executive Officer
29
STRATEGIC REPORTANNUAL REPORT 2021 Governance
30
30
Report on Corporate Governance
for the year ended 31 December 2021
OVERVIEW
As Chairman of the Board of Directors of Equals Group PLC
The Group’s
Investor Relations website (equalsplc.com)
contains all documents required by AIM rule 26, notably:
(“Equals”, “we”, “the Company”, “the Board”, or “the Group” as
• The Articles and Memorandum of Association
the context requires), it is my responsibility to ensure that
Equals has sound governance and an effective Board. This
• Admission document
responsibility includes leading the Board and overseeing
• Financial statements and annual reports
the Group’s corporate governance. Good and
timely
information flows between Executives and Non-Executives
with interactions that are both supportive and challenging are
• Governance statements
• Details of directors and advisors.
essential to this.
The goals the Group pursues are to create value for
shareholders and customers, to monitor and improve our
environmental and societal impacts and to adhere to good
corporate governance.
BOARD OF DIRECTORS
The Board is responsible for the overall management of the Group
including the formulation and approval of the Group’s long-term
objectives and strategy, the approval of budgets, the oversight
of the Group’s operations, the maintenance of sound internal
control and risk management systems and the implementation
GOVERNANCE CODE AND COMPLIANCE
of Group strategy, policies and plans. Whilst the Board may
Equals has adopted
the Quoted Companies Alliance
Corporate Governance Code (“QCA Code”) in line with the
London Stock Exchange’s AIM Rules. This Statement follows
the ten-point structure of the QCA Code and describes how
we have applied the Code. The Group will provide updates not
less than annually.
delegate specific responsibilities, there is a formal schedule of
matters specifically reserved for decision by the Board; such
reserved matters include, amongst other things, approval of
significant capital expenditure, material business contracts and
major corporate transactions. The Board meets formally on a
regular basis to review performance.
The Board considers that the Group complies with the QCA
DIRECTORS
Code so far as it is practicable having regard to the size, nature
and current stage of development of the Group. The Board
recognises that even where the Group may not fully comply
with a principle or general provisions of the Code, it uses the
Code as a benchmark in assessing its corporate governance
standards. Where the Group does not fully comply, it gives
reasons for this.
and
Equals
environmentally responsible culture illustrated through its
customer-driven,
pursues
socially
a
internal values and policies and its supplier and shareholder
engagement. Equals believes that application of the QCA Code
supports the Group’s medium to long-term success whilst
simultaneously managing risks and providing an underlying
framework of commitment and transparent communications
with stakeholders.
Key governance-related matters that have arisen over the past
12 months include:
•
the appointment of Professor Christopher Bones as a Non-
Executive Director and Chair of the Remuneration Committee
and a member of the Audit and Risk Committees
• the change in Company Secretary to One Advisory Limited
The Equals Board is presently made up of five Directors. The
experience and skills of each director is set out below.
Over the reporting year, the Board made the decision to
appoint a further Non-Executive Director, Chris Bones, to the
Board, who brings further digital and commercial acumen to
the Board. The Board is confident that the current mix of skills
and competencies amongst the Board aligns well with the
Company’s strategic priorities over the medium- to long-term
but this position will continue to be kept under review.
Alan Hughes – Chair and Independent Non-Executive Director
Date of appointment: 1 March 2020
Committees: Nominations (Chair), Remuneration, Risk
Alan has 35 years of experience with HSBC, becoming General
Manager on the UK Executive board. He was also CEO of
FirstDirect Bank where he introduced its digital services, and
introduced significant product innovation. His non-executive
roles have included Chairman of RateSetter, the Peer-to-Peer
platform, and Non-Executive Director of NewDay Cards and
of Capital One Bank. He is currently Chairman of Unity Trust
Bank PLC and Senior Independent Director of Hitachi Capital
(UK) PLC. He has an MBA from Henley Business School and is a
Fellow of the Chartered Institute of Bankers.
31
ANNUAL REPORT 2021GOVERNANCE REPORT ON CORPORATE GOVERNANCE CONTINUED
IAN STRAFFORD-TAYLOR
Chief Executive Officer
Date of appointment: 4 March 2014
Committees: Nominations
PROFESSOR CHRISTOPHER BONES
Independent Non-Executive Director
Date of appointment: 9 April 2021
Committees: Remuneration (Chair); Audit, Risk, Nominations.
A Founder and a Director of the Group since 2007. Ian has
Chris Bones has held senior executive positions at major
held a number of senior banking roles, including Business
companies including Diageo and Cadbury. Chris co-founded
Unit Controller and Head of International Securities Lending
Good Growth Ltd (‘Good Growth’), a successful e-commerce
at Morgan Stanley, where he worked from 1985 to 1992.
Following this, Ian moved to UBS where he worked for 13 years
consulting business whose clients include Diageo, Kraft Heinz,
WHSmith, Pets at Home, ITV, Boohoo, Channel 4, and others.
as Managing Director and Global Head of Securities Borrowing
Good Growth has grown into a successful SME powering
& Lending, Fixed Income Repo and Prime Brokerage. Ian is a
rapid digitally fuelled growth in both B2C and B2B businesses
Chartered Accountant, qualifying with Arthur Andersen in 1985.
across Europe and North America and he will be bringing this
experience to the Board in support of Equals’ growth.
RICHARD COOPER
Chief Financial Officer
Date of appointment: 14 October 2019
Committees: none
BOARD INDEPENDENCE AND TIME COMMITMENT
The Board has reviewed the independence of the Chairman
and each of the Non-Executive Directors (“NEDs”) and
Richard has extensive public market and growth company
considers them to be independent in character and judgement,
experience. He was the CFO of GVC Holdings PLC (now Entain
with no relationships or circumstances that are likely to affect,
PLC), one of the world’s largest sports betting and gaming
or could appear to affect, their judgement. As at 31 December
groups, from 2008 to 2017. Whilst at GVC, Richard played a
2021, no NED holds any share options in the Company.
key role in the implementation of the company’s acquisition
strategy during that period, together with its move from AIM to
The Non-Executive Directors are each expected to dedicate
the premium segment of the London Stock Exchange’s Main
approximately 18 days per annum towards their duties and
Market. Richard, a Chartered Accountant, is also the Chairman
otherwise such time as required.
and Non-Executive Director of Engage XR Holdings PLC, a
technology-focused education company admitted to AIM.
SIAN HERBERT
Independent Non-Executive Director
Date of appointment: 1 October 2020
Committees: Audit
(Chair); Risk
Nominations
(Chair); Remuneration,
Sian Herbert has had an extensive City career spanning 35
years within audit, financial crime, risk and regulation, focusing
on the financial services and technology sectors. She gained
25 years’ experience at PricewaterhouseCoopers LLP (“PwC”),
including fifteen years as a partner within the forensic services
group, becoming an established expert in financial services,
e-money and payment services, advising on financial crime,
risk, regulatory change and the impact of technology. She is
currently a Non-Executive Director of HBL Bank UK Limited.
BOARD EFFECTIVENESS
All Directors are expected to keep their skill-set up-to-date,
and the Company provides a number of opportunities for
Board members to access development opportunities. The
Company Secretary provides periodic briefings to the Board
throughout the year on developments in corporate governance
and regulatory matters, and new Directors are provided with a
tailored induction. Non-Executive Directors are encouraged
to be involved in specific workshops or meetings, in line with
their individual areas of expertise. The Board shall review
annually the appropriateness and opportunity for continuing
professional development, whether formal or informal.
We believe that an effective board is one which delivers value
for its stakeholders – our shareholders, clients, customers,
communities and colleagues. In 2021, the Board implemented
a formal annual Board evaluation process that was supported
by the Company Secretary. The Company Secretary and
Chair developed bespoke questionnaires for the Board and
individual Directors to review.
32
EQUALS GROUP PLCGOVERNANCE REPORT ON CORPORATE GOVERNANCE CONTINUED
The areas covered in the evaluation were: Board relationships,
These values promote the healthy corporate ethos of effective
Board Skills & Governance, Board Processes Committees of
communication and encourage an ‘ideas culture’. The Group
the Board, and Priorities for Change. Through the evaluation,
believes such values are important in creating a strong and
the Board identified many positive areas alongside a number
consistent internal culture, as well as being essential to driving
of areas where further changes can be made to enhance the
the overall success as a business. Staff are actively encouraged
Board’s effectiveness. These changes will be taken forward by
to provide feedback on many areas surrounding the business
the Chairman over the course of 2022.The Chairman also meets
activities and initiative, and fortnightly Group-wide meetings
at least once annually with each of the Non-Executive Directors
are held to promote an open and honest dialogue across the
to discuss each Director’s contributions to Board meetings.
Group.
CULTURE
SHAREHOLDER ENGAGEMENT
The Board recognises the importance it has in setting the tone,
The Group is committed to maintaining a healthy dialogue
culture and behaviour of the Group and promotes an open
between the Board and all
its shareholders to enable
and respectful dialogue with employees, suppliers and other
shareholders to come to informed decisions about the
stakeholders. The importance of sound ethical values and
Company. The Chairman is generally available to shareholders,
behaviours is crucial to the ability to successfully achieve the
and the AGM presents shareholders with an additional
corporate objectives, and the Board places great importance
opportunity to communicate with the Board. The AGM
on this aspect of corporate life, seeking to ensure that this
is attended by the Board and is open to all the Group’s
flows across the Group.
shareholders.
The Group’s values are:
• Make it happen;
• Succeed together;
• Be the customer; and
• Go beyond
33
ANNUAL REPORT 2021GOVERNANCE REPORT ON CORPORATE GOVERNANCE CONTINUED
At the Annual General Meeting held on 10 June 2021, the proposed resolutions received the following proportion of votes:
Ordinary resolutions:
Adoption of 2020 Annual Report and Consolidated Financial Statements
Re-appointment of PriceWaterhouseCoopers LLP as auditor to the Company
Re-election of Ian Strafford-Taylor
Re-election of Sian Herbert
Re-election of Christopher Bones
Authority to allot shares
Special resolution:
Disapplication of pre-emption rights
In favour
Opposed
Withheld*
86.53%
99.99%
99.99%
99.99%
99.99%
99.96%
13.47%
0.01%
0.01%
0.01%
0.01%
0.04%
0.00%
0.01%
0.03%
0.03%
0.03%
0.01%
99.88%
0.12%
0.00%
* a vote withheld is not a vote “in law” and is not counted in the calculation of the votes cast.
The Board has established four committees to which it has formally delegated duties and responsibilities. The four committees are:
• Audit
• Risk
• Remuneration
• Nominations
The attendance record of each relevant director at board level and committee meetings during 2021 is as follows (quorum was
achieved for all meetings). Below committee attendance records represent those of committee members only, with other directors
attending by invitation but not specifically included:
Number of meetings
in the year
Alan Hughes
Ian Strafford-Taylor
Richard Cooper
Sian Herbert
Christopher Bones
(appointed 9 April)
Board
121
11/12
11/12
11/12
10/12
8/93
Audit
Committee
Remuneration
Committee
Nomination
Committee
Risk
Committee
Audit/Risk
Committee
2
1/14
2/2
1/15
2
2/2
2/2
2/2
6
6/6
6/6
3/36
3
3/3
3/3
2/27
12
1/1
1/1
[1]
Includes two ad hoc meetings only attended by two directors.
[2]
Audit/Risk Committee separated into two distinct Committees upon Christopher Bones’ appointment.
[3] Absent for first board meeting.
[4] Stepped down upon Christopher Bones’ appointment.
[5] Joined after first Audit Committee.
[6] Joined after second Remuneration Committee.
[7] Joined after first Risk Committee.
Anthony Quirke was the Company Secretary until his resignation from this role on 1 August 2021, when the corporate, One Advisory
Limited (“ONE”) was appointed as Company Secretary to the Company. ONE are responsible for ensuring that Board procedures
are followed and supporting the Company to comply with all applicable rules, regulations and obligations governing its operation,
as well as helping the Chairman maintain excellent standards of corporate governance.
34
EQUALS GROUP PLCGOVERNANCE REPORT ON CORPORATE GOVERNANCE CONTINUED
AUDIT COMMITTEE
The Audit Committee is responsible for monitoring the integrity
of the Group’s financial statements, reviewing significant
financial reporting issues, reviewing the effectiveness of
the Group’s internal control and risk management systems,
ensuring that processes are put in place to manage risk
inherent in the business, and overseeing the relationship with
The Remuneration Committee currently comprises two Non-
Executive Directors and is chaired by Christopher Bones.
The Committee meets at least twice a year.
The Remuneration Committee
report
is
included on
pages 55 to 59.
the external auditor (including advising on their appointment,
NOMINATION COMMITTEE
agreeing the scope of the audit and reviewing the audit findings).
The Audit Committee is chaired by Sian Herbert and includes
Non-Executive Director Chris Bones. The Audit Committee
meets at least 3 times a year, including at appropriate times
in the reporting and audit cycle to consider audit matters and
otherwise to focus on risk matters. The Audit Committee also
The Nomination Committee is responsible for developing and
maintaining an effective and rigorous procedure for making
recommendations on the appointments and re-appointments
to the Board. The Nomination Committee currently comprises
the Non-Executive Directors and the Chief Executive and is
chaired by Alan Hughes. The Committee meets at least once
meets regularly with the Group’s external auditor.
a year.
The report of the Audit Committee is included on pages 49 to 51.
SHARE DEALING CODE
RISK COMMITTEE
The Risk Committee is responsible for maintaining the Group’s
risk register and evaluating the risks included in it. The Risk
Committee comprises all Non-Executive Directors and is
chaired by Sian Herbert and meets not less than four times
a year. The Chief Operations Officer, not a board member, is
responsible for day-to-day risk management and compliance
and is the prime contact for regulatory bodies that have
supervisory roles for the Group.
The Company has a share dealing code for Directors and
applicable employees of the Group for the purpose of
ensuring compliance by such persons with the provisions of
the AIM Rules relating to dealings in the Company’s securities
(including, in particular, dealing during close periods in
accordance with Rule 21 of the AIM Rules). The Directors
consider that this share dealing code is appropriate for a
company whose shares are admitted to trading on AIM. The
Company takes proper steps to ensure compliance by the
Directors and applicable employees of the Group with the
terms of the share dealing code and the relevant provisions of
The report of the Risk Committee is included on pages 52 to 54.
the AIM Rules (including Rule 21).
REMUNERATION COMMITTEE
The Remuneration Committee is responsible for determining
and agreeing with
the Board
the
framework
for
the
remuneration of the Chairman, the Executive Directors and
other designated senior executives and, within the terms
of the agreed framework, determining the total individual
remuneration packages of such persons including, where
appropriate, bonuses, incentive payments and share options
or other share awards.
The remuneration of Non- Executive Directors is a matter for
the Board. No Director is involved in any decision as to his or
her own remuneration.
The Corporate Governance Report was approved and
authorised for issue by the Board on 29 March 2022, and was
signed on its behalf by:
ALAN HUGHES
Chair
35
ANNUAL REPORT 2021GOVERNANCE ESG Report: Letter from Ian Strafford-Taylor,
Chief Executive Officer
DEAR STAKEHOLDER,
OUR GOVERNANCE
Throughout 2021, our very strong employee base, great working
culture, and maturing processes and systems have meant that
customer engagement and acquisition remained strong. To
support our people and our customers, harmonisation and
continuous improvement of our practices have been the focus
of our ESG management. The following report demonstrates
our progress under our four pillars of People, Customers,
Governance and Impact, and how this has driven the success
of the business.
OUR PEOPLE
We focus on making Equals a rewarding place to work and
focus on attraction and retention of employees by developing
our recruitment practices, offering more opportunities for
growth and progression, and sharpening our focus on equality,
diversity and inclusion (EDI) to ensure we are accessing the
broadest pools of talent. In doing so this has resulted in a
motivated workforce that feels more connected than ever to
the business and its success.
OUR CUSTOMERS
Attraction and retention of Our Customers necessitate continued
enhancement and innovation of our products and services.
In 2021, centralisation of customer information, increasing
awareness of customer vulnerability, and remaining responsive
to feedback, have allowed the business to improve the customer
journey. In addition to the unceasing commitment of our
employees to provide the best possible service, this has resulted
in strong customer acquisition and retention.
Our practices remain robust. We have, increased security
awareness amongst all our employees and contractors. We
have also increased the capability of our risk and compliance
team and designed a risk framework that supports the
operational and financial objectives of the business.
OUR IMPACT
We recognise our impact beyond our immediate stakeholders.
We have a responsibility to minimise any impact our operations
have upon the environment, and as such are assessing our
practices and implementing initiatives to reduce our carbon
footprint. We are also committed to giving back to society,
supporting employee fundraising and volunteering.
I am very pleased to present our 2021 ESG Report and
welcome any questions or feedback.
IAN STRAFFORD-TAYLOR
Chief Executive Officer
29 March 2022
36
EQUALS GROUP PLCGOVERNANCE ESG Report: Vision and mission statements
VALUES
Our company culture is about how we interact with each other, our customers and other stakeholders
critical to our success. Our culture helps us achieve our business objectives.
Our culture is defined by four carefully chosen values:
• Make it happen: We will own the outcome and execute flawlessly against our plans. We need to deliver
our part and influence others to deliver theirs.
• Succeed together: We must pull in the same direction and bring out the best in each other. We need
to communicate effectively and adapt together.
• Be the customer: We should always be asking ourselves if what we’re doing is making our customers’
lives easier and helping them get more for their money.
• Go beyond: We need to care for ourselves and each other and push ourselves to excel. Every day is a
new chance to grow and develop ourselves as well as those around us.
Make it happen
Do the right things,
Succeed together
We are one team
Be the customer
We walk in our
Go beyond
If we all went that extra
do them right and own
and with common
customers’ shoes and
mile, just think how far
the outcome
goals. When we work
we always strive to
we could go
together we can
achieve more
make our customers’
lives simpler
These values guide our day-to-day behaviour and drive our decision-making at all
levels. The values are easy to understand – and yet fundamentally important. They
express our shared beliefs to form the basis for a high-performing culture that can
help maximize the full potential of Equals.
Our four values are underpinned by the philosophy #OwnTheOutcome, which
encourages us to take collective responsibility in realising these values.
37
ANNUAL REPORT 2021GOVERNANCE ESG Report: Cultural framework
Pillar
Value
Material Issues
Relevance
2021 Activities
Succeed
together
Equality,
Diversity and
Inclusion (EDI)
It is important that we promote a
supportive and inclusive working
environment and Group culture.
• Developed a new EDI strategy and
introduced pronouns on our internal
communications platform
Recruiting,
developing
and rewarding
talent
Our people are integral to the Group’s
operations and we want to ensure they
feel motivated in their work and are able
to develop their skills.
• Including EDI statement in recruitment
practices
• Flexible working practices (part-time,
condensed hours, flexible hours etc.)
• Introduced share investment schemes
• Gained visa sponsorship status
• Continuing to push internal promotion
and support professional development
Supporting the mental and physical
health and wellbeing of our employees
is very important, especially in light of
the ongoing pandemic.
• Introduced menopause assistance
programme, expanded mental health
support available, and increased Life
Assurance offering
Health and
wellbeing
Employee
engagement
We want our employees to feel
engaged and motivated and to know
that their interests and concerns are
recognised.
Be the
customer
Protecting
vulnerable
customers
It is critical that we consider customer
vulnerabilities in the development and
delivery of our products and services.
Customer
experience and
engagement
Engagement with our customers
enables us to understand their
requirements and maintain clear and
transparent communications.
• All Hands (every two weeks)
• Monthly Own The Outcome (OTO)
Awards
• Annual OTO Awards ceremony and
strategy presentation from the CEO
• Use of our internal communications
platform
• Conducted Base Camp day
celebrating achievements and
outlining strategy
• Increased awareness for customer
vulnerability across the entire Group
• Rewrote Vulnerability Policy
• Put together customer vulnerability
training and delivered to
customer-facing senior managers
• Created one centralised customer
identity management system
• Robust customer complaints process
• Logging dissatisfactions to drive
improvements
• Have a Treating Customer Fairly Policy
and conduct training
• Responding to customer feedback and
implementing quick fixes
• Three channels for customer services
• 2 weeks training for new starters in
customers services and ongoing
training for all customer services staff
• System for flagging suspicious activity
l
e
p
o
e
P
r
u
O
s
r
e
m
o
t
s
u
C
r
u
O
38
EQUALS GROUP PLCGOVERNANCE
ESG: REPORT CULTURAL FRAMEWORK CONTINUED
Pillar
Value
Material Issues
Relevance
2021 Activities
Make it
happen
IT and data
security
As a consumer finance company,
IT and data security is a key priority
for the Group as we must protect our
customers’ data and minimise the risk
of data breaches.
Governance
and business
ethics
Risk
management
Go beyond
Responsible
procurement
Our shareholders must see evidence of
our strong ESG risk management and
governance oversight, and employees
and management must demonstrate
ethical behaviour in all operations.
To combat any significant disruptions,
the Group must have robust systems in
place to ensure the continued business
operation and efficiency, as well as
strict regulatory compliance.
The Group is committed to minimising
its environmental impact by ensuring
it procures sustainably and reduces
unnecessary waste. It also seeks to
ensure fair payment terms with all
suppliers.
• Increasing awareness for cybersecurity
• Cybersecurity Manager role formalised
• Annual audit of existing tech suppliers
• Annual security awareness, general
IT/data security, GDPR, AML and other
training through a new online platform
• Updated staff on material changes to
policies
• Annual targeted penetration testing
• Two-factor authentication for all
systems containing customer data
• Informing customers of what data will
be asked for by us
• Using remote browsers to safeguard
data
• Compliance training using a new
online training platform
• Improved feedback loops
• Increased capabilities of risk and
compliance team
• ESG criteria included in the due
diligence process
Environmental
impact
All companies must consider their GHG
emissions and, even as an office-based
operation, the Group is working to
reduce its carbon emissions.
• Donating retired or unwanted
hardware to be reused
• Conducted an employee Carbon
Emissions Survey
Giving back to
the community
We want to give back to and support
the local communities in which we
operate.
• Changed energy provider
• Pursuing paper-free initiative
• Supporting charitable initiatives
e
c
n
a
n
r
e
v
o
G
r
u
O
t
c
a
p
m
I
r
u
O
39
ANNUAL REPORT 2021GOVERNANCE
ESG Report: Stakeholder Engagement
Engaging with our stakeholders helps the continued success of our business; stakeholders provide different perspectives and
expertise that can drive innovation and support our strategic direction and financial performance. We engage regularly with our
stakeholders, through both direct communications and our reporting, which we ensure accurately reflect the performance of
the business. We also appreciate that each stakeholder group has different interests and concerns, and we therefore tailor our
method of engagement with each appropriately.
In line with Section 172 of the Companies Act 2006, the below table indicates why and how we engage with, and the material
issues for, each of our stakeholder groups: Employees, Customers, Suppliers, Regulators, and Shareholders.
Why we engage
Material issues
How we engage
• Create an open, responsive, and
• Equality, Diversity and
• All Hands
inclusive culture
Inclusion (EDI)
• Establish an engaged and motivated
• Recruiting, developing and
workforce
rewarding talent
• Develop and promote internal talent
• Health and wellbeing
• Performance reviews
• Providing development opportunities
• CEO/Executive presenting the business
strategy
• Employee engagement
• Understand their individual
• Protecting vulnerable
• Customer services communication channels
requirements
customers
(email, phone, live chat)
• Innovate and improve the customer
• Customer experience and
• Social media platforms
journey
engagement
• Trustpilot page
• Identify any vulnerabilities
• Transparent practices
• Maintain clear, transparent
• IT and data security
communications
• Maintain productive relationships
• Governance and business
• Due diligence questionnaire
and open communications
ethics
• Clearly communicate our own
standards and expectations
• Risk management
• Transparent practices
• Responsible procurement
• Audits
• Ongoing performance monitoring
• Governance and business
• Regulatory compliance team
ethics
• Risk management
• External Compliance advisors
• Annual audits
• Membership of industry networks
(UK Finance and AFAP)
•
Governance and business
ethics
• Regular trading updates
• Planned investor programmes
•
Risk management
• Annual and interim reports and press releases
•
Financial performance
• AGM
s
e
e
y
o
p
m
E
l
s
r
e
m
o
t
s
u
C
s
r
e
i
l
p
p
u
S
l
s
r
o
t
a
u
g
e
R
•
Demonstrate our high standards of
governance and business ethics
l
Group’s performance
s • Keep shareholders informed of the
r
e
d
o
h
e
r
a
h
S
• Enable them to fulfil their
stewardship role
40
EQUALS GROUP PLCGOVERNANCE ESG Report: Our People
‘Succeed Together’: We are committed to bringing our people into the success of
the business. As such, and in light of the ongoing pandemic, our focus in 2021 was
assessing and consolidating our practices and initiatives to ensure that they will
support and empower our employees moving forwards.
EQUALITY, DIVERSITY AND INCLUSION (EDI)
Ensuring that equality, diversity and inclusion considerations
are embedded within all facets of our business is a key
priority. In 2021 we developed a new EDI strategy and we
were very pleased to introduce pronouns on our internal
communications platform, to allow our employees to indicate
their preferred pronouns.
We conducted a review of our recruitment practices and
now include an EDI statement in all job advertisements for
the Group. This also supports our ambition to access diverse
pools of talented candidates and demonstrate that we are
an employer that can support the employees in different
circumstances with flexible working practices.
In 2020 we commenced hybrid working. While some
departments have critical roles that must be fulfilled in
the office, we recognise that many of our employees can
work remotely. We also acknowledge that many individuals
appreciate flexible working practices due to their personal
circumstances and we endeavour to accommodate their
needs where possible with condensed or flexible hours.
EMPLOYEE ENGAGEMENT
We are keen to bring our people into the success of Equals
and have open communication sessions bi-weekly. We have
continued to embed the Group values into the business. Our
Own the Outcome (OTO) Awards held monthly, reward those
individuals who have been nominated for embodying the
values. In September 2021 we held our first Annual Awards
ceremony, during which our CEO also presented the roadmap
for the business in 2022.
Crucially, to measure the success of our continued efforts
to engage with our workforce, we will be relaunching our
employee survey. Through our HR platform, we will track
employee sentiment, including understanding how valued
employees feel and gauging engagement levels.
“We have a really great culture and it does feel like an Equals
family. Everyone buys into our company values and they know
that their hard work will be recognised and rewarded. We have
expanded our People offering in 2021 and will continue to invest
back into our workforce in the coming year.”
Shona Kerfoot, People Director
RECRUITING, DEVELOPING AND REWARDING
TALENT
Our people are central to our business so we are increasing
our capability to attract and retain talented individuals who
can support the continued success and strategic direction
of the business. In 2021 we reapplied and achieved visa
sponsorship status, which enables us to sponsor the visa
application processes of those individuals working here from
abroad and thereby retain and access talent from across the
globe. In 2022 we will launch a new remote global HR system,
which will allow us to retain key employees who now need to
work outside the UK.
Professional development is a key tenet of our people agenda.
We are proud of the high levels of internal promotion we achieve,
by enabling individuals to progress within the business. We
have launched a book exchange initiative across the business,
providing a budget for employees to buy books to encourage
individuals to expand their skillsets beyond their current remits.
To support ongoing development in 2022, we will be introducing
management and leadership training for all employees from
the line manager level upwards. The certified training will cover
core management skills and behaviours, with the objective to
establish a baseline understanding of what constitutes effective
leadership and communications.
CHAMPIONING DEVELOPMENT AND INTERNAL
PROMOTION
“I joined Equals in 2018, excited by the prospect of a growing
and changing business, and I began working on cultural
projects to improve the Group’s internal communications and
engagement. For the next couple of years, I worked across
a range of transformation projects, gradually taking on more
responsibilities and larger projects. Ian, our CEO, was very
supportive, offering me opportunities to present planning
projects to the Board and talk to them about the challenges we
were facing. Over time, rather than facilitating other people’s
ability to make strategic calls, I was making those strategic
calls myself. The opportunities I have been offered at Equals
have enabled me to progress in my role and ultimately led to
me being promoted to Head of Growth in 2021.”
Isabella Eckert, Head of Growth
41
ANNUAL REPORT 2021GOVERNANCE ESG REPORT: OUR PEOPLE CONTINUED
“The great thing about Equals is that they recognise internal
talent and help you progress. If you identify an initiative that
will benefit the company, you are given the opportunity to
pursue it. When I first joined, I proposed some changes that
could improve efficiency in our internal IT systems, and our
CTO agreed and allowed me to lead on that project. I have
continued to progress within the Group since then, and have
been supported on this journey by Ian.”
James Simcox, Chief Product Officer
A crucial element of development is providing feedback to
employees. In 2022 we will be launching a new performance
management system through our HR platform, facilitating
a more structured appraisal process, with goal setting,
360 feedback and bi-annual assessment, which will feed into
annual pay review.
Additionally, for the customer services teams, we will be
harnessing the data from CRM to set goals and KPIs, enabling
individuals to monitor their own performance on an ongoing
basis. Providing consistent, constructive performance
evaluation not only enables development, but also serves as
an opportunity for individuals to receive positive feedback and
celebrate their achievements.
We are always keen to recognise and reward the hard work
EMPLOYEES
Employees by employment type
- Number of full-time employees
- Number of part-time employees
- Number of temporary employees
Diversity and inclusion
- Number of women at Board level
- Number of women in workforce
- Percentage of women in workforce (%)
- Number of people from ethnic minorities at Board level
- Number of people from ethnic minorities in workforce
Employees internally promoted (%)
Retention rate (%)
Employees paid a national living wage (%)
and successes of our employees. In 2021 we introduced Long-
Term Incentive Plans (LTIPs) for senior managers and rolled out
a Share Incentive Plan (SIP) for all employees in 2021, issued
formally in January 2022.
HEALTH AND WELLBEING
In light of the ongoing COVID-19 pandemic, we broadened
the focus of our health and wellbeing initiatives. We have
introduced a menopause support service; for any individual
who falls within the age group for menopause as categorised
by the NHS, or those recognised as suffering from symptoms,
we will pay the £250 cost of an appointment through our
healthcare provider, Bupa, for an initial appointment and post
session check.
We recognised the need to support employees’ mental health.
We increased our Employee Assistance Programme offering,
enabling employees to access 24-hour support through a Bupa
helpline. We will also provide access to specialised support
for those facing acute mental health issues. Additionally, we
enhanced the Bupa and life assurance offerings; life assurance
cover was increased from 2 to 3 times the basic salary for all
employees.
2021
2020
2019
242
12
9
1
85
32%
0
268
9
8
1
78
29%
0
15 (declared,
not compulsory
to complete)
13 (declared,
not compulsory
to complete)
5.32%
98%
100%
11.50%
82%
100%
320
10
6
0
94
29%
1
n/a
4.30%
n/a
100%
42
EQUALS GROUP PLCGOVERNANCE
ESG Report: Our Customers
‘Be the customer’: Supporting and safeguarding our customers is critical to the long-
term success of Equals. We remain responsive and endeavour to meet our customers’
evolving needs. In 2021 we continued to improve the customer journey, engaging
regularly, listening to feedback, and putting increased focus upon awareness of
customer vulnerability. We are confident in the continued satisfaction of our customers
due to the dedication and genuine consideration our employees display during every
customer interaction.
CUSTOMER EXPERIENCE AND ENGAGEMENT
“Our staff want to go the extra mile. They truly want to help
customers and make sure they are alright. As a team we are
constantly listening to our customers, getting their feedback,
and making sure our products are working in the best way to
support those customers.”
Vicky Morris, Customer Operations Manager
In order to be accessible and responsive to our customers, we
maintain three key channels for receiving queries:
• phone calls,
• email
•
live chat.
We have a target in place to ensure that customers wait no more
than 30 seconds before their call is answered and email queries
will be responded to within the working day, and, utilise live chat
to enable even faster responses from the team.
To ensure our Customer Services Team are best placed to provide
the support required, we provide 2 weeks of training for all new
employees, followed by ongoing training including support
when they begin receiving customer phone calls. Additionally,
all customer services employees receive Anti-Money Laundering
(AML) and cybersecurity training, and in 2022 will also complete
vulnerable customer training. The integration of our online
training platform, Meta Compliance, will support this programme,
increasing accessibility to the training modules and enabling us
to monitor rates of completion and send reminders to employees
when necessary.
FEEDBACK
In addition to our three key communication channels, we also
receive customer feedback through our Trust Pilot and app
review pages, and we reach out to all customers who express
dissatisfaction to see if we can improve their experience. We
are very proud that both FairFX and Equals Connect are rated
as ‘Excellent’ on Trustpilot. Messages to our social media pages
– Twitter and Facebook – are filtered into our ticketing system,
so that the team can stay on top of all feedback provided.
We have a robust complaints process in place. Following
receipt of a complaint, our key objective is to resolve the issue
within three business days and send a summary resolution to
the customer. In the event of an issue not being resolved within
that time period, the Complaints Executive is brought into
both investigate and to advise the customer on the timescale
for resolution, to ensure the customer remains informed. We
are very proud that our Customer Services Team continues
to close 100% of all complaints and that, in 2021, over 85%
of complaints across the Group were closed out within 35
business days. If we identify a complaint that we feel has not
been dealt with effectively, we conduct a root cause analysis
and the Complaints Executive will feedback to the team and
provide guidance on where the process could have been
improved.
Concurrently, we log dissatisfactions. Whilst these are not
complaints, tracking all feedback from customers can drive
improvements across the business, as we can identify if an
issue (albeit a very small issue) is repeatedly arising and then
implement a change to improve our service. Our dedicated
AIM channel provides another medium through which both
employees and customers can feedback with suggestions.
These are reviewed regularly, with an assessment of the
resources available to make immediate changes and discussion
with the Product Team as to what can be achieved.
There are fortnightly meetings with Customer Services
Managers, chaired by the Complaints Executive, in which all
ongoing complaints, feedback from completed investigations,
and necessary changes to internal processes are discussed.
Conduct and reputation risk indicators, including complaints,
Trustpilot reviews, and vulnerability, are fed back on a quarterly
basis to the Subsidiary Board meetings, and information is
also provided to the Group Risk Committee.
An important innovation to our processes in 2021 has been
the creation of one central customer identity in our Customer
Relationship Management (CRM) system. By centralising this
customer information, we aim to improve customers’ internal
data lifecycle.
43
ANNUAL REPORT 2021GOVERNANCE ESG REPORT: OUR CUSTOMERS CONTINUED
SAFEGUARDING OUR CUSTOMERS
To ensure the continued protection of our customers we
maintain transparent, fair practices and update processes
to make sure they are fit for purpose. Our Treating Customer
Fairly (TCF) Policy, developed in line with the Financial Conduct
Authority’s (FCA) Principles, encapsulates the best practice we
expect of our employees at all levels of the business, and this
is reinforced through our TCF training.
In 2021 we introduced a new policy on the processing of
Faster Payments to strengthen security, including updating the
personal identifying information we ask for from customers
and addressing the value at which payments must be checked
before they are processed. The process of updating all our
existing policies and procedures is ongoing, as we want to
ensure all are in line with Group expectations.
Details of our fees are available on our website and included
in our FAQs. In addition to providing annual AML training,
there are controls in place in the system to recognise and flag
unusual activity, including customers who are potentially being
scammed. A member of the team will raise anything suspicious
with the Anti-Fraud Manager, who will then consider further
action as necessary.
PROTECTING VULNERABLE CUSTOMERS
“Our objective is to embed customer vulnerability awareness
across all streams of the business to make sure that we are
considering vulnerability from product inception, right through
to our direct communications with customers. We recognise
that vulnerabilities are complex – there is not a one size fits all
solution, and instead we must adapt our service to effectively
support each customer.”
Helen Griffiths, Complaints Executive
In line with FCA principles, we made significant efforts to
increase awareness for customer vulnerability. Instrumental
was the development of a new Vulnerability Policy, that
provides guidance on:
•
how we define and identify vulnerable customers,
•
outlines the processes in place to support these individuals,
•
specifies the roles, responsibilities and oversight in relation
to vulnerability.
Alongside this, we have developed Vulnerable Customer
Training;
to customer-facing senior
managers in 2021 and will be rolled out to the rest of the Group
in 2022.
this was delivered
Training is comprehensive, tackling the multifaceted nature of
vulnerability and the plethora of risk factors that can affect a
customer’s ability to make informed decisions and manage
their money. Important considerations include whether a
vulnerability is temporary or permanent, and whether the
customer wants to be identified as vulnerable at all. The
training examines how to identify and report vulnerabilities
internally to ensure customers receive the tailored support
they require, and also covers the risk of suicide protocol.
Responding
to customers with complex vulnerabilities
can be emotionally challenging. Therefore, while we want
our employees to be equipped with the right skills and
understanding to support customers, we also emphasise the
importance of their own wellbeing. All employees can access
support through our Employee Assistance Programme, Healthy
Minds, and are encouraged to reach out to their managers for
advice and support.
CUSTOMERS
Trust Pilot scores
- FairFX
- Card One Money
- Equals Connect
Training
- Number of hours of customer services training available
Calls
- Calls answered within 30 second target (%)
2021
4.6
4.6
4.9
2020
4.6 - ‘Excellent’
4.6
4.9 - ‘Excellent’
25+ hours
25+ hours
80%
80%
44
EQUALS GROUP PLCGOVERNANCE ESG REPORT: OUR CUSTOMERS CONTINUED
Percentage of complaints closed (%)
FairFX
Spectrum Payment Services
Fair Payments Limited
Equals Connect
Percentage complaints closed in less than 35 business
days (%)
FairFX
Spectrum Payment Services
Fair Payments Limited
Equals Connect
2021
2020
2019
100%
100%
100%
no complaints
87%
85%
92%
no complaints
100%
100%
100%
no complaints
60%
67%
72%
no complaints
100%
100%
no complaints
n/a
56%
92%
no complaints
n/a
45
ANNUAL REPORT 2021GOVERNANCE
ESG Report: Our Governance
To execute our strategy flawlessly we maintain strong governance practices. In 2021,
these practices have become more streamlined and harmonised across the Group.
IT AND DATA SECURITY
As a financial services business, IT and data security is critical; we endeavour to continually improve our cybersecurity procedures
and have focussed upon increasing security awareness among our colleagues.
Central to cybersecurity for the business is having robust oversight and effective governance. The importance of IT and data
security is driven from the very top of the business, with CEO recognition and direct involvement in cybersecurity matters. The
Security Council, Architecture Council and Technical Risk Committee oversee, among other matters, the security design and risk
associated with our systems and are all accountable to the Group Board.
There are strong lines of communication between the Executive Team and the Security and Architecture Councils, with regularly
scheduled meetings and dedicated channels on the internal communications platform allowing a continual flow of information.
There is ever-present Executive and senior management participation at the Technical Risk Committee, which facilitates
appropriate communications upwards within the business when required. To support the secure operation of our IT systems, there
are a comprehensive series of security policies and procedures in place1, and employees are updated on any material changes
to the policies.
Security Council
Architecture Council
Technical Risk Committee
Chair: Chief Product Officer
Chair: Head of Architecture
Chair: Head of Infrastructure
Purpose:
Purpose:
Purpose:
• Evaluate security threats to the
• To review architectural sign off
• To maintain a technical risk register
group,
requests
• To feed risks up to the Group Risk
• To discuss new architectural
Committee
changes
• To review practices and standards
• To create architectural control for
auditing purposes
• To risk assess and discuss the
outcome for changes to the status
quo
• sign off new technical decisions or
system changes,
• sign off new third party
integrations,
• ensure compliance with relevant
regulations,
• maintain certifications as required
(such as PCI),
• organise and evaluate penetration
testing,
• maintain DR & BCP plans,
• write appropriate group policy on
security
“We approach cybersecurity from the perspective that no one,
no matter if they are internal to the business, is necessarily
secure. We scrutinise any proposed initiatives thoroughly,
exploring every possibility rather than rushing something just
because it seems like a good idea, as we understand that
anything can go wrong if it is not properly managed.”
Gary Mason, Cybersecurity Manager
Cybersecurity encompasses oversight of all manner of
security matters including ensuring Payment Card Industry
(PCI) compliance, annual targeted penetration testing, and
monthly vulnerability scanning. We conduct an annual audit
of our existing technology suppliers to ensure that they are
still meeting the required standards. Whenever we engage
a new supplier, we run data protection checks, and if the
supplier is providing a core service, we conduct an in-depth
assessment and the organisation is incorporated into our
Business Continuity & Disaster Recovery Procedure, for which
the Security Council has signed off.
Policies and procedures for IT and data security: Cloud Storage Usage Policy; Computer Usage Policy; Data Classification Policy; Data Protection Impact Assessment
Procedure; Data Protection Policy; Data Retention Policy; Instant Messaging Policy; Password Policy; Business Continuity & Disaster Recovery Procedure.
1
46
EQUALS GROUP PLCGOVERNANCE ESG REPORT: OUR GOVERNANCE CONTINUED
CONTINUOUS IMPROVEMENT
PRIVACY OF CUSTOMER DATA
IT and data security practices are constantly improved, as
we react to developments and implement adjustments to
existing systems and procedures to facilitate efficiencies. In
the past year, we undertook a number of such actions. The
formalisation of a Cybersecurity Manager in 2021, solidifies
the seriousness with which we approach IT and data security,
and highlights our drive to make security a way of life rather
than an add-on to the working day.
In 2021, we commenced the process to achieve ISO 27001
certification. The Chief Technology Officer (CTO) is the
Executive Sponsor of the initiative, and it is being driven by
the Cybersecurity Manager. The gap analysis day took place
in October, conducted by our external certifying approver, with
the objective to become accredited by the end of 2022.
To ensure that concerns flagged are dealt with effectively
and efficiently, employees that raise an issue are now invited
to attend the Security Council meetings which means that
the issue is articulated to the Council first-hand. We will
also simplify the issue identification and information sharing
process to enable ease of use and understanding.
As internal employee actions pose the greatest risk to IT and
data security, the overarching objective is to raise awareness
for cybersecurity across the Group. We have begun targeted
phishing campaigns on our own staff to improve awareness
and reduce the risk of employees clicking through on
suspicious emails.
All employees must complete annual security awareness,
general cyber and data security, GDPR and AML training.
With the integration of our new online training platform, Meta
Compliance, we can monitor levels of training completion, and
push out reminders via email and our internal communications
platform. We will be introducing security awareness training
as part of our onboarding process for new employees. Meta
Compliance will also enable the setting of KPIs to measure
ongoing performance, as well as monthly mini-training
sessions on different IT and data privacy topics.
OUR GOVERNANCE
Number of data breaches
Employees completed Meta Compliance Security Awareness
training (%)
Employees completed Meta Compliance*
Anti-Money Laundering training (%)
Employees completed Meta Compliance GDPR training (%)
We handle sensitive customer information, thus our data
privacy practices are of paramount importance, and we
approach all data security scenarios from the perspective
that no employee is necessarily secure. We have two-factor
authentication for all systems that contain customer data.
Where an employee must use a personal device for work, we
require the use of remote sessions to ensure that information
cannot be exported. Customers are also kept informed of
the information we will ask from them, to mitigate the risk
of external parties accessing their data whilst posing as an
employee of Equals.
RISK MANAGEMENT
We increased the capabilities within the risk management side
of the business. Fundamental to this has been the onboarding
of our new Group Head of Risk and Compliance, who has
restructured the risk and compliance framework to ensure that
it underpins business operations and supports our financial
objectives. There is a risk committee for each operating
subsidiary undertaking. There is a Change Council, comprising
of senior members of staff, which receives suggested changes
and advise on the potential governance, operational, and
customer impacts before further investment is approved.
GOVERNANCE AND BUSINESS ETHICS
We continue to strengthen our internal governance and ensure
we are conducting business correctly even when we are not
being scrutinised. We have created a conduct policy, which will
be rolled out in 2022 alongside a wider conduct framework.
Using our new online training platform, Meta Compliance, we
will also be able to deliver compliance and ethics training
more easily.
We have established better feedback loops and our internal
knowledge sharing has greatly improved. As a result of our
continued harmonisation efforts, we are now better placed as
a business for innovation and improvement of the customer
experience.
2021
–
95.6%
98.1%
74.6%
2020
–
90%
–
–
2019
–
90%
–
–
*
Meta Compliance was launched in Q4 2022; training provided in 2021 was a mixture of an online module and in-person training
with internal and external providers.
47
ANNUAL REPORT 2021GOVERNANCE ESG REPORT: OUR GOVERNANCE CONTINUED
OUR IMPACT
‘Go beyond’
We are mindful of the impact we have beyond our direct
stakeholders; critically, the environment and the wider society.
As an office-based group of companies, we acknowledge that
our direct environmental impact is limited. Nevertheless, we
are continuing to push forwards on sustainable initiatives and
understand where our key areas of impact lie. We also strive to
support local communities and charitable initiatives, giving our
time and donations wherever possible.
Environmental impact
We have two offices; London and Chester.
Our London office in Vintners Place building is managed in
accordance with our landlord CBRE’s sustainability policy
which champions recycling and low-emission practices.
At our Chester office, we have a number of initiatives aimed at
reducing negative environmental impacts. In 2021 we changed
our energy provider to guarantee that 100% of our energy
comes from renewable sources – and this also represented
a cost-saving for the business. We continue to employ an
environmental waste service that separates all our recycling
and burns waste to feed energy back into the grid. As well as
incentivising environmentally friendly travel to work through
our Cycle to Work scheme, our offices have bike storage and
electric vehicle charging points.
We started our paper-free initiative in 2020, identifying where
the use of paper can be eliminated. We have continued to
reduce the quantity of copier paper ordered, however, due to
the relaunch and rebranding of Card One Money, the amount
of headed paper ordered increased for 2021. Our ongoing
partnership with Wales Recycles enables us to donate unused
OUR IMPACT
Total employee carbon footprint offset
Number of devices donated
CHESTER OFFICE
Energy use
- Total energy use (KwH)
Paper use
or retired devices to be wiped or refurbished and then given to
local schools and underprivileged members of the community.
We conducted an Employee Carbon Emissions Survey in 2021
to calculate the average carbon footprint of our employees
whilst at work. This has allowed us to offset the individual
carbon footprints of our entire workforce. While we are pleased
with this outcome, our next step is to assess where energy use
and carbon emissions across the business can be reduced,
Responsible procurement
The environmental impact of our supply chain is another
important consideration. In 2021 we developed a new due
diligence procedure that incorporates ESG criteria; questions
address suppliers’ own sustainability programmes, whether
they screen environmental and social impacts, and how
they engage with and determine the interests of their key
stakeholders Furthermore, as part of our upcoming assessment
into reduction strategies, we will be reviewing the practices of
our suppliers.
Giving back to the community
In considering our societal impact, we want to give our
employees the opportunity to get
involved. We support
employees in their endeavours, making a number of charitable
donations and allowing the workforce to select charities that will
receive the Company’s donations. Part of our forward-looking
strategy is to formalise our Corporate Social Responsibility
(CSR) programme, to enable employees to volunteer within
working hours and offer their time and expertise for the benefit
of local voluntary and community groups. We are engaged with
School21, where we take students from a school in Stratford,
East London, to gain experience in FinTech. This was paused
due to Covid-19 but we’ve kept in touch and plan to relaunch
in 2022.
2021
346 tonnes*
15
2020
n/a
–
2019
n/a
–
42,875**
75,100
n/a
- Number of sheets of headed paper ordered
- Number of sheets of copier paper ordered
>40,000***
7,000
20,000
25,000
40,000
152,500
LONDON
Paper use
- Number of sheets of paper ordered
2,500
3,000
45,000
Represents in 2021 51 days of offset at 10 tonnes per employee per year.
Direct measurement basis used. Vintners place not included as a result limitations of any allocation methodology, due to shared office space.
*
**
*** This figure is higher for 2021 due to a product relaunch and rebranding.
48
EQUALS GROUP PLCGOVERNANCE Report of the Audit Committee
for the year ended 31 December 2021
The Company’s Audit Committee (“the Committee”) has
financial controls and processes, and ensure any
responsibility for all subsidiaries in the Group.
material shortcomings are rectified at the earliest
In the period since the last report, the Committee focused
on the effectiveness of the controls across the Group. The
integrity of reporting and risk monitoring is a key area that
the Committee will continue to focus on over the coming
year. Monitoring of the operational performance of the Group
is an area of ongoing review. The focus is on several key
areas including a continued focus on data governance and
operational resilience.
The Audit Committee appointed various third parties to give
independent opinions on chosen topics that are regarded
as potentially higher risk (for example, cyber security, money
laundering and safeguarding). The Group has well-resourced
compliance and risk operations but given its size does not
have an internal audit function.
COMMITTEE COMPOSITION
The Audit Committee is chaired by Sian Herbert and includes
Non-Executive Director Christopher Bones. Other meeting
attendees during the year included members of the external
opportunity;
b. where appropriate, ensure compliance with the where
appropriate, ensure compliance with the UK Corporate
Governance Code, Quoted Company’s Alliance Code,
Information Commissioner’s Office, HMRC and the
Financial Conduct Authority’s
relevant
regulatory
framework
3. Risk management
a. review and provide oversight of the processes by which
risks are identified, evaluated, managed and optimised by
the Risk Committee
4. External audit
a. manage the relationship with the Group’s external auditor;
b. monitor and review the independence and performance
of the external auditor and formally evaluate their
effectiveness;
c. review the policy on non-audit services carried out by
the external auditor, taking account of relevant ethical
audit team, Non-Executive Director Alan Hughes, Ian Strafford-
guidance;
Taylor, CEO; Richard Cooper, CFO; and other members of the
finance team.
ROLES AND RESPONSIBILITIES
The Committee is appointed by the Board; their primary duties
d. review, consider and approve the external auditor’s fee,
the scope of the audit and the terms of their engagement;
e. make recommendations to the Board for the appointment
or reappointment of the external auditor.
are listed beneath the subheadings below, along with a brief
COMMITTEE ACTIVITIES DURING THE YEAR
description of sub-tasks:
Financial statements and business reports
1. Financial reporting
a. consider the areas of risk and what is done to optimise
these risks and ensure that these are communicated to
the external auditor;
b. review significant financial reporting judgements and the
application of accounting policies, including compliance
with the accounting standards;
•
•
Reviewed the 2020 Annual Report and Consolidated
Financial Statements, and recommended that both be
approved by the Board;
Reviewed the projected cash flow forecasts and sensitivity
analyses as prepared by the Chief Financial Officer; as a
result, the Committee concluded the business should be
considered a going concern, and the financial statements
should be prepared as such.
c. ensure the integrity of the financial statements and
their compliance with UK company law and accounting
EXTERNAL AUDIT
regulations;
•
Debated and agreed the external audit strategy;
d. ensure the Annual Report and financial statements are
fair, balanced and understandable, and recommend
•
Noted the adjusted and non-adjusted differences and
debated the highlights memo previously circulated to
their approval to the Board;
Committee members;
e. monitor the integrity of announcements containing
financial information.
2. Internal controls
a. monitor adequacy and effectiveness of the internal
•
Acknowledged that the prepared financial statements
represented a true and fair view of the Group’s affairs,
were in accordance with IFRS issued by the International
Accounting Standards Board (IASB) and as adopted by the
49
ANNUAL REPORT 2021GOVERNANCE
REPORT OF THE AUDIT COMMITTEE CONTINUED
European Union and had been prepared in accordance
with the Companies Act 2006. Their enquiries covered
regular management and KPI reporting, analytical review
and sign off on key control accounts;
•
Reviewed progress in dealing with control issues raised by
the external auditors in their management letter;
•
Reviewed and approved the Letter of Representation sent
by the Company to the external auditors.
OTHER
•
Ensure compliance with laws and regulations including
money laundering.
GOVERNANCE
ENGAGEMENT OF THE EXTERNAL AUDITOR AND
TENURE
PricewaterhouseCoopers LLP was appointed as an external
auditor following an audit tender process in 2019. As a matter
of course, PwC is not awarded any non-audit work; please
refer to note 5 of the financial statements for more details
regarding the breakdown of payments to the Group auditor.
AUDITOR INDEPENDENCE
At each meeting, the Committee receives a summary of all
audit fees payable to the external auditor. A summary of fees
paid to the external auditor is set out in note 5 to the financial
statements. The external auditor confirmed its independence
as auditor of the Group through written confirmation to the
Group.
The Committee meets at least three times per year and
routinely meets with the external auditor without the Executive
EXTERNAL AUDIT EFFECTIVENESS
Directors present. It is chaired by Sian Herbert, an independent
Non-Executive Director, who is a chartered accountant with
recent and relevant financial experience. The Chair has
frequent meetings with the external auditors to ensure issues
are being considered on a timely basis. The Chief Financial
Officer and other members of the finance team work closely
with the Committee Chair to facilitate open communication
and regular
information flow. The Committee members
bring a wealth of professional and practical knowledge and
experience which is relevant to the Company’s industry.
Such abilities ensure that the Committee functions with
competence and credibility. The Committee receives regular
updates on changes to financial accounting standards and
reporting requirements, regulatory and governance changes
and developments around risk management, fraud prevention
and detection, and cyber security.
In its advisory capacity, the Committee confirmed to the
Board, that based on its review of the Annual Report and
financial statements and internal controls that support the
disclosures, the Annual Report and financial statements,
taken as a whole, are fair, balanced and understandable, and
provide the necessary information for shareholders to assess
the Company’s position and performance, its business model
and strategy.
The effectiveness of the external audit process is assessed by
the Committee, which meets regularly throughout the year with
the audit partner and senior audit managers. The Committee
believes
that sufficient and appropriate
information
is
obtained to form an overall judgement of the effectiveness
of the external audit process. The external audit effectiveness
process findings from last year’s review were also incorporated
into the audit processes this year. One matter that the
Committee keeps under review is the mix of substantive and
control testing by the auditors. The most cost-effective audit is
currently a substantive audit. The Committee keeps this under
review as its preference from a control perspective is that the
external audit should use control testing to get a better view of
the control environment.
RISK MANAGEMENT AND INTERNAL CONTROLS
Further details of risk management and internal controls
are set out under note 21.2 of the consolidated financial
statements. The Committee is dedicated to the thorough
monitoring of the effectiveness of its internal controls and
risk management; they maintain a good understanding of
business performance, key areas of judgement and decision-
making processes within the Group.
50
EQUALS GROUP PLCGOVERNANCE External audit effectiveness
The effectiveness of the external audit process is assessed by the Committee, which meets regularly throughout the year with the audit
partner and senior audit managers. The Committee believes that sufficient and appropriate information is obtained to form an overall
judgement of the effectiveness of the external audit process. The external audit effectiveness process findings from last year’s review were
also incorporated into the audit processes this year. One matter that the Committee keeps under review is the mix of substantive and control
testing by the auditors. The most cost-effective audit is currently a substantive audit. The Committee keeps this under review as its
preference from a control perspective is that the external audit should use control testing to get a better view of the control environment.
Risk management and internal controls
Further details of risk management and internal controls are set out under note 21.2 of the consolidated financial statements. The Committee
is dedicated to the thorough monitoring of the effectiveness of its internal controls and risk management; they maintain a good understanding
of business performance, key areas of judgement and decision-making processes within the Group.
REPORT OF THE AUDIT COMMITTEE CONTINUED
Conflicts of interest
An annual review is undertaken, facilitated by the Company Secretary, to identify any conflicts of interest that may impact upon Board
members’ independence. All identified conflicts are recorded on a register that is adopted by the Board. Conflicted Directors are not able to
attend meetings where the conflicted matter is discussed, and decisions are made. It has been determined that none of the Directors had
or have an interest in any material contract relating to the business of the Company or any of its subsidiary undertakings.
CONFLICTS OF INTEREST
Significant issues
POST YEAR END
An annual review is undertaken, facilitated by the Company
Secretary, to identify any conflicts of interest that may impact
upon Board members’ independence. All identified conflicts
are recorded on a register that is adopted by the Board.
Conflicted Directors are not able to attend meetings where the
conflicted matter is discussed, and decisions are made. It has
been determined that none of the Directors had or have an
interest in any material contract relating to the business of the
Company or any of its subsidiary undertakings.
SIGNIFICANT ISSUES
issues and accounting
judgements (refer to
Significant
note 3.26) are identified by the Committee, the finance team,
or through the external audit process and are reviewed by the
Audit Committee.
The Audit Committee has continued the above activities in
Significant issues and accounting judgements (refer to note 3.26) are identified by the Committee, the finance team, or through the external
audit process and are reviewed by the Audit Committee.
2022. Focusing on:
Post year end
•
The 2021 Annual Report and Consolidated Financial
Statements, and the Committee has recommended that
The Audit Committee has continued the above activities in 2022. Focusing on:
both be approved by the Board;
• The 2021 Annual Report and Consolidated Financial Statements, and the Committee has recommended that both be approved by
•
• A review of the Cash Flow forecast statement as overseen by the Chief Financial Officer.
A review of the Cash Flow forecast statement as overseen by
the Board;
the Chief Financial Officer.
SIAN HERBERT
Chair of the Audit Committee
Sian Herbert
Chair of the Audit Committee
29 March 2022
29 March 2022
51
ANNUAL REPORT 2021GOVERNANCE
Report of the Risk Committee
for the year ended 31 December 2021
From January 2021, the Board of the Company re-established a Risk Committee, separate from the Audit Committee, but chaired by
the Chair of the Audit Committee and which reports to the Board. It also comprises of at least one other Non-Executive Board member.
The meetings are attended by both the CEO and CFO. An executive below Board level, the COO, who is internally responsible for
risk and compliance also attends, together with the new Head of Risk and Compliance who was appointed in July 2021. Subsidiary
undertakings hold Risk Committee and Board meetings not less than every quarter and risk is a standard item on their agenda. Minutes
of subsidiary meetings are included in the Board packs of Equals Group PLC.
The Risk Committee, along with the Executive Directors, is responsible for the identification, assessment, management and monitoring
of all risks of the Group. A risk register is maintained which scorecards those risks identified and the appropriate policies and procedures
to mitigate those risks. Below is a summary of the risks which the Committee believe are highly rated and the controls put in place to
mitigate them.
Risk
Description of Risk
Control / Mitigation
Data integrity and
security
• Losses from a cyber-attack or
• Appointed a Chief Information Officer with responsibility for
other associated malicious events
data security and data governance
• Loss of revenue
• Reputational risk
• Setup a Security Council with Group wide participants to
monitor all aspects of security in the Group
• Regular penetration testing, training and awareness, system
access controls and encryption, physical security
• Introduced new comprehensive training modules through
Meta Compliance covering Cyber/ Security Risk and Data
Protection.
Business Continuity/
Disaster Recovery
Business disruption and potential
business failure
• Detailed Business Continuity Plan and Disaster Recovery
Plan tailored to each entity
Fraud
Financial loss, reputational risk,
potential to lose customers and
reduce growth, supplier chain risk
• Regular testing of the above plan
• Increased adoption of cloud-based services (AWS)
• Senior management awareness
• Staff training
• Fraud reporting to Risk Committee
• Automated transaction monitoring
• Appropriate people in fraud roles to oversee and manage risk
Banking arrangements
and relationships
• Loss in one or more banking
partners could result in disruption
and eventual business failure
• Loss of Agency Banking services
• From February 2019, the Group became a direct member of
Faster Payments and have banking arrangements with the
Bank of England which mitigates the risk of losing agency
banking services
• Group partnered with Citi Commercial Bank in July 2019
and entered 5-year agreement with Mastercard in
September 2019
• In April 2021 the group launched the connected BIC (Swift)
that allows the group to open own named IBANs for the
benefit of collecting and allocating funds efficiently.
52
EQUALS GROUP PLCGOVERNANCE REPORT OF THE RISK COMMITTEE CONTINUED
Risk
Description of Risk
Control / Mitigation
The Group faces
significant competition
A reduction to competitive
advantage resulting in slower
business growth and ultimately
financial loss
• Engineering development to maintain research &
development and innovation
• New products
• Improved CX to enhance usability of products -
IT development to maintain research & development and
innovation
• Maintain relationship and traffic from key price comparison
sites
• Quality of people in business
• Maintain the Group’s reputation
• Investment in marketing and product development
• Increased investment in IT development
• Increased sales development
• Review of costs to ensure cost efficiency
• Development of the Solutions line that will create bespoke
payment and cash management services for global clients.
Operational liquidity
• Ability to settle trades in the correct
• Operational monitoring through controls in trading platforms
currencies as they fall due
• Incorrect hedging resulting in
cashflow needlessly being tied up
in foreign currency or overdrawn
accounts
and strict hedging policies and controls
• Automated hedging platform augmented by human oversight
• FIX engine links to liquidity providers
• Daily reconciliations of FX positions
Failure of key suppliers
impacts performance
Loss of productivity, potential to lose
customers and reduce growth.
Carry out regular review of supplier performance and seek
alternatives where necessary
Macro environment
including impact of
Brexit
IT platform re-build
Liquidity
Loss of revenue, operational
resilience
Monitor key performance indicators, increased controls on
expenditure and large single expenditure commitments
Out of date technology which
results in development delays
Re-platform tech stacks in more modern computer language
and move away from on-premises solution to cloud
Unable to meet liabilities as they
fall due
• Weekly reporting of prior week cash movements
• Regular cashflow forecasts run with sensitivities
• Longer term budgets and forecasts
Regulatory compliance
• Emerging regulations and
• Review and update Group policies and procedures.
adherence to existing regulations
• Non-compliance: fines; sanctions;
prison and reputational risk
• Review of new statutes and financial regulation.
• Annual regulatory audits by expert third parties.
• Annual staff training.
• Lack of Board oversight leading to
failure to fulfil legal and regulatory
responsibilities
• Regular Board and Committee meetings
Governance
BREXIT
Brexit results in both an opportunity and a threat. An opportunity to provide greater FX solutions to customers, but a threat due to
possible reduction in international trade. The Risk Committee regularly reviews the impact of Brexit.
53
ANNUAL REPORT 2021GOVERNANCE REPORT OF THE RISK COMMITTEE CONTINUED
External audit effectiveness
The effectiveness of the external audit process is assessed by the Committee, which meets regularly throughout the year with the audit
partner and senior audit managers. The Committee believes that sufficient and appropriate information is obtained to form an overall
judgement of the effectiveness of the external audit process. The external audit effectiveness process findings from last year’s review were
also incorporated into the audit processes this year. One matter that the Committee keeps under review is the mix of substantive and control
testing by the auditors. The most cost-effective audit is currently a substantive audit. The Committee keeps this under review as its
preference from a control perspective is that the external audit should use control testing to get a better view of the control environment.
COVID-19
The pandemic posed an existential risk to the business through customer inactivity and staff sickness. Mercifully, the incidence
Risk management and internal controls
of sickness was very low. Staff were able to self-isolate and continue to work from home as to mitigate the disruption risk the
Group had well prepared plans to cope with this eventuality. In terms of the economic shock to the business, the Group took the
Further details of risk management and internal controls are set out under note 21.2 of the consolidated financial statements. The Committee
is dedicated to the thorough monitoring of the effectiveness of its internal controls and risk management; they maintain a good understanding
of business performance, key areas of judgement and decision-making processes within the Group.
following actions:
• Continued to closely monitor the business areas assessed as vulnerable (mainly retail travel products),
Conflicts of interest
• Continued to use the Government’s Furlough scheme as appropriate,
• Retained a CBILS loan [see note 18],
An annual review is undertaken, facilitated by the Company Secretary, to identify any conflicts of interest that may impact upon Board
members’ independence. All identified conflicts are recorded on a register that is adopted by the Board. Conflicted Directors are not able to
attend meetings where the conflicted matter is discussed, and decisions are made. It has been determined that none of the Directors had
or have an interest in any material contract relating to the business of the Company or any of its subsidiary undertakings.
• Embedded and enhanced the restructuring plan prepared by the CEO and CFO as needed; and
Identified customers who might be at risk of default and contacted them immediately. No material default occurred due to
COVID-19.
•
Significant issues
The Group continues to evaluate the threats from the ongoing pandemic.
Significant issues and accounting judgements (refer to note 3.26) are identified by the Committee, the finance team, or through the external
audit process and are reviewed by the Audit Committee.
RUSSIAN INVASION OF UKRAINE
Post year end
Following the recent events, the business has taken all actions to ensure full compliance with the sanctions and actions
The Audit Committee has continued the above activities in 2022. Focusing on:
implemented in response to the Russian invasion of Ukraine. The impact of this to the group is not material and accounts that have
had historical exposure are all being reviewed. As this is an ongoing situation the compliance and risk team continue to evaluate
• The 2021 Annual Report and Consolidated Financial Statements, and the Committee has recommended that both be approved by
the situation and will ensure all requirements are implemented as soon as they become specified.
• A review of the Cash Flow forecast statement as overseen by the Chief Financial Officer.
the Board;
SIAN HERBERT
Chair of the Audit Committee
Sian Herbert
Chair of the Audit Committee
29 March 2022
29 March 2022
54
EQUALS GROUP PLCGOVERNANCE
Directors’ remuneration report
for the year ended 31 December 2021
This report for the year ended 31 December, 2021 complies
•
with the requirements of the Companies Act 2006, the
Group’s adopted Corporate Governance Code - the Quoted
Companies Alliance Code - and applicable AIM Rules.
Membership of the Remuneration Committee (“Committee”)
during the year comprised:
•
•
•
Christopher Bones, Independent Non-Executive Director,
appointed 1 May, Committee Chair from
I May to
31 December 2021
Alan Hughes,
Independent Non-Executive Director,
Interim Committee Chair from 1 January to 30th April 2021,
committee member from 1 May to 31st December 2021
Sian Herbert,
1st January to 31st December 2021
Independent Non-Executive Director,
Ensure that short-term cash incentives are linked to
stretching performance measures; and
•
Align more remuneration at every level to the shareholder
interest through share-based remuneration.
Cognisant of the concerns raised by shareholders in early
2021 over the awards made under the previous group share
option plan, the Committee also undertook an overhaul of
share-based rewards and implemented a new long-term
share remuneration Plan that better aligns with our policy. This
Plan provides a single set of principles against which we can
make awards to Executive Directors and other key staff.
Within these principles to better align our remuneration with
our goals and shareholder interests we also adopted an all-
employee ‘Share Incentive Plan’ which complies with the
HMRC rules governing tax-efficient staff participation in share-
Executive Directors are invited to contribute, and the CEO may
based rewards.
be invited to attend. No attendee or member is present for
discussion of their own remuneration or for matters that may
These plans were the subject of a shareholder consultation
have a bearing on their remuneration.
exercise in the summer of 2021 in which shareholders
representing 60% of the total shares issued were taken through
During the year the Remuneration Committee were advised
the Plan principles and the proposed awards to be made after
by MM&K LLP on the issue of long-term incentive awards and
its adoption. We were pleased with the clear support received.
shared-based remuneration as well as the levels of Executive
The key principles of the new share-based rewards framework
Director remuneration. The cost of this advice was £67,390. A
are fully compliant with the ISS guidelines. In particular:
further £17,100 was incurred in relation to accounting advice
and custodian fees, and the total of £84,490 has been reported
in the financial statements as “share option charges” and
disclosed separately.
REMUNERATION POLICY
In 2021, the Committee undertook a full review of remuneration
policy for the Executive Directors, and of the principles that
underpin the Group’s overall approach to remuneration of its
senior executives and the role that share-based rewards play
in wider employee rewards.
Its overall policy remains
that
the potential
for
total
remuneration should, for all roles, be at median to upper
levels for companies of a similar size, complexity and growth
aspirations. To reinforce this, the Committee has established
some key principles to ensure that shareholders are confident
that performance-based rewards
incentivise growth and
encourage behaviours that support our ESG principles and
company values; these are:
•
Ensure a competitive balance in the remuneration mix
between salary and pay ‘at risk’, with this element being
related to performance over both the short and longer-term;
•
•
•
•
•
All awards will have a minimum three-year vesting period
and all awards will be subject to a further two-year holding
requirement before they are released to the individual;
Every award is subject to a ‘malus’ clause and has clawback
criteria that cover both financial and non-financial issues
that may come to light after the award;
Where the award is linked to performance, there will be a
minimum threshold above the level of the share-price on
the date of award that will need to be achieved prior to the
award vesting;
Awards are capped to limit the value of an award to be
no more than 100% of annual cash remuneration with an
ability in exceptional circumstances to grant up to 200% on
the approval of the Board; and
Should the Committee decide to award market-value share
options then there is the option of setting a cap on the cash
value of such awards at the point of vesting.
55
ANNUAL REPORT 2021GOVERNANCE DIRECTORS’ REMUNERATION REPORT CONTINUED
In accordance with these principles, two award plans were
introduced in October 2021 (Executive Directors and a key
staff retention plan) along with the aforementioned ‘Share
Short-term Incentives – Annual Executive Director
Bonuses
As in 2020, all bonuses have been accrued whether or not the
Incentive Plan’ for all staff. The final awards were for the
conditions have been met.
following amounts:
Executive directors
performance-based plan
Key staff retention plan
Share incentive plan*
Number of
options/share
awards
1,250,000
2,415,000
704,000
4,369,000
Recipients
2
36
176
*
At the date of grant there were 780,000 shares to be awarded
to a total of 195 staff, but in the period from then until the
actual subscription, 19 staff left, thus the final number was
lower at 704,000.
Non-Executive Directors continue to be excluded from
incentives but are
share-based rewards and any other
The 2020 bonus was paid as follows: 50%, £137,500, April 2021
after the publication of the 2020 Financial Statements. A further
50% the 2020 CEO bonus (£137,500) was deferred, to be
released conditional on evidence that the actions taken in 2020
resulted in the continuing strength of the Group’s performance.
This sum was paid to the CEO in September 2021 after the
publication of the Group’s half-year results.
The CEO is entitled to a discretionary bonus of 100% of salary
in relation to 2021 should all conditions be met. The Committee
confirms that all conditions have been met and the sum of
£300,000 is immediately payable. In addition, the strength of
these results is such that we have agreed to award a further
£30,000 payable immediately, giving a total of £330,000.
encouraged to hold shares. At the date of writing, all three
The CFO is entitled to a discretionary bonus of 80% of salary
should all conditions be met. The Committee confirms that
all conditions have been met and the sum of £200,000 is
immediately payable. In addition, the strength of these results
is such that we have agreed to award a further £20,000 payable
immediately. giving a total of £220,000.
In addition, the CEO and CFO were also included in one all-
employee bonus in December 2021 in recognition for the
effort that went into the recovery post the pandemic during
the year. These resulted in payments of £2,500 for the CEO
and £2,083 for the CFO.
Executive Director Benefits
During the year following a competitive review against peer
group companies it was also agreed to provide each of the
Executive Directors with a car. This benefit came into effect
in April 2021 and has a taxable value for the financial year for
the CEO and CFO of £17,844 (Nil in 2020) and £12,493 (Nil
in 2020) respectively.
Executive Director Pensions
Both Executive Directors are members of the group workplace
pension plan and in 2021 the CFO commuted £40,000 of his
bonus into a pension top-up.
Non-Executive Directors are shareholders.
2021 REMUNERATION
Market Review
The Group operates in a very competitive environment and
the recovery in economic activity from 2020, combined with
a demand for technology and other specialist skills, has led to
pressure on salaries at every level of the Group. This pressure
has been the context for a number of the changes made
during the year.
Executive Director Salaries
The Executive Director base salaries were reviewed
in
March 2021 against a comparator group of similar companies
and the data from this, along with their performance, led to
the base salary of the CEO being increased to £300,000 (2020
£275,000) on 1st April 2021. This followed a year in which the
CEO received no increase. The salary for the CFO salary was
set on joining in October 2019 and remained at the same level,
£250,000, throughout the year.
Both Executive Directors were repaid some of the salary
sacrifice from 2020 as were all other employees in April 2021
and August 2021. These repayments were £2,792 for the CEO
and £2,583 for the CFO and are reported in the bonus figures
below.
Non-Executive Director Fees
There were no changes to the remuneration of Non-Executive
Directors.
56
EQUALS GROUP PLCGOVERNANCE DIRECTORS’ REMUNERATION REPORT CONTINUED
The table of fees and remuneration for the directors for both 2021 and 2020 is shown below:
Gross Salary
and Fees
Pension
HealthCare
Benefits
Car Benefits
Performance
related
Bonuses
Other
bonuses*
Total 2021
Total 2020
Executive Directors
I A I Strafford-Taylor
R Q M Cooper
Comparative for 2020
Non-Executive Directors
A Hughes
S Herbert
C Bones (appointed 9 April 2021)
A Chowdhury (resigned 29 July 2020)
J Pearson (resigned 9 October 2020)
RM Head (resigned 1 October 2020)
Comparative for 2020
Total 2021
Total 2020
291,553
247,803
539,356
485,622
80,000
65,000
40,052
–
–
–
185,052
188,794
724,408
674,416
3,515
3,515
7,030
7,006
3,495
3,495
6,990
5,454
17,621
11,456
29,077
–
330,000
220,000
550,000
465,000
5,792
4,667
651,976
490,936
10,459
1,142,912
–
963,082
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
80,000
65,000
40,052
–
–
–
7,030
7,006
6,990
5,454
29,077
–
550,000
465,000
10,459
1,327,964
–
1,151,876
85,052
188,794
188,794
535,661
427,421
963,082
56,359
18,734
–
21,333
59,618
32,750
*
Numbers above are represented on an accrual basis. The most significant difference to on a cash basis is relation to bonuses.
See note 5b for further details of cash basis.
BONUSES
Performance related bonuses
2021 – represents amounts accrued and approved by the remuneration committee in relation to the 2021 financial year
2020 – Ian Strafford-Taylor was entitled to a bonus for the 2020 financial year equal to 100% of his prevailing salary of £275,000.
This was paid in two equal tranches of £137,500 in April 2021 and September 2021. Richard Cooper received a bonus of £190,000
for the 2020 financial year of which £150,000 was paid during 2020 and £40,000 was paid in 2021, commuted via a pension top-up
2019 – an amount of £82,500 relating to part of Ian Stafford-Taylor’s bonus for the 2019 Financial year was paid in February 2021.
Other bonuses
The Remuneration Committee agreed to compensate all eligible staff as a reward for the sacrifices they made to help the company
through Covid. The Executive directors received treatment on the same basis.
2022 REMUNERATION FOR EXECUTIVE DIRECTORS
There has been a review of the base salaries for the Executive Directors for 2022 the results of which are shown below:
CEO
Salary of £300,000 raised to £350,000 from 1 April 2022
CFO
Salary of £250,000 raised to £285,000 from 1 January 2022
For the 2022 financial year, both the CEO and CFO have the opportunity to earn up to 120% and 96% of their salaries respectively.
The bonus criteria are associated with the achievement of targets set for revenue, cash and operating margin. Payments in excess
of 100% for the CEO and 80% for the CFO are linked to levels of performance significantly ahead of market expectations. None
of this bonus entitlement will be payable before the publication of the audited financial statements for 2022. The 2022 financial
statements will however accrue whatever award the Remuneration Committee decide on.
LONG TERM INCENTIVES
All employees
In line with the Group’s stated ambition to extend alignment with shareholder interests to all employees, the Group all-employee
‘Share Incentive Plan’ referred to above made awards in September 2021 to all employees with a length of service of 12 months
or more. Each employee received the same award of 4,000 shares. This plan has a vesting period of three years, in line with HMRC
guidelines.
57
ANNUAL REPORT 2021GOVERNANCE DIRECTORS’ REMUNERATION REPORT CONTINUED
Key Staff
Part of the Group’s response to the general pressures in the market was the launch of a key staff retention plan issued under the
2021 share-based remuneration policy principles and framework. Aimed at senior staff who are accountable for our product,
growth and operational effectiveness, this plan supports the retention of key talent and only vests should the recipient be in
employment a full three years after the award. Recipients are all subject to a further two-year holding period. The Committee,
following input from its advisors, came to the conclusion that this is a more effective approach than a salary or cash-based
response to pressures it believes are only going to intensify as the economy recovers.
Executive Directors
The changes noted above in share-based remuneration have been applied when making Executive Director’s long-term incentive
awards in 2021. The awards were restricted share awards with performance criteria (see below). The nature of this award reduces
dilution for shareholders and provides the Committee with the opportunity to model the potential cash award on vesting based
on publicly available market forecasts and to aim for these to be no more than 100% of total remuneration should forecasts be
exceeded by a significant amount.
As the table below shows, there is now a two-year holding period on top of a three-year vesting period that applies to awards
made in 2021 and this will apply to any made going forward.
Directors’ interest in long term incentive plan share options as at 31 December 2021 was:
Option
price (£)
Number
Granted
Date of
Grant
Earliest
Exercise date
Latest
exercise date
0.22
0.36
0.36
0.30
0.30
0.30
0.29
0.29
0.29
0.29
0.29
0.29
0.01
0.01
0.01
0.01
192,950
28/07/2014
05/08/2016
03/11/2022
1,789,300
28/07/2014
05/08/2016
03/11/2022
1,535,750
28/07/2014
05/08/2016
03/11/2022
250,000
250,000
250,000
666,667
666,667
666,666
333,333
333,333
333,334
7,268,000
28/09/2016
28/09/2017
27/09/2026
28/09/2016
28/09/2018
27/09/2026
28/09/2016
28/09/2019
27/09/2026
01/09/2020
30/04/2021
01/09/2030
01/09/2020
30/04/2022
01/09/2030
01/09/2020
30/04/2023
01/09/2030
01/09/2020
30/04/2021
01/09/2030
01/09/2020
30/04/2022
01/09/2030
01/09/2020
30/04/2023
01/09/2030
4,000
18/10/2021
18/10/2024
18/10/2031
4,000
8,000
18/10/2021
18/10/2024
18/10/2031
750,000
18/10/2021
18/10/2024
18/10/2031
500,000
18/10/2021
18/10/2024
18/10/2031
1,250,000
8,526,000
Director award date
Ian Strafford-Taylor
28/07/2014
28/07/2014
28/07/2014
28/09/2016
28/09/2016
28/09/2016
01/09/2020
01/09/2020
01/09/2020
Richard Cooper
01/09/2020
01/09/2020
01/09/2020
Share Incentive Plan
Ian Strafford-Taylor
18/10/2021
Richard Cooper
18/10/2021
Long-Term Incentive Plan
Ian Strafford-Taylor
18/10/2021
Richard Cooper
18/10/2021
Total
58
EQUALS GROUP PLCGOVERNANCE DIRECTORS’ REMUNERATION REPORT CONTINUED
As well as the principles above, the vesting criteria for the 2021
awards include a minimum share-price threshold above the
price on the date of grant; the eventual amount awarded from
the grant made will be driven by revenue growth, growth in
active B2B customers and performance against EPS targets.
In addition, the final award will be assessed against progress
against a range of ESG matters including the effectiveness of
our compliance operations.
Options vested by 30 April 2022.
A total of 5,601,334 options for Ian Strafford-Taylor had vested
by 30 April 2022, leaving, 1,420,666 unvested at that date.
A total of 666,666 options for Richard Cooper had vested by 30
April 2022, leaving, 837,334 unvested at that date.
The total number of shares used for the calculation of diluted
EPS at 31 December 2021 was 3,553,681 (31 December
2020: Nil).
PROFESSOR CHRISTOPHER BONES
Chair of the Remuneration Committee
29 March 2022
59
ANNUAL REPORT 2021GOVERNANCE Directors’ report
for the year ended 31 December 2021
Equals Group PLC is a company limited by shares. The
Further details of the Group’s relationship with its employees
Directors present their annual report and audited consolidated
can be found in the Section 172 statement on page 28 and in
financial statements for the year ended 31 December 2021.
the ESG report on page 36.
FINANCIAL REPORTING
The consolidated financial statements of Equals Group PLC for
the year ended 31 December 2021 are set out on pages 70 to 105.
These have been prepared in accordance with international
accounting standards in conformity with the requirements of
the Companies Act 2006.
PRINCIPAL ACTIVITIES
RELATIONSHIPS WITH SUPPLIERS, CUSTOMERS AND
OTHERS
The Group recognises that strong relationships with customers
and fair dealings with its suppliers are key to its success as a
business. Further details of how this is applied in practice can
be found in the Section 172 statement in the Strategic Report
on page 28.
DIVIDENDS
The principal activities of the Group during the year were to
provide foreign exchange payment services and banking
The Directors do not recommend the payment of a dividend
for the year ended 31 December 2021 (2020: Nil).
services to both private customers and corporations through
prepaid currency cards, travel cash, international money
transfers and current accounts. Major trading subsidiaries
FairFX PLC, Spectrum Payment Services Limited and Equals
Connect Limited are authorised by the Financial Conduct
Authority under the Payment Services Regulations 2009 for
the provision of payment services and Fair Payments Limited
is authorised by the Financial Conduct Authority under
the Electronic Money Regulations 2011 for the provision of
electronic money services.
DIRECTORS
The following Directors have held office during the financial year
and up to the date of approval of these financial statements:
I A I Strafford–Taylor
R Q M Cooper
A R F Hughes
S A Herbert
C J Bones (appointed 9 April 2021)
The principal activity of the Company is as an investment
DIRECTORS’ INTERESTS
holding company for the Equals Group of companies.
The Directors who held office at 31 December 2021 held the
following shares in the Company as at that date:
KEY PERFORMANCE INDICATORS
The Strategic Report set out on pages 5 to 29 provides key
performance indicators and an assessment of the Group’s
financial performance throughout the year.
I A I Strafford-Taylor
RELATIONSHIP WITH EMPLOYEES
The Group operates transparently with its employees and
holds fortnightly Group wide “All Hands” with the purpose of
keeping employees up to date with Group business and its
developments. These also offer staff the opportunity to present
their viewpoints and are in addition to regular departmental
updates. The Board believes this helps create a common
awareness and goals across the Group to help it achieve its
strategies.
is an equal opportunity employer.
It does not
Equals
discriminate on the basis of disability, gender reassignment,
marriage and civil partnership, pregnancy and maternity, race,
sexual orientation, religion or belief, sex or age. It ensures that
this is upheld in regard to hiring, continuing employment and
training, career development and promotion.
60
Ordinary 1p
Shareholding
%
1.21%
0.08%
0.03%
0.02%
0.003%
shares
2021
2,177,750
150,000
54,800
34,000
4,500
R Q M Cooper
S A Herbert
A R F Hughes
C J Bones
The Directors who held office at 31 December 2021 held the
following unexercised share options in the Company as at that
date:
I A I Strafford-Taylor
R Q M Cooper
Option
price
(£)
0.22
0.36
0.36
0.30
0.29
0.01
0.29
0.01
Number
Granted Date Granted
192,950
28/07/2014
1,789,300
28/07/2014
1,535,750
28/07/2014
750,000
28/09/2016
2,000,000
01/09/2020
754,000
18/10/2021
1,000,000
01/09/2020
504,000
18/10/2021
EQUALS GROUP PLCGOVERNANCE DIRECTORS’ REPORT CONTINUED
INDEMNITY INSURANCE
RISK AND RISK MANAGEMENT
The Company maintains a directors and officers liability
The Group is exposed to various financial and operational
insurance policy in respect of any legal costs that may be
risks. Further details of these, including processes put in place
incurred against the Directors in dealing with any legal claims
to mitigate these risks, are disclosed in the Risk Committee
or investigations. The policy was in place throughout the year
Report on pages 52 to 54 and note 21 of the financial
and up to the date of approval of the financial statements.
statements.
CAPITAL STRUCTURE
INDEPENDENT AUDITORS
Details of the Group’s authorised and issued share capital,
Under section 487(2) of
the Companies Act 2006,
together with details of the movement therein, are set out in
PricewaterhouseCoopers LLP will be deemed to have been
note 16 to the financial statements. This includes the rights
reappointed as auditor 28 days after the financial statements
and obligations attaching to shares. There are no restrictions
are sent to members or 28 days after the latest date prescribed
on the transfer of the Company’s shares. Details of Directors
and major shareholders (that hold greater than 3.0%) are set
out below:
No. of Ordinary
Shares held
Percentage of
issued capital
24,889,833
23,295,000
10,549,500
13.82%
12.94%
5.86%
for filing the accounts with the registrar, whichever is earlier.
DISCLOSURE OF INFORMATION TO AUDITOR
The Directors who held office at the date of approval of this
Directors’ report confirm that, so far as they are each aware,
there is no relevant audit information of which the Company’s
auditors are unaware; and each Director has taken all the steps
that they ought to have taken as a Director to make themselves
aware of any relevant audit information and to establish that
9,017,652
5.00%
the Company’s auditors are aware of that information.
9,000,000
8,648,341
7,589,414
7,069,344
4.99%
4.80%
4.22%
3.96%
POST BALANCE SHEET EVENTS
There have been no post balance sheet events from the
balance sheet date to the date of signing which require separate
disclosure.
Name
Pembar Limited
Crystal Amber Fund Limited
Schroders Funds
Threadneedle Asset
Management
Jo Hambro Capital
Management
Stephen Heath
Hargreaves Lansdown
Christian Levett
ENVIRONMENT
Carbon dioxide emission data has been collected for 2021
FUTURE DEVELOPMENT
and disclosed within the ESG report. This along with further
The Group’s business activities, together with the factors likely
information on environmental matters can be found in the ESG
to affect its future development and position, are set out in the
report on pages 36 to 48.
Strategic Report on pages 5 to 29.
RESEARCH AND DEVELOPMENT
The Group has continued its investment in research and
development throughout the year. A review of the work
undertaken can be found in the Chief Executive’s Report on
pages 7 to 14.
61
ANNUAL REPORT 2021GOVERNANCE DIRECTORS’ REPORT CONTINUED
GOING CONCERN
Based on the Group’s budgets and financial projections, the
Directors are satisfied that the business is a going concern
and therefore the financial statements have been prepared
on a going concern basis. This assessment is based on
whether there is sufficient liquidity and financing to support
the business, the post balance sheet trading of the Group,
the regulatory environment and the effectiveness of risk
management policies. Management has sensitised its base
case, assumed certain business lines might be discontinued
and examined the truncating of product development
expenditure. The Group is satisfied with the adequacy of its
cash position. Further details of post balance sheet trading
and position can be found in the Chairman’s Statement on
page 6.
The Directors’ Report was approved by the Board on 29 March
2022 and signed on its behalf by:
IAN STRAFFORD-TAYLOR
Chief Executive Officer
29 March 2022
62
EQUALS GROUP PLCGOVERNANCE Statement of Directors’ Responsibilities in Respect
of the Annual Report and the Financial Statements
for the year ended 31 December 2021
Statement of directors’ responsibilities in respect of the
financial statements
The directors are responsible for preparing the Equals Group
Plc annual report for the year ended 31 December 2021 and
the financial statements in accordance with applicable law
and regulation.
Company law requires the directors to prepare financial
statements for each financial year. Under that law, the directors
have prepared the group and the parent company financial
statements in accordance with UK-adopted international
accounting standards.
Under company law, directors must not approve the financial
statements unless they are satisfied that they give a true and
fair view of the state of affairs of the group and parent company
and of the profit or loss of the group for that period. In preparing
the financial statements, the directors are required to:
•
•
•
•
select suitable accounting policies and then apply them
consistently;
state whether applicable UK-adopted
international
accounting standards have been followed, subject to
any material departures disclosed and explained in the
financial statements;
make judgements and accounting estimates that are
reasonable and prudent; and
prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the group
and parent company will continue in business.
The directors are responsible for safeguarding the assets of the
group and parent company and hence for taking reasonable
steps for the prevention and detection of fraud and other
irregularities.
The directors are also responsible for keeping adequate
accounting records that are sufficient to show and explain the
group’s and parent company’s transactions and disclose with
reasonable accuracy at any time the financial position of the
group and parent company and enable them to ensure that
the financial statements comply with the Companies Act 2006.
The directors are responsible for the maintenance and
integrity of the parent company’s website. Legislation in the
United Kingdom governing the preparation and dissemination
of financial statements may differ from legislation in other
jurisdictions.
Directors’ confirmations
The directors consider that the Equals Group Plc annual report
for the year ended 31 December 2021 and accounts, taken as
a whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the group’s
and parent company’s position and performance, business
model and strategy.
IAN STRAFFORD-TAYLOR
Chief Executive Officer
29 March 2022
63
ANNUAL REPORT 2021GOVERNANCE Independent auditors’ report to the members of
Equals Group PLC
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS
OPINION
BASIS FOR OPINION
In our opinion, Equals Group PLC’s Group financial statements
We conducted our audit in accordance with International
and Company financial statements (the “financial statements”):
Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.
•
•
•
give a true and fair view of the state of the group’s and of
the company’s affairs as at 31 December 2021 and of the
group’s loss and the group’s and company’s cash flows for
the year then ended;
have been properly prepared
UK-adopted international accounting standards; and
in accordance with
have been prepared in accordance with the requirements
of the Companies Act 2006.
We have audited the financial statements, included within the
Annual Report, which comprise: consolidated and company
statements of financial position as at 31 December 2021;
the consolidated statement of comprehensive income, the
consolidated and company statements of cash flows, and
the consolidated and company statements of changes in
Our responsibilities under ISAs (UK) are further described
in the Auditors’ responsibilities for the audit of the financial
statements section of our report. We believe that the audit
evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Independence
We remained independent of the group in accordance with
the ethical requirements that are relevant to our audit of the
financial statements in the UK, which includes the FRC’s
Ethical Standard, as applicable to listed public interest entities,
and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
To the best of our knowledge and belief, we declare that
non-audit services prohibited by the FRC’s Ethical Standard
equity for the year then ended; and the notes to the financial
were not provided.
statements, which include a description of the significant
accounting policies.
Our opinion is consistent with our reporting to the audit
We have provided no non-audit services to the company or its
controlled undertakings in the period under audit.
committee.
OUR AUDIT APPROACH
Overview
•
•
•
Our audit focused on where the Group made subjective judgements; for example, significant
accounting estimates involving assumptions and inherently uncertain future events.
The Group comprises multiple subsidiary entities in the UK. Most of the Group’s accounting
systems are centralised in the corporate head office located in London.
Our overall audit approach considered each subsidiary entity’s contribution to the Group’s
financial reporting balances.
• Capitalisation of IT development costs (Group)
• Carrying value of goodwill (Group and Company)
• Overall group materiality: £440,914 (2020: £241,660) based on 1% of total revenue.
•
•
Overall company materiality: £440,914 (2020: £22,485) based on 1% of total assets (2020: 1% of
total expenses) capped at the overall group materiality.
Performance materiality: £330,686 (2020: £181,245) (group) and £330,686 (2020: £16,864)
(company).
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial
statements.
64
EQUALS GROUP PLCGOVERNANCE INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF EQUALS GROUP PLC CONTINUED
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the
financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not
due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of
resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we make on the results
of our procedures thereon, were addressed in the context of our audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
Considering the impact of Covid-19 (Group and Company), which was a key audit matter last year, is no longer included because of
changes in risk assessment. Otherwise, the key audit matters below are consistent with last year.
Key audit matter
How our audit addressed the key audit matter
Capitalisation of IT development costs (Group)
The Group’s disclosures are provided in Note 10 ‘Intangible
assets and goodwill’ and the related accounting policies
applied are detailed in Note 3.13. Management’s judgements
in the application of the accounting policy is disclosed in
Note 3.26(i).
The Group capitalises, as intangible assets, certain expenditure
on the development of systems and infrastructure designed
its business strategy. Determining whether
to support
expenditure qualifies for capitalisation requires judgement and
the total expenditure capitalised in the financial year ending 31
December 2021 amounts to £4.5m.
•
•
•
The carrying value of software assets was £23.4m at the end
of the period.
•
When capitalising costs, management determines whether
it is probable that expected future economic benefits are
attributable to the asset, the cost or value can be reliably
measured, and the nature of expenditure qualifies for
capitalisation under the accounting standards. Additionally, the
determination of costs, particularly salaries and other personnel
related costs, that meet the criteria in IAS 38 Intangible Assets
to be capitalised is subjective. The Group’s estimates included
determining the extent of time spent by employees performing
IT and non-IT roles in developmental activities and whether all
costs were directly attributable to the relevant projects.
We performed the following substantive audit procedures over
the capitalised IT development costs:
We evaluated the design and implementation of key
controls around the capitalisation of internally generated
intangible assets.
For a sample of projects to which costs have been
capitalised, we obtained and evaluated management’s
assessment of the nature, feasibility and probably economic
benefit expected from the intangible asset.
We obtained a breakdown of the capitalised IT development
costs and evaluated whether the nature of expenses meet
the criteria in IAS 38 Intangible Assets to be capitalised.
For a sample of IT development cost capitalised, we
obtained supporting documentation to corroborate the
value and the nature of the expenditure and assessed
whether it met the criteria for capitalisation.
•
We recalculated the amounts capitalised and tested the
reliability of data used within the calculation. Based on the
procedures performed and evidence obtained.
With respect to the IT development costs capitalised during
the current financial period we found it to be reasonable and
materially compliant with the requirements of IAS 38 Intangible
Assets.
65
ANNUAL REPORT 2021GOVERNANCE INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF EQUALS GROUP PLC CONTINUED
Key audit matter
How our audit addressed the key audit matter
Carrying value of goodwill (Group and Company)
The Group’s disclosures are provided in Note 10 ‘Intangible
assets and goodwill’ and the related accounting policies
applied are detailed in Note 3.13. Management’s judgements
in the application of the accounting policy is disclosed in
Note 3.26B.
The Group has £13.5m of goodwill on the balance sheet as at
31 December 2021 (£15.1m at 31 December 2020).
An impairment test was performed by management, with
supporting sensitivity analysis, using the higher of value in use
(‘VIU’) and fair value less cost to sell. The recoverable amount
of each cash generating unit (‘CGU’) was predominantly
determined using the VIU model, unless it believed that fair
value less cost to sell would result in a higher recoverable
amount for any cash generating unit (‘CGU’). Management
recognised an impairment of £1.6m relating to the Travel Cash
CGU following the impairment assessment performed.
The methodology applied by management is dependent
on various assumptions, both short term and long term in
nature. These assumptions, which are subject to estimation
uncertainty, are derived from a combination of management’s
judgement, experts engaged by management and market
data. The significant assumptions that we focused our audit
on were those with greater levels of management judgement
and for which variations had the most significant impact on
the recoverable amount. Specifically, these included valuation
multiples used, forecast revenue and costs and discount rates.
We performed the following substantive audit procedures
over managements’ impairment assessment:
•
•
•
•
•
•
•
We evaluated managements’ identification and allocation
of goodwill and other assets to CGUs based on our
understanding of the business;
We obtained managements’
impairment assessment
calculations and tested the forecast cash flows to the latest
approved board plans.
Evaluated the key assumptions in the forecasts, and
evaluated the evidence provided to corroborate them with
a focus on revenue growth and costs.
We challenged, and agreed to supporting evidence where
available, the Group’s assumptions used in particular
relating to the valuation multiples and discount rate applied.
Assessed whether the cash flows included in the model
were in accordance with the relevant accounting standard;
Assessed the sensitivity of the VIU to reasonable variations
in significant assumptions; and
We tested the mathematical accuracy of the calculations
used to estimate the recoverable amounts for each CGU.
Based on the procedures performed and evidence obtained,
we found management’s conclusions to be reasonable and
appropriate.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the group and the company, the accounting processes and controls,
and the industry in which they operate.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the Group and the Company, the accounting processes and controls,
and the industry in which they operate. Within the Group’s main consolidation and financial reporting system, the consolidated
financial statements are a consolidation of subsidiary entities. In establishing the overall approach to the Group audit, we scoped
our work using the balances included in the consolidation. We determined the type of work that needed to be performed over
the subsidiary entities by us, as the Group engagement team. As a result of our scoping, we determined that an audit of the
complete financial information of FairFx Plc, Spectrum Payment Services Limited and Equals Connect Limited was necessary,
owing to their financial significance. All audit work over these subsidiary entities was performed by the Group engagement team.
We then considered the significance of other reporting units in relation to primary statement account balances. In doing this we
also considered the presence of any significant audit risks and other qualitative factors. For the remainder, the risk of material
misstatement was mitigated through Group audit procedures including subsidiary level analytical review procedures. Certain
Group-level account balances, including goodwill, were audited by the Group engagement team.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These,
together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our
audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements,
both individually and in aggregate on the financial statements as a whole.
66
EQUALS GROUP PLCGOVERNANCE INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF EQUALS GROUP PLC CONTINUED
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall materiality
£440,914 (2020: £241,660).
£440,914 (2020: £22,485).
How we determined it
1% of average revenue over the last three years 1% of total assets (capped at the overall
Financial statements - Group
Financial statements - Company
Rationale for
benchmark applied
The Group
is very focused on expansion
materiality for the group)
The entity’s assets predominantly consist of
through acquisition and organic growth.
investments in their subsidiaries and are a
Revenue has been determined to be a key
benchmark for financial statement users to
measure of financial performance for the Group
measure the entity’s scale and how they operate
and therefore has been used to determine
their business. Total assets has been determined
materiality.
to be a key measure and has been used to
A 3-year average revenue amount was used as
determine materiality.
the benchmark in the prior year for the group
Additionally, we used total operating expenses as
financial statements. This was determined
the benchmark in the prior year for the company
more appropriate as a result of the COVID-19
financial statements. The basis for determining
pandemic, and the related uncertainty and
materiality was re-evaluated and Total assets
impact on the 2020 financial year across the
was determined to be a more appropriate
industry. As the markets have normalised, we
benchmark as it indicates more reasonably the
have reverted back to the benchmark used
investments within the holding company which
prior to the 2020 financial year.
is driven by the group’s strategies.
For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality.
The range of materiality allocated across components was £3,601 to £440,914.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and
undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope
of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example
in determining sample sizes. Our performance materiality was 75% (2020: 75%) of overall materiality, amounting to £330,686
(2020: £181,245) for the group financial statements and £330,686 (2020: £16,864) for the company financial statements.
In determining the performance materiality, we considered a number of factors - the history of misstatements, risk assessment
and aggregation risk and the effectiveness of controls - and concluded that an amount at the upper end of our normal range was
appropriate.
We agreed with the audit committee that we would report to them misstatements identified during our audit above £22,046 (group
audit) (2020: £12,083) and £22,046 (company audit) (2020: £1,124) as well as misstatements below those amounts that, in our view,
warranted reporting for qualitative reasons.
CONCLUSIONS RELATING TO GOING CONCERN
Our evaluation of the Directors’ assessment of the Group’s and the Company’s ability to continue to adopt the going concern basis
of accounting included:
•
•
We used our knowledge of the Group, its industry and the general economic environment in which it operates to identify the
inherent risks in its business model and analysed how those risks might affect the Group’s and Company’s financial resources
or ability to continue operations over the going concern period;
We considered whether these risks could plausibly affect the liquidity or profitability in the going concern period by comparing
severe, but plausible downside scenarios that could arise from these risks individually and collectively against the level of
available financial resources indicated by the Group and Company’s financial forecasts
•
We considered whether the going concern disclosure in note 3.1 to the financial statements gives a full and accurate description
of the Directors’ assessment of going concern, including the identified risks, dependencies, and related sensitivities.
67
ANNUAL REPORT 2021GOVERNANCE INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF EQUALS GROUP PLC CONTINUED
Based on the work we have performed, we have not identified
In light of the knowledge and understanding of the Group and
any material uncertainties relating to events or conditions that,
Company and their environment obtained in the course of the
individually or collectively, may cast significant doubt on the
audit, we did not identify any material misstatements in the
Group’s and the Company’s ability to continue as a going
Strategic report and Directors’ Report.
concern for a period of at least twelve months from when the
financial statements are authorised for issue.
In auditing the financial statements, we have concluded that
the Directors’ use of the going concern basis of accounting in
the preparation of the financial statements is appropriate.
However, because not all future events or conditions can be
predicted, this conclusion is not a guarantee as to the Group’s
and the Company’s ability to continue as a going concern.
Our responsibilities and the responsibilities of the Directors
Responsibilities for the financial statements and the
audit
Responsibilities of the directors for the financial
statements
As explained more fully in the Statement of Directors’
responsibilities in respect of the annual report and financial
statements, the Directors are responsible for the preparation
of the financial statements in accordance with the applicable
framework and for being satisfied that they give a true and fair
view. The Directors are also responsible for such internal control
with respect to going concern are described in the relevant
as they determine is necessary to enable the preparation of
sections of this report.
financial statements that are free from material misstatement,
Reporting on other information
The other information comprises all of the information in the
whether due to fraud or error.
In preparing the financial statements, the Directors are
Annual Report other than the financial statements and our
responsible for assessing the Group’s and the Company’s
auditors’ report thereon. The Directors are responsible for the
ability to continue as a going concern, disclosing, as applicable,
other information. Our opinion on the financial statements
matters related to going concern and using the going concern
does not cover the other information and, accordingly, we do
basis of accounting unless the Directors either intend to
not express an audit opinion or, except to the extent otherwise
liquidate the Group or the Company or to cease operations, or
explicitly stated in this report, any form of assurance thereon.
have no realistic alternative but to do so.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing
so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge
obtained in the audit, or otherwise appears to be materially
misstated. If we identify an apparent material inconsistency or
material misstatement, we are required to perform procedures
to conclude whether there is a material misstatement of the
financial statements or a material misstatement of the other
information. If, based on the work we have performed, we
conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing
to report based on these responsibilities.
With respect to the Strategic report and Directors’ Report, we
also considered whether the disclosures required by the UK
Companies Act 2006 have been included.
Based on our work undertaken in the course of the audit, the
Companies Act 2006 requires us also to report certain opinions
and matters as described below.
Auditors’ responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to
issue an auditors’ report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always
detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken
on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line
with our responsibilities, outlined above, to detect material
misstatements in respect of irregularities, including fraud.
The extent to which our procedures are capable of detecting
irregularities, including fraud, is detailed below.
Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the course
of the audit, the information given in the Strategic report
and Directors’ Report for the year ended 31 December 2021
is consistent with the financial statements and has been
prepared in accordance with applicable legal requirements.
Based on our understanding of the group and industry, we
identified that the principal risks of non-compliance with laws
and regulations related to the Financial Conduct Authority’s
(‘FCA’) regulations, Alternative Investments Market (‘AIM’)
Listing Rules, Pensions legislation, Anti-Money Laundering
legislation and UK tax legislation, and we considered the
68
EQUALS GROUP PLCGOVERNANCE INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF EQUALS GROUP PLC CONTINUED
extent to which non-compliance might have a material effect
on the financial statements. We also considered those laws
Use of this report
This report, including the opinions, has been prepared for and
and regulations that have a direct impact on the financial
only for the company’s members as a body in accordance
statements such as the Companies Act 2006. We evaluated
with Chapter 3 of Part 16 of the Companies Act 2006 and for
management’s incentives and opportunities for fraudulent
no other purpose. We do not, in giving these opinions, accept
manipulation of the financial statements (including the risk of
or assume responsibility for any other purpose or to any other
override of controls), and determined that the principal risks
person to whom this report is shown or into whose hands it
were related to posting inappropriate journal entries to misstate
may come save where expressly agreed by our prior consent
revenue or reduce costs through incorrect capitalisation,
in writing.
creation of fictitious transactions to hide losses or to improve
financial performance, and management bias in accounting
estimates. Audit procedures performed by the engagement
team included:
•
•
•
•
Obtaining confirmations from third parties to confirm the
existence of a sample of transactions and balances; and
Identifying and testing journal entries meeting specific fraud
criteria, including those posted with certain descriptions,
posted and approved by the same individual, backdated
journals or posted by infrequent and unexpected users.
Review of correspondence with and reports to the
regulators, including the PRA and FCA;
Challenging assumptions and
judgements made by
management in their significant accounting estimates, in
particular in relation to capitalisation of costs to internally
generated intangible assets and the impairment of goodwill
and intangible assets (see related key audit matters above);
There are
inherent
limitations
in the audit procedures
described above. We are less likely to become aware of
instances of non-compliance with laws and regulations that
are not closely related to events and transactions reflected
in the financial statements. Also, the risk of not detecting a
material misstatement due to fraud is higher than the risk of
not detecting one resulting from error, as fraud may involve
deliberate concealment by, for example, forgery or intentional
misrepresentations, or through collusion.
Our audit testing might include testing complete populations
of certain transactions and balances, possibly using data
auditing techniques. However, it typically involves selecting a
limited number of items for testing, rather than testing complete
populations. We will often seek to target particular items for
testing based on their size or risk characteristics. In other cases,
we will use audit sampling to enable us to draw a conclusion
about the population from which the sample is selected.
A further description of our responsibilities for the audit of
the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditors’ report.
OTHER REQUIRED REPORTING
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to
you if, in our opinion:
•
•
•
•
we have not obtained all the information and explanations
we require for our audit; or
adequate accounting records have not been kept by the
Company, or returns adequate for our audit have not been
received from branches not visited by us; or
certain disclosures of Directors’ remuneration specified by
law are not made; or
the Company financial statements are not in agreement
with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
APPOINTMENT
We were appointed by the directors on 12 September 2019 to
audit the financial statements for the year ended 31 December
2019 and subsequent financial periods. The period of total
uninterrupted engagement is 3 years, covering the years
ended 31 December 2019 to 31 December 2021
DANIEL BRYDON
(Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Manchester
29 March 2022
69
ANNUAL REPORT 2021GOVERNANCE Financial statements
70
7070
Consolidated Statement
of Comprehensive Income
for the year ended 31 December 2021
Gross value of all transactions*1
Revenue on currency transactions
Banking revenue
Revenue
Transaction and commission costs
Gross profit
Administrative expenses
Depreciation charge
Amortisation charge
Impairment charge
Acquisition expenses
Total operating expenses
Adjusted EBITDA*2
Operating loss
Finance costs
Loss before tax
Tax credit
Loss after tax
Attributable to:
Owners of Equals Group PLC
Non-controlling interest
Other comprehensive income:
Items that may be reclassified to profit or loss
Exchange differences arising on translation of foreign operations
Total comprehensive loss for the year
Attributable to:
Owners of Equals Group PLC
Non-controlling interest
Loss per share
Basic
Diluted
Note
3.4
4
5
8/9
10
10
5j
6
7
7
2021
£’000
6,529,034
2020
£’000
3,492,671
38,424
5,667
44,091
(20,071)
24,020
(18,499)
(1,398)
(5,812)
(1,638)
–
(27,347)
6,713
(3,327)
(490)
(3,817)
1,555
(2,262)
(2,424)
162
–
(2,262)
(2,424)
162
(1.35)p
(1.35)p
23,849
5,110
28,959
(10,670)
18,289
(21,040)
(1,427)
(4,347)
–
(130)
(26,944)
1,164
(8,655)
(391)
(9,046)
2,109
(6,937)
(6,919)
(18)
6
(6,931)
(6,913)
(18)
(3.87)p
(3.87)p
*1
*2
Gross value of currency transactions sold and banking deposit transactions are a non-GAAP measure and represent the gross value of currency
transactions sold to customers and banking deposits made by customers. See Note 3.4 for more guidance.
Adjusted EBITDA is not a GAAP measure and represents operating loss before share option charges, depreciation, amortisation and separately
identifiable items (exceptional items).
All income and expenses arise from continuing operations.
The notes on pages 76 to 105 form an integral part of these financial statements.
71
FINANCIAL STATEMENTSANNUAL REPORT 2021 Consolidated and Company
Statement of Financial Position
as at 31 December 2021
Note
Group
2021
£’000
ASSETS
Non-current assets
Property, plant and equipment
Right of use assets
Intangible assets and goodwill
Deferred tax assets
Investments
Current assets
Inventories
Trade and other receivables
Current tax assets
Derivative financial assets
Cash and cash equivalents
TOTAL ASSETS
EQUITY AND LIABILITIES
Equity attributable to equity holders
Share capital
Share premium
Share-based payment reserve
Other reserves
Accumulated losses / Retained earnings
Company profit / (loss) in the year
Equity attributable to owners of Equals
Group Plc
Non-controlling interest
Non-current liabilities
Borrowings
Lease liabilities
Deferred tax liabilities
Current liabilities
Borrowings
Trade and other payables
Current tax liabilities
Lease liabilities
Derivative financial liabilities
TOTAL EQUITY AND LIABILITIES
8
9
10
6
11
13
14
6
20
15
16
17
18
9
6
18
19
6
9
20
1,257
4,874
30,960
949
–
38,040
168
8,256
397
2,593
13,104
24,518
62,558
1,793
53,218
1,858
8,609
(24,590)
–
40,888
263
41,151
1,600
4,484
–
6,084
400
12,002
61
778
2,082
15,323
62,558
2020
£’000
1,646
6,061
34,850
3,193
–
45,750
194
9,586
1,367
3,019
10,032
24,198
69,948
1,786
53,003
1,402
8,609
(22,259)
–
42,541
101
42,642
2,000
5,509
3,740
11,249
–
12,110
–
897
3,050
16,057
69,948
Company
2021
£’000
–
–
–
1,163
61,978
63,141
–
339
–
–
–
339
63,480
1,793
53,218
1,580
3,187
1,623
(692)
60,709
–
60,709
–
–
–
–
–
2,771
–
–
–
2,771
63,480
2020
£’000
–
–
–
744
61,707
62,451
–
274
–
–
–
274
62,725
1,786
53,003
1,402
3,187
(1,625)
3,155
60,908
–
60,908
–
–
–
–
–
1,817
–
–
–
1,817
62,725
The notes on pages 76 to 105 form an integral part of these financial statements.
The financial statements on pages 70 to 75 were approved by the Board of Directors on 29 March 2022 and were signed on its
behalf by:
Richard Cooper
Director, Chief Financial Officer
Company Registration number: 08922461
72
FINANCIAL STATEMENTSEQUALS GROUP PLC Consolidated and Company
Statements of Changes in Equity
for the year ended 31 December 2021
Total
equity
£’000
49,516
(6,937)
6
444
(387)
42,642
(2,262)
271
–
222
278
41,151
Total
equity
£’000
57,309
3,155
444
60,908
(692)
271
–
222
Group
At 1 January 2020
Loss for the year
Other comprehensive income:
Items that will not be reclassified subsequently to
profit or loss:
Exchange differences arising on translation of
foreign operations
Other items:
Share-based payment charge (note 22)
Movement in deferred tax on share-based
payment reserve
At 31 December 2020
(Loss) / profit for the year
Share-based payment charge (note 22)
Share options exercised in year
Shares issued in year
Movement in deferred tax on share-based
payment reserve
Called up
share capital
£’000
Share
premium
£’000
Share-based
payment
£’000
Accumulated
losses /
retained
earnings
£’000
1,786
53,003
1,345
(15,340)
Total
attributable
to owners
of Equals
Group PLC
£’000
49,397
(6,919)
Other
reserves
(note 17)
£’000
8,603
–
Non-
controlling
interest
£’000
119
(18)
–
–
–
–
–
–
–
–
1,786
53,003
–
–
–
7
–
–
–
–
215
–
–
–
444
(387)
1,402
–
271
(93)
–
278
1,858
(6,919)
–
–
–
(22,259)
(2,424)
–
93
–
–
6
–
–
8,609
–
–
–
–
–
6
444
(387)
42,541
(2,424)
271
–
222
278
40,888
–
–
–
101
162
–
–
–
–
263
At 31 December 2021
1,793
53,218
Company
At 1 January 2020
Profit for the year and total comprehensive
income
Share-based payment charge (note 22)
At 31 December 2020
Loss for the year
Share-based payment charge (note 22)
Share options exercised in year
Shares issued in year
At 31 December 2021
(24,590)
8,609
Called up
share capital
£’000
Share
premium
£’000
Share-based
payment
£’000
1,786
53,003
–
–
–
–
1,786
53,003
–
–
–
7
–
–
–
215
958
–
444
1,402
–
271
(93)
–
Accumulated
losses /
retained
earnings
£’000
(1,625)
3,155
–
1,530
(692)
–
93
–
Other
reserves
(note 17)
£’000
3,187
–
–
3,187
–
–
–
–
1,793
53,218
1,580
931
3,187
60,709
The following describes the nature and purpose of each reserve within owners’ equity:
Share capital
Share premium
Amount subscribed for shares at nominal value.
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
Accumulated losses Other
reserves comprise:
Cumulative profit and losses 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.
Foreign currency reserve
Arising on translation of foreign operations
The notes on pages 76 to 105 form an integral part of these financial statements.
73
FINANCIAL STATEMENTSANNUAL REPORT 2021 Consolidated Statement of Cash Flows
for the year ended 31 December 2021
Group
Loss before tax
Cash flows from operating activities
Adjustments for:
Depreciation
Amortisation
Impairment
Share-based payment charge
Decrease / (increase) in trade and other receivables *1
(Decrease) / Increase in trade and other payables*2
Decrease in derivative financial assets
Decrease in derivative financial liabilities
Decrease in inventories
Finance Costs
Net cash inflow
Tax receipts
Net cash inflow from operating activities
Cash flows from investing activities
Acquisition of property, plant and equipment
Acquisition of intangibles
Acquisition of subsidiary, net of cash acquired
Net cash used in investing activities
Cash flows from financing activities
New borrowings
Principal elements of lease payments
Interest paid on finance lease
Interest paid
Proceeds from issuance of ordinary shares
Net cash inflow from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at end of the year
Note
5
10
5
20
13
8
10
12
18
9
9
15
2021
£’000
(3,817)
1,398
5,812
1,638
272
3,614
(2,688)
426
(968)
26
490
6,203
1,367
7,570
(78)
(3,560)
–
(3,638)
–
(872)
(194)
(14)
220
(860)
3,072
10,032
13,104
2020
£’000
(9,046)
1,427
4,347
–
444
(400)
3,050
1,542
(1,511)
70
391
314
2,539
2,853
(160)
(4,531)
(255)
(4,946)
2,000
(891)
(222)
(27)
–
860
(1,233)
11,265
10,032
*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.
The notes on pages 76 to 105 form an integral part of these financial statements.
74
FINANCIAL STATEMENTSEQUALS GROUP PLC Company Statement of Cash Flows
for the year ended 31 December 2021
Company
(Loss)/profit before tax
Cash flows from operating activities
Adjustments for:
Increase in trade and other receivables*1
Increase / (decrease) in trade and other payables*2
Finance costs
Net cash outflow from operating activities
Cash flows from financing activities
Interest paid
Proceeds from issuance of ordinary shares
Net cash inflow from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at end of the year
2021
£’000
(1,111)
(63)
954
6
(214)
(6)
220
214
–
–
–
2020
£’000
2,650
(2,507)
(143)
–
–
–
–
–
–
–
–
*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.
The notes on pages 76 to 105 form an integral part of these financial statements.
75
FINANCIAL STATEMENTSANNUAL REPORT 2021 Notes to the Consolidated
Financial Statements
for the year ended 31 December 2021
1. GENERAL INFORMATION
The Company is a public company limited by shares and
incorporated in England and Wales and domiciled in the UK
and whose shares are admitted to trading on AIM, a market
operated by The London Stock Exchange. These consolidated
its
financial statements comprise
subsidiaries (together referred to as the ‘Group’). The Group is
a financial technology (“fintech”) provider, primarily providing
foreign currency and banking services. In addition, the Group
has 2 (2020: 3) outlets as part of its Bureau de Change retail
network in the City of London.
the Company and
The Company and Group’s consolidated financial statements
for the year ended 31 December 2021 were authorised for
issue on 29 Mar 2022 and the Company and Group’s statement
of financial position signed by Richard Cooper on behalf of the
Board.
2. NEW STANDARDS, AMENDMENTS AND
INTERPRETATIONS TO PUBLISHED STANDARDS
New and revised accounting standards and interpretations
adopted, none of which had any material impact to the Group:
•
•
•
Amendments to References to Conceptual Framework in
IFRS Standards
COVID-19-Related Rent Concessions beyond 30 June
2021 – Amendment to IFRS 16
Interest Rate Benchmark Reform – Phase 2 (Amendments
to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)
New standards, amendments and interpretations issued but
not yet effective or early adopted, none of which is expected
to have a material impact on the Group:
•
•
•
•
•
Onerous Contracts – Cost of Fulfilling a Contract
(Amendments to IAS 37) (effective 1 January 2022)
Property, Plant and Equipment: Proceeds before Intended
Use (Amendments to IAS 16) (effective 1 January 2022)
IFRS 17 Insurance Contracts (effective date of 1 January
2023)
Classification of Liabilities as Current or Non-current
(Amendments to IAS 1) (effective date of 1 January 2023)
Definition of Accounting Estimates (Amendments to IAS 8)
(effective date of 1 January 2023)
3. BASIS OF PREPARATION AND SIGNIFICANT
ACCOUNTING POLICIES
The principal accounting policies applied in the preparation
of the Group and Company financial statements are set out
below. These policies have been consistently applied to all
the years presented, unless otherwise stated. The financial
statements have been prepared on a historical cost basis with
the exception of derivative financial instruments which are
measured at fair value through profit or loss.
76
3.1 Basis of preparation
These financial statements are prepared in accordance with
UK-adopted International Accounting Standards in conformity
with the requirements of the Companies Act 2006 and AIM
Regulations. The financial statements are presented in Sterling,
the Company and Group’s presentational currency.
On 1 January 2021, IFRS as adopted by the European Union
at that date was brought into UK law and became UK-adopted
International Accounting Standards, with future changes being
subject to endorsement by the UK Endorsement Board. The
Company transitioned to UK-adopted International Accounting
Standards
its consolidated financial statements on 1
January 2021. This change constitutes a change in accounting
framework. However, there
impact on recognition,
measurement or disclosure in the period reported as a result of
the change in framework.
is no
in
IFRS requires management to make certain accounting
estimates and to exercise judgement in the process of
applying the Company and Group’s accounting policies.
These estimates are based on the Directors best knowledge
and past experience and are explained further in note 3.26.
Going concern
Details of the Group’s business activities, results, cash flows
and resources, together with the risks it faces and other factors
likely to affect its future development, performance and position
are set out in the strategic report. Certain Group companies
are regulated by the Financial Conduct Authority and perform
annual capital adequacy assessments. Consideration was
given to whether there is sufficient liquidity and financing to
support the business, the post balance sheet trading of the
Group, the regulatory environment and the effectiveness of risk
management policies. Management has sensitised its base
case, assumed certain business lines might be discontinued and
examined the truncating of product development expenditure.
The Board therefore has a reasonable expectation that the Group
has adequate resources to continue in operational existence for
the foreseeable future and therefore the financial statements are
prepared on a going concern basis.
3.2 Basis of consolidation
The consolidated financial statements comprise the financial
statements of all Group subsidiaries as at 31 December each
year using consistent accounting policies.
Business combinations
The Group financial statements for business combinations
using the acquisition method when control is transferred to
the Group. The consideration transferred in the acquisition
is generally measured at fair value, as are the identifiable net
assets acquired. Any goodwill that arises is tested annually for
impairment. Any gain on a bargain purchase is recognised in
profit or loss immediately. Transaction costs are expensed as
incurred, except if related to the issue of debt or equity securities.
The consideration transferred does not include amounts related
to the settlement of pre-existing relationships. Such amounts
are generally recognised in profit or loss.
FINANCIAL STATEMENTSEQUALS GROUP PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
CONTINUED
that meets
Any contingent consideration is measured at fair value at
the date of acquisition. If an obligation to pay contingent
consideration
the definition of a financial
instrument is classified as equity, then it is not re-measured
and settlement is accounted for within equity. Otherwise, other
contingent consideration is re-measured at fair value at each
reporting date and subsequent changes in the fair value of the
contingent consideration are recognised in profit or loss.
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group
controls an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and has
the ability to affect those returns through its power over the
entity. In assessing control, the Group takes into consideration
potential voting rights. The acquisition date is the date on
which control is transferred to the acquirer. The financial
statements of subsidiaries are included in the consolidated
financial statements from the date that control commences
until the date that control ceases. A non-controlling interest is
recognised, representing the interests of minority shareholders
in subsidiaries not wholly owned by the Group.
Transactions eliminated on consolidation
Intra-group balances and transactions and any unrealised
income and expenses arising from intra-group transactions
are eliminated.
On publishing the Company financial statements here,
together with the Group financial statements, the Company
is taking advantage of exemption in section 408 of the
Companies Act 2006 not to present the individual income
statement and related notes of the Company which form part
of these approved financial statements.
3.3 Foreign currency
In preparing these financial statements, transactions
in
currencies other than the Company and Group’s presentational
currency (“foreign currencies”) are recorded at the rates of
exchange prevailing on the dates of the transaction. At each
statement of financial position date monetary items in foreign
currencies are translated into the presentational currency at
the exchange rate prevailing at statement of financial position
date.
Exchange differences arising on the settlements of monetary
items and on the retranslation of monetary items are included
in the consolidated statement of comprehensive income for
the year.
3.4 Gross value of currency transactions sold and the
gross value of banking transactions
The gross value of currency transactions sold represent
the gross value of currency transactions undertaken with
customers by the Group, where the net is reported as revenue.
The gross value of banking transactions represents client
money deposits by customers. These values are a non-GAAP
measure and therefore disclosed as additional information in
the consolidated statement of comprehensive income.
3.5 Revenue recognition
The Group applies IFRS 15 Revenue from Contracts with
Customers for the recognition of revenue. IFRS 15 established
a comprehensive framework for determining whether, how
much and when revenue is recognised. It affects the timing
and recognition of revenue items, but not generally the overall
amount recognised.
The performance obligations of all revenue streams are
satisfied on the transaction date or by the provision of the
service for the period described in the contract. Revenue is not
recognised where there is evidence to suggest that customers
do not have the ability or intention to pay. The Group does not
have any contracts with customers where the performance
obligations have not been fully satisfied.
How the Group recognises revenue for its significant revenue
streams is described below.
Currency Cards – Retail and Corporate
A contract is identified when it is approved by relevant parties
and when the card is issued to the customer. Performance
obligations and transaction prices are set out in the contract.
Revenue from provision of card services is recognised over
period in which they are provided.
ATM transaction and out-of-currency variable
fees are
constrained to the amount not expected to be reversed.
Variable revenue is recognised at the point at which it is
unlikely to be reversed, typically the transaction date.
International Payments and Travel Cash
This service relates to the facility to buy and sell currency. A
contract is identified when a payment is approved by the Group
and the customer. Performance obligations and transaction
prices are set out in the contract. Revenue is recognised on
the transaction date for both spot and forward transactions.
Banking
This service relates to the provision of bank account services.
A contract is identified when a customer enters an agreement
with the Group for a Cardone Banking account. Performance
obligations and transaction prices are set out in the contract.
Monthly account fees are recognised during the month the
account is provided. ATM transaction and out-of-currency
variable fees are recognised up to the amount not expected to
be reversed. Variable revenue is recognised at the point at which
it is unlikely to be reversed, typically the transaction date.
3.6 Accounting for government grants
The Group recognises government grants once it has satisfied
itself that it is compliant with the relevant conditions and the
grant will be received. Grant income is recognised in profit or
loss on a systematic basis and in line with the recognition of
the expenses that the grants are intended to compensate, and
is offset against related expenditure.
77
FINANCIAL STATEMENTSANNUAL REPORT 2021 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
CONTINUED
3.7 Pension costs
The Group operates a defined contribution pension scheme
and outsources the administration of the pension scheme to
a third party. The Group contributes to the pension scheme
in line with Auto-enrolment obligations as defined in the
Pensions Act 2008 and passes on the employer and employee
contributions to the pension scheme administrator on a
monthly basis. The employer contributions are recognised as
they occur through the payroll.
3.8 Share-based payments
Employees (including Directors) of the Group may receive
remuneration in the form of share-based payment transactions,
whereby employees render services as consideration for
equity instruments (equity-settled transactions). In situations
where equity instruments are issued and some or all of the
services received by the entity as consideration cannot be
specifically identified, they are measured as the difference
between fair value of the share-based payment and the fair
value of any identifiable services received at the grant date.
The cost of equity-settled transactions with employees,
is measured by reference to the fair value at the date on
which they are granted. The fair value is determined using an
appropriate pricing model, further details of which are given
in note 22.
The cost of equity-settled transactions is recognised, together
with a corresponding increase in equity, over the period in
which the performance and/or service conditions are fulfilled,
ending on the date on which the relevant employees become
fully entitled to the award (“the vesting date”). The cumulative
expense recognised for equity settled transactions at each
reporting date until the vesting date reflects the extent to which
the vesting period has expired and the Group’s best estimate
of the number of equity instruments that will ultimately vest.
The profit or loss charge or credit for a period represents
the movement in cumulative expense recognised as at the
beginning and end of that period.
No expense is recognised for awards that do not ultimately
vest, except for awards where vesting is conditional upon a
market condition, which are treated as vesting irrespective of
whether or not the market condition is satisfied, provided that
all other performance and/or service conditions are satisfied.
Where the terms of an equity-settled award are modified, the
minimum expense recognised is the expense as if the terms
had not been modified. An additional expense is recognised
for any modification, which increases the total fair value of the
share-based payment arrangement, or is otherwise beneficial
to the employee as measured at the date of modification.
Where an equity settled award is cancelled, it is treated as
if it had vested on the date of cancellation, and any expense
not yet recognised for the award is recognised immediately.
However, if a new award is substituted for the cancelled award,
and designated as a replacement award on the date that it is
granted, the cancelled and new awards are treated as if they
were a modification of the original award, as described in the
previous paragraph.
78
The dilutive effect of outstanding options is reflected as
additional share dilution on the computation of earnings
per share. Where the Company grants options over its own
shares to the employees of its subsidiaries it recognises, in
its individual financial statements, an increase in the cost of
investment in its subsidiaries equivalent to the equity settled
share-based payment charge recognised.
3.9 Research and development
Research costs are expensed as incurred. Expenditure on
IT software and development is recognised as an intangible
asset only if the expenditure can be measured reliably,
when the intangible asset is technically and commercially
feasible, future economic benefits are probable, and the
Group intends to and has sufficient resources to complete
development and to use or sell the asset. Subsequent to initial
recognition, development expenditure is measured at cost less
accumulated amortisation and any accumulated impairment
losses.
3.10 Treatment of research and development tax
credits
Research and development tax credits are treated as taxation
credits as defined under IAS12 Income Taxes with a credit
recorded in the year to which the claim relates.
3.11 Taxation
The tax expense comprises current and deferred tax and R&D
tax credits.
3.12 Deferred tax
Deferred tax is recognised in respect of temporary differences
between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation
purposes. Deferred tax is not recognised for:
-
-
-
temporary differences on the initial recognition of assets or
liabilities in a transaction that is not a business combination
and that affects neither accounting nor taxable profit or
loss;
temporary differences related to investments in subsidiaries
to the extent that the Group is able to control the timing of
the reversal of the temporary differences and it is probable
that they will not reverse in the foreseeable future; and
taxable
recognition of goodwill.
temporary differences arising on
the
initial
The measurement of deferred tax reflects the tax consequences
that would follow the manner in which the Group expects, at
the end of the reporting period, to recover or settle the carrying
amount of its assets and liabilities. Deferred tax is measured
at the tax rates that are expected to be applied to temporary
differences when they reverse, using tax rates enacted or
substantively enacted at the reporting date.
FINANCIAL STATEMENTSEQUALS GROUP PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
CONTINUED
Deferred tax assets and liabilities are offset if there is a legally
enforceable right to offset current tax liabilities and assets, and
they relate to taxes levied by the same tax authority on the same
taxable entity, or on different tax entities but they intend to settle
current tax liabilities and assets on a net basis or their tax assets
and liabilities will be realised simultaneously.
A deferred tax asset is recognised for unused tax losses, tax
credits and deductible temporary differences to the extent that
it is probable that future taxable profits will be available against
which they can be utilised. Deferred tax assets are reviewed at
each reporting date and are reduced to the extent that it is no
longer probable that the related tax benefit will be realised.
3.13 Intangible assets and goodwill
(i) Recognition and measurement
Goodwill arising on business combinations is measured at
cost less accumulated impairment losses.
Development expenditure is capitalised only if the expenditure
can be measured reliably, the product or process is technically
and commercially feasible, future economic benefits are
probable, and the Group intends to and has sufficient
resources to complete development and to use or sell the
asset. Otherwise, it is recognised in profit or loss as incurred.
Subsequent to initial recognition, development expenditure
is measured at cost less accumulated amortisation and any
accumulated impairment losses.
Separately acquired trademarks and licences are shown at
historical cost less accumulated impairment losses. Other
intangible assets, including customer relationships, patents
and trademarks acquired in a business combination are
recognised at fair value at the acquisition date. They have a
finite useful life and are subsequently carried at cost less
accumulated amortisation and impairment losses.
(ii) Subsequent expenditure
Subsequent expenditure is capitalised only when it increases
the future economic benefits embodied in the specific asset
to which it relates. All other expenditure, including expenditure
on internally generated goodwill and brands, is recognised in
profit or loss as incurred.
less
their estimated residual values using
(iii) Amortisation
Amortisation is calculated to write off the cost of intangible
assets
the
straight-line method over their estimated useful lives and is
generally recognised in profit or loss. Goodwill is not amortised.
The estimated useful lives for current and comparative periods
are as follows:
Customer relationships
Brands
Trademarks, licences, patented
and non-patented technology
6-9 years
5 years
3-10 years
Amortisation methods, useful lives and residual values are
reviewed at each reporting date and adjusted if appropriate.
3.14 Property, plant and equipment
All property, plant and equipment is stated at cost of
acquisition or production cost less accumulated depreciation
and impairment losses. Any gain or loss on disposal of an item
of property, plant and equipment is recognised in profit or loss.
Depreciation is charged so as to write off the cost or valuation
of assets over their estimated useful lives, using the straight-line
method, on the following basis:
Plant and equipment
Fixtures and fittings
Leasehold improvements
3-5 years
3-5 years
10 years
3.15 Investments in subsidiaries
Investments in subsidiary undertakings are stated at cost less
impairment in value.
3.16 Inventories
Inventories comprise of stock of plastic payment cards not yet
distributed to customers. Inventories are valued at the lower of
cost and net realisable value. Cost is based on the first-in first-
out principle and includes expenditure incurred in acquiring
the inventories, production or conversion costs and other
costs in bringing them to their existing location and condition.
There are no currency amounts loaded on the stock of cards.
3.17 Trade and other receivables
Trade receivables are recognised initially at the amount
of consideration that is unconditional unless they contain
significant financing components, when they are recognised
at fair value. The Group holds the trade receivables with the
objective to collect the contractual cash flows and therefore
measures
them subsequently at amortised cost using
the effective interest method. Details about the Group’s
impairment policies and the calculation of the loss allowance
are provided in note 3.24.
3.18 Derivative financial assets and liabilities
Derivative financial assets and liabilities are carried as assets
when their fair value is positive and as liabilities when their
fair value is negative. Changes in the fair value of derivatives
are included in the income statement. The Group’s derivative
financial assets and liabilities at fair value through profit or loss
comprise solely of forward foreign exchange contracts.
3.19 Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net
amount reported in the statement of financial position if, and
only if, there is a currently enforceable legal right to offset the
recognised amounts and there is an intention to settle on a
net basis, or to realise the assets and settle the liabilities
simultaneously.
3.20 Cash and cash equivalents
These include cash in hand and deposits held at call with
banks. Any cash held on behalf of customers is segregated
from operational cash and safeguarded in accordance with our
regulatory obligations. The risks and rewards to the Group that
arise from the holding of customer money are principally vested
79
FINANCIAL STATEMENTSANNUAL REPORT 2021 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
CONTINUED
with the customers. As a result, the Group does not account for
customer cash in the Group’s financial statements.
3.21 Trade and other payables
These are initially recognised at fair value and then carried at
amortised cost using the effective interest method. The Group
does not account for customer cash and the associated
customer liability in the Group’s financial statements, as
the risks and rewards that arise are principally vested with
the customers.
3.22 Provisions excluding those under IFRS 9
(see note 3.24)
A provision is recognised in the statement of financial
position when the Company and Group has a present legal
or constructive obligation as a result of a past event, and it is
probable that an outflow of economic benefits will be required
to settle the obligation. If the effect is material, provisions are
determined by discounting the expected future cash flows at a
pre-tax rate that reflects the current market assessment of the
time value of money and, where appropriate, the risks specific
to the liability.
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from net profit as reported in the
statement of comprehensive income because it excludes
items of income or expense that are taxable or deductible in
other years and it further excludes items that are never taxable
or deductible. The liability for current tax is calculated using tax
rates that have been enacted or substantively enacted by the
consolidated statement of financial position date.
3.23 Leases
At inception of a contract, the Group assesses whether the
contract is, or contains, a lease. A contract is, or contains,
a lease if the contract conveys the right to control the use
of an identified asset for a period of time in exchange for
consideration. To assess whether a contract conveys the right
to control the use of an identified asset, the Group uses the
definition of a lease in IFRS 16.
Contracts may contain both lease and non-lease components.
The Group allocates the consideration in the contract to the
lease and non-lease components based on their relative
stand-alone prices. However, for leases of real estate for which
the Group is a lessee, it has elected not to separate lease and
non-lease components and instead accounts for these as a
single lease component.
The Group recognises a Right of Use asset and a corresponding
liability at the date at which the leased asset is available for
use. Lease liabilities arising from a lease are initially measured
on a present value basis. Lease liabilities include the net
present value of the fixed payments (including in-substance
fixed payments), less any lease incentives receivable. Lease
payments to be made under reasonably certain extension
80
lease payments are discounted using the
options are also included in the measurement of the liability.
lessee’s
The
incremental borrowing rate, being the rate that the individual
lessee would have to pay to borrow the funds necessary to
obtain an asset of similar value to the Right of Use asset in a
similar economic environment with similar terms, security and
conditions.
Lease payments are allocated between principal and finance
cost. The finance cost is charged to profit or loss over the lease
period so as to produce a constant periodic rate of interest on
the remaining balance of the liability for each period.
Right of Use assets are measured at cost comprising the
following:
• the amount of the initial measurement of lease liability;
•
any lease payments made at or before the commencement
date less any lease incentives received;
• any initial direct costs.
Right of Use assets are depreciated using the straight-line
basis over the lease term at a rate between 10-25%. The
Group applies the following practical expedients permitted by
the standard:
•
•
excluding short term leases (less than 12 months) and
low-value items (less than £3,775)
exercising extension options where the contract contains a
provision.
There are no variable payment terms in current leases.
3.24 Impairment
A. Non-derivative financial assets
IFRS 9 offers two approaches for measuring and recognising
the loss allowance: General and Simplified. The general
approach should be applied for all financial assets subject to
impairment, except for trade receivables or contract assets
(IFRS 15) without significant financing component, for these
assets simplified approach should be applied.
The Group’s financial instruments measured at amortised
cost falling within the scope of the standard are (i) trade and
other receivables and (ii) cash and cash equivalents. While
cash and cash equivalents are also subject to the impairment
requirements of IFRS 9, the identified impairment loss was
immaterial.
FINANCIAL STATEMENTSEQUALS GROUP PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
CONTINUED
Trade and other receivables
The Group applies the IFRS 9 Simplified approach, by
recognising a loss allowance based on a lifetime expected
credit loss (“ECL”) at each reporting date.
B. Non-financial assets
At each reporting date, the Group reviews the carrying
amounts of its non-financial assets (other than inventories
and deferred tax assets) to determine whether there is any
indication of impairment. If any such indication exists, then the
asset’s recoverable amount is estimated. Goodwill is tested
annually for impairment.
For impairment testing, assets are grouped together into the
smallest group of assets that generates cash inflows from
continuing use that are largely independent of the cash inflows
of other assets or CGUs. Goodwill arising from a business
combination is allocated to CGUs or groups of CGUs that are
expected to benefit from the synergies of the combination.
The recoverable amount of an asset or CGU is the greater
of its value in use and its fair value less costs of disposal
(“FVLCOD”). Value in use is based on the estimated future
cash flows, discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset or CGU.
FVLCOD is the price that would be received to sell an asset
or CGU in an orderly transaction between market participants
at the measurement date, less any incremental costs directly
attributable to the disposal of an asset or CGU, excluding
finance costs and income tax expense. The Group’s CGU’s
for impairment testing are defined in note 10. An impairment
loss is recognised if the carrying amount of an asset or CGU
exceeds its recoverable amount. Impairment losses are
recognised in profit or loss. They are allocated first to reduce
the carrying amount of any goodwill allocated to the CGU,
and then to reduce the carrying amounts of the other assets
in the CGU on a pro rata basis. An impairment loss in respect
of goodwill is not reversed. For other assets, an impairment
loss is reversed only to the extent that the asset’s carrying
amount does not exceed the carrying amount that would have
been determined, net of depreciation or amortisation, if no
impairment loss had been recognised.
3.25 Director’s remuneration
From 2020, the Group have adopted accrual accounting for
the recognition of annual bonuses to Executive Directors,
with bonuses being accrued in the year to which they relate,
provided in management’s opinion it seems more certain
than not that any award dependent on the fulfilment of
performance criteria will, in fact, be met. Previously bonuses
were recognised in the year they were awarded. See note 5b
for further details.
requires management
3.26 Judgements and estimates
the Group’s consolidated financial
The preparation of
statements
to make estimates,
judgements and assumptions that affect the application of
the Group’s accounting policies and the reported amounts
of assets, liabilities, income and expenses. Estimates and
underlying assumptions are reviewed on an ongoing basis.
Revisions to estimates are recognised prospectively.
A. Judgements
The judgements made in applying the Group’s accounting
policies that have the most significant effect on the amounts
recognised in the financial statements were as follows:
that
the project
(i) Technology development intangibles
Development costs are capitalised based on management’s
judgements
technologically and
economically feasible, the asset is expected to generate
future net cash inflows and a successful outcome is probable
in accordance with IAS 38 Intangible Assets. Management
judgement is required to determine the useful economic lives
of these assets and uses market and technological knowledge
in determining these.
is
(ii) IFRS 16 Leases – lease term and extension options
In determining the lease term, management considers all
facts and circumstances that create an economic incentive
to exercise an extension option, or not exercise a termination
option. Extension options (or periods after termination
options) are only included in the lease term if the lease is
reasonably certain to be extended (or not terminated). All
extension options in offices leases have been included in the
lease liability.
(iii) IFRS 16 Leases – incremental borrowing rate
To determine the incremental borrowing rate, the Group uses
a build-up approach that starts with a risk-free interest rate
adjusted for credit risk for leases held by the Group which do
not have recent third-party financing, and makes adjustments
specific to the lease; inflation, country risk premium, financing
spread level of indebtedness and asset specific risk.
B. Assumptions and estimation uncertainties
The assumptions and estimation uncertainties at the end of
the financial year that have a significant risk of resulting in a
material adjustment to the carrying amounts of assets and
liabilities in the next financial year were as follows:
Impairment of goodwill and intangibles
The Group assesses goodwill annually for impairment. The
assumptions and estimates used in the impairment test for
goodwill including the sensitivity testing are disclosed in note 10.
Valuation of share options
The Group fair values share options on date of grant using the
Black-Scholes model. Further details on the use of fair value
can be found in note 3.27 Measurement of fair values and note
22 Share options.
81
FINANCIAL STATEMENTSANNUAL REPORT 2021 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
CONTINUED
Valuation of derivative instruments
The Group enters into foreign exchange forward positions with clients which it offsets against foreign exchange forward positions
with various financial institutions, earning a margin in the process. Open positions are fair valued at the balance sheet date using
Bloomberg forward rates for all major currencies.
Deferred consideration
Total compensation for acquisitions may include an element of deferred consideration payable, subject to the fulfilment of
certain conditions post-acquisition. Where this is the case, management use historical information and management forecasts to
estimate a liability, using the discounted cash-flow methodology, to derive a fair value of the deferred consideration payable. This
estimate is revised at each reporting date to reflect latest current and expected outcomes.
3.27 Measurement of fair values
When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible. Fair values
are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities.
•
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly
(i.e., as prices) or indirectly (i.e., derived from prices).
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
4. REVENUE AND 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 reviews financial information on revenue for the following segments: Currency Cards (both
personal and corporate), International Payments, Travel Cash, Banking and Central (which includes overheads and corporate
costs). Revenue is primarily 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 affected 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.
Group
Year ended 31 December 2021
Segment revenue
Transaction and commission
costs
Gross profit
Administrative expenses
Depreciation charge
Amortisation charge
Impairment charge
Acquisition expenses
Finance costs
Profit / (loss) before tax
Current assets
Non-current assets
Total liabilities
Total net assets
Currency
Cards
£’000
International
Payments
£’000
Travel
Cash
£’000
Banking
£’000
Central
£’000
Total
£’000
8,642
29,436
346
5,667
–
44,091
(2,616)
6,026
–
–
–
–
–
–
6,026
6,602
–
6,602
(15,799)
13,637
–
–
–
–
–
–
13,637
18,258
–
18,258
(101)
245
–
–
–
(1,638)
–
–
(1,393)
600
–
600
(1,555)
4,112
–
–
–
–
–
–
4,112
11,631
(1,744)
9,887
–
–
(18,499)
(1,398)
(5,812)
–
–
(490)
(26,199)
24,518
949
(19,663)
5,804
(20,071)
24,020
(18,499)
(1,398)
(5,812)
(1,638)
–
(490)
(3,817)
24,518
38,040
(21,407)
41,151
82
FINANCIAL STATEMENTSEQUALS GROUP PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
CONTINUED
4. REVENUE AND SEGMENTAL ANALYSIS (CONTINUED)
Group
Year ended 31 December 2020
Segment revenue
Transaction and commission
costs
Gross profit
Administrative expenses
Depreciation charge
Amortisation charge
Impairment charge
Acquisition expenses
Finance costs
Profit / (loss) before tax
Current assets
Non-current assets
Total liabilities
Total net assets
5. OPERATING LOSS
Currency
Cards
£’000
International
Payments
£’000
5,856
(2,947)
2,909
–
–
–
–
–
–
2,909
6,604
–
6,604
17,241
(6,176)
11,065
–
–
–
–
–
–
11,065
19,847
–
19,847
Operating Loss is stated after charging the following operating expenses:
Staff costs (net of expenditure capitalised)
IT and telephone cost (net of expenditure capitalised)
Other professional fees
Marketing costs
Property and office costs (net of expenditure capitalised)
Travel and subsistence
Other share option related costs
Other
Sub-total, cash-based expenses
Write-off of card stocks
Bad debt expense
Contingent consideration
Share option charge
Foreign exchange loss
Other
Sub-total, non cash-based costs
Total administrative expenses
Depreciation of right of use assets
Depreciation of property, plant and equipment
Amortisation charge
Impairment charge
Acquisition costs – staff costs
Acquisition costs – professional fees
Total operating expenses
Travel
Cash
£’000
630
(274)
356
–
–
–
–
–
–
356
Banking
£’000
Central
£’000
5,110
(1,356)
3,754
–
–
–
–
–
–
3,754
122
83
205
(21,040)
(1,427)
(4,347)
–
(130)
(391)
(27,130)
24,198
2,099
(25,551)
746
2,595
–
2,595
14,605
(1,755)
12,850
Note
5a
5c
5d
5f
5g
5g
5h
9
8
5j
5j
2021
£’000
12,550
1,800
1,332
1,171
822
300
84
3
18,062
–
–
46
272
119
–
437
18,499
931
467
5,812
1,638
–
–
27,347
Total
£’000
28,959
(10,670)
18,289
(21,040)
(1,427)
(4,347)
–
(130)
(391)
(9,046)
24,198
45,750
(27,306)
42,642
2020
£’000
12,894
1,299
1,645
1,206
993
233
–
26
18,296
575
513
642
444
199
371
2,744
21,040
940
487
4,347
–
83
47
26,944
83
FINANCIAL STATEMENTSANNUAL REPORT 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
CONTINUED
5. OPERATING LOSS (CONTINUED)
5A STAFF COSTS
Number of employees
The number of employees (including Directors) was:
Administrative staff – average for the year
Number of staff at the balance sheet date
Employee costs
Cost of Staff on payrolls
Cost of contractors and consultants
Gross costs
Less: categorised in transaction and commission costs
Less: re-categorised as acquisition costs
Less: reported within internally generated software intangibles
Wages and salaries
Social security costs
Pension costs
Less: categorised in transaction and commission costs
Employee furlough government grant received
Recruiting, training, benefits and similar
Total*
2021
Headcount
255
254
2020
Headcount
311
272
2021
£’000
18,074
656
18,730
(3,152)
15,578
–
(3,028)
12,550
2021
£’000
12,883
1,437
566
14,886
(3,152)
11,734
(34)
11,700
850
12,550
2020
£’000
18,827
651
19,478
(2,499)
16,979
(83)
(4,002)
12,894
2020
£’000
12,724
1,360
664
14,748
(2,499)
12,249
(546)
11,703
1,191
12,894
*includes £628k (2020: £1,333k) of expenditure identified by the Directors as separately identifiable items. Separately identifiable
items are large, one-off items identified by management.
84
FINANCIAL STATEMENTSEQUALS GROUP PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
CONTINUED
5. OPERATING LOSS (CONTINUED)
5B DIRECTORS’ REMUNERATION
Company
All bonuses and conditional bonuses, whether the conditions have been made or not, have, from 2021 onwards, been accrued.
CEO bonus
In relation to the 2020 financial year, a bonus of £275k was awarded during 2021. £275k was paid during 2021 and £83k relating
to 2019 bonus was paid in 2021.
The CEO is entitled to a bonus of £330k in relation to 2021 should all performance conditions be met. At the date of signing these
financial statements, 100% of the conditions have been met and £330k is immediately payable. The full amount of the bonus has
been accrued.
CFO bonus
The CFO was awarded and paid a pension contribution of £40k in relation to 2020 and was paid during 2021.
The CFO is entitled to a bonus of £220k in relation to 2021 should all performance conditions be met. At the date of signing these
financial statements, 100% of the conditions have been met and £220k is immediately payable. The full amount of the bonus has
been accrued.
Year ended 31 December 2021
Paid during the year
Ian Strafford-Taylor
Richard Cooper
Sub-total - executives
Non-Executive Directors
A R F Hughes
S Herbert
C Bones (appointed 9 April 2021)
Total remuneration paid
Year ended 31 December 2020
Paid during the year
Ian Strafford-Taylor
Richard Cooper
Sub-total - executives
Non-Executive Directors
A Chowdhury (resigned 29 July 2020)
J Pearson (resigned 9 October 2020)
R M Head (resigned 1 October 2020)
A R F Hughes (appointed 1 March 2020)
S Herbert (appointed 1 October 2020)
Total remuneration paid
Gross Salary
£’000
Bonus
£’000
Employer
Pension
£’000
Total
Remuneration
Paid
£’000
Benefits
£’000
297
252
549
81
66
40
736
358
–
358
–
–
–
358
3
44
47
–
–
–
47
21
15
36
–
–
–
36
679
311
990
81
66
40
1,177
Gross Salary
£’000
Bonus
£’000
Employer
Pension
£’000
Total
Remuneration
Paid
£’000
Benefits
£’000
255
231
486
21
57
33
56
19
672
165
150
315
–
–
–
–
–
315
4
4
8
–
2
–
–
–
10
2
3
5
–
–
–
–
–
5
426
388
814
21
59
33
56
19
1,002
85
FINANCIAL STATEMENTSANNUAL REPORT 2021 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
CONTINUED
5. OPERATING LOSS (CONTINUED)
In December 2021 a payroll error was made such that the NEDs were overpaid by 10% of their monthly base salary. This error was
corrected in February 2022 payroll and the money repaid.
The above tables have been prepared on a cash paid basis for 2021, whereas the remuneration committee report will be shown
on an accrual basis to detail out the bonuses accrued as at 31 December 2021.
Highest Paid Director
Gross Salary
Average wage per employee
Gross Salary
2021
£’000
297
2021
£’000
51
2020
£’000
255
2020
£’000
47
Group
The total amount paid during 2021 to Executive Directors, when including Executive Directors of all the subsidiaries in the
consolidated Group, was £2,893k (2020: £1,773k). This included pension payments of £82k (2020: £25k). Details of CEO and CFO
bonuses accrued during the year but not paid are given in the Company disclosures above. Information about Directors’ share
options is given in note 22.
5C IT AND TELEPHONE
IT and telephone costs
Capitalised costs
Total IT and telephone costs included in administrative expenses
5D PROFESSIONAL FEES
Professional fees
Acquisition costs
Total professional fees included in administrative expenses*
2021
£’000
2,101
(301)
1,800
2021
£’000
1,332
–
1,332
*includes £3k (2020: £217k) of expenditure identified by the Directors as separately identifiable items.
5E AUDIT FEES
Included in professional fees above are amounts charged by the Group’s auditors as follows:
Statutory audit fees
Fees payable for the statutory audit of the Group
PY additional statutory audit fees payable for the prior year audit – to PwC LLP
Total audit fees
2021
£’000
303
–
303
There were no non-audit fees during the current and preceding year. These amounts are shown exclusive of VAT.
86
2020
£’000
1,718
(419)
1,299
2020
£’000
1,693
(48)
1,645
2020
£’000
255
120
375
FINANCIAL STATEMENTSEQUALS GROUP PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
CONTINUED
5. OPERATING LOSS (CONTINUED)
5F PROPERTY AND OFFICE COSTS
Property costs
Capitalised costs
IFRS 16 adjustment
Total property costs included in administrative expenses
5G WRITE-OFF OF CARD STOCKS AND BAD DEBTS INCURRED
Card stock write-off
Bad debts
2021
£’000
1,823
–
(1,001)
822
2021
£’000
–
–
2020
£’000
2,101
(45)
(1,063)
993
2020
£’000
575
513
The demise of Wirecard AG led to the Group having to re-card all its customers on the Wirecard programme. Amounts due to the
Group were likely to be irrecoverable.
5H CONTINGENT CONSIDERATION
Contingent consideration represents the fair value of additional consideration estimated in respect of the acquisitions of Casco
Financial Services Limited (renamed to Equals Connect Limited) in November 2019 and Effective FX Limited intellectual property
rights in October 2020. This additional consideration payable is the result of revenues being in excess of forecasts at the time of
acquisition.
5J ACQUISITION EXPENSES
Professional fees
Staff costs
Total acquisition expenses
Note
5d
5a
2021
£’000
–
–
–
2020
£’000
47
83
130
Costs incurred in 2020 were in relation to the acquisition of Effective FX in October 2020.
6. 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.
At 31 December 2021, the Group had tax losses available to be offset against future taxable profits of £17,186k (2020: £16,880k).
The losses can be carried forward indefinitely and have no expiry date.
87
FINANCIAL STATEMENTSANNUAL REPORT 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
CONTINUED
6. TAXATION (CONTINUED)
Additional to corporate taxation, the Group paid the following taxation costs during the year:
a. Employers National Insurance contributions - £1,724k (2020: £1,752k)
b. Irrecoverable VAT - £1,127k (2020: £1,053k)
Group
R&D credit – current year
R&D credit – prior year
Corporation tax charge
Current tax credit
Origination and reversal of temporary differences
Recognition of previously unrecognised deductible temporary differences
Deferred tax credit
Total tax credit
2021
£’000
(398)
–
61
(337)
(997)
(221)
(1,218)
(1,555)
2020
£’000
(1,347)
(24)
–
(1,371)
(564)
(174)
(738)
(2,109)
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:
Loss before taxation: Continuing operations
Taxation at the UK corporation rate tax of 19.0% (2020: 19.0%)
Net permanent differences between tax and accounting
Adjustments to R&D tax credits in respect of previous accounting period
Net impact of R&D tax credit claim
Remeasure of deferred tax asset on carry forward losses
Effect of change in tax rates
Utilisation of tax losses
Total tax credit for the year
Movement in deferred tax balances
2021
£’000
(3,817)
(725)
112
–
(535)
(221)
(121)
(65)
(1,555)
2020
£’000
(9,046)
(1,719)
380
(24)
(658)
(174)
98
(12)
(2,109)
Net balance
at 1 January
£’000
Acquired in
business
combination
£’000
Recognised
to equity
£’000
Recognised
to profit or
loss
£’000
Net balance
at
31 December
£’000
Deferred
tax asset
£’000
Deferred
tax liability
£’000
(3,480)
(260)
15
3,178
–
(547)
–
–
–
–
–
–
–
–
278
–
–
278
(66)
(3,546)
64
380
840
–
(196)
673
4,018
–
–
–
673
4,018
–
(3,546)
(196)
–
–
–
1,218
949
4,691
(3,742)
Group
2021
Intangibles
Property plant and
equipment
Equity settled share-
based payments
Unutilised tax losses
Other
Deferred tax
(liabilities)/assets
88
FINANCIAL STATEMENTSEQUALS GROUP PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
CONTINUED
6. TAXATION (CONTINUED)
Group
2020
Intangibles
Property plant and
equipment
Equity settled share-
based payments
Unutilised tax losses
Other
Deferred tax
(liabilities)/assets
Net balance
at 1 January
£’000
Acquired in
business
combination
£’000
Recognised
to equity
£’000
Recognised
to profit or
loss
£’000
Net balance
at
31 December
£’000
Deferred
tax asset
£’000
Deferred
tax liability
£’000
(2,955)
(110)
(271)
550
1,888
–
–
–
–
–
(788)
(110)
–
–
(387)
–
–
(387)
(415)
(3,480)
11
(260)
(148)
1,290
–
15
3,178
–
–
–
15
3,178
–
(3,480)
(260)
–
–
–
738
(547)
3,193
(3,740)
The standard rate of corporation tax applicable to the Group for the year ended 31 December 2021 was 19.0%. The rate in the
year ending 31 December 2022 will be 19%. The Government has confirmed that the rate of corporation tax will be increased to
25% with effect from 1 April 2023. Deferred tax assets and liabilities have been recognised at the substantively enacted rate. The
effect of change in tax rate has been calculated on deferred tax.
Assumptions and estimation uncertainties
The Group has recorded a £4,018k (2020: £3,178k) deferred tax asset in relation to carried forward tax losses and has a further
£NIL (2020: £29k) deferred tax asset unrecognised. 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 the recovery is reasonably certain. The Group has concluded that the deferred assets
will be recoverable using estimated future taxable income based on a five-year forecast horizon.
89
FINANCIAL STATEMENTSANNUAL REPORT 2021 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
CONTINUED
7 LOSS PER SHARE
Basic earnings per share
The calculation of basic profit or loss per share has been based on the profit or loss attributable to ordinary shareholders and weighted
average number of ordinary shares outstanding. The loss after tax attributable to ordinary shareholders of the Group is £2,424k (2020:
£6,919k) and the weighted average number of shares for the period was 178,959,402 (2020: 178,602,918).
Diluted earnings per share
The calculation of diluted earnings per share has been based on the loss 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 178,959,402 (2020: 178,602,918).
Loss per share
8 PROPERTY, PLANT AND EQUIPMENT
Basic
2021
(1.35)p
Diluted
2021
(1.35)p
Basic
2020
(3.87)p
Diluted
2020
(3.87)p
Plant and machinery
£’000
Fixtures and fittings
£’000
Leasehold
improvements
£’000
1,295
68
1,363
901
232
1,133
230
464
–
464
181
89
270
194
1,319
10
1,329
350
146
496
833
Plant and machinery
£’000
Fixtures and fittings
£’000
Leasehold
improvements
£’000
1,210
85
1,295
626
275
901
394
449
15
464
91
90
181
283
1,259
60
1,319
228
122
350
969
Group
Cost
At 1 January 2021
Additions
At 31 December 2021
Accumulated Depreciation
At 1 January 2021
Charge for the year
At 31 December 2021
Net book value
At 31 December 2021
Group
Cost
At 1 January 2020
Additions
At 31 December 2020
Accumulated Depreciation
At 1 January 2020
Charge for the year
At 31 December 2020
Net book value
At 31 December 2020
90
Total
£’000
3,078
78
3,156
1,432
467
1,899
1,257
Total
£’000
2,918
160
3,078
945
487
1,432
1,646
FINANCIAL STATEMENTSEQUALS GROUP PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
CONTINUED
9 LEASES
Group
Right of use assets
At 1 January 2020
Additions to right of use assets
Modifications to leases
Depreciation charge for the year
At 1 January 2021
Additions to right of use assets
Modifications to leases
Depreciation charge for the year
At 31 December 2021
Lease liabilities
At 1 January 2020
Additions to lease liabilities
Lease finance expenses
Modification to leases*
Payments
At 1 January 2021
Additions to lease liabilities
Lease finance expenses
Modification to leases*
Payments
At 31 December 2021
Current lease liabilities
Non-current lease liabilities
Vehicles
Property
£’000
53
41
–
(43)
51
338
–
(122)
267
Vehicles
£’000
53
41
2
–
(47)
49
338
8
–
(138)
257
109
148
257
£’000
6,895
90
(78)
(897)
6,010
–
(594)
(809)
4,607
Property
£’000
7,190
90
220
(76)
(1,067)
6,357
–
186
(616)
(922)
5,005
669
4,336
5,005
* Modification to lease assets and lease liabilities relates to a negotiated future early termination of a property lease.
Net lease liability
(i) Amounts recognised in the consolidated statement of comprehensive income
Group
2021
£’000
388
Depreciation charge for right of
use assets
Lease finance expenses
Modification of lease terms – net
impact
Expense relating to short-term
and low value items leases
Property
£’000
809
Vehicles
£’000
122
186
(22)
66
8
–
–
Total
2021
£’000
931
194
(22)
66
Property
£’000
897
Vehicles
£’000
43
220
2
78
2
–
–
Total
£’000
6,948
131
(78)
(940)
6,061
338
(594)
(931)
4,874
Total
£’000
7,243
131
222
(76)
(1,114)
6,406
338
194
(616)
(1,060)
5,262
778
4,484
5,262
2020
£’000
345
Total
2020
£’000
940
222
2
78
1,039
130
1,169
1,197
45
1,242
91
FINANCIAL STATEMENTSANNUAL REPORT 2021 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
CONTINUED
9 LEASES (CONTINUED)
Included within expenses relating to low value assets, which are below the de-minimis level, are amounts relating to IT equipment (printer
and photocopiers etc) and property costs (fridges, microwaves etc). The total cash outflow for leases in 2021 was £1,060k (2020: £1,113k)
including for principal and interest.
10 INTANGIBLE ASSETS AND GOODWILL
Trademarks,
licences,
patented and
non-patented
technology
Customer
relationships
£’000
£’000
Brands
£’000
Goodwill
£’000
15,106
–
–
–
21,725
1,629
2,899
–
15,106
26,253
–
–
–
6,955
4,980
11,935
1,638
–
–
13,468
14,318
2,436
Trademarks,
licences,
patented and
non-patented
technology
Customer
relationships
£’000
£’000
Goodwill
£’000
14,350
–
–
756
16,814
933
3,978
–
15,106
21,725
–
–
–
3,225
3,730
6,955
4,652
–
–
–
4,652
1,475
741
2,216
4,066
–
–
586
4,652
949
526
1,475
Under
construction
£’000
1,629
(1,629)
661
–
Total
£’000
43,567
–
3,560
–
661
47,127
–
–
–
–
8,717
5,812
14,529
1,638
661
30,960
455
–
–
–
455
287
91
378
–
77
Brands
£’000
455
–
–
–
455
196
91
287
Under
construction
£’000
2,009
(933)
553
–
Total
£’000
37,694
–
4,531
1,342
1,629
43,567
–
–
–
4,370
4,347
8,717
15,106
14,770
3,177
168
1,629
34,850
Group
Cost
At 1 January 2021
Reclassifications
Additions
Acquisitions through business
combinations
At 31 December 2021
Amortisation
At 1 January 2021
Charge for the year
At 31 December 2021
Impairment
Impairment for the year*
Net book value
At 31 December 2021
Group
Cost
At 1 January 2020
Reclassifications
Additions
Acquisitions through business
combinations
At 31 December 2020
Amortisation
At 1 January 2020
Charge for the year
At 31 December 2020
Net book value
At 31 December 2020
92
* The impairment charge in 2021 relates to the Travel Cash CGU.
FINANCIAL STATEMENTSEQUALS GROUP PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
CONTINUED
10 INTANGIBLE ASSETS AND GOODWILL (CONTINUED)
Included within additions to ‘assets under construction’ and ‘trademarks, licenses, patented and non-patented technology’ is
£3,329k (2020: £4,465k) for internally generated software. The intangibles under construction balance consists of costs incurred
on software development projects that were not completed before the end of the reporting period. IAS 36 Impairment of Assets
requires that intangible assets that are not available for use are required to be tested for impairment at least on an annual basis.
The balance at reporting date relates to additions made during the reporting period, which are tested annually for impairment
during the 2021 calendar year.
Goodwill
Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units (CGUs) that are expected to
benefit from that business combination. Impairment testing of goodwill that was recognised in a business combination is required
by IAS 36 to be performed on an annual basis or whenever indicators of impairment exist. Where goodwill has been allocated to a
cash-generating unit (“CGU”) that CGU is tested for impairment to determine whether the carrying amount of the CGU may not be
recoverable. The Group has carried out the impairment review of goodwill recognised in the following CGUs as required by IAS 36:
- Banking
-
International Payments (including businesses of Hermex, Eiger, Equals Connect (previously Casco), the International Payments
business of CFX and Effective)
- Travel Cash (the Travel Cash business of CFX)
This represents the lowest level at which goodwill is monitored for internal management purposes.
Management estimates discount rates using pre-tax rate that reflects the current market assessment of the time value of money
and the specific risks associated with the asset for which the future cash flow estimates have not been adjusted. The rate used to
discount the forecast cash flows are based upon the CGU’s weighted average cost of capital (WACC). The WACC for the CGUs
were Banking: 14.56% (2020: 11.70%), International Payments: 12.34% (2020: 10.08%) and Travel Cash: 11.83% (2020: 8.00%).
The increase in discount factors is a function of both, increased in the interest rate environment impacting the risk free rate and
volatility within comparable company share prices impacting the cost of equity calculation.
The Group prepared cash flow forecasts derived from the most recent detailed financial budgets approved by management for
the next five years. For the purpose of the value in use calculation the management forecasts were extrapolated into perpetuity
using a growth rate of 2% (2020: 2%), representing the expected long-run rate of inflation in the UK. The forecasts assume growth
rates in acquisitions which in turn drive the forecast collections and cost figures.
The Group has conducted a sensitivity analysis on the impairment test of the CGU’s carrying value. The table below summarises
the changes required and the key assumptions which would result in the recoverable value of each of the CGUs being equal to
the respective carrying amounts:
Group
Decrease (increase) in revenue
Banking
International Payments
Travel Cash
Group
Decrease (increase) in discount rate (WACC)
Banking
International Payments
Travel Cash
2021
7.98%
37.77%
(17.05%)
2021
5.74%
57.89%
(5.26%)
2020
1.71%
23.64%
12.32%
2020
0.79%
20.30%
5.38%
Based on the sensitivity analyses, the Group has determined that for Banking and International Payments there are no reasonable
possible changes to the key assumptions which would result in the carrying value of the CGU exceeding its recoverable value at
31 December 2021. Based on the management forecasts and the assumptions the value in use of the Travel Cash was calculated
to be £791k whilst the carrying amount was £2,209k. An impairment of £1,638k (2020: NIL) was recognised in the Consolidated
Statement of Comprehensive Income for the year.
93
FINANCIAL STATEMENTSANNUAL REPORT 2021 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
CONTINUED
11 INVESTMENTS
Company – shares in subsidiary undertakings
Cost
At 1 January
Capitalisation of loan to subsidiary
Other additions
At 31 December
Net Book Value
At 31 December
2021
£’000
61,707
–
271
61,978
2020
£’000
38,892
13,423
9,392
61,707
61,978
61,707
The additions for the year arise largely from Group restructuring activity during the year designed to yield administrative and
accounting efficiencies and provide a more transparent structure for both customers and supply chains. The Group structure has
been simplified, with fewer intermediate holding companies and the number of trading companies streamlined. As a result, the
Group structure is now more closely aligned to the strategic vision for the Group.
In the opinion of the Directors the aggregate value of the Company’s investment in subsidiary undertakings is not less than the
amount included in the statement of financial position.
Subsidiary undertakings
The Company holds the share capital (both directly and indirectly) of the following companies:
Subsidiary Undertaking
FairFX PLC
Spectrum Payment Services Limited
Fair Payments Limited
Equals Connect Limited*
Equals Pay LLC
City Forex Limited
Fair Foreign Exchange Ireland Limited*
* Share capital held indirectly
Country of registration
or incorporation
England and Wales
England and Wales
England and Wales
England and Wales
United States of
America
England and Wales
Class
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Shares held
%
100 Trading
100 Trading
100 Trading
52 Trading
100 Trading
Ordinary
100 Dormant
Ireland
Ordinary
100 Dormant
The registered office address of subsidiary undertakings is 3rd Floor Thames House, Vintners’ Place, 68 Upper Thames Street,
London, EC4V 3BJ, England.
12 ACQUISITION
There were no acquisitions made in the year or up to the date of signing these financial statements.
On 14 October 2020, Equals acquired business information and intellectual property rights from Effective FX Limited (“Effective”),
a London-based international payments business servicing both corporate and private clients for a maximum consideration of
£1,575k. This payment is contingent on future net revenue targets over a period of three years from the acquisition date and is
payable in quarterly instalments, in cash. Based on current and forecast performance it has been assumed that the contingent
consideration will be paid in full, each quarter.
The Group determined that the activities and assets acquired represent a business as defined under IFRS 3 Business Combinations
and has accounted for the transaction accordingly. The acquisition was made in accordance with the Group’s strategy to
consolidate smaller, attractive market participants and has been immediately earnings enhancing. In addition, the acquisition fits
with one of the Group’s stated core strategies of extracting value from increasing economies of scale.
The acquisition of Effective contributed £1,035k of revenue and £796k of profit before tax to the Group since its acquisition.
94
FINANCIAL STATEMENTSEQUALS GROUP PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
CONTINUED
12 ACQUISITION (CONTINUED)
The acquisition date fair value of consideration transferred was calculated as follows:
Contingent consideration – undiscounted maximum payments in cash, payable in quarterly instalments
over three years
Contingent consideration discounted - fair value
The recognised amounts of assets acquired and liabilities recognised at the date of acquisition were as follows:
Intangibles – customer relationships
Deferred tax liabilities
Total identifiable new assets acquired
£’000
1,575
1,511
£’000
586
(110)
476
Based on the valuation of the intangibles and enacted UK corporation tax rates a deferred tax liability of £110k was recognised as
a result of the identified intangible asset.
Goodwill arising from the acquisition has been recognised as follows:
Consideration transferred
Fair value of identifiable new assets
Goodwill
£’000
1,232
(476)
756
Goodwill comprises the value of expected synergies arising from the acquisition and additional value attributed by the acquirer
in relation to the future expected cash flows, which is not separately recognised. None of the goodwill recognised is expected to
be deductible for income tax purposes.
13 INVENTORIES
Group
Finished goods
2021
£’000
168
2020
£’000
194
The Group’s inventories comprise of stock of cards. Included within cost of sales is a charge relating to stock of £177k (2020:
£470k) incurred in the ordinary course of business.
14 TRADE AND OTHER RECEIVABLES
Current assets
Trade receivables
Amounts due from Group undertakings
Other receivables
Prepayments
Accrued income
Group
2021
£’000
3,176
–
3,620
998
462
8,256
2020
£’000
2,444
–
5,863
860
419
9,586
Company
2021
£’000
–
192
–
147
–
339
2020
£’000
–
193
–
81
–
274
Information about the Group’s exposure to market risk, credit risk and impairment losses for trade and other receivables is
included in note 21.
95
FINANCIAL STATEMENTSANNUAL REPORT 2021 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
CONTINUED
14 TRADE AND OTHER RECEIVABLES (CONTINUED)
Amounts owed by group undertaking are unsecured, non-interest bearing and repayable on demand.
Group – movement in expected credit loss (“ECL”)
Cost
Allowance for ECLs at 1 January
Provided/(released) during the period
Allowance for ECLs at 31 December
The ECL allowance for the Company is £Nil (2020: £Nil)
15 CASH AND CASH EQUIVALENTS
Group
Cash at bank
16 SHARE CAPITAL
Group and Company
Authorised, issued and fully paid-up capital
179,341,807 (2020: 178,602,918) ordinary shares of £0.01 each
2021
£’000
261
(166)
95
2021
£’000
13,104
2021
£’000
1,793
Merger reserve
£’000
Contingent
consideration reserve
£’000
Foreign currency
reserve
£’000
–
6
6
–
6
8,396
–
8,396
–
8,396
207
–
207
–
207
Merger reserve
£’000
2,980
Contingent
consideration reserve
£’000
207
–
2,980
–
2,980
–
207
–
207
17 OTHER RESERVES
Group
At 1 January 2020
Exchange differences arising on
translation of foreign operations
At 31 December 2020
Exchange differences arising on
translation of foreign operations
At 31 December 2021
Company
At 1 January 2020
Shares issued in the year
At 31 December 2020
Shares issued in the year
At 31 December 2021
96
2020
£’000
–
261
261
2020
£’000
10,032
2020
£’000
1,786
Total
£’000
8,603
6
8,609
–
8,609
Total
£’000
3,187
–
3,187
–
3,187
FINANCIAL STATEMENTSEQUALS GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
CONTINUED
18 BORROWINGS
Group
Loan debenture
2021
£’000
2,000
2020
£’000
2,000
Under the Coronavirus Business Interruption Loan Scheme (CBILS) to further support working capital, the main trading subsidiary
of the Company, FairFX PLC, on 23 December 2020 entered into a £2,000k loan agreement with the Royal Bank of Scotland (RBS).
Under the terms of the loan, there is an initial twelve month capital repayment holiday and the UK Government will pay the first 12
months of interest due. This is being recognised as a Government grant, with interest grant income received being offset against
the loan interest due. At the current Bank Base rate, the grant income received by the Group for 2021 representing twelve-month
repayment holiday was £53k. The loan is for a six-year period at the Bank Base rate + 2.53% and may be repaid at any point
without penalty.
The loan agreement required that by 31 March 2021, Equals Group PLC issued a guarantee to FairFX PLC as security on the loan
and that FairFX PLC provides a debenture to the RBS for the value of the loan. Both of these requirements have been met.
19 TRADE AND OTHER PAYABLES
Current liabilities
Trade payables
Amounts owing to Group undertakings
Taxation and social security
Other creditors
Accruals and deferred income
Group
2021
£’000
3,583
–
666
27
7,726
12,002
2020
£’000
4,172
–
766
–
7,172
12,110
Company
2021
£’000
124
2,102
–
–
545
2,771
2020
£’000
138
1,216
–
–
463
1,817
Amounts owed to group undertakings are unsecured, non-interest bearing and repayable on demand.
20 DERIVATIVE FINANCIAL ASSETS AND FINANCIAL LIABILITIES
20.1 Derivative financial assets
Financial assets at fair value through profit or loss
Group
Foreign exchange forward contracts
Total financial instruments at fair value
20.2 Derivative financial liabilities
Financial liabilities at fair value through profit or loss
Group
Foreign exchange forward contracts
Total financial instruments at fair value
Fair Value
2021
£’000
2,593
2,593
Fair Value
2020
£’000
2,082
2,082
Notional
Principal
2021
£’000
170,083
170,083
Notional
Principal
2021
£’000
150,202
150,202
Fair Value
2020
£’000
3,019
3,019
Fair Value
2020
£’000
3,050
3,050
Notional
Principal
2020
£’000
137,306
137,306
Notional
Principal
2020
£’000
135,644
135,644
97
FINANCIAL STATEMENTSANNUAL REPORT 2021 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
CONTINUED
21 FINANCIAL INSTRUMENTS
The Group’s financial instruments comprise cash, foreign exchange forward contracts and various items arising directly from its
operations. The main purpose of these financial instruments is to provide working capital for the Group. In common with other
businesses, the Group is exposed to the risk that arises from its use of financial instruments. The Group does not deal in any
financial instrument contracts for its own benefit. This note describes the Group’s objectives, policies and processes for managing
those risks and the methods used to measure them. Further quantitative information is found throughout these consolidated
financial statements.
21.1 Principal financial instruments
The principal financial instruments of the Group, from which financial instrument risk arises, are as follows:
Group
Financial instruments held at amortised cost
Cash and cash equivalents
Trade and other receivables
Borrowings
Trade and other payables
Lease liabilities
Financial instruments held at fair value through profit or loss
Derivative financial assets – Forward foreign exchange contracts
Derivative financial liabilities – Forward foreign exchange contracts
2021
£’000
13,104
7,258
(2,000)
(7,968)
(5,262)
2021
£’000
2,593
(2,082)
2020
£’000
10,032
8,726
(2,000)
(6,443)
(6,406)
2020
£’000
3,019
(3,050)
Trade and other payables generally have a maturity of less than one month.
Forward foreign exchange contracts fall into Level 2 of the fair value hierarchy as set out in note 3.27 since Level 2 comprises those
financial instruments which can be valued using inputs other than quoted prices that are observable for the asset or liability either
directly (i.e., prices) or indirectly (i.e., derived from prices). In 2021, the unrealised gain or loss recognised in the income statement
on the fair value of financial instruments was a loss of £93k (2020: £31k gain). This was reported in administration costs in the
statement of comprehensive income.
21.2 Financial risk management objectives and policies
Credit risk
As required under IFRS 9, the Group analysed its trade debtors and split them into portfolios: bank and other financial institutions,
financial service providers and corporate customers. The Group has significant short-term receivables and security collateral
arrangements with bank and other financial institutions which are generally considered to be a low credit risk due to the financial
strength of the counterparty. The cash balances exposure to credit risk is addressed further in table 14 and 15 in the CFO report.
The ageing of financial assets at the statement of financial position date is as follows:
2021
Group
Trade and other receivables - gross
Allowance for ECL
Trade and other receivables - net
Derivative financial assets
On demand
£’000
7,163
95
7,258
412
Between
1 and 3
months
£’000
–
–
–
1,017
Between
3 and 12
months
£’000
–
–
–
1,117
Over
1 year
£’000
–
–
–
47
Total
£’000
7,163
95
7,258
2,593
98
FINANCIAL STATEMENTSEQUALS GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
CONTINUED
21 FINANCIAL INSTRUMENTS (CONTINUED)
2020
Group
Trade and other receivables - gross
(Allowance for ECL)
Trade and other receivables - net
Derivative financial assets
On demand
£’000
8,263
–
8,263
1,013
Between
1 and 3
months
£’000
109
–
109
650
Between
3 and 12
months
£’000
615
(261)
354
1,246
Over
1 year
£’000
–
–
–
110
Total
£’000
8,987
(261)
8,726
3,019
Liquidity risk
Management of liquidity risk is achieved by monitoring budgets and forecasts and actual cash flows and available cash balances.
The daily settlement flows in respect of financial asset and liability, spot and swap contracts require adequate liquidity which is
provided through intra-day settlement facilities. Further details of the risk management objectives and policies are disclosed in
the principal risks and uncertainties section of the Strategic Report.
The table below analyses the Group’s gross undiscounted financial liabilities by their contractual maturity date.
2021
Group
Borrowings
Trade and other payables
Derivative financial liabilities
Lease liabilities
2020
Group
Borrowings
Trade and other payables
Derivative financial liabilities
Lease liabilities
On demand
and within
1 month
£’000
31
7,968
404
64
On demand
and within
1 month
£’000
–
6,443
1,019
96
Between
1 and 3
months
£’000
63
–
836
134
Between
1 and 3
months
£’000
–
–
667
149
Between
3 and 12
months
£’000
285
–
814
580
Between
3 and 12
months
£’000
–
–
1,251
652
Over
1 year
£’000
1,621
–
28
4,484
Over
1 year
£’000
2,000
–
113
5,509
Total
£’000
2,000
7,968
2,082
5,262
Total
£’000
2,000
6,443
3,050
6,406
Market risk
Market risk arises from the Group’s use of foreign currency. This is detailed below.
Interest rate risk
The Group is subject to interest rate risk as its bank balances and borrowings are subject to interest at a floating rate. No interest
is payable on the borrowings until 2022 (see note 18).
Foreign currency risk
Foreign currency risk arises from having assets and liabilities in currencies other than sterling. The Group’s balance sheet includes
foreign currency balances placed with card issuers and foreign currency settlement partners. The sterling equivalent of foreign
currency balances with card providers at year end was £124k (2020: £464k), which is primarily made up of USD and EUR. The
Group’s foreign currency (FX) collateral with FX settlement partners is immaterial as collateral is primarily settled in sterling.
The Group does not hold any material foreign currency cash at bank on its balance sheet.
99
FINANCIAL STATEMENTSANNUAL REPORT 2021 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
CONTINUED
21 FINANCIAL INSTRUMENTS (CONTINUED)
Financial instruments and fair value risk
The following table shows the carrying amount of financial assets and financial liabilities. It does not include a fair value adjustment
as the carrying amount is a reasonable approximation of fair value.
31 December 2021
Financial assets
Cash and cash equivalents
Trade and other receivables
Derivative financial assets
Financial liabilities
Borrowings
Trade and other payables
Lease liabilities
Derivative financial liabilities
31 December 2020
Financial assets
Cash and cash equivalents
Trade and other receivables
Derivative financial assets
Financial liabilities
Borrowings
Trade and other payables
Lease liabilities
Derivative financial liabilities
Measured at
amortised cost
£’000
Measured at
fair value
£’000
13,104
7,258
–
20,362
2,000
8,063
5,262
–
15,325
–
–
2,593
2,593
–
–
–
2,082
2,082
Measured at
amortised cost
£’000
Measured at
fair value
£’000
10,032
8,726
–
18,758
2,000
6,443
6,406
–
14,849
–
–
3,019
3,019
–
–
–
3,050
3,050
Total
£’000
13,104
7,258
2,593
22,955
2,000
8,063
5,262
2,082
17,407
Total
£’000
10,032
8,726
3,019
21,777
2,000
6,443
6,406
3,050
17,899
All financial instruments measured at fair value are classified as level 2 financial instruments in the fair value hierarchy.
Capital management policy and procedures
The Group’s capital management objectives are:
-
-
to ensure that the Group and Company will be able to continue as a going concern; and
to maximise the income and capital return to the Company’s shareholders.
The Company is subject to the following externally imposed capital requirements:
-
as a public limited company, the Company is required to have a minimum issued share capital of £50k.
FairFX PLC, a wholly owned subsidiary, and Equals Connect Limited, a 51.8% partly owned subsidiary, are each subject to the
following capital requirement under the Payment Service Regulations 2009.
- either 10% of fixed overheads for the preceding year or the initial capital requirement of €25k, whichever is the higher.
Spectrum Payment Services Limited, a wholly owned subsidiary, is subject to the following capital requirement under the Payment
Service Regulations 2009.
- either 10% of fixed overheads for the preceding year or the initial capital requirement of €323k, whichever is the higher
Fair Payments Limited, a wholly owned subsidiary, is subject to the following capital requirement under the Electronic Money
Regulations 2011:
The Company is subject to the following externally imposed capital requirements:
- capital at least equal to 2% of the average outstanding electronic money of the institution or €350k, whichever is the higher
The Group has complied with these requirements.
100
FINANCIAL STATEMENTSEQUALS GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
CONTINUED
22 SHARE OPTIONS
The Group issues equity-settled share-based payments to certain Directors and employees. Equity-settled share-based payments
are measured at fair value (excluding the effect of non-market based vesting conditions) at the date of grant. The fair value of options
granted has been calculated with reference to the Black-Scholes option pricing model with the exception of the new LTIP scheme
offered to the Executive Directors which have been calculated under the Monte Carlo pricing model as detailed below. The fair value
determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period,
based on the Group’s estimate of shares that will eventually vest and adjusted for the effect of non-market based vesting conditions.
During the year ended 31 December 2021, there were a number of share-based payment transactions within the Group.
Date
Granted
22/07/2014
22/07/2014
22/07/2014
22/07/2014
22/07/2014
22/07/2014
28/09/2016
28/09/2016
28/09/2016
01/12/2016
01/12/2016
01/12/2016
18/01/2017
18/01/2017
18/01/2017
28/09/2019
28/09/2019
28/09/2019
01/09/2020
01/09/2020
01/09/2020
01/09/2020
01/09/2020
01/09/2020
01/09/2020
01/09/2020
01/09/2020
01/09/2020
01/09/2020
01/09/2020
18/10/2021
18/10/2021
18/10/2021
Total number of
options
At
1 January
2021
Number
Exercise price
(£)
Cancelled/replaced
Cancelled
Number
Granted
Number
Exercised
Number
Lapsed
Number
At
31 December
2021
Number
0.07 200,000
0.22 447,750
0.36 3,813,938
0.58 120,000
1.16 120,000
1.74 120,000
0.30 388,887
0.30 388,888
0.30 388,888
0.27 100,000
0.27 100,000
0.27 100,000
0.44 16,667
0.44 16,667
0.44 16,667
1.01 166,667
1.01 166,667
1.01 166,667
0.29 250,000
0.29 250,000
0.29
250,000
0.29 416,667
0.29 416,667
0.29 416,667
0.29 166,667
0.29 166,667
0.29 166,667
0.29 166,667
0.29 166,667
0.29 166,667
0.01 –
0.01 –
0.01 –
9,838,356
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
720,000
2,415,000
1,250,000
4,385,000
–
–
(88,888)
–
–
–
(100,000)
(100,000)
(100,000)
(100,000)
(100,000)
(100,000)
(16,667)
(16,667)
(16,667)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(738,889)
–
–
–
(120,000)
(120,000)
(120,000)
(5,555)
(5,556)
(5,556)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(376,667)
200,000
447,750
3,725,050
–
–
–
283,332
283,332
283,332
–
–
–
–
–
–
166,667
166,667
166,667
250,000
250,000
250,000
416,667
416,667
416,667
166,667
166,667
166,667
166,667
166,667
166,667
720,000
2,415,000
1,250,000
13,107,800
101
FINANCIAL STATEMENTSANNUAL REPORT 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
CONTINUED
22 SHARE OPTIONS (CONTINUED)
In 2021 executives have been granted performance-based share options shown in the table below.
Executive Directors*
Non-Executive Directors who
resigned in previous years*
Employees
At
1 January
2021
Number
7,268,000
748,887
1,821,469
9,838,356
Cancelled
Number
–
–
Granted
Number
1,258,000
–
Exercised
Number
–
(388,887)
Lapsed
Number
–
(360,000)
At
31 December
2021
Number
8,526,000
–
–
–
3,127,000
4,385,000
(350,002)
(738,889)
(16,667)
(376,667)
4,581,800
13,107,800
* See Remuneration Committee report pages 55 to 59 for a list of current Directors’ share options.
The above share options issued in Equals Group PLC have been granted to both Directors and employees of the Group. At
31 December 2021, there were unexercised share options amounting to 7.31% (2020: 5.51%) of the Company’s total issued shares.
Of the above options 8,526k (2020: 8,017k) have been granted to Directors of the Company see Directors’ remuneration report
pages 55 to 59, with an additional Nil (2020: 1,271k) having been granted to individuals who are, or have been during the year,
Directors of wholly owned subsidiaries within the Group.
In October 2021, Equals Group PLC introduced a new discretionary share incentive plan. A total of 720,000 share options were
awarded under the plan to various employees, which had a vesting period of three years. The shares will be awarded as ‘free shares’
and therefore the exercise price is equal to the nominal value. The fair value of the options was 62p determined using the Black-
Scholes model and principles.
In October 2021, Equals Group PLC introduced a new discretionary long-term incentive plan for 36 SLT employees. A total of
2,415,000 share options were awarded under the plan, which had a vesting period of three years. The shares will be awarded as ‘free
shares’ and therefore the exercise price is equal to the nominal value. The fair value of the options was 62p determined using the
Black-Scholes model and principles.
In October 2021, Equals Group PLC introduced a new discretionary long-term incentive plan for the 2 Executive Directors. A total of
1,250,000 share options were awarded under the plan to, which had a vesting period of three years. The shares will be awarded as
‘free shares’ and therefore the exercise price is equal to the nominal value. The fair value of the options was 16p determined using
the Monte Carlo model and principles.
Weighted average exercise price of options
The number and weighted average exercise prices of share options are as follows:
Outstanding at the beginning of the year
Granted during the year
Lapsed during the year
Exercised during the year
Outstanding at the end of the year
Exercisable at the end of the year
Weighted
average
exercise
price
2021
0.3805
0.0100
(1.1218)
(0.3017)
0.2397
0.1793
Number of
options
2021
9,838,356
4,385,000
(376,667)
(738,889)
13,107,800
6,556,133
Weighted
average
exercise
price
2020
0.5081
0.2900
(0.2975)
–
0.3805
0.3899
Number of
options
2020
8,221,691
1,750,000
(133,335)
–
9,838,356
6,505,023
The weighted average share price for the year was £0.49 (2020: £0.34).
102
FINANCIAL STATEMENTSEQUALS GROUP PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
CONTINUED
22 SHARE OPTIONS (CONTINUED)
The fair values of share options in the relevant schemes are calculated using a Black-Scholes model. The fair value of a share award is
based on the share price at the date of the grant. Details of the inputs made into that model are disclosed in the table below.
Weighted average share price (£)
Weighted average exercise price (£)
Expected volatility
Expected option life in years
Risk-free rate
Expected dividends
Fair value of the options granted (£)
At
1 January 2021
0.62
Variable
47.1%
4.3
0.28%
none
Variable
Granted during
year
0.49
Variable a
37.7% b
2.3
0.77%
none
Variable c
The fair values of share options in the relevant schemes are calculated using a Monte Carlo model. The fair value of a share award is
based on the share price at the date of the grant. Details of the inputs made into that model are disclosed in the table below.
Weighted average share price (£)
Weighted average exercise price (£)
Expected volatility
Expected option life in years
Risk-free rate
Expected dividends
Fair value of the options granted (£)
At
1 January 2021
0.62
Variable
47.1%
Nil
0.28%
none
Nil
Granted during
year
0.49
Variable a
37.7% b
0.9
0.77%
none
0.16 c
a. The weighted average exercise price varies dependent upon the amount stipulated in the individual option deeds. The exercise
price ranges from £0.01 to £1.74.
b. Expected volatility has been determined on the share price from date of admission up to 31 December in the year the options
were granted.
c. A summary of the fair value of the options granted is summarised in the table below. If the fair value of the option was deemed
to be Nil, it is marked accordingly.
22/07/2014
22/07/2014
22/07/2014
22/07/2014
22/07/2014
22/07/2014
28/09/2016
01/12/2016
18/01/2017
26/09/2019
14/10/2019
01/09/2020
18/10/2021
18/10/2021
Exercise price
(£)
0.07
0.22
0.36
0.58
1.16
1.74
0.30
0.27
0.44
1.01
1.01
0.29
0.01
0.01
Fair Value
(£)
0.28
0.20
0.12
Nil
Nil
Nil
0.13
0.11
0.20
0.39
0.31
0.16
0.62
0.16
103
FINANCIAL STATEMENTSANNUAL REPORT 2021 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
CONTINUED
22 SHARE OPTIONS (CONTINUED)
For the options outstanding at 31 December 2021, the weighted average fair values and the weighted average remaining
contractual lives (being the time period from 31 December 2021 until the lapse date of each option) are set out below:
Historic Share Schemes Pre 2021
2021 Share Incentive Plan
2021 Long-Term Incentive Plan SLT
2021 Long-Term Incentive Plan - Exec
Weighted average
fair value of options
outstanding (£)
0.10
0.03
0.11
0.01
Weighted average
remaining contractual
life (years)
2.87
0.54
1.81
0.93
The charge expensed to the statement of comprehensive income is £272k (2020: £444k). During the year the Group recognised a
£658k increase (2020: £536k decrease) in deferred tax assets in relation to unexercised share options. Of this amount £380k was
recognised in the current year’s tax credit (2020: £148k tax credit) and £278k (2020: £387k) was taken to equity.
23 FINANCIAL COMMITMENTS
The Group has no significant financial commitments not on balance sheet for 2021 and 2020 year-end.
24 RELATED PARTY TRANSACTIONS
The related parties of the Group and related companies under IFRS are the Group’s key management personnel.
Key Management Personnel
Key management personnel are those responsible for controlling and directing the activities of the Group and comprise the
Executive Directors, the Non-Executive Directors and members of the Executive. Key management personnel compensation paid
during the year is as follows:
Salaries, fees and other short-term employee benefits
Post-employment benefits
2021
£’000
3,587
88
3,675
Key management personnel share-based payment expense for all existing and new share schemes:
Share-based payment expense
2021
£’000
262
2020
£’000
2,707
37
2,744
2020
£’000
421
104
FINANCIAL STATEMENTSEQUALS GROUP PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
CONTINUED
24 RELATED PARTY TRANSACTIONS (CONTINUED)
Company
Intercompany transactions and balances with the rest of the Group:
31 December 2021
Balance sheet
FairFX PLC
Fair Payments Limited
Spectrum Payment Services
Limited
Income statement
FairFX PLC
Due from
2021
£’000
–
192
–
192
Due to
2021
£’000
(1,002)
–
(1,100)
(2,102)
Due from
2020
£’000
1
192
–
193
Due to
2020
£’000
(758)
–
(458)
(1,216)
Payable to
Payable to
2021
£’000
–
2020
£’000
1,122
25 ULTIMATE CONTROLLING PARTY
The Directors consider Equals Group Plc to be the ultimate controlling party of the Group.
26 POST BALANCE SHEET EVENTS
There have been no post balance sheet events from the balance sheet date to the date of signing which require separate disclosure.
105
FINANCIAL STATEMENTSANNUAL REPORT 2021
Designed and printed by Perivan
Equals Group PLC
Contents
COMPANY INFORMATION
About Equals Group
1
2
3
Directors and advisors
Financial summary and highlights
STRATEGIC REPORT
6
Chairman’s Statement
Chief Executive Officer’s Report
7
15 Chief Financial Officer’s Report
28 Statement on section 172, Companies Act 2006
GOVERNANCE
31 Report on Corporate Governance
36 ESG report
49 Report of the Audit Committee
52 Report of the Risk Committee
55 Directors’ Remuneration Report
60 Directors’ Report
63
64
Statement of Directors’ responsibilities in respect of the annual report and financial statements
Independent Auditors’ Report to the Members of Equals Group Plc
FINANCIAL STATEMENTS
71 Consolidated Statement of Comprehensive Income
72 Consolidated and Company Statements of Financial Position
73 Consolidated and Company Statements of Changes in Equity
74 Consolidated Statement of Cash Flows
75 Company Statement of Cash Flows
76 Notes to the Consolidated Financial Statements
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Annual Report 2021
EQUALS GROUP PLC
VINTNERS’ PLACE
68 UPPER THAMES STREET
LONDON
EC4V 3BJ