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www.equalsplc.com
Annual Report 2022
EQUALS GROUP PLC
THIRD FLOOR, THAMES HOUSE
VINTNERS PLACE
68 UPPER THAMES STREET
LONDON, EC4V 3BJ
5 Year Trading History
Additional unaudited information
Turnover
Revenue
Gross Profit
Profit after tax
Cash
2018
2,369
26.1
17.5
2.6
7.9
2019
2,888
30.9
20.6
(5.4)
11.3
2020
3,493
29.0
18.3
(6.9)
10.0
2021
6,529
44.1
24.2
(2.3)
13.1
2022
9,216
69.7
33.7
3.6
15.0
Equals Group PLC
Contents
COMPANY INFORMATION
About Equals Group
1
2
3
4
Directors and Advisors
Financial Summary and Highlights
History
STRATEGIC REPORT
6
7
Chairman’s Statement
Chief Executive Officer’s Report
12 Chief Financial Officer’s Report
20 Statement on Section 172, Companies Act 2006
GOVERNANCE
23 Report on Corporate Governance
28 ESG Report
36 Report of the Audit Committee
39 Report of the Risk Committee
42 Directors’ Remuneration Report
49 Directors’ Report
52
53
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
60 Consolidated Statement of Comprehensive Income
61 Consolidated and Company Statements of Financial Position
62 Consolidated and Company Statements of Changes in Equity
63 Consolidated Statement of Cash Flows
64 Company Statement of Cash Flows
65 Notes to the Consolidated Financial Statements
IBC 5 Year Trading History
Subscribe to our investor alert service and receive all
press releases, financial results and other key shareholder
messages as soon as they become available.
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 24 March 2023.
11
Directors and Advisors
Directors
ALAN R F HUGHES
(Non-Executive Director and Chair)
IAN A I STRAFFORD–TAYLOR
(Chief Executive Officer)
RICHARD Q M COOPER
(Chief Financial Officer)
SIAN A HERBERT
(Non-Executive Director)
CHRISTOPHER J BONES
(Non-Executive Director)
Company Secretary
ONE ADVISORY LIMITED
(appointed 1 August 2021)
2
Advisors
Registered Number
08922461 (England and Wales)
Registered Office
Third Floor, Thames House
Vintners Place,
68 Upper Thames Street,
London, EC4V 3BJ
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
EQUALS GROUP PLC 3
Financial Summary and Highlights FY-2022
Financial Summary
Underlying transaction values
Underlying transaction volumes
Revenue
Adjusted EBITDA2
Profit / (Loss) after taxation
Memo:
Separately reported items (below
Adjusted EBITDA)
Basic EPS
Adjusted diluted EPS3
Diluted EPS
Financial Highlights
• Transaction flow increased 41% to £9.2 billion
(FY-2021: £6.5 billion)
• Revenue
increased by 58% to £69.7 million
(FY-2021: £44.1 million)
• Adjusted EBITDA2 increased 81% to £12.1 million
(FY-2021: £6.7 million)
• Year-end cash increased 15% to £15.0 million
(FY-2021: £13.1 million)
FY-2022
£ millions
FY-2021
£ millions
Change1
9,216
69.7
12.1
3.6
0.2
1.80p
3.03p
1.73p
6,529
44.1
6.7
(2.3)
+41%
+58%
+81%
0.7
- 76%
(1.35)p
0.02p
(1.35)p
Q1 FY-2023 Trading update and Outlook
• Revenue in Q1-2023 up to 24 March 2023 reached
£20.2 million, up from £13.2 million in the same
period in 2022, an increase of 54%.
• Revenues per working day so far in Q1-2023 were
£342k, an increase of 52% over £225k per day
in Q1-2022 and 13% higher than £302k per day
achieved in Q4-2022
• Share purchase agreement entered
for
Oonex SA, Belgian regulated payment processor,
conditional on regulatory approval
into
• Acquisition of Hamer & Hamer, UK regulated
FX broker, conditional on regulatory approval
• Cash position has increased to £18.0 million, equal
to 10 pence per share, as at 21 March 2023
Notes
1 Based on underlying, not rounded, figures.
2 Adjusted EBITDA is defined as: earnings before; depreciation, amortisation, impairment charges, share option charges, foreign exchange differences and
separately reported items. Separately reported items are of a material nature, non-recurring items.
3 The measure of profit for this ratio has been adjusted to form Adjusted EPS. The add-back adjustments consist of share option charges, amortisation of acquired
intangibles, exceptional items, acquisition costs and tax impacts on these items thereon.
3
3
STRATEGIC REPORTANNUAL REPORT 2021 EQUALS GROUP PLC
History
March 2023
Acquisition of Oonex SA
(Subject to regulatory approval)
November 2019
Acquisition of Casco Financial Services
Limited
August / September 2019
Capital raise and share placing for
acquisitions, raising £14.5m net of
expenses for expansion
July 2019
Banking partnership with
Citi Commercial Bank
February 2019
Becomes part of Bank of England’s
Faster Payments Scheme
February 2018
Acquisition of City Forex
January 2017
e-Money licence obtained via
acquisition of Q-Money
2013
Customer milestone,
over 500,000 registered customers
2010
Launch of international payments platform
4
4
January 2023
Acquisition of Roqqett Ltd
September 2019
New five-year agreement with Mastercard
August 2019
Acquisition of Hermex FX
June 2019
The Group rebrands to become Equals Group
2018
Partnership with US bank
Metropolitan Commercial Bank
August 2017
Acquisition of CardOneBanking
2014
IPO on AIM
2012
Launch of expense platform
2007
Foundation of travel cash business
Strategic report
55
Chairman’s Statement
I am pleased to report another record year for your Company
with a 41% growth in the value of transactions, 58% growth in
revenue, 81% growth in adjusted EBITDA, and 234% growth in
Basic EPS.
The growth in services to businesses is the source of this.
PEOPLE
Developments in the Group’s platform continued apace,
The Group has made significant additions to its sales, marketing
including the ability to offer customers direct links with
and onboarding teams in the year. The longer-term incentive
major international payment schemes, principally, the Bank
plans put in place in Q4-2021 were echoed in Q4-2022 and
of England’s “Faster Payments” and the EU’s “SEPA” for the
fastest possible payments. Equals offers customers fast and
should provide significant incentives both to employees and
senior staff below the board level. These plans link rewards
simple access to their payments combined with the benefit
with financial success and cannot pay-out until after five years.
of a tailored and highly competitive and personal payment
service. The benefits of our investment in our platform and
In response to high inflation, the Group made two “cost of
the closer links we’ve established into international payments
living” awards during the year to all employees (other than the
platforms are evident in our current trading volumes.
executive directors).
The Group continues to seek grow both organically and through
The Board is grateful to, and appreciative of, our staff and
acquisition – ensuring the value of changes is accretive. To this
executive team for the considerable progress of the Group.
end, the Group acquired the minority of the interest it did not
own in Equals Connect Limited on 30 September 2022 and
announced the acquisition of an open-banking platform,
Roqqett Limited, on 28 November 2022 – the latter completing
on 6 January 2023.
The Board was unchanged in 2022, it benefits from a
considerable range of experience ranging from finance,
banking, risk assessment, regulatory, people management
and, above all commercial experience gained through many
years and a variety of companies and institutions.
ESG
The Group has a diverse workforce and
remains
highly conscious of its role as a responsible employer.
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.
ECONOMIC ENVIRONMENT
The Group is not immune to the uncertain and volatile
economic conditions, but the broadness of our product set,
the robustness of our platforms and the skills of our staff give
us confidence in our ability to continue to grow and increase
the financial returns to shareholders and service to more
customers.
ALAN HUGHES
Chairman
24 March 2023
6
STRATEGIC REPORTEQUALS GROUP PLC Chief Executive Officer’s Report
2022
Management’s objective for FY-2022 was to continue its
trajectory of strong growth of transaction volumes, revenues,
and profits, focused on the B2B customer segment with Equals
Money being targeted at the SME base and Equals Solutions at
larger corporate opportunities.
We significantly surpassed our expectations in the year by
continuing to invest in our technology platform, payments
infrastructure, licences and connectivity whilst concurrently
delivering our growth agenda.
The headline financial performance in the full year included:
•
•
•
Transactions executed on the Group’s platforms increased
41% to £9.2 billion (FY-2021: £6.5 billion)
Revenue increased 58% to £69.7 million (FY-2021: £44.1
million)
Adjusted EBITDA increased 81% to £12.1 million (FY-2021:
£6.7 million)
A detailed financial analysis is presented in the Report of the
Chief Financial Officer which follows this statement.
SUMMARY OF FY-2022 PERFORMANCE
The financial results reflect significant investments made
over several years in creating a robust platform comprising
international and domestic payments, card payments and
banking services underpinned by exceptional technology
and direct connections to multiple payment networks. Further
investments were made in FY-2022 in compliance, onboarding
and user experience such that the rich functionality of
the platform is easily accessible to current and potential
customers.
Successful pivot resulting in operational gearing
The results reflect two concurrent pivots: from B2C to B2B
and, from being a product-led business to becoming more
platform driven. The breakdown of revenues from different
customer groupings reflects the B2B shift with the percentage
of revenues coming from consumers and small businesses
falling from 28% in FY-2021 to 24% in FY-2022. Concurrently,
the percentage of revenues derived from large corporates
increased from 12% in FY-2021 to 23% in FY-2022, reflecting
the growth and potential of the Equals Solutions offering.
Processed transaction volumes grew 41% to £9.2 billion (FY-
2021: £6.5 billion), reflecting the Group’s successful growth
strategy and the scalability of the platform we have built,, which
has ample capacity to process even higher volumes. Over the
year, revenues grew faster than transaction volumes, up 58% to
£69.7 million (FY-2021: £44.1 million), which demonstrates the
success of the Group’s focus on high-margin business lines.
Breaking down growth trends further, the ‘core’ products within
Equals Money grew strongly and were augmented by a very
strong uptake of Equals Solutions. Within the ‘core’ category,
International Payments grew 33% to £34.4 million (FY-2021:
£25.9 million) and Card-based revenues grew 45% to £12.5
million (FY-2021: £8.6 million). Equals Solutions revenues grew
by 333% to £15.6 million (FY-2021: £3.6 million).
This growth resulted in rapid profit growth, with Adjusted
EBITDA up 81% to £12.1 million (FY-2021: £6.7 million)
and demonstrated the operational gearing. In addition, the
Group’s operations are strongly cash generative, opening
up opportunities to add scale via acquisitions as we look to
further broaden functionalities and/or regulatory licences. In
October 2022, for example, the Group acquired the remaining
minority interest in Equals Connect for £3.3 million (over three
years), the white-label international payments platform to
smaller Foreign Exchange Brokers, enabling Equals to broaden
its reach and homogenise it with our existing platform.
Growth with control
The overall strategy of the Group is to grow revenues and
profits by increasing the volumes of transactions processed
via its platform whilst concurrently minimising risk. Accordingly,
investment into finance, operations, compliance, and risk
functions is a key focus.
Whilst payments businesses in general will always incur
some operational risk, especially
in
‘daylight exposure’
before transactions are settled, the Group seeks to minimise
or mitigate risks wherever possible. Therefore, all foreign
exchange transactions with customers are automatically
matched with a liquidity provider and funds are never released
until inbound funds have been received. Further, although
the Group does offer forward contracts to its customers, its
deposit and mark-to-market policies ensure that Equals runs
immaterial risk in this area.
Recent times have seen an increased focus from Regulators
and Banks on anti-money laundering (‘AML’) and compliance
standards. Equals welcomes the raising of standards in this
area as we view our compliance controls and governance,
backed up by a Group-wide emphasis on compliance
culture facilitated by regular training for all employees, to be
a competitive advantage. The Group has continued to invest
in this area both in terms of headcount, with over 10% of the
workforce focused on compliance and risk, and in technology
using outsourced platforms to automate compliance tasks
such as ‘know your customer’ and other checks. In addition,
given increasing transaction volumes, the Group invested into
7
STRATEGIC REPORTANNUAL REPORT 2022 CHIEF EXECUTIVE OFFICER’S REPORT CONTINUED
a new transaction monitoring system, called Featurespace,
employee reached £260k; an increase of 50% over the prior
which is a state-of-the-art real-time machine-learning platform
year.
used by many leading banks and financial institutions. The first
phase of the deployment is already live, and the platform will
The Group appointed Tom Kiddle as its Chief Commercial
be rolled-out across the Group during FY-2023.
Officer in June 2022 and has made significant further
investment in its growth agenda by upgrading our teams in
In product and engineering, the Group’s customer-facing
sales, sales operations, and marketing.
product developments are built with the involvement of all
areas of the business to ensure Equals creates end-to-end
Highlights include: -:
applications that support
internal operational efficiency.
Further, the technical roadmaps for FY-2022 and FY-2023 both
include many workstreams that improve internal efficiency and
control, not just outward facing product rollouts. In addition,
Equals will look to use external tooling and software, where
appropriate, so the Group’s engineering teams can focus on
building in the areas where we can add value.
–
Sales – appointed a Group Sales Director, implemented
forecast and opportunity pipeline measurement and
cadence, increased regional sales, increased experience
and expertise across sales functions, hired three Equals
Solutions sales specialists with
technical payments
backgrounds and commenced a regular sales training
process.
The engineering, product and design teams achieved a very
–
Partnership sales – appointed Head of Partnerships,
high cadence in FY-2022 with multiple code releases per week
expanded team, implemented new process and procedure
and significant progress in the platform. Highlights included:
for onboarding partners, refined strategy to focus on wider
–
Equals Money – new web and mobile applications,
customer interface to configure people and teams, flexible
account settings and multiple accounts on a single login;
–
Equals Solutions – significant improvements in reporting
and statements. Customer-facing API integrations made
available. Direct payments into sub-accounts;
partnerships in key verticals of wealth management, estate
agents and IFAs and introduced white label option for
partners.
–
Marketing – refined KPIs, systems and measurement
processes, appointed new Head of Digital, refreshed PR
agency, radically improved digital lead quality, refined
website and introduced dynamic split testing, improved
–
Card Platform – delivery of self-issued cards supporting 20
SEO scoring, and introduced customer lifecycle analysis to
currencies, both prepaid and debit. Physical or virtual cards
identify key intervention points.
usable on Apple Pay, Google Pay and Samsung Pay;
–
Sales operations – appointed sales operations lead and a
–
Connectivity – SEPA CT and SEPA Instant. Automated fund
HubSpot expert, implemented a QA team to smooth the
management with Bank of England settlement account;
path of leads through the wider organisation, delivered
–
Infrastructure – database migrations to the cloud via
Amazon Web Services (‘AWS’), significant advances in
internal tooling; and
significant changes to HubSpot reporting capabilities giving
real time access to marketing and sales performance.
While the Group continues to seek efficiencies and has a
–
Reconciliation – automation of inbound funds reconciliation,
strong cost-control culture, the Group is growing rapidly and
advances in auto-reconciliation via Kani, automated profit
has opportunities to continue this trajectory. Accordingly, the
sell-backs to GBP.
SUSTAINED INVESTMENT IN PEOPLE
The Group’s employees continue to be its greatest strength
and we are delighted to have a diverse workforce and are
total headcount of the Group is now more than 300 people,
and we are continuing to hire talent, mainly into growth areas
of sales, marketing, onboarding and compliance.
MARKETPLACE AND COMPETITIVE LANDSCAPE
proud to train and promote from within as well as seek fresh
Global payments is a multi-trillion dollar market that remains
talent from elsewhere. We continue to invest in our people
function and have implemented a much-enhanced appraisal
a complex and constantly evolving space, comprising
various payment mechanisms from cash, cards, account-to-
programme during the year which forms the basis for salary
account transfers, and other methodologies across physical,
reviews and compensation. The Group has had a high level
internet and mobile interfaces. Against this background,
of retention amongst key employees. Implementation of a
many of the settlement rails, particularly on a cross-border
Company-wide share ownership plan (‘SIP’) combined with
basis, are antiquated with little investment. The advent of
an LTIP for management has been well received. Revenue per
crypto currencies brought with it the concept of settlement
8
STRATEGIC REPORTEQUALS GROUP PLC CHIEF EXECUTIVE OFFICER’S REPORT CONTINUED
via blockchain technologies, and this has been a factor in
navigate the complexities of payments via dedicated account
ushering more focus on existing payment infrastructures and
management teams.
working to improve the speed and reliability of settlements in
fiat currencies.
The Group therefore differentiates itself by harnessing the best
of these two competitor groups, namely the trust and heritage
This is the backdrop to the Group’s sustained investment
of the incumbent banks combined with the technological
over several years that has enabled Equals to develop a
innovation of the Fintechs. Accordingly, Equals will continue to
unique proposition; the Group provides both account-to-
invest in its platform, connectivity, and payment rails to remain
account transfers and card payment capabilities, overlaid on
one step ahead and its success to-date in doing so is reflected
infrastructure giving bank-grade connectivity and security
in the Group’s FY-2022 results.
on superior customer interfaces that can be consumed by
customers directly via the platform, on a white-label basis,
or via an API technical interface. The flexibility the Group can
support and the channels by which this can be consumed by
customers is a key differentiator. Within Equals B2B focus, the
Group targets two major segments, SMEs, via Equals Money,
and larger corporates, via Equals Solutions. Both offer a single
platform comprising own-name, multi-currency IBAN current
accounts, account-to-account transfers, and card products for
both domestic and international transactions.
Competition and differentiation
Competition falls into two major categories, the incumbent
banks and the fintech ‘disruptors’. The majority of payment
volumes flow
through
the
former,
therefore
targeting
LOOKING FORWARD – FROM PRODUCT TO
PLATFORM
Management anticipates that FY-2023 will be the year where
the various strands of investment into engineering and
connectivity come together into the overall platform offering.
At the centre of the Group is Equals Core, the division that
holds all the technology, payment rails, direct connections,
operations, compliance, and regulatory licences. Equals Core
powers everything that the Group does via one technology
stack which serves all customers via the same API’s and is
built for scale.
Equals Core ultimately has four distribution channels:
its customer base is key focus for the Group’s product
1. Equals Group itself via its product offering – Equals Money,
development and its sales and marketing activities. Fintechs
Equals Solutions, FairFX & CardOne Money;
tend to market one silo of what Equals provides as an overall
platform (e.g. current accounts, cards, and
international
2. Customers who consume Equals Core via API;
payments) and are often B2C focused. Further, they typically
3. White-label customers who consume Equals Core with
operate ‘self-serve’ platforms in contrast to the Group’s
their own brand being shown to their end customers, who
provision of human assistance in supporting customers
they acquire via their own sales and marketing; and
9
STRATEGIC REPORTANNUAL REPORT 2022 CHIEF EXECUTIVE OFFICER’S REPORT CONTINUED
4. Those who consume some but not all of Equals Core’s
–
Automation of outbound payments
via SWIFT,
services via API.
FasterPayments, SEPA
Equals currently has customers utilising the first three levels
–
Full white-label of Equals Money
outlined above and will be able to offer the fourth level during
–
Final migration of legacy products to Equals Core
the course of FY-2023. The direction of travel for the Group is to
further build out the capabilities of all four of these distribution
–
Automated bulk payments
channels in the current financial year and beyond.
–
Straight-through-processing (‘STP’)
Further differentiation
The Group is constantly looking to add functionality that can
further differentiate Equals. The current platforms allow B2B
customers to have global collection accounts and to pay out
funds locally in over 40 countries but lack the full range of
capabilities to assist customers in receiving payments from
their customers, both B2B and B2C. In January 2023, Equals
completed its acquisition of Roqqett Limited (‘Roqqett’), an
open banking platform. Roqqett will enable Equals’ customers
to acquire payments from its customers using open banking
ESG
Equals wholeheartedly embraces ESG initiatives and takes
Equality, Diversity, and Inclusivity (‘EDI’) extremely seriously.
Our EDI strategy, which covers not only employees but also
customers, includes an internal EDI network populated with
elected representatives and regular employee surveys. This
is a key objective for all Executive Committee members and
forms part of their appraisals.
rather than traditional methods of debit or credit cards. The
Q1-2023 TRADING AND OUTLOOK
Roqqett platform fits perfectly with the Equals Core technology
FY-2023 has started exceptionally well with revenue in Q1-
and the first integration milestone of putting Roqqett in the
2023 up to 24 March 2023 reaching £20.2 million, up from
process flow for FairFX was completed in Q1-2023. This
£13.2 million in the same period in 2022, an increase of 54%.
acquisition allows Equals to offer an ‘end-to-end’ solution
Revenues per working day so far in Q1-2023 were £342k, an
to its B2B customers from the point at which their customer
increase of 52% over £225k per day in Q1-2022 and 13%
transacts all the way through to disbursements internationally
higher than £302k per day achieved in Q4-2022.
or domestically. In a similar vein, the Group is looking at the
ability to accept card-based payments for its customers, so-
Strong B2B revenue growth continues with all product lines
called merchant acquiring.
M&A
The Group continues to assess M&A opportunities in three
progressing well. Equals Solutions, which contributed £15.6
million of revenues in FY-2022, has already contributed £6.0
million in FY-2023 to-date and is expected to continue to grow
strongly as the Group adds new functionality to its payments
main areas, which are not mutually exclusive. Firstly, to
platform during the year.
acquire profitable businesses that can easily be added to the
platform and provide scale. Secondly, to acquire value-add
functionality complementary to our offering. Lastly, to expand
in a regulatory sense via the acquisition of licences and access
to overseas markets.
Other notable achievements in Q1-2023 to-date include:
–
Completion of the acquisition of Roqqett following FCA
approval and completing a key technical milestone by
having the platform live on the FairFX platform for inbound
Accordingly, the product and development roadmap for FY-
payments.
2023 reflects our continued investment into Equals Core with
–
Sale of the legacy travel-cash banknote business and
key deliverables being:-
–
Implementation of new transaction monitoring platform –
Featurespace
–
Multi-currency corporate cards
advantage)
in USA
(first-mover
–
Further integration of Roqqett
accompanying Bureau-de-Change. This enables the Group
to focus more on its core B2B activity.
–
Acquisition, subject to FCA approval, of Hamer & Hamer,
a B2B International Payments business with revenues of
approximately £1.5 million per annum.
–
Acquisition, subject to approval by National Bank of Belgium
(‘NBB’) of Oonex, a Brussels-based merchant acquiring
–
Further investment into information security and becoming
business. This gives the Group access to customers across
ISO27001 compliant
10
Europe as well as new banking partners and Belgium
prefixed IBANs to augment the Group’s current GB-prefixed
STRATEGIC REPORTEQUALS GROUP PLC CHIEF EXECUTIVE OFFICER’S REPORT CONTINUED
IBANs, which widens the use cases for our Equals Money
and Equals Solutions platforms.
The outlook for the business, as a result of our sustained and
continuing investments, is strong and the Group’s addressable
market is now significantly greater. Equals has created a
payments platform comprising international and domestic
payments, card payments and banking services underpinned
by exceptional technology and direct connections to multiple
payment networks.
Finally, given the current customer base is largely within the
UK, the growth opportunities of geographical expansion are
considerable. Accordingly, the Board looks forward to the
future with much confidence.
IAN STRAFFORD-TAYLOR
Chief Executive Officer
24 March 2023
11
STRATEGIC REPORTANNUAL REPORT 2022 Chief Financial Officer’s Report
I present my review and financial analysis for the year ended 31 December 2022.
Table 1: Income and Expense account
Revenue (tables 3, 4)
Gross Profits (table 5)
Less: Marketing
Contribution
Staff costs
Property and office cost
IT and telephone costs
Professional Fees
Compliance Fees
Travel and other expenses
Adjusted EBITDA
Less: Share option expense
Less: Acquisition costs and exceptional items
EBITDA
IFRS 16 Depreciation (table 6)
Other depreciation (table 6)
Amortisation of acquired intangibles (table 7)
Other amortisation (table 7)
Contingent consideration cost
Impairment of the Bureau operations
FY-2022
FY-2021
£ millions
£ millions
69.7
44.1
33.7
(1.9)
31.8
(14.4)
(0.9)
(2.0)
(1.2)
(0.7)
(0.4)
12.1
(0.9)
(0.2)
11.0
(0.8)
(0.4)
(1.3)
(4.4)
(0.3)
–
(7.2)
24.2*
(1.3)
22.9
(11.9)
(0.8)
(1.7)
(1.2)
(0.4)*
(0.2)
6.7
(0.3)
(0.7)
5.7
(0.9)
(0.5)
(1.3)
(4.5)
(0.1)
(1.6)
(8.9)
EBIT
3.8
(3.2)
Lease interest
Foreign exchange differences
Contingent consideration finance charges
PROFIT / (LOSS) BEFORE TAXATION
Corporate and deferred taxation
R&D tax credits receivable
PROFIT / (LOSS) FOR THE YEAR
(0.2)
(0.1)
(0.1)
(0.4)
3.4
0.1
–
0.1
3.6
(0.2)
(0.1)
(0.3)
(0.6)
(3.8)
1.1
0.4
1.5
(2.3)
* With effect from 1 January 2021, certain compliance and onboarding costs which had been included in cost of sales, are now shown within
compliance costs. For 2021, which has not been restated, these costs amounted to £255k.
When the changes are presented as a bridge, the standout facts are the increase in revenue leading to increased contribution (gross profits less
marketing costs), offset by higher labour costs, both through planned increases in staff resources and responding to labour market pressures. Other
cost increases were also a mix of inflation pressures, but also decisions taken to upskill and upscale resources for a rapidly growing business.
12
STRATEGIC REPORTEQUALS GROUP PLC CHIEF FINANCIAL OFFICER’S REPORT CONTINUED
TABLE 2 – Adjusted EBITDA bridge from FY-2021 to FY-2022 (in £’000s)
FY-2021 Adjusted EBITDA
Add: 39% uplift in contribution FY-2022
Less: 21% increase in staff costs, reflecting higher planned headcount along with pay adjustments averaging 8%
19% increase in IT and communications, taking into account of increased web hosting charges.
18% increase in professional and compliance costs, much of which is attributable to increased compliance
investment
Increase in travel and entertaining costs
Increase in property utility and insurance costs and with taking back legacy office lease
FY-2022 Adjusted EBITDA
Uplift over FY-2021
% uplift over FY-2021
6,713
8,873
(2,488)
(324)
(296)
(247)
(111)
12,120
5,407
81%
Revenue
A split of revenues by both customer group and platform, clearly shows both the strong and growing emergence of Solutions
and very significant migration away from the legacy travel products. All product lines and all verticals saw significant increases in
revenue in the year. The table below shows the revenue by both CGU and customer types.
Table 3: Revenue by customer type
Consumer
and small
business Corporates
Large
enterprises Sub-total
4.5
5.1
6.1
–
1.0
16.7
12.5
14.9
7.5
–
–
–
22.4
18.7
–
–
–
15.7
–
15.7
5.1
19.4
12.5
6.1
15.7
1.0
54.7
36.4
White-
label
15.0
–
–
–
–
15.0
7.7
TOTAL
FY-2022
TOTAL
FY-2021 % change
34.4
12.5
6.1
15.7
1.0
69.7
44.1
25.9
8.7
5.6
3.6
0.3
44.1
32.8%
43.7%
9.0%
336.1%
233%
58.0%
Revenue in £ millions
International payments
Cards
Banking
Solutions
Travel cash
Total, FY-2022
Total, FY-2021
% Change*
FY-2022 to FY-2021
+33%
+20%
>207%
+51%
+94%
+58%
+58%
* based on underlying figures
Continuing the analysis which was presented at the 2022 interims, we disclose below, revenue per half year period. The well
publicised political uncertainty saw many clients “bring-forward” activity into Q3 from the usual Q4 trading.
13
STRATEGIC REPORTANNUAL REPORT 2022 CHIEF FINANCIAL OFFICER’S REPORT CONTINUED
TABLE 4 – Revenue by half-year
Revenue in £ millions
Solutions
White-
Label
Other
International
Payments
Cards
(Retail
and
Corporate)
Banking
Bureau
H1-2021
H2-2021
FY-2021
% of total
H1-2022
H2-2022
FY-2022
% of total
0.3
3.3
3.6
8%
6.2
9.4
15.6
22%
2.4
5.4
7.7
18%
7.2
7.8
15.0
22%
7.5
10.7
18.2
41%
9.1
10.3
19.4
28%
3.9
4.8
8.6
2.8
2.7
5.6
20%
13%
5.6
6.9
12.5
18%
2.8
3.3
6.1
9%
0.1
0.3
0.3
1%
0.5
0.5
1.0
1%
Revenue
per day in
£000’s
136.3
210.7
174.3
255.1
301.4
278.7
Total
16.9
27.2
44.1
100%
31.4
38.3
69.7
100%
2022 vs 2021
333%
95%
7%
45%
9%
233%
58%
60%
Gross profits
The gross profit margins have also improved – and continue to improve. These, over the last four half-year periods are shown
below:
TABLE 5 – Gross profit margin by half-year
H1-2021
H2-2021
FY-2021
H1-2022
H2-2022
FY-2022
White-
Label
Other
International
Payments
Cards
(Retail
and
Corporate)
16%
12%
14%
12%
14%
13%
65%
58%
61%
59%
56%
57%
71%
69%
70%
61%
65%
63%
Solutions
37%
47%
46%
46%
50%
48%
Banking
Bureau
75%
76%
76%
76%
78%
77%
72%
68%
69%
48%
42%
45%
Total
61%
51%
55%
47%
59%
48%
Marketing, branding and contribution
The Group has accelerated its marketing plans after pausing this during FY-2020 and FY-2021 when Covid posed greater
uncertainties. Expenditure has been incurred on additional ad campaigns, pay-per-click, exhibitions and similar events including
those in the USA where the Group noticed considerable interest in it’s Spend platform and the Group’s ability to sell this through
its partnership with Metropolitan Commercial Bank.
Staff costs
Staff costs, gross of capitalisation and exceptional items, were £18.6 million in FY-2022 against £15.6 million in FY-2021. These
costs were offset by £4.2 million of capitalised internal software (FY-2021: £3.0 million), which included £1.4 million on contractors
(FY-2021: £0.5 million). The amounts capitalised represent 22% of gross staff costs, increased from 19% in 2021 largely due
to inflation impacting contractor costs. Headcount numbers have moved from 255 as at 31 December 2021 to 285 as at 31
December 2022.
Professional fees and Compliance costs
Owing to an increasing cross-industry compliance burden, the Group has chosen to report compliance and similar costs separate
to other professional fees. Such costs, including onboarding systems, have risen due to a combination of greater business activity
and the Group’s desire to fast-track business applications but not at the expense of quality. Professional fees have risen in line with
trends widely reported in the national press, most notably the cost of the audit.
14
STRATEGIC REPORTEQUALS GROUP PLC CHIEF FINANCIAL OFFICER’S REPORT CONTINUED
Property, insurance and office costs
Renegotiation of office leases has led to lower passing rents which benefit the Group’s cashflows but not the EBITDA as such rents
are accounted for under IFRS-16. Utility, rates, and insurance charges have however risen by an aggregate of 35% from FY-2021
to FY-2022, although much of this is associated with re-occupying a floor in Vintners Place which had previously been vacated
during the Covid pandemic.
Exceptional items
There were no exceptional costs in FY-2022. In FY-2021, £0.7 million had been incurred in the restructuring of a layer of senior
management.
Acquisition costs
The Group acquired the remainder of the Non-Controlling Interest of Equals Connect Ltd on 30 September 2022. On 28 November
the Group announced that it was acquiring an open banking platform through the acquisition of Roqqett Limited. Professional fees
incurred in FY-2022 on acquisitions amounted to £164k.
Depreciation
Tangible fixed assets are depreciated over the anticipated useful life with a maximum of 60 months (other than leasehold
improvements which is a maximum of 120 months).
Table 6: Depreciation
IFRS 16 depreciation
Other depreciation
FY-2022
£’000s
FY-2021
£’000s
822
389
1,211
931
467
1,398
£’000s
668
375
1,043
Based upon the expenditure incurred to 31 December 2022, the depreciation charges for those assets in FY-2023 will be:
IFRS 16 depreciation
Other depreciation
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 7: Components of amortisation charges
Amortisation charge arising from the capitalisation of internally developed software in the following
years:
2018 and earlier
2019
2020
2021
2022
Amortisation charge for other intangibles
Amortisation of acquired intangibles
Total amortisation charge
FY-2022
£’000s
FY-2021
£’000s
916
1,661
893
576
388
4,435
291
4,726
1,282
6,008
1,303
1,661
893
287
–
4,144
357
4,501
1,311
5,812
15
STRATEGIC REPORTANNUAL REPORT 2022 CHIEF FINANCIAL OFFICER’S REPORT CONTINUED
Based upon expenditure to 31 December 2022, the amortisation charges for FY-2023 are expected to be:
Internally developed software
Other intangible assets
Acquired intangibles
£’000
4,953
267
984
6,205
Operating result
The Group made a profit before taxation of £3.4 million for the year, compared to a loss of £3.8 million for FY-2021.
Taxation, incorporating R&D credits
The Group has recognised a net tax credit of £135k (FY-2021: £1,555k) of which £nil (H1-2021: £398k) relates to an R&D tax credit
repayment. 2021 R&D tax credit repayment was received in full in H2-2022.
Table 8: Balance sheet
This table shows a compressed “balance sheet” for the Group.
Internally generated software – cost
Internally generated software – accumulated amortisation
Other non-current assets (other than deferred tax)
IFRS 16 assets, less IFRS 16 liabilities
Liquidity (per Table 11)
Trade debtors and accrued income
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 9)
Implied interest thereon
Net corporation and deferred tax
Net value of forward contracts*
31.12.2022
£’000s
31.12.2021
£’000s
26,001
(13,411)
12,590
18,558
(830)
30,318
14,321
4,244
–
1,345
1,019
292
(2,069)
(2,563)
(2,506)
(1,938)
12,145
(2,025)
–
(2,025)
1,639
827
441
21,402
(8,976)
12,426
19,791
(388)
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)
NET SHAREHOLDER FUNDS
42,904
41,151
At the date of signing of these financial statements, the Company has distributable reserves of £1,411k. This is equivalent to
£0.0078 pence per share.
* The gross value of the forwards book at 31st December 2022 was £253.3 million (31st December 2021: £170.1 million)
16
STRATEGIC REPORTEQUALS GROUP PLC CHIEF FINANCIAL OFFICER’S REPORT CONTINUED
Earn-outs
The table below shows the financial position relating to acquisitions in and after 2019, including Roqqett Limited which was
completed before the signing of these financial statements but does not appear on the FY-2022 Balance Sheet. However, post
the signing of the Share Purchase Agreement, funds were advanced to Roqqett Limited to ensure they were able to meet their
regulatory obligations.
The table below shows the financial position relating to these acquisitions.
TABLE 9 – Earnouts
Hermex
Casco
Effective
Roqqett
Limited
09.08.2019
19.11.2019
15.10.2020
06.01.2023
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 2022
Purchase of the remainder of the NCI
Initial consideration paid by 31.12.2022
Gross Outstanding at 31.12.2022
Loan in advance of acquisition (FY-2022)
Paid during Q1-2023
Due in remainder of FY-023
Due in FY-2024
Maximum consideration
Total consideration
£’000s
2,000
(2,000)
–
–
–
–
–
–
–
–
–
–
–
–
–
2,000
2,000
£’000s
2,236
(1,733)
793
1,296
(741)
46
601
(601)
2,955
(930)
2,025
–
–
1,560
465
6,655
6,075
£’000s
–
–
–
–
–
–
–
–
–
–
–
830
170
£’000s
1,575
(125)
–
1,450
(368)
–
1,082
(1,082)
–
–
–
–
–
–
–
1,250
2,810
1,575
1,575
2,250
2,250
Total
£’000s
5,811
(3,858)
793
2,746
(1,109)
46
1,683
(1,683)
2,955
(930)
2,025
830
170
465
12,480
11,900
Share capital
The number of shares in issue at 1 January 2022 was 179,341,807. This increased in the year through the exercise of 666,666 share
options and 704,000 shares at nominal value were issued pursuant to the 2021 SIP, thus the number of shares outstanding at
31 December 2022 was 180,712,473. A further 747,488 shares at nominal value were issued pursuant to the 2022 SIP and admitted
to trading on AIM on 25 January 2023, resulting in a total number of shares in issue at the date of signing of the Financial Statements
of 181,459,961.
Share options
At 1 January 2022, the Company had 13,107,800 options outstanding. 666,666 of these were exercised in 2022, 16,000 were
cancelled and 250,576 lapsed. On 14 December 2022, the Company announced Discretionary Share Incentive Plans over
3,966,500 shares. Thus, at the date of signing of these financial statements, there were 16,141,058 options, representing 8.9% of
the issued share capital and 8.6% of the enlarged share capital.
The cost of external advice for these schemes amounted to £46k in the year (FY-2021: £84k)
17
STRATEGIC REPORTANNUAL REPORT 2022 CHIEF FINANCIAL OFFICER’S REPORT CONTINUED
Earnings per share
Earnings per share are reported/calculated in accordance with IAS 33. For non-diluted, the result after tax is divided by the
average number of shares in issue in the year. The average number of shares were 180,304,802 (FY-2021: 178,959,402).
The calculation of diluted EPS is based on the result after tax divided by the number of actual shares in issue (above) plus the
number of options where the fair value exceeds the weighted average share price in the year. The fair value of options is measured
using Black-Scholes and Monte-Carlo. It should be noted that in accordance with Accounting Standards, this calculation is based
on fair value, not the difference between the market price at the end of the year or the weighted average price and the exercise
price. The weighted average price was 84 pence (FY-2021: 49 pence), the number of options exceeding the fair value was 7,278,986
(FY-2021: 3,553,681).
The basic and diluted EPS are shown below:
Profit/(loss) per share in pence
Basic
Basic
FY-2022
FY-2021
Diluted
FY-2022
Diluted
FY-2021
1.80
(1.35)
1.73
(1.35)
Adjusted earnings and adjusted EPS
We have observed that the analyst community prepares EPS calculations on a number of different bases. To try and harmonise
these we have prepared below a basis which hopefully offers consistency:
P&L YTD Attributable to owners of Equals Group PLC
Add back:
- Share option charges
- Amortisation of acquired intangibles.
- Exceptional items*
- Acquisition costs
- Tax impacts thereon*
Adjusted earnings
*Tax impacts thereon are associated to Exceptional items and Acquisition costs.
The resulting earnings per share are shown below
FY-2022
£’000s
3,236
FY-2021
£’000s
(2,425)
970
1,282
–
164
31
5,683
356
1,302
671
–
128
32
Adjusted profit per share in pence
Basic
Basic
FY-2022
FY-2021
3.15
0.02
Diluted
FY-202
3.03
Diluted
FY-2021
0.02
18
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 10: Cashflow
Adjusted EBITDA
R&D tax credits received
Lease payments (principal and interest)
Acquisition costs and Exceptional items
Internally developed software capitalised for R&D:
– Staff
– IT Costs
Purchase of other intangible assets less disposals (Non-R&D)
Purchase of other non-current assets
Movement in working capital
Funds from exercise of share options
Earn-outs and acquisitions
Loan made to of acquisition of Roqqett Limited
External funding repaid (CBILS)
NET CASHFLOWS
Balance at 1st January
Balance at 31st December
Cash per share
Table 11: Liquidity
Cash at bank
Balances with liquidity providers
Pre-funded balances with card provider
Gross liquid resources
Customer balances not subject to safeguarding
CBILS loan
Net position
FY-2022
£’000s
12,120
400
(969)
(164)
FY-2021
£’000s
6,713
1,367
(1,080)
(671)
(4,191)
(3,028)
(408)
(445)
(271)
1,147
7,219
193
(2,614)
(830)
(2,028)
1,940
13,104
15,044
(301)
(532)
(78)
1,571
3,960
220
(1,108)
–
–
3,072
10,032
13,104
8.3 pence
7.3 pence
FY-2022
£’000s
15,044
1,950
1,491
18,485
(4,165)
–
(4,165)
FY-2021
£’000s
13,104
1,675
1,615
16,394
(3,655)
(2,000)
(5,655)
14,320
10,739
The Group has its principal banking and deposit arrangements with Barclays, NatWest, Citibank and Blackrock.
RICHARD COOPER
Chief Financial Officer
24 March 2023
19
STRATEGIC REPORTANNUAL REPORT 2022 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 for their invoices once 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 ongoing 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.
20
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 19 was approved and authorised for issue by the Board after stock market trading hours on
24 March 2023, and was signed on its behalf by:
IAN STRAFFORD-TAYLOR
Chief Executive Officer
21
STRATEGIC REPORTANNUAL REPORT 2022 Governance
22
22
Report on Corporate Governance
for the year ended 31 December 2022
OVERVIEW
• Financial statements and annual reports
As Chairman of the Board of Directors of Equals Group PLC
• Governance statements
(“Equals”, “we”, “the Company”, “the Board”, or “the Group” as
the context requires), it is my responsibility to ensure that
Equals has sound governance and an effective Board. This
responsibility includes leading the Board and overseeing
• Details of directors and advisors.
BOARD OF DIRECTORS
the Group’s corporate governance. Good and
timely
The Board is responsible for the overall management of the Group
information flows between Executives and Non-Executives
including the formulation and approval of the Group’s long-term
with interactions that are both supportive and challenging are
objectives and strategy, the approval of budgets, the oversight
essential to this.
of the Group’s operations, the maintenance of sound internal
control and risk management systems and the implementation
The goals the Group pursues are to create value for
of Group strategy, policies, and plans. Whilst the Board may
shareholders and customers, to monitor and improve our
delegate specific responsibilities, there is a formal schedule of
environmental and societal impacts and to adhere to good
corporate governance.
matters specifically reserved for decision by the Board; such
reserved matters include, amongst other things, approval of
GOVERNANCE CODE AND COMPLIANCE
Equals has adopted the Quoted Companies Alliance Corporate
Governance Code (“QCA Code”) in line with the London Stock
significant capital expenditure, material business contracts and
major corporate transactions. The Board meets formally on a
regular basis to review performance.
Exchange’s AIM Rules. This Statement, in conjunction with the
DIRECTORS
Chairman’s Corporate Governance Statement published on
The Equals Board is presently made up of five Directors. The
our website, follows the ten-point structure of the QCA Code
experience and skills of each director is set out below.
and describes how we have applied the Code. The Group will
provide updates not less than annually.
The Board is confident that the current mix of skills and
competencies amongst the Board aligns well with the
The Board considers that the Group complies with the QCA
Company’s strategic priorities over the medium- to long-term
Code so far as it is practicable having regard to the size, nature
but this position will continue to be kept under review.
and current stage of development of the Group. The Board
recognises that even where the Group may not fully comply
Alan Hughes – Chair and Independent Non-Executive Director
with a principle or general provisions of the Code, it uses the
Code as a benchmark in assessing its corporate governance
Date of appointment: 1 March 2020
Committees: Nominations (Chair), Remuneration, Risk
standards. Where the Group does not fully comply, it gives
reasons for this.
Equals pursues a customer-driven, socially and environmentally
responsible culture illustrated through its internal values and
policies and its supplier and shareholder engagements. 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.
The Group’s
Investor Relations website (equalsplc.com)
contains all documents required by AIM rule 26, notably:
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.
He has had several non-executive roles, currently he is Chair of
Unity Trust Bank plc and Chair of Mitsubishi HC Capital UK plc.
He has taught banking and lectured at Warwick and Oxford
Universities on service and innovation. He was Pro-Chancellor
and deputy Chair of Council at Loughborough University. He
has an MBA from Henley, is a Fellow of the Chartered Institute
of Bankers, a Fellow of the Royal Society for Arts, Manufactures
and Commerces and holds an Honorary Doctorate from
• The Articles and Memorandum of Association
Loughborough University.
• Admission document
23
ANNUAL REPORT 2022GOVERNANCE 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 has held senior executive positions at major companies
held a number of senior banking roles, including Business
including Diageo and Cadbury. He was also Principal/Executive
Unit Controller and Head of International Securities Lending
Dean of the Henley Business School from 2004-2010. Chris
at Morgan Stanley, where he worked from 1985 to 1992.
co-founded Good Growth Ltd (‘Good Growth’), a successful
Following this, Ian moved to UBS where he worked for 13 years
e-commerce consulting business whose clients include Diageo,
as Managing Director and Global Head of Securities Borrowing
Kraft Heinz, WH Smith, Pets at Home, ITV, Boohoo, Channel 4, and
& Lending, Fixed Income Repo and Prime Brokerage. Ian is a
others. Good Growth has grown into a successful SME powering
Chartered Accountant, qualifying with Arthur Andersen in 1985.
rapid digitally-fuelled growth in both B2C and B2B businesses
RICHARD COOPER
Chief Financial Officer
Date of appointment: 14 October 2019
Committees: none
Richard has extensive public market and growth company
experience. He was the CFO of GVC Holdings PLC (now
Entain PLC), one of the world’s largest sports betting and
gaming groups, from 2008 to 2017. Whilst at GVC, Richard
played a key role in the implementation of the company’s
acquisition strategy during that period, together with its
move from AIM to the premium segment of the London Stock
Exchange’s Main Market. Richard, a Chartered Accountant,
is also a non-executive director of two other companies on
AIM: Non-Executive Chairman of Engage XR Holdings PLC,
a technology-focused education company, and Chair of the
across Europe and North America and he brings this experience
to the Board in support of Equals’ growth. Chris sold his shares in
Good Growth in 2021 and now has a solely non-executive career.
He is chair of the Remuneration Committee for Equals Group
PLC. His other roles are that of Chair of the Chartered Institute of
Legal Executives and as a Non-Executive Director of The Pipeline,
a specialist consultancy and training organisation focusing on
the development of women and managers from ethnic minority
communities into executive leadership positions in business,
public and third sector organisations. He is also a non-executive
director of the Glasgow Colleges Regional Board. Chris was
awarded an honorary doctorate from Aberdeen University, from
which he holds his undergraduate degree.
BOARD INDEPENDENCE AND TIME COMMITMENT
Audit Committee of Insig AI plc, a machine learning business
The Board has reviewed the independence of the Chairman
focused on ESG for the fund management industry.
and each of the Non-Executive Directors (“NEDs”) and
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
considers them to be independent in character and judgement,
with no relationships or circumstances that are likely to affect,
or could appear to affect, their judgement. As at 31 December
2022, no NED holds any share options in the Company.
The Non-Executive Directors are each expected to dedicate
approximately 18 days per annum towards their duties and
otherwise such time as required.
gained 25 years’ experience at PricewaterhouseCoopers LLP
BOARD EFFECTIVENESS
(“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. As
well as being a member of the ICAEW, Sian is also a Member
of the Hong Kong Society of Accountants. She has recently
been appointed to the Board of Mitsubishi HC Capital UK PLC
as the Audit and Risk Committee Chairs.
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.
24
EQUALS GROUP PLCGOVERNANCE REPORT ON CORPORATE GOVERNANCE CONTINUED
The Companies believes that an effective board is one which
The Group’s values are:
delivers financial value for its shareholders along with other
values and integrity for other stakeholders - customers,
suppliers, communities, and colleagues. In 2022, the Board took
forward the outcomes of the formal annual Board evaluation
• Make it happen;
• Succeed together;
• Be the customer; and
process undertaken in 2021, with a view to ensuring continued
• Go beyond
improvements in all aspects of the Board’s operations.
The areas covered in the evaluation were: Board relationships,
Board Skills & Governance, Board Processes Committees
of the Board, and Priorities for Change. The Chairman also
meets at least once annually with each of the Non-Executive
Directors to discuss each Director’s contributions to Board
meetings. The Board intends to continue its approach toward
periodic board evaluation in 2023 and beyond.
These values promote the healthy corporate ethos of effective
communication and encourage an ‘ideas culture’. The Group
believes such values are important in creating a strong and
consistent internal culture, as well as being essential to driving
the overall success as a business. Staff are actively encouraged
to provide feedback on many areas surrounding the business
activities and initiative, and fortnightly Group-wide meetings
are held to promote an open and honest dialogue across the
Group.
CULTURE
The Board recognises the importance it has in setting the tone,
SHAREHOLDER ENGAGEMENT
culture and behaviour of the Group and promotes an open
and respectful dialogue with employees, suppliers and other
stakeholders. The importance of sound ethical values and
behaviours is crucial to the ability to successfully achieve the
corporate objectives, and the Board places great importance
on this aspect of corporate life, seeking to ensure that this
flows across the Group.
The Group is committed to maintaining a healthy dialogue
between the Board and all
its shareholders to enable
shareholders
to come
to
informed decisions about
the Company. The Chairman
is generally available to
shareholders, and the AGM presents shareholders with an
additional opportunity to communicate with the Board. The
AGM is attended by the Board and is open to all the Group’s
shareholders.
25
ANNUAL REPORT 2022GOVERNANCE REPORT ON CORPORATE GOVERNANCE CONTINUED
At the Annual General Meeting held on 17 May 2022, the proposed resolutions received the following proportion of votes:
Ordinary resolutions:
Adoption of 2021 Annual Report and Consolidated Financial Statements
Re-appointment of PriceWaterhouseCoopers LLP as auditor to the Company
Authority to allot shares
Special resolution:
Disapplication of pre-emption rights
* a vote withheld is not a vote “in law” and is not counted in the calculation of the votes cast.
In favour
Opposed
Withheld*
99.98
99.95
99.99
97.73
0.02
0.05
0.01
2.27
0.00%
0.00%
0.00%
0.00%
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 2022 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
Christopher Bones
Sian Herbert
Board
91
9/9
9/9
9/9
9/9
9/9
Audit
Committee
Remuneration
Committee
Nomination
Committee
Risk
Committee
3
3/3
3/3
6
6/6
6/6
6/6
2
2/2
2/2
2/2
2/2
4
4/4
4/4
4/4
[1] Four additional Board or Board Committee meetings were held throughout the reporting period.
Canaccord Genuity Limited (“CGL”) are appointed as Nominated Advisor, a position required under the rules of AIM support the
Company to comply with the rules of AIM and the Market Abuse Regulations.
Browne Jacobson, solicitors, have served the Group for a number of years, and have dialogue as and when required with the
Chairman, Chief Executive Officer and other executives of the Group.
One Advisory Limited (“ONE”) was appointed as Company Secretary to the Company on 1 August 2021. ONE are responsible
for ensuring that Board procedures are followed and supporting the Company to comply with applicable rules, regulations and
obligations governing its operation, as well as helping the Chairman maintain excellent standards of corporate governance.
26
EQUALS GROUP PLCGOVERNANCE REPORT ON CORPORATE GOVERNANCE CONTINUED
AUDIT COMMITTEE
NOMINATION COMMITTEE
The Audit Committee is responsible for monitoring the integrity
The Nomination Committee is responsible for developing and
of the Group’s financial statements, reviewing significant
maintaining an effective and rigorous procedure for making
financial reporting issues, reviewing the effectiveness of
recommendations on the appointments and re-appointments
the Group’s internal control and risk management systems,
to the Board. The Nomination Committee currently comprises
ensuring that processes are put in place to manage risk
the Non-Executive Directors and the Chief Executive and
inherent in the business, and overseeing the relationship with
is chaired by Alan Hughes. The Committee meets at least
the external auditor (including advising on their appointment,
once a year.
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
meets regularly with the Group’s external auditor.
The report of the Audit Committee is included on pages 36 to 38.
RISK COMMITTEE
SHARE DEALING CODE
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
The Risk Committee is responsible for maintaining the Group’s
Directors and applicable employees of the Group with the
risk register and evaluating the risks included in it. The Risk
terms of the share dealing code and the relevant provisions of
Committee comprises all Non-Executive Directors and is
the AIM Rules (including Rule 21).
chaired by Sian Herbert and meets not less than four times
a year. The Chief Operations Officer, not a board member, is
The Corporate Governance Report was approved and
responsible for day-to-day risk management and compliance
authorised for issue by the Board after stock market trading
and is the prime contact for regulatory bodies that have
hours on 24 March 2023, and was signed on its behalf by:
ALAN HUGHES
Chair
supervisory roles for the Group.
The report of the Risk Committee is included on pages 39 to 41.
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 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 42 to 48.
27
ANNUAL REPORT 2022GOVERNANCE ESG Report
This report provides stakeholders with a guide to the way in which Equals deals with the three core
tenets of ESG, namely:
Environmental
Social
Governance
This Annual Report has already dealt with governance in detail in its report on Corporate Governance
on pages 23 to 27, however there are some other aspects which are reported in the Governance
section below.
1. CORPORATE CULTURE
Underpinning everything the Group does – and seeks to do – is its culture and values. The core elements
of this are articulated below:
• 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.
28
EQUALS GROUP PLCGOVERNANCE ESG REPORT CONTINUED
2. ESG – THE ENVIRONMENTAL DIMENSION
An Employee Carbon Emissions Survey was conducted in 2021
The Group has two offices; London and Chester.
The London office in Vintners Place building is managed in
accordance with the landlord, CBRE’s, sustainability policy which
champions recycling and low-emission practices. Vintners Place
has an extensive and secure bicycle store and employees are
encouraged to commute this way if they can do so safely.
The Chester office, has a number of initiatives aimed at reducing
negative environmental impacts. In 2021 energy provider
was changed to guarantee that 100% of energy comes from
renewable sources – and this also represented a cost-saving for
the business. An environmental waste service that separates all
our recycling and burns waste to feed energy back into the grid
is used. The Group has a Cycle to Work scheme in place to help
those employees who which to participate in it.
A number of employees are provided with a Company car. All
such vehicles must either by fully electric or hybrid, and, at
Chester, there are electric charging points for these vehicles.
A paper-free initiative was started in 2020, identifying where
the use of paper can be eliminated. The quantity of copier
paper ordered continues to be modest.
The ongoing partnership with Wales Recycles has enabled
the Group to donate unused or retired devices to be
wiped or refurbished and then given to local schools and
underprivileged members of the community. A similar scheme
has been launched for the London office.
to calculate the average carbon footprint of employees whilst
at work. This has allowed the Group to offset the individual
carbon footprints for the entire workforce. Whilst pleased with
this outcome, the next step is to assess where energy use and
carbon emissions across the business can be reduced.
Responsible procurement
The environmental impact of the Group’s supply chain is
another important consideration. Since 2021 a new due
diligence procedure was introduced to 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.
With the exception of staff, the next most significant area
of expenditure remains third party IT and communication
supplies, followed by costs incurred by other service industries
such as law, accounting, and compliance advisory firms.
As part of the Group’s upcoming assessment into reduction
strategies, the practices of suppliers are reviewed.
Giving back to the community
In considering societal impact, the Group wishes to give
employees the opportunity to get involved and support is
provided to 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 the forward-looking strategy is to formalise the 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.
IMPACT ON THE GROUP
Total employee carbon footprint offset
Number of devices donated
CHESTER OFFICE
Energy use
- Total energy use (KwH)
Paper use
2022
491 tonnes
–*
2021
346 tonnes
15
2020
n/a
–
41,062**
42,875
n/a
- Number of sheets of headed paper ordered
- Number of sheets of copier paper ordered
30,000
6,500
40,000
7,000
40,000
25,000
LONDON
Paper use
- Number of sheets of paper ordered
37,500
25,000
3,000
* No devices were donated in 2022 as a result of replacing old desktops with new laptops for certain employees, 2023 shall see an increase in
devices donated.
** Direct measurement basis used. Vintners place not included as a result of limitations of any allocation methodology, due to shared office space
29
ANNUAL REPORT 2022GOVERNANCE ESG REPORT CONTINUED
3. ESG – THE SOCIAL DIMENSION
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
• Flexible working
• Visa sponsorship
• Mental health support
our stakeholders, through both direct communications and our
• Healthcare and life assurance schemes.
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
Employee communication
The Group has a strong ethos of employee communication
tailor our method of engagement with each appropriately.
with “All Hands” being held every two weeks; Monthly Own
3.1 EMPLOYEES
We are passionate on making Equals a rewarding place to
The Outcome (OTO) awards; annual OTO Awards ceremony
and strategy presentation from the CEO; use of our internal
communications platform; and Base Camp days celebrating
work and to foster attraction and retention of employees
by developing our recruitment practices, offering more
achievements and outlining strategy. To take advantage of
Zoom, many departments themselves hold weekly “all-in”
opportunities for growth and progression, and sharpening our
sessions to discuss progress, initiatives and problems.
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
EDI
Ensuring that equality, diversity and inclusion considerations
than ever to the business and its success.
are embedded within all facets of our business is a key priority.
The recent initiatives introduced by the Group include:
pleased to introduce pronouns on our internal communications
In 2021 we developed a new EDI strategy, and we were very
•
•
•
•
Ex-gratia bonus schemes to help employees with cost of
living – two awards were made in 2022,
All-employee Share Incentive Plans; grants were announced
in both 2021 and 2022 giving eligible employees up to 7976
shares in the Company to vest over a four year period,
Key-employee LTIP programme which identified around
40 key staff below board level and that granted 4,245,000
share options over two years up to 44 employees,
The Group has a referral program which allows employees
(below the level of executive) to financially benefit from
direct employee introductions and hence avoid paying
recruitment fees externally,
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.
Contractors
The Group regularly uses contractors in the UK and overseas
to assist chiefly with engineering projects. These people are
regarded as part of the Equals family and are offered the same
working conditions and communication systems as regular
employees.
The table below provides as summary of the number of staff within the Group based on the average for the financial year:
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 paid a national living wage (%)
30
2022
2021
2020
255
13
0
1
97
36%
0
242
12
9
1
85
32%
0
268
9
8
1
78
29%
0
32 (declared,
not compulsory
to complete)
15 (declared,
not compulsory
to complete)
13 (declared,
not compulsory
to complete)
100%
100%
100%
EQUALS GROUP PLCGOVERNANCE
ESG REPORT CONTINUED
3.3 CUSTOMERS
The Group prides itself on providing a high level of customer
accessibility to the training modules and enabling us to
monitor rates of completion and send reminders to employees
service. We don’t get it right all the time, but we aim to!
when necessary.
At the heart of this is our initial and ongoing engagement with
In addition to our three key communication channels, we also
our customers to enable us to understand their requirements
receive customer feedback through our Trust Pilot and app
and maintain clear and transparent communication with them.
review pages, and we reach out to all customers who express
To this end, we have adopted the following approach:
dissatisfaction to see if we can improve their experience. We
•
Created one centralised customer identity management
system (Hubspot)
• 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 of training for new starters in customers services
and ongoing training for all customer services staff
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
• System for flagging suspicious activity
100% of all complaints and that, in 2021, over 85% of complaints
In addition, we have an obligation to identify and protect
we identify a complaint that we feel has not been dealt with
vulnerable customers. To this end we have:
•
Increased awareness for customer vulnerability across the
entire Group
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.
across the Group were closed out within 35 business days. If
•
Rewritten the Vulnerability Policy
Concurrently, we log dissatisfactions. Whilst these are not
•
Put together customer vulnerability training and delivered
to customer-facing senior managers
complaints, tracking all feedback from customers can drive
improvements across the business, as we can identify if
In order to be accessible and responsive to our customers, we
and then implement a change to improve our service. Our
maintain three key channels for receiving queries:
dedicated AIM channel provides another medium through
an issue (albeit a very small issue) is repeatedly arising
• phone calls,
• email
•
live chat.
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.
We have a target in place to ensure that customers wait no
There are fortnightly meetings with Customer Services
more than 30 seconds before their call is answered and email
Managers, chaired by the Complaints Executive, in which all
queries will be responded to within the working day, and utilise
ongoing complaints, feedback from completed investigations,
live chat to enable even faster responses from the team.
and necessary changes to internal processes are discussed.
Conduct and reputation risk indicators, including complaints,
To ensure our Customer Services Team are best placed
Trustpilot reviews, and vulnerability, are fed back on a quarterly
to provide the support required, we provide 2 weeks of
training for all new employees, followed by ongoing training
basis to the Subsidiary Board meetings, and information is
also provided to the Group Risk Committee.
including support when they begin receiving customer phone
calls. Additionally, all customer services employees receive
An important innovation to our processes has been the
Anti-Money Laundering (AML) and cybersecurity training,
creation of one central customer identity in our Customer
and in 2022 we have also completed vulnerable customer
integration of our online training platform,
training. The
Relationship Management (CRM) system. By centralising this
customer information, we aim to improve customers’ internal
Meta Compliance, will support this programme, increasing
data lifecycle.
31
ANNUAL REPORT 2022GOVERNANCE ESG REPORT CONTINUED
Safeguarding our customers
To ensure the continued protection of our customers we
and addressing the value at which payments must be checked
before they are processed. The process of updating all our
maintain transparent, fair practices and update processes
existing policies and procedures is ongoing, as we want to
to make sure they are fit for purpose. Our Treating Customer
ensure all are in line with Group expectations.
Fairly (TCF) Policy, developed in line with the Financial Conduct
Authority’s (FCA) Principles, encapsulates the best practice we
Details of our fees are available on our websites and included
expect of our employees at all levels of the business, and this
in our FAQs. In addition to providing annual AML training,
is reinforced through our TCF training.
there are controls in place in the system to recognise and flag
unusual activity, including customers who are potentially being
Since 2021 we introduced a new policy on the processing of
scammed. A member of the team will raise anything suspicious
Faster Payments to strengthen security, including updating the
with the Anti-Fraud Manager, who will then consider further
personal identifying information we ask for from customers
action as necessary.
Feedback from customers
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 (%)
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
2022
4.4
4.4
4.7
2021
4.6
4.6
4.9
2020
4.6 – Excellent
4.6
4.9 – Excellent
25+ hours
25+ hours
25+ hours
80%
2022
100%
100%
100%
100%
95%
91%
93%
80%
80%
2021
100%
100%
100%
no complaints
87%
85%
92%
no complaints
80%
2020
100%
100%
100%
no complaints
60%
67%
72%
no complaints
32
EQUALS GROUP PLCGOVERNANCE
ESG REPORT CONTINUED
3.4 SUPPLIERS
The key issues for us with suppliers are:
• Their integrity
• The reliability
• Their governance and business ethics
Many of our suppliers have been with us for a number of years
and hence we have built up a good understanding of them and
their values. For all new significant suppliers, we ask them to
complete a due-diligence questionnaire and annually review
the supplier.
3.5 REGULATORS
Equals endeavours to have an open dialogue with every
one of its regulators. We constantly seek demonstrate our
high standards of governance and business ethics, this may
range from telephone and email communication, the prompt
and professional responses to queries they may have, and
the timely submission of all scheduled returns (examples:
corporation tax, vat, P60’s compliance returns).
3.6 BANKS AND LIQUIDITY PROVIDERS
Equals has banking relationships with a number of banks and
liquidity providers. We are in regular – often daily – contact
with these and at all times adhere to the rules and customs
imposed on us by these banks. The principal banking/liquidity
partners we have include: Citibank, Barclays, NatWest, Crown
Agents Bank, Blackrock, Valitor, Suden and Velocity.
3.7 SHAREHOLDERS AND THE ANALYST COMMUNITY
Shares in Equals Group PLC are publicly traded on London’s
AIM. Under AIM rules we are obliged to have a NOMinated
ADvisor (“NOMAD”) and broker with whom we work closely on
all AIM and MAR (Market Abuse Regulations) matters.
The broker is the prime interface with our shareholders.
In 2022, in addition to the Annual and Interim results, Equals
released four trading updates. At the final and interim results,
the Executive directors present the results to investors and
handle regular analyst calls. Our investor presentations and
audio-casts are included in our Investor Relations website,
the link to which is here: https://www.equalsplc.com/content/
Subsidiaries of the Group have licences from a variety of
investors/results-and-reports
regulators and these are updated on our investor relations
website, the link to which section is: https://www.equalsplc.com/
content/company/our-permissions
33
ANNUAL REPORT 2022GOVERNANCE ESG REPORT CONTINUED
4. ESG – THE GOVERNANCE DIMENSION
matters. The Security Council, Architecture Council and
To execute our strategy flawlessly we maintain strong
governance practices. These practices are streamlined and
harmonised across the Group. Our full Report on Corporate
Governance is on pages 23 to 27.
4.1 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
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
• sign off new technical decisions or
• To discuss new architectural
Committee
system changes,
changes
• sign off new third party integrations,
• To review practices and standards
• ensure compliance with relevant
• To create architectural control for
regulations,
auditing purposes
• To risk assess and discuss the
outcome for changes to the status
quo
• maintain certifications as required
(such as PCI),
• organise and evaluate penetration
testing,
• maintain DR & BCP plans,
• write appropriate group policy on
security
Cybersecurity encompasses oversight of all manner of
security matters including ensuring Payment Card Industry
4.2 Continuous improvement
IT and data security practices are constantly improved, as we
(PCI) compliance, annual targeted penetration testing, and
react to developments and implement adjustments to existing
monthly vulnerability scanning. We conduct an annual audit
systems and procedures to facilitate efficiencies. In the past
of our existing technology suppliers to ensure that they are
year, we undertook a number of such actions. The appointment
still meeting the required standards. Whenever we engage
and retention of a Cybersecurity Manager in 2021, solidifies
a new supplier, we run data protection checks, and if the
the seriousness with which we approach IT and data security,
supplier is providing a core service, we conduct an in-depth
assessment and the organisation is incorporated into our
and highlights our drive to make security a way of life rather
than an add-on to the working day.
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
34
EQUALS GROUP PLCGOVERNANCE ESG REPORT CONTINUED
Since 2021, we commenced the process to achieve ISO 27001
approach all data security scenarios from the perspective
certification. The Chief Technology Officer (CTO) is the
that no employee is necessarily secure. We have two-factor
Executive Sponsor of the initiative, and it is being driven by
authentication for all systems that contain customer data.
the Cybersecurity Manager. The gap analysis day took place
Where an employee must use a personal device for work, we
in October, conducted by our external certifying approver, with
require the use of remote sessions to ensure that information
the objective to become accredited within 2023.
cannot be exported. Customers are also kept informed of
To ensure that concerns flagged are dealt with effectively
of external parties accessing their data whilst posing as an
the information we will ask from them, to mitigate the risk
and efficiently, employees that raise an issue are now invited
employee of Equals.
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
4.4 Risk management
We increased the capabilities within the risk management side
process to enable ease of use and understanding.
of the business. Fundamental to this has been the onboarding
As internal employee actions pose the greatest risk to IT and
of our new Group Head of Risk and Compliance, who has
restructured the risk and compliance framework to ensure that
data security, the overarching objective is to raise awareness
it underpins business operations and supports our financial
for cybersecurity across the Group. We have begun targeted
objectives. There is a Risk Committee for each operating
phishing campaigns on our own staff to improve awareness
subsidiary undertaking. There is a Change Council, comprising
and reduce the risk of employees clicking through on
of senior members of staff, which receives suggested changes
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
and advise on the potential governance, operational, and
customer impacts before further investment is approved.
4.5 Governance and business ethics
We continue to strengthen our internal governance and ensure
Compliance, we can monitor levels of training completion, and
we are conducting business correctly even when we are not
push out reminders via email and our internal communications
being scrutinised. We have created a conduct policy, rolled-
platform. We will be introducing security awareness training
out in 2022 alongside a wider conduct framework. Using our
as part of our onboarding process for new employees. Meta
new online training platform, “Meta Compliance+, we are also
Compliance will also enable the setting of KPIs to measure
able to deliver compliance and ethics training easily.
ongoing performance, as well as monthly mini-training
sessions on different IT and data privacy topics.
We have established better feedback loops and our internal
4.3 Privacy of customer data
We handle sensitive customer information, thus our data
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
privacy practices are of paramount importance, and we
customer experience.
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 (%)
2022
–
98.3%
97.2%
95.3%
2021
–
95.6%
98.1%
74.6%
2020
–
90%
–
–
35
ANNUAL REPORT 2022GOVERNANCE Report of the Audit Committee
for the year ended 31 December 2022
This report covers the following areas:
The Committee is appointed by the Board; in their primary
1. Membership of the Audit Committee (“the Committee”)
duties are listed beneath the subheadings below, along with a
brief description of sub-tasks:
2. Responsibilities of the Committee
3. Activities of the Committee during the year
4. Governance
5. External Auditor and independence thereof
6. Risk Management and Internal Control
7. Conflicts of interest
8. Significant issues
9. Events after 31 December 2022
2.1 Financial reporting
a. consider the areas of financial reporting 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;
c. oversee the integrity of the financial statements and
their compliance with UK company law and accounting
regulations;
1. MEMBERSHIP OF THE AUDIT COMMITTEE
The Audit Committee is chaired by Sian Herbert and includes
Non-Executive Director Christopher Bones. Other meeting
d. ensure the Annual Report and financial statements are
fair, balanced and understandable, and recommend their
approval to the Board;
attendees during the year included members of the external
e. monitor the integrity of announcements containing financial
audit team, Chairman and Non-Executive Director Alan
information.
Hughes, Ian Strafford-Taylor, CEO; Richard Cooper, CFO; and
other members of the finance team.
2. RESPONSIBILITIES OF THE AUDIT COMMITTEE
The Audit Committee (“the Committee”) has responsibility for
2.2 Internal controls
a. monitor adequacy and effectiveness of the
internal
financial controls and processes, and ensure any material
shortcomings are rectified at the earliest opportunity;
Equals Group PLC and all subsidiaries in the Group.
b. where appropriate, ensure compliance with UK Corporate
In the period since the last report, the Committee continued
to focus on the effectiveness of the controls across the Group
both within the ambit of the finance department and other
departments, including but not limited to Risk, Compliance,
Operations and Human Resources.
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, regulatory
compliance and operational resilience.
Governance Code, Quoted Company’s Alliance Code,
Information Commissioner’s Office, HMRC and the Financial
Conduct Authority’s relevant regulatory framework.
2.3 Risk management
a. review and provide oversight of the processes by which
risks are identified, evaluated, managed and optimised by
the Risk Committee.
2.4 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
The Audit Committee appointed various third parties to give
effectiveness;
independent opinions on chosen topics that are regarded
c. review the policy on non-audit services carried out by the
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
consider it necessary to have an internal audit function, using
external auditor, taking account of relevant ethical guidance;
d. review, consider and approve the external auditor’s fee, the
scope of the audit and the terms of their engagement;
external parties when considered appropriate. Non-statutory
e. make recommendations to the Board for the appointment
audits of subsidiaries for the purpose of FCA safeguarding
or reappointment of the external auditor.
obligations are conducted by a separate audit firm, Azets.
36
EQUALS GROUP PLCGOVERNANCE REPORT OF THE AUDIT COMMITTEE CONTINUED
3. COMMITTEE ACTIVITIES DURING THE YEAR
Such abilities ensure that the Committee functions with
The principal activities which the Committee undertook within
the year were as follows:
3.1 Financial statements and business reports
•
Reviewed the 2021 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.
3.2 External audit
• Debated and agreed the external audit strategy;
•
•
•
•
Noted the adjusted and non-adjusted differences and
debated the highlights memo previously circulated to
Committee members;
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
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 any control issues raised by the external auditors
in their management letter and monitored progress thereon;
Reviewed and approved the Letter of Representation sent
by the Company to the external auditors.
3.3 Other
•
Oversees the compliance with
laws and regulations
including money laundering including working with the
Compliance department and external counsel to verify the
Group’s position on any contentious matters.
4. GOVERNANCE
The Committee meets at least three times per year and
routinely meets with the external auditor without the Executive
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.
5. EXTERNAL AUDITOR AND INDEPENDENCE
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.
The Committee agrees the budget for the audit with the
auditor and 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.
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 currently remains a “substantive audit.”
Directors present. It is chaired by Sian Herbert, an independent
The Committee keeps this under review.
Non-Executive Director, who is a Chartered Accountant with
recent and relevant financial experience.
The Chair has 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.
6. RISK MANAGEMENT AND INTERNAL CONTROL
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.
37
ANNUAL REPORT 2022GOVERNANCE 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.
REPORT OF THE AUDIT COMMITTEE CONTINUED
Risk management and internal controls
7. CONFLICTS OF INTEREST
Conflicts of interest
8. SIGNIFICANT ISSUES
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.
Significant
issues and accounting
note 3.26, “judgements and estimates”) are identified by the
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.
Committee, the finance team, or through the external audit
judgements (refer to
process and are reviewed by the Audit Committee.
Significant issues
9. EVENTS AFTER 31 DECEMBER 2022
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.
The Audit Committee has continued the above activities in
2023, focusing on:
Post year end
•
The 2022 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.
the Board;
A review of the Cash Flow forecast as overseen by the Chief
Financial Officer.
SIAN HERBERT
Chair of the Audit Committee
Sian Herbert
Chair of the Audit Committee
29 March 2022
24 March 2023
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.
38
EQUALS GROUP PLCGOVERNANCE
Report of the Risk Committee
for the year ended 31 December 2022
PURPOSE AND COMPOSITION
The CEO continues to hold the prime responsibility for the identification, assessment, management and monitoring of risks to the
Group, but to assist and to bring external expertise a board-level Risk Committee was formed on 1st January 2021
The Committee consists of the full board of directors plus the Chief Operational Officer (‘COO”), who is not a member of the board.
The COO has day-to-day responsibility for risk and compliance. By invitation other employees of the Group, including the Director of
Trading, the Head of Risk and Compliance.
Formal papers are prepared for each meeting. These include a review of the individual Risk Committees of each regulated subsidiary
company whose meetings are held every quarter.
A risk register is maintained which scorecards those risks identified and the appropriate policies and procedures to mitigate those risks.
A risk appetite statement has been developed and approved. Below is a summary of the risks which the Committee believe are highly
rated and the controls put in place to mitigate them.
Risk
Position risk
Description of Risk
Control / Mitigation
A forward foreign exchange contract
is partially completed exposing the
Company to volatile exchange rate
movements.
The trading system does not allow trades to be completed
without a matching entry with a liquidity provider. More than
95% of trades are booked via an API.
Client default on an out
of the money forward
position
Volatile currency markets make
a client’s margined position
significantly out of the money
The trading team have data feeds which constantly monitor
the positions. All trades over £3 million require senior manager
approval and all trades over £10 million require the approval
of the CEO.
The operations team provide “out of the money” reports at least
once a day and independently advise both the trading team
and the Executive directors of any margin calls to be made.
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
39
ANNUAL REPORT 2022GOVERNANCE REPORT OF THE RISK COMMITTEE CONTINUED
Risk
Description of Risk
Control / Mitigation
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
The Group faces
significant competition
A reduction to competitive
advantage resulting in slower
business growth and ultimately
financial loss
Key person absence
The CEO or other key persons
become ill, or incapacitated
• 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.
• 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 creating significant
revenue opportunities.
The Group does not have silo management, and there are
overlaps in skills between Executives. The Group is examining
the feasibility of “key-man” cover for the CEO.
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
Loss of revenue, operational
resilience
Monitor key performance indicators, increased controls on
expenditure and large single expenditure commitments
IT platform re-build
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
Liquidity
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.
Governance
• Lack of Board oversight leading to
failure to fulfil legal and regulatory
responsibilities
• Regular Board and Committee meetings
40
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 RISK 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.
COVID-19
The Group continues to evaluate the threats from more new variants of COVID-19 affecting the ability of key staff to be working.
Significant issues
RUSSIAN INVASION OF UKRAINE AND OTHER SANCTIONED COUNTRIES
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.
The business has taken all actions to ensure full compliance with the sanctions and actions 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
Post year end
continued to be reviewed.
The Audit Committee has continued the above activities in 2022. Focusing on:
Certain other countries (such as Iran) are on sanction lists. The Groups data monitoring tools search for links to these countries
• The 2021 Annual Report and Consolidated Financial Statements, and the Committee has recommended that both be approved by
and red-flag any issues which are immediately relayed up to the CEO.
• A review of the Cash Flow forecast statement as overseen by the Chief Financial Officer.
the Board;
SIAN HERBERT
Chair of the Risk Committee
Sian Herbert
Chair of the Audit Committee
29 March 2022
24 March 2023
41
ANNUAL REPORT 2022GOVERNANCE
Directors’ Remuneration Report
for the year ended 31 December 2022
This report for the year ended 31 December 2022 complies
of working or terms of reference over the period of this report
with the requirements of the Companies Act 2006, the
save that Ms Shona Kerfoot, People Director, attends meetings
Group’s adopted Corporate Governance Code - the Quoted
to provide staff support.
Companies Alliance Code - and applicable AIM Rules.
This report covers the following areas;
1. Membership of the Remuneration Committee
2. Responsibilities of the Remuneration Committee
3. Remuneration Policy
4. Remuneration for 2022
5. Remuneration for 2023
6. Long-term incentives
7. Service agreements and similar
8. Professional fees incurred by the Committee
1.
MEMBERSHIP OF THE REMUNERATION
COMMITTEE
Membership of the Remuneration Committee (“Committee”)
comprises:
•
•
•
Christopher Bones, Independent Non-Executive Director,
Committee Chair since 1 May 2021
Alan Hughes, Independent Non-Executive Director, on
committee since 1 October 2020
Sian Herbert, Independent Non-Executive Director, on
committee since 1 October 2020
Executive Directors are invited to contribute, and the CEO may
be invited to attend. No attendee or member is present for
discussion of their own remuneration or for matters that may
have a bearing on their remuneration.
2.
RESPONSIBILITIES OF THE REMUNERATION
COMMITTEE
The Committee is responsible for:
•
•
Setting remuneration policy and remuneration for the
Executive Directors of the Company and remuneration
policy and governance of awards under that policy for
senior executives and employees earning over £100,000pa
Oversight of remuneration policy for the whole Group
and its adherence to group values and the principles
established in the policy laid out below
As part of the overall review of Board effectiveness the
performance of this and other committees is considered and
reviewed. No material changes have been made to its ways
42
3. REMUNERATION POLICY
3.1 Overall Policy
The Group’s overall policy remains one underpinned by
the need to attract and retain the key skills and capabilities
throughout the organisation that will deliver our strategy,
particularly
in strategic
leadership, commercial, product
and engineering capabilities alongside the financial and
compliance expertise to meet both our operational and
regulatory requirements.
Core to this is the belief that better than average performance
should result in higher than average rewards and that these
should incentivise a longer-term perspective to reflect that of
our shareholders; as such for Executive Directors and other
senior executives there are long-term incentives as well as
annual ones alongside a competitive salary.
The core reward principle is 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 with better than average performance achieving
upper median
levels. To reinforce this, the Committee
established some key principles to ensure that shareholders
are confident that performance-based rewards:
•
incentivise growth in revenue, and earnings per share and,
•
encourage behaviours that support our ESG principles and
company values; these are:
o
o
o
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;
Ensure that short-term cash incentives are linked to
stretching performance measures; and
Align more remuneration at every
the
shareholder financial interest through share-based
remuneration.
level
to
The Committee procured specialist advice through the
appointment of remuneration advisers H2glenfern Ltd to
ensure that decisions made going forward on Executive
and Non-Executive Director remuneration are properly
informed with robust data. H2glenfern is a member of the UK
Remuneration Consultants Group (RCG) and has confirmed
that it complies with the RCG Code. H2glenfern has no other
relationship with the Company and the Committee is satisfied
EQUALS GROUP PLCGOVERNANCE DIRECTORS’ REMUNERATION REPORT CONTINUED
that the advice it receives is independent and objective. The Committee instructed H2glenfern to carry out benchmarking for
executive and non-executive remuneration during Q4 2022.
This part of the report sets out the remuneration policy with regard to the Executive Directors (“EDs”). The policy on each element
of remuneration and how it operates is detailed in the table:
Elements of Remuneration
Element
Base salary
Link to remuneration
policy
To attract and retain
individuals of the
experience and calibre
required to achieve our
strategic goals and in
whom shareholders
can have confidence.
EDs salaries are
reviewed annually on
1 April.
Application of policy
Maximum opportunity Performance metric
Salary reviews are
conducted vs. business
performance including
ESG aspects.
Using an externally
recommended ‘peer
group’ of similar listed
companies in our
sector and others
with common core
capabilities and
product offering we
establish a range that
reflects our policy
position.
The benchmarking
provides a range for
both roles from the
median to Upper
Quartile and we will
reflect the business
performance outcome
in agreeing any salary
increase.
Annual Bonus
To incentivise
performance and to
align the interests of
EDs and shareholders
over the short to
medium terms.
The scale of the bonus
is set through the peer
group benchmarking
exercise to ensure a
competitive annual
reward.
The parameters,
performance criteria,
weightings and targets
are ordinarily set at the
start of each financial
year.
Payments are made
in cash following
completion of
the annual audit
and subject to
the Committee’s
assessment of
performance against
targets and other
matters it deems
relevant.
Awards are subject to
malus and clawback
provisions.
The CEO has a
maximum bonus
opportunity of 140% of
salary; the CFO has a
maximum of 120%.
Performance measures
may include financial,
non- financial,
personal and strategic
objectives.
The salaries used are
those as at the end of
the financial year.
Performance criteria
and weightings may be
changed from year to
year.
At present, the
performance targets
are based on Revenue
and Adjusted EBITDA
which is considered
by the committee to
be the Group’s key
financial performance
metric.
43
ANNUAL REPORT 2022GOVERNANCE DIRECTORS’ REMUNERATION REPORT CONTINUED
Element
Long Term Incentive
Plan
Link to remuneration
policy
Application of policy
Maximum opportunity Performance metric
Performance measures
are CAGR in revenue
over the vesting
period and the annual
achievement of an
internally set EPS
target ahead of market
expectations for each
of the three years of the
vesting period.
The award reflects
practices in the median
to upper quartile of our
peer group.
The plan sets a normal
maximum of 100% of
the base rate of salary
and lays down that
the committee may
exceptionally grant up
to 200% of the base
rate of salary at the
time of the award.
To incentivise
performance and to
align the interests of
EDs and shareholders
over the long term.
EDs are eligible to
receive awards under
the Long Term Incentive
Plan at the discretion of
the Committee.
Awards are granted
as conditional awards
which vest after
three years subject
to the meeting of
objective performance
conditions specified at
award.
Awards are subject to
malus and clawback
provisions.
An additional holding
period of two years
post vesting is applied
to awards made to the
EDs.
All employee
shareholding plan
Pensions
Benefits
Non-Executive
Remuneration
To encourage all
employees to make a
long-term investment in
the Company’s shares
in a tax efficient way.
To attract and retain
individuals of the
experience and calibre
required to achieve our
strategic goals and in
whom shareholders
can have confidence.
To attract and retain
individuals of the
experience and calibre
required to achieve our
strategic goals and in
whom shareholders
can have confidence.
To provide fees
appropriate to time
commitments and
responsibilities of each
role.
The EDs and enrolled
in the plan as it covers
all employees.
Complies with the
HMRC regulations for
Share Incentive Plans.
None
The EDs are eligible for
the Group Workplace
Pension Plan.
None
None
The EDs are eligible for
the Group Workplace
Pension Plan.
None
None
The EDs are eligible for
the Group Workplace
Pension Plan.
None
The Group Board is
guided by the general
increase for the
broader employee
population and takes
into account relevant
market movements.
44
EQUALS GROUP PLCGOVERNANCE DIRECTORS’ REMUNERATION REPORT CONTINUED
3.2 Malus and clawback
Both Annual Bonus and Long-Term Incentive Plan awards
are subject to malus and clawback provisions. Reasons for
malus and clawback being applied would include material
misstatement
in audited results, discovery of errors or
inaccuracies in the assessment of any performance condition,
fraud or gross misconduct, events or behaviour which lead to
the censure of the Group by a regulatory authority or have a
may leave is determined by the Remuneration Committee in
accordance with the rules of any applicable scheme.
3.6 Non-executive Directors’ letters of appointment
The Non-executive Directors do not have service contracts but
instead have letters of appointment dated as follows:
Alan Hughes
Sian Herbert
1 July 2020
1 October 2020
significant detrimental impact on the reputation of the Group.
Christopher Bones
9 April 2021
3.3 Remuneration of employees below the Group
All of which contain a three-month notice period.
Board
3.7 Consideration of new Executive Directors or senior
Employees below the Group Board receive base salary,
executives
benefits, annual bonus, and senior executives are invited to
participate in the Long Term Incentive plan.
Pay and conditions throughout the Group are taken into
consideration when setting
remuneration policy. The
Committee does not consult other employees when setting
executive remuneration.
3.4 Shareholder consultation
The Committee’s policy is to consult with major shareholders
in respect of significant decisions on executive remuneration.
The Chair of the Remuneration Committee is available for
contact with investors concerning the Company’s approach to
remuneration.
3.5 Executive Directors’ service contracts and
payments for loss of office
The Executive Directors have rolling service contracts, Ian
Strafford Taylor’s commencing 1st August 2014 (continuous
service from 1st August 2006), Richard Cooper’s commencing
14th October 2019. but a fixed period of 12 months’ notice of
termination for Ian Strafford Taylor and of six months’ notice of
termination for Richard Cooper. Our approach to remuneration
in each of the circumstances in which an Executive Director
4.1 Table of total remuneration for 2022 and 2021
When recruiting or promoting any senior executive, we seek to
apply consistent policies on fixed and variable remuneration
components in line with the remuneration policy set out
above. This helps to ensure that any new Executive Directors
or senior executive is on the same remuneration footing as
existing Executive Directors or senior executives respectively,
while still taking into account the skill and experience of the
individual, the market rate for a candidate of that experience
and the importance of securing the relevant individual.
4. ANNUAL REMUNERATION REPORT FOR 2022
Salaries were reviewed and adjusted in line with both the
significant performance ahead of expectations in 2021 and
available market data. In addition, the date for the annual
review of salary for Richard Cooper was moved to align with
that of the CEO in 2023 to 1 April.
Bonus payments as reported below were linked directly to
the performance against revenue growth and achievement
against goals set for Adjusted EBITDA – both of which were
significantly ahead of internal goals and external expectations.
There were no increases in fees to Non-Executive Directors for
2022.
Executive Directors
Ian Strafford-Taylor
Richard Cooper
2021 Comparative
Non-Executive Directors*
Alan Hughes
Sian Herbert
Christopher Bones
2021 Comparative
Total, 2022
Total, 2021
Gross salary
and fees
Benefits
Table 4.2
Bonuses*
Table 4.3
Total
2021
337,500
285,000
622,500
539,356
80,000
65,000
55,000
200,000
185,052
822,500
724,408
36,757
26,374
63,131
43,097
–
–
–
–
–
63,131
43,097
435,542
287,683
723,225
560,459
–
–
–
–
–
723,225
560,459
809,799
599,057
1,408,856
1,142,912
80,000
65,000
55,000
200,000
185,052
1,608,856
1,327,964
651,966
490,936
1,142,912
80,000
65,000
40,052
185,082
*Numbers above are represented on an accrual basis. The most significant difference to on a cash basis is in relation to bonuses. See note 5b for
further details of cash basis.
45
ANNUAL REPORT 2022GOVERNANCE
DIRECTORS’ REMUNERATION REPORT CONTINUED
4.2 Table of benefits for 2022 and 2021
Executive Directors
Ian Strafford-Taylor
Richard Cooper
2021 Comparative
4.3 Table of bonuses for 2022 and 2021
Executive Directors
Ian Strafford-Taylor
Richard Cooper
2021 Comparative
Pension
Healthcare
Car/car
allowance
Total
2021
3,522
3,522
7,044
7,030
6,279
6,279
12,558
6,990
26,956
16,573
43,529
29,077
36,757
26,374
63,131
43,097
24,631
18,466
43,097
Performance
related
Covid
reimbursement
Total
2021
420,000
273,600
693,600
550,000
15,542
14,083
29,625
10,459
435,542
287,683
723,225
560,459
335,792
224,667
560,459
Bonuses, as a percentage of adjusted EBITDA before bonuses equated to 5.5% (2021: 7.7%)
5. 2023 REMUNERATION
As indicated above there has been a review of the base salaries for the Executive Directors for 2023 vs a peer group of comparator
companies the results of which are shown below:
CEO
Salary of £350,000 raised to £400,000 from 1 April 2023
CFO
Salary of £285,000 raised to £300,000 from 1 April 2023
For the 2023 financial year, both the CEO and CFO have the opportunity to earn up to 140% and 120% of their salaries respectively.
The bonus criteria are associated with achievement of targets set for revenue growth and Adjusted EBITDA as in 2022. 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 2023. The 2023
financial statements will however accrue whatever award the Remuneration Committee decide on.
6. LONG TERM INCENTIVES
The Group launched new share-based incentive plans in 2021 and has made additional grants in 2022. These plans were
announced to the stock market on 18 October 2021 and 14 December 2022.
All employees
All employees with a length of service of 12 months or more are able to participate in the Share Incentive Plan. This plan has a
vesting period of three years, in line with HMRC guidelines.
Key Staff
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. Grants made in 2021 were subject to no performance
conditions whereas grants made in 2022 are subject to performance conditions.
Executive Directors
The grants are performance related and only vest should the recipient be in employment a full three years after the award.
Recipients are all subject to a further two-year holding.
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 although the Committee has discretion in this area.
The Remuneration Committee resolved to extend the option exercise period of certain options granted at IPO in 2014 to ensure
alignment with the standard ten-year option period. Such change was announced to the Stock Exchange on 31 October 2022.
46
EQUALS GROUP PLCGOVERNANCE
DIRECTORS’ REMUNERATION REPORT CONTINUED
Summary of grants made in 2022 and 2021
Date of award
Date shares issued into trust
2022 Number of
options/share
awards
14.12.2022
25.01.2023
2022
Number of
recipients
2021 Number of
options/share
awards
18.10.2021
20.04.2022
2021
Number of
recipients
Executive directors’ performance-based plan
Key-staff retention plan
Share incentive plan
TOTAL
1,012,500
2,170,000
747,488
3,929,988
2
44
188
1,250,000
2,415,000
704,000
4,369,000
2
36
176
Of the LTIP awards made in 2021, a total of 170,576 lapsed through employees leaving the Group by 31 December 2022. Of the
SIP awards made in 2021, a total of 80,000 lapsed through employees leaving the Group, but, remain in Trust. Directors’ interest in
share options, including the LTIP and SIP at 31 December 2022 were:
Director award date
SHARE OPTIONS
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
SHARE INCENTIVE PLAN (“SIP”)
Ian Strafford-Taylor
18/10/2021
14/12/2022
Richard Cooper
18/10/2021
14/12/2022
LONG TERM INCENTIVE PLAN (“LTIP”)
Ian Strafford-Taylor
18/10/2021
14/12/2022
Richard Cooper
18/10/2021
14/12/2022
Totals
Ian Strafford-Taylor
Richard Cooper
Option
price (£)
Number
Granted
Date of
Grant
Earliest
Exercise date
Latest
exercise date
192,950
0.22
1,789,300
0.36
1,535,750
0.36
250,000
0.30
250,000
0.30
0.30
250,000
0.29 666,667
0.29 666,667
0.29 666,666
6,268,000
0.29 333,334
6,601,334
0.01 4,000
3,976
0.01
7,976
0.01 4,000
3,976
0.01
7,976
0.01 750,000
637,500
0.01
1,387,500
0.01
0.01
500,000
375,000
875,000
2,262,500
7,663,476
1,216,310
8,879,786
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
05/08/2016
05/08/2016
05/08/2016
28/09/2017
28/09/2018
28/09/2019
30/04/2021
30/04/2022
30/04/2023
28/07/2024
28/07/2024
28/07/2024
27/09/2026
27/09/2026
27/09/2026
01/09/2030
01/09/2030
01/09/2030
01/09/2020
30/04/2023
01/09/2030
07/01/2022
20/01/2023
07/01/2025
20/01/2026
07/01/2032
20/01/2023
07/01/2022
20/01/2023
07/01/2025
20/01/2026
07/01/2032
20/01/2023
18/10/2021
14/12/2022
18/10/2024
14/12/2025
18/10/2031
14/12/2032
18/10/2021
14/12/2022
18/10/2024
14/12/2025
18/10/2031
14/12/2032
47
ANNUAL REPORT 2022GOVERNANCE DIRECTORS’ REMUNERATION REPORT CONTINUED
As well as the principles above, the vesting criteria for the 2021
and 2022 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 24 March 2022
Of the total of 7,663,476 share incentives for Ian Strafford-
Taylor 6,268,000 had vested by 24 March 2023, through the
approval of these financial statements leaving, 1,395,476
unvested at that date.
Of the total of 1,216,310 share incentives for Richard Cooper
333,334 had vested by 24 March 2023, through the approval
of these financial statements leaving, 882,976 unvested at that
date.
At the date of this report, the equity awards made to Ian
Strafford-Taylor and Richard Cooper were equal to 4.09% and
0.65% of the fully diluted share capital.
Option numbers used for EPS
The calculation of diluted EPS and diluted adjusted EPS
ignores any dilution if the result attributable to owners of
Equals Group PLC is a statutory loss. The number to be used
for 2022 is 187,583,788(2021: 178,959,402).
7. PROFESSIONAL FEES INCURRED BY THE RE-
MUNERATION COMMITTEE
During 2022 the cost (including irrecoverable VAT) of advice
taken by the Remuneration Committee in the year amounted to
£23,250 (2021: £84,490). This advice relates to share incentive
awards, share-based
remuneration and
remuneration
comparative report.
In addition, the manager of the shares platform, “Global
Shares” invoiced the Company for a total of £18,000 for the
administration of their platform and administration of the SIP
and LTIP in 2022 (2021: £nil).
PROFESSOR CHRISTOPHER BONES
Chair of the Remuneration Committee
24 March 2023
48
EQUALS GROUP PLCGOVERNANCE Directors’ Report
for the year ended 31 December 2022
Equals Group PLC is a company limited by shares. The Directors present their annual report and audited consolidated financial
statements for the year ended 31 December 2022.
FINANCIAL REPORTING
The consolidated financial statements of Equals Group PLC for the year ended 31 December 2022 are set out on pages 59 to 94.
These have been prepared in accordance with international accounting standards in conformity with the requirements of the
Companies Act 2006.
PRINCIPAL ACTIVITIES
The principal activities of the Group during the year were to provide payment processing and banking-style services and to
both private customers and corporations through prepaid currency cards, travel cash, international money transfers and current
accounts. Its trading subsidiaries have various degrees of regulation as shown below:
Company
number
Company name (and date of
name change in 2022)
Previous name
05539698
Equals Money plc (13.09.2022)
FairFx plc
06268340
Equals Money UK Limited
(26.09.2022)
Spectrum Payment Services
Limited
07131446
Equals Connect Limited
09558664
Fair Payments Limited
12330839
Roqqett Limited
FCA permissions
Authorised Payment institution under
Payment Service Regulations, 2009
Authorised Payment institution under
Payment Service Regulations, 2009
Authorised Payment institution under
Payment Service Regulations, 2009
Authorised E-Money institution under
the Electronic Money Regulations 2011
Authorised Payment institution under
Payment Service Regulations, 2009
The principal activity of the Company is as an investment holding company for the Equals Group of companies.
KEY PERFORMANCE INDICATORS
The Strategic Report set out on pages 5 to 19 provides key performance indicators and an assessment of the Group’s financial
performance throughout the year.
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.
Equals is an equal opportunity employer. It does not 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.
Further details of the Groups relationship with its employees can be found in the Section 172 statement on page 20 and in the
ESG report on page 30.
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 20.
DIVIDENDS
The Directors do not recommend the payment of a dividend for the year ended 31 December 2022 (2021: Nil). At 31 December
2022 the Company had distributable reserves of £(89)k (31 December £931k).
49
ANNUAL REPORT 2022GOVERNANCE DIRECTORS’ REPORT CONTINUED
DIRECTORS
CAPITAL STRUCTURE
Details of the Group’s authorised and issued share capital,
together with details of the movement therein, are set out in
note 16 to the financial statements. This includes the rights
and obligations attaching to shares. There are no restrictions
on the transfer of the Company’s shares. Details of major
shareholders (that hold greater than 3.0%) as at 31/12/2022
are set out below:
Name
Pembar Limited
Threadneedle Asset
Management
Schroders Funds
Hargreaves Lansdown
Chelverton Asset
Management
JP Morgan Asset
Management
Interactive Investor (EO)
Stephen Heath
Christian Levett
AJ Bell, stockbrokers (EO)
ENVIRONMENT
No. of Ordinary
Shares held
Percentage of
issued capital
24,265,744
13.42%
22,605,405
19,866,978
13,320,211
12.51%
11.00%
7.37%
9,900,000
5.32%
9,628,032
8,346,223
7,358,341
7,069,344
6,069,111
5.32%
4.61%
4.07%
3.93%
3.35%
Carbon dioxide emission data has been collected for 2022
and disclosed within the ESG report. This along with further
information on environmental matters can be found in the ESG
report on pages 28 to 35.
RESEARCH AND DEVELOPMENT
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
DIRECTORS’ INTERESTS
The Directors who held office at 31 December 2022 held the
following shares in the Company as at that date:
I A I Strafford-Taylor
R Q M Cooper
S A Herbert
A R F Hughes
C J Bones
Ordinary 1p
Shareholding
%
1.22%
0.47%
0.04%
0.03%
0.003%
shares
2022
2,200,250
850,000
77,800
46,000
4,500
The Directors who held office at 31 December 2022 held the
following unexercised share options in the Company as at that
date:
Option
price (£)
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
I A I Strafford-Taylor
R Q M Cooper
0.22
0.36
0.36
0.30
0.29
0.01
0.01
0.01
0.01
0.29
0.01
0.01
0.01
0.01
750,000
18/10/2021
The Group has continued its investment in research and
4,000
07/01/2022
development throughout the year. A review of the work
637,500
14/12/2022
undertaken can be found in the Chief Executive’s Report on
3,976
20/01/2023*
pages 7 to 11.
333,334
01/09/2020
500,000
18/10/2021
RISK AND RISK MANAGEMENT
4,000
07/01/2022
375,000
14/12/2022
The Group is exposed to various financial and operational
risks. Further details of these, including processes put in place
3,976
21/01/2023*
to mitigate these risks, are disclosed in the Risk Committee
*Per IFRS 2, service period for the 2022 SIP commences before the grant
date and thus the share are disclosed in the year which participants
are made aware of the grant conditions which in this case was the
announcement date on 14th December 2022.
INDEMNITY INSURANCE
The Company maintains a directors and officers liability
insurance policy in respect of any legal costs that may be
incurred against the Directors in dealing with any legal claims
or investigations. The policy was in place throughout the year
and up to the date of approval of the financial statements.
Report on pages 39 to 41 and note 21 of the financial
statements.
INDEPENDENT AUDITORS
Under section 487(2) of
the Companies Act 2006,
PricewaterhouseCoopers LLP will be deemed to have been
reappointed as auditor 28 days after the financial statements
are sent to members or 28 days after the latest date prescribed
for filing the financial statements with the registrar, whichever
is earlier.
50
EQUALS GROUP PLCGOVERNANCE DIRECTORS’ REPORT CONTINUED
DISCLOSURE OF INFORMATION TO AUDITOR
GOING CONCERN
The Directors who held office at the date of approval of this
Based on the Group’s budgets and financial projections, the
Directors’ report confirm that, so far as they are each aware,
Directors are satisfied that the business is a going concern and
there is no relevant audit information of which the Company’s
therefore the financial statements have been prepared on a
auditors are unaware; and each Director has taken all the steps
going concern basis. This assessment is based on whether there
that they ought to have taken as a Director to make themselves
is sufficient liquidity and financing to support the business, the
aware of any relevant audit information and to establish that
post balance sheet trading of the Group, the regulatory
the Company’s auditors are aware of that information.
environment, and the effectiveness of risk management
POST BALANCE SHEET EVENTS
On 6 January 2023, the Group completed the acquisition
of Roqqett Limited, an open-banking platform, for a total
consideration of up to £2,250k.
This acquisition was initially announced on 28 November 2022,
the acquisition was conditional upon regulatory approval from
the Financial Conduct Authority (FCA) which was received on
6 January 2023.
During the year ended 2022, the Group entered into a loan
agreement with Roqqett Limited for a principal amount of £830K
(2021: Nil) as shown in note 14. The loan was unsecured and does
not bear interest. The terms of the loan required that the principal
to be converted towards the payment to acquire Roqqett Limited
upon regulatory approval from the Financial Conduct Authority
(FCA) which was received on 6 January 2023.
On 14 March 2023, the Group sold the Travel Cash CGU for an
initial £250k with a further £100k subject to certain conditions
being met to Currency Exchange Corporation Ltd. The carrying
value of the assets disposed off were £128k shown in note 4 and
consisted of right of use and intangible assets.
On the 24 March 2023 after stock trading hours, the Group signed
a share purchase agreement for the acquisition of Oonex S.A. an
authorised payment institution regulated by the National Bank
of Belgium to enable the provision of Equals products into the
EEA for consideration of 5 million shares in Equals Group PLC.
The acquisition is conditional upon regulatory approval from the
National Bank of Belgium.
On the 24 March 2023 after stock trading hours, the Group signed
a share purchase agreement for the acquisition of Hamer and
Hamer Limited an authorised payment institution regulated by
the FCA for an initial consideration of £1.5 million and deferred
consideration capped at £2.7 million based on performance
over a three-year period. The acquisition is conditional upon
regulatory approval from the FCA.
FUTURE DEVELOPMENT
The Group’s business activities, together with the factors likely
to affect its future development and position, are set out in the
Strategic Report on pages 5 to 19.
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 after stock
market trading hours on 24 March 2023 and signed on its
behalf by:
IAN STRAFFORD-TAYLOR
Chief Executive Officer
24 March 2023
51
ANNUAL REPORT 2022GOVERNANCE Statement of Directors’ Responsibilities in Respect
of the Annual Report and the Financial Statements
for the year ended 31 December 2022
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 2022 and financial
statements,,
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.
taken as a whole,
is
IAN STRAFFORD-TAYLOR
Chief Executive Officer
24 March 2023
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 2022 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.
52
EQUALS GROUP PLCGOVERNANCE 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.
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 entities, and we have
fulfilled our other ethical responsibilities in accordance with
these requirements.
•
•
•
give a true and fair view of the state of the group’s and of
the company’s affairs as at 31 December 2022 and of the
group’s profit and the group’s and company’s cash flows
for the year then ended;
have been properly prepared in accordance with UK-
adopted international accounting standards as applied
in accordance with the provisions of the Companies Act
2006; and
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 2022;
the consolidated statement of comprehensive income, the
consolidated and company statements of cash flows, and
the consolidated and company statements of changes in
equity for the year then ended; and the notes to the financial
statements, which include a description of the significant
accounting policies.
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 parent)
• Overall group materiality: 696,822 (2021: 440,914) based on 1% of total revenue.
• Overall company materiality: 654,103 (2021: 440,914) based on 1% of total assets.
•
Performance materiality: 522,616 (2021: 330,686) (group) and 490,577 (2021: 330,686)
(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.
53
ANNUAL REPORT 2022GOVERNANCE 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.
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)
We performed the following audit procedures over the
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
to support
its business strategy. Determining whether
expenditure qualifies for capitalisation requires judgement
and the total expenditure capitalised in the financial year
ended 31 December 2022 amounts to £5.1m (£3.6m during the
financial year ended 31 December 2021).
The carrying value of software assets was £14.8m at the end of
the period (£15.0m at 31 December 2021).
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.
capitalised IT development costs:
•
•
•
•
We evaluated the design 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 assets.
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.
With respect to the IT development costs capitalised during
the current financial period we found them to be reasonable
and materially compliant with the requirements of IAS 38
Intangible Assets based on the procedures performed and
evidence obtained.
54
EQUALS GROUP PLCGOVERNANCE 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 parent)
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
We performed
the
managements’ impairment assessment:
following audit procedures over
•
We evaluated the design of key controls over the annual
assessment of the recoverable amount and impairment
testing in respect to the goodwill balances.
3.26B. The Group has £13.5m of goodwill on the balance sheet
•
at 31 December 2022 (£13.5m at 31 December 2021).
Management uses an expert to help them perform an
impairment test, 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
determined using the VIU model.
Based on the results of the impairment test performed,
management concluded that no impairment charge is required
as the recoverable amount exceeded the carrying value of the
CGUs.
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 forecast
revenue, costs, the terminal growth rate and discount rates.
•
•
•
•
•
•
•
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 agreed 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 assessed the competence of management’s expert and
read their report provided to management
We challenged the appropriateness of the discount rates
applied by evaluating the reasonability of key assumptions
made by management’s experts
through obtaining
supporting evidence and corroborating inputs available in
the market.
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. 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 Equals Money PLC, Fair Payments Limited, Equals Money UK 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.
The impact of climate risk on our audit
As part of our audit we made enquiries of management to understand the extent of the potential impact of climate risk on the
group’s and company’s financial statements, and we remained alert when performing our audit procedures for any indicators
of the impact of climate risk. Our procedures did not identify any material impact as a result of climate risk on the group’s and
company’s financial statements.
55
ANNUAL REPORT 2022GOVERNANCE INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF EQUALS GROUP PLC CONTINUED
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.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall materiality
696,822 (2021: 440,914).
How we determined it
1% of total revenue
654,103 (2021: 440,914).
1% of total assets
Financial statements – Group
Financial statements – Company
Rationale for benchmark
The Group
is very focused on expansion
The entity’s assets predominantly consist of
applied
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
determine materiality.
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 £3,856 to £696,822.
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% (2021: 75%) of overall materiality, amounting to £522,616 (2021:
£330,686) for the group financial statements and £490,577 (2021: £330,686) 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 those charged with governance that we would report to them misstatements identified during our audit above
£34,841 (group audit) (2021: £22,046) and £32,705 (company audit) (2021: £22,046) 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 assessed and challenged key assumptions used by directors in their determination of going concern of the Group and
Company;
We used our knowledge of the Group and Company, 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.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the group’s and the company’s ability to continue as a going concern for
a period of at least twelve months from when the financial statements are authorised for issue.
56
EQUALS GROUP PLCGOVERNANCE INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF EQUALS GROUP PLC CONTINUED
In auditing the financial statements, we have concluded that
audit, we did not identify any material misstatements in the
the directors’ use of the going concern basis of accounting in
Strategic report and Directors’ Report.
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
with respect to going concern are described in the relevant
sections of this report.
REPORTING ON OTHER INFORMATION
The other information comprises all of the information in the
Annual Report other than the financial statements and our
auditors’ report thereon. The directors are responsible for the
other information. Our opinion on the financial statements
does not cover the other information and, accordingly, we do
not express an audit opinion or, except to the extent otherwise
explicitly stated in this report, any form of assurance thereon.
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.
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 2022
is consistent with the financial statements and has been
prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the group and
company and their environment obtained in the course of the
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
as they determine is necessary to enable the preparation of
financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group’s and the company’s
ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern
basis of accounting unless the directors either intend to
liquidate the group or the company or to cease operations, or
have no realistic alternative but to do so.
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.
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, Anti-Money Laundering legislation and UK
tax legislation, and we considered the extent to which non-
57
ANNUAL REPORT 2022GOVERNANCE INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF EQUALS GROUP PLC CONTINUED
compliance might have a material effect on the financial
statements. We also considered those laws and regulations
Use of this report
This report, including the opinions, has been prepared for and
that have a direct impact on the financial statements such
only for the company’s members as a body in accordance
as the Companies Act 2006. We evaluated management’s
with Chapter 3 of Part 16 of the Companies Act 2006 and for
incentives and opportunities for fraudulent manipulation
no other purpose. We do not, in giving these opinions, accept
of the financial statements (including the risk of override of
or assume responsibility for any other purpose or to any other
controls), and determined that the principal risks were related
person to whom this report is shown or into whose hands it
to posting inappropriate journal entries to misstate revenue
may come save where expressly agreed by our prior consent
or reduce costs through incorrect capitalisation, creation of
in writing.
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 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);
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.
There are
inherent
limitations
in the audit procedures
We have no exceptions to report arising from this responsibility.
DANIEL BRYDON
(Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
24 March 2023
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.
58
EQUALS GROUP PLCGOVERNANCE Financial statements
59
Consolidated Statement
of Comprehensive Income
for the year ended 31 December 2022
Revenue on currency transactions
Banking revenue
Revenue
Transaction and commission costs
Gross profit
Administrative expenses
Depreciation charge
Amortisation charge
Impairment charge
Acquisition expenses*1
Note
4
5
8/9
10
10
2022
£’000
63,541
6,141
69,682
(36,027)
33,655
(22,576)
(1,211)
(6,008)
–
(164)
2021
£’000
38,424
5,667
44,091
(20,071)
24,020
(18,499)
(1,398)
(5,812)
(1,638)
–
Total operating expenses
(29,959)
(27,347)
Adjusted EBITDA*2
Operating profit/(loss)
Finance costs
Profit/(loss) before tax
Tax credit
Profit/(loss) after tax
Attributable to:
Owners of Equals Group PLC
Non-controlling interest
Total comprehensive income/(loss) for the year
Attributable to:
Owners of Equals Group PLC
Non-controlling interest
Earnings/(loss) per share
Basic
Diluted
12,120
3,696
(280)
3,416
135
3,551
3,237
314
3,551
3,237
314
1.80p
1.73p
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
6
7
7
*1 Acquisition costs represents and includes costs pursuant to acquisitions.
*2 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 65 to 94 form an integral part of these financial statements.
60
FINANCIAL STATEMENTSEQUALS GROUP PLC Consolidated and Company
Statements of Financial Position
as at 31 December 2022
Note
Group
2022
£’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 loss in the year
Equity attributable to owners of Equals
Group PLC
Non-controlling interest
Non-current liabilities
Borrowings
Lease 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
18
19
6
9
20
1,139
3,367
30,008
1,831
–
36,345
292
10,274
–
5,616
15,044
31,226
67,571
1,807
53,405
3,231
8,609
(24,148)
–
42,904
–
42,901
–
3,417
3,417
–
15,489
192
780
4,789
21,250
67,571
2021
£’000
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
Company
2022
£’000
–
–
–
1,368
62,902
64,270
–
1,159
–
–
–
1,159
65,429
1,807
53,405
2,397
3,187
1,038
(1,127)
60,707
–
60,707
–
–
–
–
4,722
–
–
–
4,722
65,429
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
The notes on pages 65 to 94 form an integral part of these financial statements.
The financial statements on pages 59 to 64 were approved by the Board of Directors after stock market trading hours on 24 March
2023 and were signed on its behalf by:
Richard Cooper
Director, Chief Financial Officer
Company Registration number: 08922461
61
FINANCIAL STATEMENTSANNUAL REPORT 2022 Consolidated and Company
Statements of Changes in Equity
for the year ended 31 December 2022
Total
equity
£’000
42,642
(2,262)
271
–
222
278
41,151
3,551
(3,479)
924
–
201
556
42,904
Total
equity
£’000
60,908
(692)
271
–
222
60,709
(1,127)
924
–
201
Called up
share capital
£’000
Share
premium
£’000
Share-based
payment
£’000
1,786
53,003
1,402
Group
At 1 January 2021
(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
At 31 December 2021
Profit for the year
Acquisition of the remaining NCI (note 12)
Share-based payment charge (note 22)
Share options exercised in year
Shares issued in year
Movement in deferred tax on share-based
payment reserve
–
–
–
7
–
–
–
–
215
–
1,793
53,218
–
–
–
–
14
–
–
–
–
–
187
–
Accumulated
losses /
retained
earnings
£’000
(22,259)
(2,424)
–
93
–
–
Other
reserves
(note 17)
£’000
8,609
–
–
–
–
–
(24,590)
8,609
3,237
(2,902)
–
107
–
–
–
–
–
–
–
–
Total
attributable
to owners
of Equals
Group PLC
£’000
42,541
(2,424)
271
–
222
278
40,888
3,237
(2,902)
924
–
201
556
(24,148)
8,609
42,904
Non-
controlling
interest
£’000
101
162
–
–
–
–
263
314
(577)
–
–
–
–
–
–
271
(93)
–
278
1,858
–
–
924
(107)
–
556
3,231
At 31 December 2022
1,807
53,405
Company
At 1 January 2021
Loss for the year
Share-based payment charge (note 22)
Share options exercised in year
Shares issued in year
At 31 December 2021
Loss for the year
Share-based payment charge (note 22)
Share options exercised in year
Shares issued in year
At 31 December 2022
Called up
share capital
£’000
Share
premium
£’000
Share-based
payment
£’000
1,786
53,003
1,402
–
–
–
7
–
–
–
215
–
271
(93)
–
1,793
53,218
1,580
–
–
–
14
–
–
–
187
–
924
(107)
–
Accumulated
losses /
retained
earnings
£’000
1,530
(692)
–
93
–
931
(1,127)
–
107
–
Other
reserves
(note 17)
£’000
3,187
–
–
–
–
3,187
–
–
–
–
1,807
53,405
2,397
(89)
3,187
60,707
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 65 to 94 form an integral part of these financial statements.
62
FINANCIAL STATEMENTSEQUALS GROUP PLC Consolidated Statement of Cash Flows
for the year ended 31 December 2022
Group
Profit/(Loss) before tax
Cash flows from operating activities
Adjustments for:
Depreciation
Amortisation
Impairment
Share-based payment charge
(Increase)/decrease in trade and other receivables*1
Increase/(decrease) in trade and other payables*2
(Increase)/decrease in derivative financial assets
Increase/(decrease) in derivative financial liabilities
(Increase)/decrease in inventories
Finance Costs
Net cash inflow
Tax receipts
Tax paid
Net cash inflow from operating activities
Cash flows from investing activities
Acquisition of property, plant and equipment
Acquisition of intangibles
Net cash used in investing activities
Cash flows from financing activities
Repayment of borrowings
Principal elements of lease payments
Interest paid on finance lease
Interest paid
Acquisition of the remaining non-controlling interest
Proceeds from issuance of ordinary shares
Net cash outflow 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
Note
5
10
5
20
13
8
10
18
9
9
15
2022
£’000
3,416
1,211
6,008
–
924
(9,920)
9,707
(3,023)
2,707
(124)
280
11,186
400
(61)
11,525
(271)
(5,056)
(5,327)
(2,000)
(837)
(169)
(47)
(1,405)
200
(4,258)
1,940
13,104
15,044
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
*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 65 to 94 form an integral part of these financial statements.
63
FINANCIAL STATEMENTSANNUAL REPORT 2022 Company Statement of Cash Flows
for the year ended 31 December 2022
Company
Loss before tax
Cash flows from operating activities
Adjustments for:
Increase in trade and other receivables*1
Increase in trade and other payables*2
Finance costs
Net cash outflow from operating activities
Cash flows from financing activities
Interest paid
Acquisition of the remaining non-controlling interest
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
2022
£’000
(1,332)
(1,024)
3,086
3
733
(3)
(930)
200
(733)
–
–
–
2021
£’000
(1,111)
(63)
954
6
(214)
(6)
–
220
214
–
–
–
*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 65 to 94 form an integral part of these financial statements.
64
FINANCIAL STATEMENTSEQUALS GROUP PLC Notes to the Consolidated
Financial Statements
for the year ended 31 December 2022
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 financial statements comprise the Company
and its 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 had, until 14 March 2023, 1 (2021: 2) outlets as part
of its Bureau de Change retail network in the City of London.
The Company and Group’s consolidated financial statements
for the year ended 31 December 2022 were authorised for
issue after stock market trading hours on 24 Mar 2023 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
Company and Group:
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.
COVID-19-Related Rent Concessions beyond 30 June
2021 – Amendment to IFRS 16
Onerous Contracts – Cost of Fulfilling a Contract
(Amendments to IAS 37)
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.
•
•
•
Property, Plant and Equipment: Proceeds before Intended
Use (Amendments to IAS 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 Company and Group:
•
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.
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.
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 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.
Any contingent consideration is measured at fair value at
the date of acquisition. If an obligation to pay contingent
consideration that meets 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
65
FINANCIAL STATEMENTSANNUAL REPORT 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
CONTINUED
3 BASIS OF PREPARATION AND SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
How the Group recognises revenue for its significant revenue
streams is described below.
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.
66
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 the
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.
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
FINANCIAL STATEMENTSEQUALS GROUP PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
CONTINUED
3 BASIS OF PREPARATION AND SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
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.
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.
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
67
FINANCIAL STATEMENTSANNUAL REPORT 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
CONTINUED
3 BASIS OF PREPARATION AND SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
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.
(iii) Amortisation
Amortisation is calculated to write off the cost of intangible
assets less their estimated residual values using 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-
68
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 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.
FINANCIAL STATEMENTSEQUALS GROUP PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
CONTINUED
3 BASIS OF PREPARATION AND SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
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
options are also included in the measurement of the liability. The
lease payments are discounted using the lessee’s 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.
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
69
FINANCIAL STATEMENTSANNUAL REPORT 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
CONTINUED
3 BASIS OF PREPARATION AND SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
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 office 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
70
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:
(i) 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.
(ii) Valuation of share options
The Group fair values share options on date of grant using the
Black-Scholes and Monte-Carlo models. Further details on the
use of fair value can be found in note 3.27 Measurement of fair
values and note 22 Share options.
(iii) Valuation of derivative instruments
The Group enters into foreign exchange forward positions with
clients which it matches 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.
for acquisitions may
(iv) Deferred consideration
Total compensation
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).
FINANCIAL STATEMENTSEQUALS GROUP PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
CONTINUED
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, Solutions, 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 2022
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
Solutions
£’000
12,539
(4,618)
7,921
34,357
(21,362)
12,995
15,636
(8,089)
7,547
–
–
–
–
–
–
7,921
–
5,341
–
5,341
–
–
–
–
–
–
–
–
–
–
–
–
12,995
7,547
–
17,975
–
17,975
–
–
–
–
Travel
Cash
£’000
1,009
(553)
456
–
–
–
–
–
–
456
–
128
–
128
Banking
£’000
Central
£’000
Total
£’000
6,141
(1,405)
4,736
–
–
–
–
–
–
4,736
2,343
4,372
(2,287)
4,428
–
–
–
(22,576)
(1,211)
(6,008)
–
(164)
(280)
(30,239)
28,883
8,529
(22,380)
15,032
69,682
(36,027)
33,655
(22,576)
(1,211)
(6,008)
–
(164)
(280)
3,416
31,226
36,345
(24,667)
42,904
71
FINANCIAL STATEMENTSANNUAL REPORT 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
CONTINUED
4 REVENUE AND SEGMENTAL ANALYSIS (CONTINUED)
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
Solutions
£’000
8,642
(2,616)
6,026
25,882
(13,911)
11,971
3,554
(1,888)
1,666
–
–
–
–
–
–
6,026
–
6,602
–
6,602
–
–
–
–
–
–
11,971
–
18,258
–
18,258
Travel
Cash
£’000
346
(101)
245
–
–
–
(1,638)
–
–
–
–
–
–
–
–
1,666
(1,393)
–
–
–
–
–
600
–
600
5 OPERATING PROFIT/(LOSS)
Operating profit/(loss) is stated after charging the following operating expenses:
Note
5a
5c
5d
5f
5h
9
8
Staff costs (net of expenditure capitalised)
IT and telephone cost (net of expenditure capitalised)
Other professional fees
Compliance costs
Marketing costs
Property and office costs (net of expenditure capitalised)
Travel and subsistence
Other share option related costs
Other
Sub-total, cash-based expenses
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
Total operating expenses
72
Banking
£’000
Central
£’000
Total
£’000
5,667
(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
2022
£’000
14,406
2,012
1,201
683
1,858
932
440
46
3
21,581
–
924
71
–
995
22,576
822
389
6,008
–
164
29,959
44,091
(20,071)
24,020
(18,499)
(1,398)
(5,812)
(1,638)
–
(490)
(3,817)
24,518
38,040
(21,407)
41,151
2021
£’000
12,550
1,800
883
449
1,171
822
300
84
3
18,062
46
272
119
–
437
18,499
931
467
5,812
1,638
–
27,347
FINANCIAL STATEMENTSEQUALS GROUP PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
CONTINUED
5 OPERATING PROFIT/(LOSS) (CONTINUED)
5A STAFF COSTS
Number of employees
The number of employees (including Directors) was:
Administrative staff – monthly average for the year
Number of staff at the balance sheet date
All employees are employed by the subsidiaries of Equals Group PLC.
Employee costs
Cost of staff on payrolls
Cost of contractors and consultants
Gross costs
Less: categorised in transaction and commission 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*
2022
Headcount
268
285
2021
Headcount
255
255
2022
£’000
20,990
1,471
22,461
(3,864)
18,597
(4,191)
14,406
2022
£’000
14,812
1,769
597
17,178
(3,864)
13,314
–
13,314
1,092
14,406
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
*includes £nil (2021: £628k) of expenditure identified by the Directors as separately identifiable items. Separately identifiable
items are large, one-off items identified by management.
73
FINANCIAL STATEMENTSANNUAL REPORT 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
CONTINUED
5 OPERATING PROFIT/(LOSS) (CONTINUED)
5B DIRECTORS’ REMUNERATION
Company
All bonuses and conditional bonuses, whether the conditions have been made or not, have, from 2022 onwards, been accrued.
CEO bonus
In relation to the 2021 financial year, a bonus of £330k was paid during 2022.
The CEO is entitled to a bonus of £420k in relation to 2022 should all performance conditions be met. At the date of signing these
financial statements, 100% of the conditions have been met and £420k is immediately payable. The full amount of the bonus
together with associated national insurance contributions has been accrued.
CFO bonus
In relation to the 2021 financial year, a bonus of £220k was awarded during 2022. £160k of this was paid as a bonus and £60k paid
as a pension contribution.
The CFO is entitled to a bonus of £273.6k in relation to 2022 should all performance conditions be met. At the date of signing these
financial statements, 100% of the conditions have been met and £273.6k is immediately payable. The full amount of the bonus
together with associated national insurance contributions has been accrued.
Year ended 31 December 2022
Gross Salary
£’000
Bonus
£’000
Employer
Pension
£’000
Total
Remuneration
Paid
£’000
Benefits
£’000
350
304
654
82
65
55
856
330
160
490
–
–
–
490
4
64
68
–
–
–
68
33
23
56
–
–
–
56
717
551
1,268
82
65
55
1,470
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
Paid during the year
Ian Strafford-Taylor
Richard Cooper
Sub-total - executives
Non-Executive Directors
A R F Hughes
S Herbert
C Bones
Total remuneration paid
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
74
FINANCIAL STATEMENTSEQUALS GROUP PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
CONTINUED
5 OPERATING PROFIT/(LOSS) (CONTINUED)
The above tables have been prepared on a cash paid basis for 2022, whereas the remuneration committee report will be shown
on an accrual basis to detail out the bonuses accrued as at 31 December 2022.
Highest Paid Director
Gross Salary
Average wage per employee
Gross Salary
2022
£’000
350
2022
£’000
55
2021
£’000
297
2021
£’000
51
Group
The total amount paid during 2022 to Executive Directors, when including Executive Directors of all the subsidiaries in the
consolidated Group, was £3,466k (2021: £2,893k). This included pension payments of £105k (2021: £82k). 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
Total professional fees included in administrative expenses*
2022
£’000
2,420
(408)
2,012
2022
£’000
1,201
1,201
2021
£’000
2,101
(301)
1,800
2021
£’000
883
883
*includes £nil (2021: £3k) 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 are shown exclusive if VAT are as follows:
Statutory audit fees
Fees payable for the statutory audit of the Group
Total audit fees
There were no non-audit fees during the current and preceding year.
2022
£’000
350
350
2021
£’000
303
303
75
FINANCIAL STATEMENTSANNUAL REPORT 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
CONTINUED
5 OPERATING PROFIT/(LOSS) (CONTINUED)
5F PROPERTY AND OFFICE COSTS
Property costs
IFRS 16 property adjustment lease payments and finance costs (note 9)
Total property costs included in administrative expenses
5G CONTINGENT CONSIDERATION
2022
£’000
1,695
(763)
932
2021
£’000
1,823
(1,001)
822
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.
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 2022, the Group had tax losses available to be offset against future taxable profits of £17,632k (2021: £17,186k).
The losses can be carried forward indefinitely and have no expiry date.
Additional to corporate taxation, the Group paid the following taxation costs during the year:
a. Employers National Insurance contributions - £2,145k (2021: £1,724k)
b. Irrecoverable VAT - £1,584k (2021: £1,127k).
Group
R&D credit – current year
Corporation tax charge
Current tax charge/(credit)
Origination and reversal of temporary differences
Recognition of previously unrecognised deductible temporary differences
Deferred tax credit
Total tax credit
2022
£’000
–
192
192
(203)
(124)
(327)
(135)
2021
£’000
(398)
61
(337)
(997)
(221)
(1,218)
(1,555)
76
FINANCIAL STATEMENTSEQUALS GROUP PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
CONTINUED
6 TAXATION (CONTINUED)
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:
Profit/(loss) before taxation: Continuing operations
Taxation at the UK corporation rate tax of 19.0% (2021: 19.0%)
Net permanent differences between tax and accounting
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
2022
£’000
3,416
649
78
(655)
(124)
–
(83)
(135)
2021
£’000
(3,817)
(725)
112
(535)
(221)
(121)
(65)
(1,555)
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
(3,546)
(196)
673
4,018
949
–
–
–
–
–
–
–
556
–
556
(137)
(3,683)
(43)
(239)
216
290
327
1,445
4,308
1,831
–
–
1,445
4,308
(3,683)
(239)
–
–
5,753
(3,922)
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
2022
Intangibles
Property plant and
equipment
Equity settled share-
based payments
Unutilised tax losses
Deferred tax
(liabilities)/assets
Group
2021
Intangibles
Property plant and
equipment
Equity settled share-
based payments
Unutilised tax losses
Deferred tax
(liabilities)/assets
The standard rate of corporation tax applicable to the Group for the year ended 31 December 2022 was 19.0%. The rate in the
year ending 31 December 2023 will be 23.5%. 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 the change in tax rate has been calculated on deferred tax.
77
FINANCIAL STATEMENTSANNUAL REPORT 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
CONTINUED
6 TAXATION (CONTINUED)
Assumptions and estimation uncertainties
The Group has recorded a £4,308k (2021: £4,018k) deferred tax asset in relation to brought forward and carried forward tax losses
and has a further £nil (2021: £nil) 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 approved board budget for 2023 and 5-year forecast horizon.
The Group has recorded a £1,445k (2021: £673k) deferred tax asset in relation to share option awards outstanding at the year-end.
Deferred tax assets are recognised for share options when the share options have intrinsic value that could be deductible for tax
purposes, this is classed as share options in-the-money at the year-end.
7 PROFIT/(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 profit/(loss) after tax attributable to ordinary shareholders of the Group is £3,236k
(2021: £2,424k Loss) and the weighted average number of shares for the period was 180,583,788 (2021: 178,959,402).
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 187,611,447 (2021: 178,959,402).
Profit / (loss) per share
Basic
2022
1.80p
Diluted
2022
1.73p
Basic
2021
(1.35)p
Diluted
2021
(1.35)p
Adjusted earnings per share
The calculation of adjusted earnings per share has been based on the analyst community calculations, which takes profit or loss
attributable to ordinary shareholders and excludes share option charges, amortisation on acquired intangibles, exceptional items,
acquisition costs and tax on these items, and weighted average number of ordinary shares. The adjusted earnings after tax to ordinary
shareholders of the Group is £5,683k* (2021: £32k) and the weighted average number of shares and diluted shares are as above.
Adjusted profit per share
Basic
2022
3.15p
Diluted
2022
3.03p
Basic
2021
0.02p
Diluted
2021
0.02p
* See page 18 in the CFO report for detailed adjusted earnings calculation.
78
FINANCIAL STATEMENTSEQUALS GROUP PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
CONTINUED
8 PROPERTY, PLANT AND EQUIPMENT
Group
Cost
At 1 January 2022
Additions
At 31 December 2022
Accumulated Depreciation
At 1 January 2022
Charge for the year
At 31 December 2022
Net book value
At 31 December 2022
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
Plant and machinery
£’000
Fixtures and fittings
£’000
Leasehold
improvements
£’000
1,363
227
1,590
1,133
180
1,313
277
464
22
486
270
90
360
126
1,329
22
1,351
496
119
615
736
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
Total
£’000
3,156
271
3,427
1,899
389
2,288
1,139
Total
£’000
3,078
78
3,156
1,432
467
1,899
1,257
79
FINANCIAL STATEMENTSANNUAL REPORT 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
CONTINUED
9 LEASES
Group
Right of use assets
At 1 January 2021
Additions to right of use assets
Modifications to leases
Depreciation charge for the year
At 31 December 2021
Additions to right of use assets
Modifications to leases
Depreciation charge for the year
At 31 December 2022
Lease liabilities
At 1 January 2021
Additions to lease liabilities
Lease finance expenses
Modification to leases*
Payments
At 31 December 2021
Additions to lease liabilities
Lease finance expenses
Modification to leases*
Credit notes
Payments
At 31 December 2022
Current lease liabilities
Non-current lease liabilities
Vehicles
£’000
51
338
–
(122)
267
157
(61)
(170)
193
Vehicles
£’000
49
338
8
–
(138)
257
157
10
(51)
–
(191)
182
114
68
182
Property
£’000
6,010
–
(594)
(809)
4,607
4
(784)
(653)
3,174
Property
£’000
6,357
–
186
(616)
(922)
5,005
–
159
(808)
473
(814)
4,015
666
3,349
4,015
Total
£’000
6,061
338
(594)
(931)
4,874
161
(845)
(823)
3,367
Total
£’000
6,406
338
194
(616)
(1,060)
5,262
157
169
(859)
473
(1,005)
4,197
780
3,417
4,197
*
Modifications to lease assets and lease liabilities relate to a negotiated early termination of a Bureau property lease, early
termination of a vehicle and modifications to a current lease for the main London office property lease.
2022
£’000
830
2021
£’000
388
Net lease liability
80
FINANCIAL STATEMENTSEQUALS GROUP PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
CONTINUED
9 LEASES (CONTINUED)
(i) Amounts recognised in the consolidated statement of comprehensive income
Group
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
653
Vehicles
£’000
170
10
10
–
159
(24)
67
855
Total
2022
£’000
823
169
(14)
67
Property
£’000
809
Vehicles
£’000
122
186
(22)
66
8
–
–
Total
2021
£’000
931
194
(22)
66
190
1,045
1,039
130
1,169
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 2022 was £1,005k (2021: £1,060k)
including for principal and interest.
10 INTANGIBLE ASSETS AND GOODWILL
Group
Cost
At 1 January 2022
Reclassifications
Additions
Disposals
At 31 December 2022
Amortisation
At 1 January 2022
Charge for the year
Disposals
At 31 December 2022
Impairment
Impairment for the year
Net book value
At 31 December 2022
Trademarks,
licences,
patented and
non-patented
technology
Customer
relationships
£’000
£’000
Brands
£’000
Goodwill
£’000
13,468
–
–
–
13,468
–
–
–
–
–
26,253
214
4,321
(205)
30,583
11,935
5,196
(13)
17,118
4,652
–
–
–
4,652
2,216
741
–
2,957
–
–
13,468
13,465
1,695
455
–
–
–
455
378
71
–
449
–
6
Under
construction
£’000
661
(214)
927
–
1,374
–
–
–
–
–
Total
£’000
45,489
–
5,248
(205)
50,532
14,529
6,008
(13)
20,524
–
1,374
30,008
81
FINANCIAL STATEMENTSANNUAL REPORT 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
CONTINUED
10 INTANGIBLE ASSETS AND GOODWILL (CONTINUED)
Trademarks,
licences,
patented and
non-patented
technology
Customer
relationships
£’000
£’000
21,725
1,629
2,899
26,253
6,955
4,980
11,935
4,652
–
–
4,652
1,475
741
2,216
Goodwill
£’000
15,106
–
–
15,106
–
–
–
1,638
–
–
13,468
14,318
2,436
Brands
£’000
455
–
–
455
287
91
378
–
77
Under
construction
£’000
1,629
(1,629)
661
661
–
–
–
–
Total
£’000
43,567
–
3,560
47,127
8,717
5,812
14,529
1,638
661
30,960
Group
Cost
At 1 January 2021
Reclassifications
Additions
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
* The impairment charge in 2021 relates to the Travel Cash CGU.
Included within additions to ‘assets under construction’ and ‘trademarks, licenses, patented and non-patented technology’ is
£4,599k (2021: £3,329k) 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 2022 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)
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: 16.15% (2021: 14.56%) and International Payments: 14.30% (2021: 12.34%).
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 3% (2021: 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.
82
FINANCIAL STATEMENTSEQUALS GROUP PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
CONTINUED
10 INTANGIBLE ASSETS AND GOODWILL (CONTINUED)
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 in revenue
Banking
International Payments
Group
Increase in discount rate (WACC)
Banking
International Payments
2022
9.40%
10.84%
2022
6.45%
22.61%
2021
7.98%
37.77%
2021
5.74%
57.89%
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 2022.
11 INVESTMENTS
Company – shares in subsidiary undertakings
Cost
At 1 January
Other additions*
At 31 December
Net Book Value
At 31 December
2022
£’000
61,978
924
62,902
2021
£’000
61,707
271
61,978
62,883
61,978
*
Other additions relate to share based payment expense recognised in Equals Money Plc, as the parent Company Equals Group
PLC has no payroll and therefore all employees are employed via subsidiaries.
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
Equals Money PLC
Equals Money UK 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
Ireland
Class
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Shares held
%
100 Trading
100 Trading
100 Trading
100 Trading
100 Trading
100 Dormant
100 Dormant
The registered office address of subsidiary undertakings is Third Floor Thames House, Vintners Place, 68 Upper Thames Street,
London, EC4V 3BJ.
83
FINANCIAL STATEMENTSANNUAL REPORT 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
CONTINUED
12 ACQUISITION
On 30 September 2022, Equals through its subsidiary Equals Money Plc acquired the remaining 48% minority interest in Equals
Connect Limited, a UK-based payment service provider, which is regulated by the FCA as an Authorised Payment Institution (API)
for a maximum consideration of £3,430k. The initial consideration is £1,405k, which £475k of this being payable to cover the share
of distributable reserves attributable to the minority shareholders. An additional £1,395k consideration is payable at certain dates,
with a further £630k additional consideration dependant on certain targets and milestones being exceeded.
As the Group had majority control at the start of the year of this subsidiary and the change in the parent’s ownership does not
result in the parent losing control of the subsidiary, the total consideration has been treated as equity transactions and recognised
against retained earnings as per IFRS 10.
Contingent consideration – undiscounted maximum payments in cash
13 INVENTORIES
Group
Finished goods
£’000
2,025
2021
£’000
168
2022
£’000
292
The Group’s inventories comprise of stock of cards. Included within transaction and commission costs is a charge relating to
stock of £207k (2021: £177k) 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
2022
£’000
3,434
–
4,684*
1,344
812
10,274
2021
£’000
3,176
–
3,620
998
462
8,256
Company
2022
£’000
–
192
830*
137
–
1,159
2021
£’000
–
192
–
147
–
339
*
During the year ended 2022, the Group entered into a loan agreement with Roqqett Limited for a principal amount of £830K
(2021: Nil). The loan is unsecured and does not bear interest. The terms of the loan require that the principal to be converted
towards the payment to acquire Roqqett Limited upon regulatory approval from the Financial Conduct Authority (FCA) which
was received on 6th January 2023.
Information about the Group’s exposure to market risk, credit risk and impairment losses for trade and other receivables is
included in note 21.
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
Released during the period
Allowance for ECLs at 31 December
The ECL allowance for the Company is £nil (2021: £nil)
84
2022
£’000
95
(68)
27
2021
£’000
261
(166)
95
FINANCIAL STATEMENTSEQUALS GROUP PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
CONTINUED
15 CASH AND CASH EQUIVALENTS
Group
Cash at bank
16 SHARE CAPITAL
Group and Company
Authorised, issued and fully paid-up capital
B/fwd
Exercised in year
Issued in year
C/fwd - 180,712,473 (2021: 179,341,807) ordinary shares of £0.01 each
2022
£’000
15,044
2022
£’000
1,793
7
7
1,807
17 OTHER RESERVES
Group
At 31 December 2020, 2021
and 2022
Company
At 31 December 2020, 2021
and 2022
18 BORROWINGS
Group
Loan debenture
Merger reserve
£’000
Contingent
consideration reserve
£’000
Foreign currency
reserve
£’000
8,396
207
6
Merger reserve
£’000
Contingent
consideration reserve
£’000
2,980
207
2022
£’000
–
2021
£’000
13,104
2021
£’000
1,786
7
–
1,793
Total
£’000
8,609
Total
£’000
3,187
2021
£’000
2,000
Under the Coronavirus Business Interruption Loan Scheme (CBILS) to further support working capital, the main trading subsidiary
of the Company, Equals Money 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 was 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 was 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 Equals Money PLC as security on
the loan and that Equals Money PLC provides a debenture to the RBS for the value of the loan. Both of these requirements have
been met.
The loan has been fully repaid by 8 August 2022 and the debenture has been released.
85
FINANCIAL STATEMENTSANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
CONTINUED
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
2022
£’000
4,767
–
911
390
9,421
15,489
2021
£’000
3,583
–
666
27
7,726
12,002
Company
2022
£’000
70
3,980
–
–
672
4,722
2021
£’000
124
2,102
–
–
545
2,771
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
21 FINANCIAL INSTRUMENTS
Fair Value
2022
£’000
5,616
5,616
Fair Value
2022
£’000
4,789
4,789
Notional
Principal
2022
£’000
253,300
253,300
Notional
Principal
2022
£’000
147,360
147,360
Fair Value
2021
£’000
2,593
2,593
Fair Value
2021
£’000
2,082
2,082
Notional
Principal
2021
£’000
170,083
170,083
Notional
Principal
2021
£’000
150,202
150,202
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
86
2022
£’000
15,044
8,930
–
(10,582)
(4,197)
2021
£’000
13,104
7,258
(2,000)
(7,968)
(5,262)
FINANCIAL STATEMENTSEQUALS GROUP PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
CONTINUED
21 FINANCIAL INSTRUMENTS (CONTINUED)
Financial instruments held at fair value through profit or loss
Derivative financial assets – Forward foreign exchange contracts
Derivative financial liabilities – Forward foreign exchange contracts
2022
£’000
5,616
(4,789)
2021
£’000
2,593
(2,082)
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 2022, the unrealised gain or loss recognised in the income statement
on the fair value of financial instruments was a loss of £30k (2021: £93k loss). 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 banks 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 tables 14 and 15 in the CFO report.
The ageing of financial assets at the statement of financial position date is as follows:
2022
Group
Trade and other receivables - gross
Allowance for ECL
Trade and other receivables - net
Derivative financial assets
2021
Group
Trade and other receivables - gross
Allowance for ECL
Trade and other receivables - net
Derivative financial assets
On demand
£’000
8,903
27
8,930
556
On demand
£’000
7,163
95
7,258
412
Between
1 and 3
months
£’000
–
–
–
2,268
Between
1 and 3
months
£’000
–
–
–
1,017
Between
3 and 12
months
£’000
–
–
–
2,711
Between
3 and 12
months
£’000
–
–
–
1,117
Over
1 year
£’000
–
–
–
81
Over
1 year
£’000
–
–
–
47
Total
£’000
8,903
27
8,930
5,616
Total
£’000
7,163
95
7,258
2,593
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.
87
FINANCIAL STATEMENTSANNUAL REPORT 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
CONTINUED
21 FINANCIAL INSTRUMENTS (CONTINUED)
The table below analyses the Group’s gross undiscounted financial liabilities by their contractual maturity date.
2022
Group
Borrowings
Trade and other payables
Derivative financial liabilities
Lease liabilities
2021
Group
Borrowings
Trade and other payables
Derivative financial liabilities
Lease liabilities
On demand
and within
1 month
£’000
–
10,582
453
65
On demand
and within
1 month
£’000
31
7,968
404
64
Between
1 and 3
months
£’000
–
–
2,276
130
Between
1 and 3
months
£’000
63
–
836
134
Between
3 and 12
months
£’000
–
–
1,936
585
Between
3 and 12
months
£’000
285
–
814
580
Over
1 year
£’000
–
–
124
3,417
Over
1 year
£’000
1,621
–
28
4,484
Total
£’000
–
10,582
4,789
4,197
Total
£’000
2,000
7,968
2,082
5,262
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.
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 £160k (2021: £124k), 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.
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 2022
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
88
Measured at
amortised cost
£’000
Measured at
fair value
£’000
15,044
8,930
–
23,974
–
10,582
4,197
–
14,779
–
–
5,616
5,616
–
–
–
4,789
4,789
Total
£’000
15,044
8,930
5,616
29,590
–
10,582
4,197
4,789
19,568
FINANCIAL STATEMENTSEQUALS GROUP PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
CONTINUED
21 FINANCIAL INSTRUMENTS (CONTINUED)
31 December 2021
Measured at
amortised cost
£’000
Measured at
fair value
£’000
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
13,104
7,258
–
20,362
2,000
8,063
5,262
–
15,325
–
–
2,593
2,593
–
–
–
2,082
2,082
Total
£’000
13,104
7,258
2,593
22,955
2,000
8,063
5,262
2,082
17,407
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.
Equals Money PLC and Equals Connect Limited, wholly owned subsidiaries, 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.
Equals Money UK 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.
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 except for the new LTIP scheme offered
to the Executive Directors in 2021 and all 2022 LTIP awards which have been calculated under the Monte Carlo pricing model as
detailed below due to various performance conditions. 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.
89
FINANCIAL STATEMENTSANNUAL REPORT 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
CONTINUED
22 SHARE OPTIONS (CONTINUED)
During the year ended 31 December 2022, there were a number of share-based payment transactions within the Group.
At
1 January
2022
Number
200,000
447,750
3,725,050
283,333
283,333
283,333
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
2,415,000
1,250,000
720,000
–
–
13,107,800
Exercise
price (£)
0.07
0.22
0.36
0.30
0.30
0.30
1.01
1.01
1.01
0.29
0.29
0.29
0.29
0.29
0.29
0.29
0.29
0.29
0.29
0.29
0.29
0.01
0.01
0.01
0.01
0.01
Cancelled/replaced
Cancelled
Number
Granted
Number
Exercised
Number
Lapsed
Number
At
31 December
2022
Number
–
–
–
–
–
–
–
–
-
-
–
–
–
–
–
–
–
–
–
–
–
–
–
(16,000)
–
–
(16,000)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
3,182,500
784,000
3,966,500
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(166,667)
(166,667)
-
(166,667)
(166,667)
–
–
–
–
–
–
(666,666)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(170,576)
–
(80,000)
–
–
(250,576)
200,000
447,750
3,725,050
283,333
283,333
283,333
166,667
166,667
166,667
250,000
250,000
250,000
416,667
416,667
416,667
-
-
166,667
-
-
166,667
2,244,424
1,250,000
624,000
3,182,500
784,000
16,141,058
Date
Granted
22/07/2014
22/07/2014
22/07/2014
28/09/2016
28/09/2016
28/09/2016
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
07/01/2022*
14/12/2022
20/01/2023*
Total number of
options
* Per IFRS 2, service period commences before the grant date and thus the shares are disclosed in the year which participants
are made aware of the grant conditions and thus the expense is accrued at the date participants become aware of the grant
condition. Which in the case of the 2022 SIP was 14 December 2022.
In 2022 executives have been granted performance-based share options shown in the table below.
At
1 January
2022
Number
8,526,000
4,581,800
13,107,800
Cancelled
Number
–
(16,000)
(16,000)
Granted
Number
1,020,500
2,946,000
3,966,500
Exercised
Number
(666,666)
–
(666,666)
At
31 December
2022
Number
8,879,834
7,261,224
16,141,058
Lapsed
Number
–
(250,576)
(250,576)
Executive Directors*
Employees
90
FINANCIAL STATEMENTSEQUALS GROUP PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
CONTINUED
22 SHARE OPTIONS (CONTINUED)
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 42 to 48 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 2022, there were unexercised share options amounting to 8.93% (2021: 7.31%) of the Company’s total issued shares.
Of the above options 8,880k (2021: 8,526k) have been granted to Directors of the Company (see Directors’ remuneration report
pages 42 to 48), with an additional 2,421k (2021: 1,120k) having been granted to individuals who are, or have been during the year,
Directors of wholly owned subsidiaries within the Group.
The prior year financial statements disclosed that the fair value for 2021 long-term incentive awards of £1,250,000 share options to
2 Executive Directors was £0.16. This has been reviewed by management and should have been £0.80. There is no material impact
on the prior year charge.
The prior year financial statements disclosed the fair value of a new discretionary share incentive plan options as £0.62. However, this
was the estimated future grant date fair value for the basis of the FY2021 charge, as in accordance with IFRS 2, the actual grant date
was 7 January 2022. The grant date fair value has been updated to £0.68.
In December 2022, Equals Group PLC extended share options over 4,372,800 shares which were originally granted in July 2014 to
2 Executive Directors. These had been due to lapse in November 2022 but this is now extended to July 2024. The options had already
fully vested and there are no other changes to the terms.
In December 2022, Equals Group PLC awarded new shares under their discretionary long-term incentive plan for 42 SLT members.
A total of 2,170,000 share options were awarded under the plan to various SLT employees, which had a vesting period of three
years. The options included vesting criteria of: a £0.80 Threshold share price, annual revenue CAGR targets, annual EPS targets and
annual active customer growth targets. The shares will be awarded as ‘free shares’. The fair value of the options was 81p using the
Monte-Carlo model and principals.
In December 2022, Equals Group PLC awarded new shares under their discretionary long-term incentive plan for the 2 Executive
Directors of the group. A total of 1,012,500 share options were awarded under the plan, which had a vesting period of three years.
The options included vesting criteria of a £0.80 Threshold share price, annual revenue CAGR targets, annual EPS targets and annual
active customer growth targets. The shares will be awarded as ‘free shares’ The fair value of the options was £0.81 using the Monte
Carlo model and principals.
In December 2022, Equals Group PLC awarded new shares under their discretionary share incentive plan. A total of 784,000 share
options were awarded under the plan to various employees, which had a vesting period of three years from the grant date. The
shares will be awarded as ‘free shares’. The estimated future grant date fair value for the basis of the FY2022 charge was £0.87, as in
accordance with IFRS 2. The actual grant date was 20th January 2023 and the grant date fair value will be updated to £0.90 in FY2023.
91
FINANCIAL STATEMENTSANNUAL REPORT 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
CONTINUED
22 SHARE OPTIONS (CONTINUED)
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
Cancelled 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
2022
0.2397
Number of
options
2022
13,107,800
Weighted
average
exercise
price
2021
0.3805
Number of
options
2021
9,838,356
0.0020
3,966,500
0.0100
4,385,000
–
(0.0100)
(0.2900)
0.1822
0.3706
(16,000)
(250,576)
(666,666)
16,141,058
7,056,134
–
(1.1218)
(0.3017)
0.2397
0.1793
–
(376,667)
(738,889)
13,107,800
6,556,133
The weighted average share price for the year was £0.84 (2021: £0.49).
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 (£)
Weighted average expected volatility
Weighted average option life in years
Weighted average risk-free rate
Weighted average expected dividends
Weighted average fair value of the options granted (£)
At
1 January 2022
0.47
0.26
34.6%
6.2
0.71%
None
0.28
Granted during
year
0.69
– d
51.9% b
5.0 a
1.00%
None
0.68 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 (£)
Weighted average expected volatility
Weighted average option life in years
Weighted average risk-free rate
Weighted average expected dividends
Weighted average air value of the options granted (£)
At
1 January 2022
0.63
–
52.0%
5.0
0.84%
None
0.44
Granted during
year
0.88
Nil d
50.1% b
5.0 a
3.27% c
None
0.81 d
a. Option life is an estimate of the average time expected between the issue of the options and exercise. This is calculated on
each individual tranche of options issued and varies between 3 and 10 years.
b. Expected volatility has been determined on the company share price for the same time frame as the average option life for that
tranche, this varies between 21% and 52%.
c. Risk Free rate is based on the UK gilt rate for a time period equal to the Option Life at the date of grant of the option. This varies
between 0.1% and 3.3%
d. A summary of the exercise price and fair value of the options granted is summarised below. If the fair value of the option was
deemed to be nil it is marked accordingly.
92
FINANCIAL STATEMENTSEQUALS GROUP PLC NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
CONTINUED
22 SHARE OPTIONS (CONTINUED)
22/07/2014
22/07/2014
22/07/2014
28/09/2016
26/09/2019
01/09/2020
18/10/2021
18/10/2021
07/01/2022
14/12/2022
20/01/2023
Exercise price
(£)
0.07
0.22
0.36
0.30
1.01
0.29
0.01
–
0.01
–
0.01
Fair Value
(£)
0.28
0.20
0.12
0.13
0.39
0.16
0.62
0.44
0.68
0.81
0.87
For the options outstanding at 31 December 2022, the weighted average fair values and the weighted average remaining
contractual lives (being the time period from 31 December 2022 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
2022 Share Incentive Plan
2022 Long-Term Incentive Plan - SLT
2022 Long-Term Incentive Plan - Exec
Weighted average
fair value of options
outstanding (£)
0.16
0.68
0.62
0.44
0.87
0.81
0.81
Weighted average
remaining contractual
life (years)
3.89
9.02
8.80
8.80
9.96
9.96
9.96
The charge expensed to the statement of comprehensive income is £924k (2021: £272k). During the year the Group recognised a
£779k increase (2021: £658k increase) in deferred tax assets in relation to unexercised share options. Of this amount, £216k was
recognised in the current year’s tax credit (2021: £380k tax credit) and £562k (2020: £278k) was taken to equity.
23 FINANCIAL COMMITMENTS
The Group has no significant financial commitments not on balance sheet for 2022 and 2021 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
2022
£’000
4,064
104
4,172
2021
£’000
3,587
88
3,675
93
FINANCIAL STATEMENTSANNUAL REPORT 2022 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
CONTINUED
24 RELATED PARTY TRANSACTIONS (CONTINUED)
Key management personnel share-based payment expense for all existing and new share schemes:
Share-based payment expense
Company
Intercompany transactions and balances with the rest of the Group:
31 December 2022
Balance sheet
Equals Money PLC
Fair Payments Limited
Equals Money UK Limited
Due from
2022
£’000
–
192
–
192
Due to
2022
£’000
(3,980)
–
–
(3,980)
2022
£’000
(612)
Due from
2021
£’000
–
192
–
192
2021
£’000
262
Due to
2021
£’000
(1,002)
–
(1,100)
(2,102)
25 ULTIMATE CONTROLLING PARTY
The Directors consider Equals Group PLC to be the ultimate controlling party of the Group.
26 POST BALANCE SHEET EVENTS
On 6th January 2023, the Group completed the acquisition of Roqqett Limited, an open-banking platform, for a total consideration
of up to £2,250k.
This acquisition was initially announced on 28 November 2022, the acquisition was conditional upon regulatory approval from the
Financial Conduct Authority (FCA) which was received on 6th January 2023.
During the year ended 2022, the Group entered into a loan agreement with Roqqett Limited for a principal amount of £830K (2021:
Nil) as shown in note 14. The loan was unsecured and does not bear interest. The terms of the loan required that the principal to be
converted towards the payment to acquire Roqqett Limited upon regulatory approval from the Financial Conduct Authority (FCA)
which was received on 6th January 2023.
On 14th March 2023, the Group sold the Travel Cash CGU for an initial £250k with a further £100k subject to certain conditions
being met to Currency Exchange Corporation Ltd. The carrying value of the assets disposed off were £128k shown in note 4 and
consisted of right of use and intangible assets.
On the 24th March 2023 after stock trading hours, the Group signed a share purchase agreement for the acquisition of Oonex S.A.
an authorised payment institution regulated by the National Bank of Belgium to enable the provision of Equals products into the
EEA for consideration of 5 million shares in Equals Group PLC. The acquisition is conditional upon regulatory approval from the
National Bank of Belgium.
On the 24th March 2023 after stock trading hours, the Group signed a share purchase agreement for the acquisition of Hamer
and Hamer Limited an authorised payment institution regulated by the FCA for an initial consideration of £1.5 million and deferred
consideration capped at £2.7 million based on performance over a three-year period. The acquisition is conditional upon
regulatory approval from the FCA.
94
FINANCIAL STATEMENTSEQUALS GROUP PLC 5 Year Trading History
Additional unaudited information
Turnover
Revenue
Gross Profit
Profit after tax
Cash
2018
2,369
26.1
17.5
2.6
7.9
2019
2,888
30.9
20.6
(5.4)
11.3
2020
3,493
29.0
18.3
(6.9)
10.0
2021
6,529
44.1
24.2
(2.3)
13.1
2022
9,216
69.7
33.7
3.6
15.0
Equals Group PLC
Contents
COMPANY INFORMATION
About Equals Group
1
2
3
4
Directors and Advisors
Financial Summary and Highlights
History
STRATEGIC REPORT
6
7
Chairman’s Statement
Chief Executive Officer’s Report
12 Chief Financial Officer’s Report
20 Statement on Section 172, Companies Act 2006
GOVERNANCE
23 Report on Corporate Governance
28 ESG Report
36 Report of the Audit Committee
39 Report of the Risk Committee
42 Directors’ Remuneration Report
49 Directors’ Report
52
53
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
60 Consolidated Statement of Comprehensive Income
61 Consolidated and Company Statements of Financial Position
62 Consolidated and Company Statements of Changes in Equity
63 Consolidated Statement of Cash Flows
64 Company Statement of Cash Flows
65 Notes to the Consolidated Financial Statements
IBC 5 Year Trading History
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www.equalsplc.com
Annual Report 2022
EQUALS GROUP PLC
THIRD FLOOR, THAMES HOUSE
VINTNERS PLACE
68 UPPER THAMES STREET
LONDON, EC4V 3BJ