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viewEquals Group PLC

Equals Group looks to business customers as profitability rises

Snapshot

  • Equals is a payment and FX specialist focused on SMEs
  • Shifting focus toward corporate and B2B customers
  • Changed name from FairFx in June 2019
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Quick facts: Equals Group PLC

Price: 27.5 GBX

AIM:EQLS
Market: AIM
Market Cap: £49.12 m
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Our strategic focus on rationalising supply chain through direct connectivity to payment schemes and other measures are proving successful.

Ian Strafford- Taylor, chief executive

 

What Equals Group does:

Equal Group PLC (LON:EQLS) is a low-cost payment services provider based in the UK, with business-to-business and consumer products including international payments, corporate expenses, current accounts, credit facilities, currency cards and travel cash.

The company's cloud-based peer-to-peer payments platform allows personal and business customers to make payments in different currencies and across a range of foreign exchange products through one system.

The platform facilitates payments in a number of countries via mobile apps, the internet, SMS, wire transfer and debit cards.

 

What it owns:

Since 2017, Equals has almost tripled in size in terms of turnover and its operations have broadened into three significant businesses - FairFX, CardOneMoney and City Forex.

On 21 June 2019, the company won received permission from the Financial Conduct Authority (FCA) to provide credit facilities and loan products to its business and retail customers. As a broker, the group will carry no credit risk and the loans will not appear on its balance sheet.

Digital banking products firm Q-Money was acquired in 2017, bringing an e-money licence that underpinned the group's digital banking products as well as direct membership of the Mastercard network that enables it to issue its own bank cards.

The firm acquired international payments and risk management firm City Forex in 2018 and in 2019 bought FX group Hermes and payments firm Casco.

 

How is it doing

In a trading update in April 2020, the firm said revenues in the first quarter of 2020 were up 32% year-on-year at £8.3mln.

The first-quarter performance was driven by its international payments operations, where revenue was up 116% year-on-year and corporate banking, where revenues were up 30%.

Business-to-business accounted for 67% of group revenues versus 46% in the same quarter last year and 52% for the whole of 2019, after Equals last year decided to shift its focus toward “more profitable relationships” with corporate and B2B customers.

As might be expected, as the spread of the coronavirus hit international travel, the travel money side of the business was hit, as was the corporate expense platform.

In line with most companies, the group has reduced its cost base during the lockdown period and is seeking to take advantage of support measures provided by the government.

For the second quarter of 2020, Equals said early indications are that trading will be within the group's median expectations on its scenario modelling.

 

 

What the CEO says

“We are pleased with the resilience that business has demonstrated in Q1-2020 which reflects the underlying growth of the business in 'normal' conditions and validates our strategy over the last two years of transforming the business to one that focuses largely on B2B,” said chief executive Ian Strafford-Taylor in April.

“We have also taken decisive and prudent steps to protect the group including cost reduction measures and this combined with the continued dedication of our staff, provides us with increased confidence that we will emerge from this pandemic in a strong position.”

 

Inflexion points:

  • Increasing focus on more profitable corporate customers 
  • New FD was key in growing GVC into a FTSE 250 business
  • Five-year deal with Mastercard was signed in September
  • Online credit facility in live beta testing

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