As previously reported, revenues in H1-2020 averaged £110k per day (H1-2019: £108k). Revenues for the period from 1 July 2020 to 30 November 2020 averaged £114k per day despite revenues from travel products averaging only £12k per day compared to £34k per day in the same period in 2019.

The Group accelerated its resizing and its focus on SMEs throughout the Covid-19 pandemic. Whilst the legacy retail travel products have been significantly impacted by the pandemic, they remain trading but now with a lower cost footprint. The Group anticipates that these products (which provider feeder income to the B2B channel) will rebound partially in 2021 before fully recovering by 2022 but in both cases will make a positive contribution to profitability.

The B2B channel, (comprising International Payments, our proprietary Spend platform, Faster Payments, and business IBAN products) has continued to grow despite the effects of Covid-19. In the five months to 30 November 2020, B2B generated revenues of around £82k per day, 9% ahead of the £75k per day in the same period in 2019.

The Group’s payroll run-rate will be less than £1.1 million per month by January 2021, down from £1.5 million in January 2020 and will be further reduced by H2-2021. Capitalised software is expected to be less than 50% of 2019 levels in 2020, around 40% in 2021 and one third in 2022.

Like many other firms across the financial services industry, the Group is experiencing increasing regulatory costs, but is mitigating this by continuing to move more resources into its office in Chester.

Despite reductions in headcount, progress has been made with the Group’s product roadmap and this will lead to platform improvements before the year-end and new product launches in 2021. As a result of these actions, a further reduction in operating costs is anticipated in H2-2021.

Cash resources have been tightly managed, with cash of £7.0 million (as at 30 November 2020), without any significant delay to suppliers, and once again directors and staff took further salary sacrifices in Q4-2020. In addition, the Group has the ability to drawdown a further £2.0 million from the Government’s CBILS scheme.

The retail card product was further negatively impacted by the wind-down of Wirecard and migration of the Group’s card infrastructure. This results in an exceptional charge of around £1.0 million, 50% a write-down of Wirecard card stock and 50% monies yet to be recovered from the supply chain. The Group has now fully migrated all cards onto a new platform with an improved product offering and better economics.

The exceptional charge incurred against the effects of the Covid-19 pandemic was redundancy and severance costs incurred to reduce the Group’s workforce, and is expected to be £1.0 million for the full year.

Both the acquisition of Effective FX on 15 October 2020, and the previous acquisitions in 2019, particularly of Casco, have performed well and widened the Group’s SME footprint.

The Board is pleased with the performance to date and expects to report adjusted EBIDTA for the twelve months to 31 December 2020 at a similar level that it reported in the interim results. Beyond that, the Board expects the Group to maintain a blended gross profit ratio of 62% throughout 2021 but anticipates an improvement across the Group’s card products on its new platform. Our Group contribution ratio (Gross Profits less marketing) is expected to remain between 55% and 60% allowing Equals to scale up its marketing to further grow profitable streams of revenue.

As the Group increasingly uses its infrastructure and products across all of its revenue streams, there is less distinction between the divisions as previously reported, and the Group will therefore be reporting in two broad customer segments going forward: Business (B2B), and Consumer (B2C), but will continue to show underlying revenue aspects within these groupings.

Ian Strafford Taylor, CEO of Equals, said: “Despite the economic fallout from both Covid-19 pandemic and the collapse of Wirecard, the level of activity we are experiencing from our customers, particularly those in International Payments, but also now on the Spend platform provides us with increasing confidence for a recovery in 2021 and beyond. The sacrifices and hard work from our employees during the pandemic has been outstanding and the progress that the Group has made this year is testament to their actions.”