Eql Pharma (Stockholm:EQL) — FY-2021 Results & Q1-2022 Trading Update’

0:02 Good afternoon, ladies and gentlemen, and welcome to the EQUALS GROUP PLC Full Year Results Investor Presentation. Throughout this presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time via the Q and A tab situated on the right hand corner. Please simply type in your question at any time and press send. The company may not be in a position to ask every question received during the meeting itself. However, the company review all questions submitted today and publish responses where it's appropriate to do so and to remind you that this presentation is being recorded.

0:30 Before we begin, we would like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I'd now like to hand over to Richard Cooper, CFO, and Ian Stratford Taylor, CEO. Good afternoon. Good afternoon. Actually, good evening, isn't it? Welcome, everybody, and thank you for taking the time at 06:00 to listen to us talking about our results and trading update. We feel we've got a very positive message to convey to you all. So without further ado, if we could just kick straight in, and I'll be covering between Rich and myself. We'll be giving you an overview of the business, the core products that we have, how we differentiate ourselves, how that leads to the platforms that we're now delivering, becoming more of a platform business rather than a product business.

1:22 What we did in 2021, the financial review in quite some detail of 2021, what's happening now and what's happened in the first quarter and what we're gonna do in 2022, and then a wrap up at the end. So in terms of our history, I won't labor this. I would think most people now know this, but we originally, we're a b to c travel money dominated business listed in 2014 as a company called FairFX. We still have FairFX on our b two c cards, but we could see in 2017 that we needed to pivot away from that, not least with the advent of freemium models perpetuated by the likes of Revolut. And so that pivot and the concurrent investment has happened over the last few years has put us into the position we are now in.

2:15 We unleashed our own name multicolority I band product in the middle of last year, and you'll see later how that's sort of transformed our revenue profile for the balance of that year and now continuing into this. And as I mentioned earlier, we're very much a platform and product business, increasingly more of a platform business. We're a challenger brand taking business from incumbent banks is our main focus, and a b to b focused fintech is the business that you're now hearing about. If we could flip the slide. So what are our core products? I don't hesitate to call them legacy products, but they are the the products upon which we built the business over the last few years. Three main categories, international payments, the card products, and current accounts.

3:05 And you'll see that all three, ultimately, the conclusion of each is that you need to be you need to be able to move quickly, and you need efficiency to to really, really succeed in those areas. In international payments, we have spot contracts and forward contracts. With forward contracts, you know, it can be up to a year out in terms of people buying or selling currencies. We've got way better service and pricing than the banks. Customers can speak to dealers, people here that will speak to them, talk them through the transaction, book the transaction, or they can self serve via the the platform that we've built. And the direct connections we've assembled over the last few years, local settlement and the only multi currency iBan are vital to this.

3:51 The the local settlement, what does that mean? A key part of of of being better than the competition here is the speed at which we can move money for our customers. I'm sure we've all had experience of doing FX with the bank, and you might do the trade today, and it might the money might move tomorrow. It might take a couple of days. We're working hard to eliminate all of those delays such that, ultimately, that means our customers can manage their working capital better. The card products augment the international payment products. We've got the corporate side and the retail side. With direct members of Mastercard, we can issue our own cards. So, again, we're removing people out the supply chain wherever we can. We go direct to payment networks with direct members of Mastercard and issue our own cards.

4:40 You see the pattern here. We can support prepaid and debit cards, physical cards, and even virtual cards. So so many use cases we can support there. The current account product, also called the banking product, this operates under what's called an EMI license. So we're not a bank. All that we the only things we can't do, a bank can do, is to pay interest on deposits and to relend money. So we are inherently less risky than a bank if you think about it because any money that's deposited with us has to be safeguarded and custody at a tier one bank.

5:21 We we invest in direct connections where it's economic for us on a current account product. We we did the faster payments connection in 2019. And this year, you've seen the RNS. We're now direct members of SEPA, and we'll be doing more as we move forward. And we use agency banking at Barclays. It basically means we use Barclays infrastructure for everything else. So the stuff that we're not connected to directly, we use them. And bit by bit will go direct over time. Highly regulated environment, obviously, again, underpinned by the own name IBAM. Speed and efficiency. Next slide, please, Richard. So how do we differentiate ourself in those categories in what is, you know, quite a well populated marketplace in terms of competition.

6:10 Well, the first is the platform. And what we're trying to do there is invest in user experience or UX such that we are you know, inherently, what we do under the skin of all of this is quite complicated. And if we can demystify this so that the user has an intuitive, easy to use platform that does all of this and it takes all of the strain away for them, then that's obviously quite a compelling thing. Equally, which needs to be efficient and scalable. You'll see in the numbers that Richard presents later, we pretty much doubled the amount transaction volume through our platform in the last year. I mean, that's amazing, and we didn't miss a beat. And everything we build, we build for scale. Underneath the skin of what we do, we have what's called the box's infrastructure. That's our internal name. A box is basically it's like an account. It's a receptacle into which you can put currency or an asset value.

7:09 And the way that Box's infrastructure works means that we can give a customer an own name, iBan, but beneath that, literally unlimited number of subaccounts. However they want it structured, Boxes will support it. So it's an incredibly flexible and powerful tool. And combining cards and payments into one platform is part of the differentiator because, you know, increasingly now, if you're dealing with an ecommerce provider, let's take Google as a for instance, if you do pay per click via Google and you can have to pay Google, you can only pay them by card. They won't take payment via bank transfer. So having both payment options in one platform taken from one pot of money, all underpinned with multiple currencies all in one place, is a very, very powerful thing that we've assembled.

8:03 Then we have the connectivity side. As I mentioned on the earlier slide, speed of movement of money is vital here. So we'll directly integrate into payment networks where that's gonna make a difference and where it's economic for us. Faster payments, SEPA. Also, SWIFT. You've heard SWIFT suddenly became a thing that people have heard of through the Ukraine conflict recently, you know, and Russia was cut off or certain Russian banks were cut cut out of SWIFT with direct members into SWIFT. And we'll take out more supply chain where it suits us. For those countries where we're not yet at the stage that we want to do that, we have Citigroup who are our major banking partner. They are an exceptional partner because they have proper branches in multiple countries around the world such that you can get domestic settlement, I. More rapid settlement in 42 currencies and countries.

9:01 So they were a key partner for And the only multi currency Iban is vital in terms of this this whole scenario. Also, though, whilst we're growing rapidly, adding all this stuff, signing up customers, investment into compliance. And in fact, the whole back office, if you want to call it that, has been key to what we do and as are the relationships we have with our banks, our supporting banks, the regulatory bodies. So we've really invested heavily in terms of personnel, systems, everything we can to be, you know, very, very good and trusted partner of banks and regulatory bodies. We have a very strong reputation with all of those parties, and that takes a long time to build up and can be easily lost. So we continue to be very, very we're actually, by nature, a cautious business. So, you know, that's bearing fruit now in terms of what banks and regulators will allow us to do. They might not allow others to do.

10:03 We've also invested into automated onboarding for vanilla verification. KYC is know your customer. KYC is know your business. We can do a lot of the easier to do stuff that can be automatically checked via systems, and then you overlay that with enhanced due diligence or, you know, more manual checks as required. So we have a very strong capability there. You take those products, those differentiators, and move along to the platform. You get EQUALS money, which is the platform let's call it the bread and butter platform that we're building and have largely built that we can give to the SME population within the b to b space, so small and medium sized enterprises.

10:54 We're building for typically 50 to 500 employee type size businesses, but the platform works just as easily and just as well for smaller or larger businesses than that. But you need to build focus. And, actually, someone earlier asked me, you know, on the b to c side, are we not bothering with that anymore? Of course, we are. I mean but we'll take things that we build on the b to b side and drop them into the b to c

11:20 channels where appropriate. So last year, we we, for instance, implemented link cards on the b to c side. That was a direct lift and shift out of the tech stack of the b to b corporate card platform. And as I mentioned earlier, businesses need the capability to pay by transfer or card from one platform and one balance. So you can see the sell selling proposition there. And this is underpinned by literally best in class security. We have a security council that meets every month that I attend where we cover everything from the security of, know, not allowed to put a USB stick in the side of your laptop all the way through encryption. Everyone here has to do regular.

12:05 Every two weeks, we get new modules where we're learning about data security and compliance all the time. A lot of training underpins all of that. And if you take the EQUALS money platform and you bulk it up, you get equal solutions. So at heart, it's the same thing. It's a platform underpinned by the capability to give a corporate an account in their name, an own name multicurrency IBAM. Why is that a benefit? Well, if you think of a a corporate receiving lots of money from lots of different places, what we can do is allow them to give an IBAM to each person that's paying them such that they know instantly where that money's come from rather than it all arriving into one big account and trying to work out where it's from. Or they can have just one IBAM, and we divide it into subaccounts, whatever they want. The flexibility we can offer with multiple I bands, one I band, multiple subaccounts, or a mixture of the two is literally astonishing, and then the Box's infrastructure allows us to do that.

13:15 On top of that, though, these these type of customers also have quite complex approval hierarchies and permission hierarchies. So it could be they won't allow a payment to go out unless maybe five sets of people have approved it. We can support however they want that bespoke. The platform will support it. And, you know, last but by no means least, we have the ability with the compliance investment to onboard these businesses rapidly. So, you know, a a solutions customer might go to a bank. It might take months for them to get onboarded, and then they'll have one account per currency. And if they ask for more accounts, they'll have to, you know, be charged a fortune.

14:01 It'll take forever. Compare and contrast to us where we can onboard people in hours or days and configure the platform as they want it and have accounts set up literally instantly. The use case is I list some of them below, and they're growing all the time. Because I think fair to say we understood some time ago that what we needed to do was create this own name iBank capability and that, you know, people would want it, and there was a product there. We were right. But what we're developing now is based on the feedback from live customers. So we're enhancing the product at pace, at serious pace now and putting into it what customers say they need.

14:48 And by doing that, we'll we'll extract more revenue out of the customers we already have plus sign up customers we couldn't sign up before. So we're very bullish about the pipeline, for the solutions business. And the categories we have there, you know, I've tried to subdivide them so that you get some idea. Global collection accounts. You know, if you take an emerchant selling stuff around the world, may have three or four or five or six, let's say, six merchant acquiring providers around the world sending the money, before, you know, it would all come into one account or one account per currency. It's very messy. You wouldn't know where the money had come from. Now that we can give them an IBAM per puts each six IBAMs, one for each of the of the people sending the money so they know instantly where it's come from.

15:39 Reconciliations become much easier. They receive a currency they're not received before. A box is automatically created, automatically appears on their portal, automatically, will be doing something with that money. You get start to get some idea how powerful that is. And that's applicable across e merchants, online media, CFDs, crypto, not crypto, actually, know, the currency, but the exchanges. That we're not transacting the crypto itself and the gaming industry. Increasingly, we're moving also to allow other financial institutions to use our platform, so banks or other authorized payment institutions. The shorthand for those is API, but we're actually connected to them via API, you know, the technical shorthand APIs or automated protocol.

16:27 So we'll that's where you see more and more, it's platform and even software as a service. We could even license the technology as we move forward. And management services, fund administrators is a is a rich theme. Corporate service providers all need the same thing, the ability to spin up accounts quickly as legal entities are created or contracts are one, and have flexible, account hierarchies. We can do all of that literally at a push of a button. So, hopefully, that gives you the kind of overview of of what we have now assembled. So let's, dive into what we did in 2021. Just a few snapshot things of, that we delivered.

17:14 On the payment side, we deployed the new pay platform, which is the self serve platform for customers. And the exact same system, but the flip side of it, if you will, is what the dealing team internally use. So customers and our own traders are seeing the same thing. I should emphasize at this point for those of you that not we've not spoken to before that we do not take risk. So if a customer buys a million euro, we sell the million euro at the exact same time. And in

17:42 fact, you know, a lot of that is now automated directly with the banks on what's called a fixed engine. So this is not a risk or a trading business at all. It's all about flow through the plant. And if we get flow, we make money. It's binary. The ONAME iBAN, as I mentioned, how critical that is, that was delivered in late May, and then the revenue trajectory kicked up as you'll see on the graphs later. And the solutions revenue stream, as you've seen in the RNS, contributed 3,600,000 in revenues last year, and we'll cover what it's done so far this year,

18:18 later on. Onboarding, investment into the onboarding automation, as I mentioned earlier. CRM, there was a gap in our capabilities. We didn't have a single CRM across the whole company. We used a we're using a platform called HubSpot. Anyone that's worked with CRM will know one thing to, like, wire it up. It's nothing to get the most out of it, and that's a ongoing process. It's been a revelation already. HubSpot, we're getting more and more out of it as time goes on. Sales, we revised the structure. We've got rid of a lot of old salespeople who maybe were, you know, more kind of just selling on price. And we've hired sort of higher grade salespeople who are able to sell the overall service, the package,

19:09 you know, have more to say, more consultative sales process, and that's bearing fruit. And hand in hand with that is the marketing side. So I restructured the marketing team. I actually created a a team called the GROUP team, which incorporates marketing and what we call sales enablement. So they own the whole CRM, if you will, and make sure that it's implemented across sales. So sales and marketing working hand in hand. And last, but by no means least, the people side. No. Our strength ultimately is the people that work here. Very close knit team.

19:41 We've strengthened the whole agenda. We have a little bit like the CRM side. We put a a platform in called Bamboo as our people platform, which does the basics of, you know, everyone's details and history and etcetera working with the company. But, also, the same platform is used for appraisals and pretty much everything we do on the people agenda goes through that platform. So we made great strides with that, with more to do. And if we flip to the next slide, you get some idea, in terms of, sorry, in terms of what we're doing on the ESG agenda. We've done an awful lot in 2021 and a lot more to do. This is, we were across this, especially on the people side before anyway.

20:30 I won't read everything on here. I think I don't think we have time to go through it, but please do read it at your leisure. But you can see how seriously we take this, whether it be it through carbon footprint, all the stuff we're doing on social and on people in general. And the governance side has been a great investment in '21 and will be in '22. And, you know, it's certainly not we don't view it as overhead because you get you get more engagement from your people out of doing this, you in your workforce. Ultimately, that is our strength. So at that point, I will pass over to Richard who will take you through in some detail the

21:13 the 2021 financial performance. K. Thank you very much, Ian. And the the next series of slides contain lots of numbers and a couple of pictures, and they should be regarded as complementary to the r and s, not substitutional.

21:29 Anyway, let's let's crack on. So high level underlying transaction values through our platforms, what we are capable of doing, you know, almost doubled in the year. And we were asked a question earlier about, you know, is there a limit to the number of transactions that our platforms can do and a limit to the number of transactions at any one time. Yes. There is, but we are way, way, way below it. And in fact, our head of product has reported to me that we can stress test. We've have stress tested our technology to do over a thousand times the expected client notes.

22:16 So much more to go.

22:19 Revenues up 52%. There's a a slide on where those revenues came from. You know, more than 80% now from b to b. We set out on a path to reposition ourselves. We've done it. Like to get towards probably 90%. I think that's achievable this year.

22:40 And quality quality customers as well. So our adjusted EBITDA, so what does that mean? That's before exceptional items and share option charges. Exceptional items issue, very modest as we'll come on to in a moment. Significant so adjusted EBITDA is massively up on the previous year and indeed the year before that. And the cash balance, you know, really, really significant turnaround. And we were talking to our staff earlier, and they asked, well, how how you know, what was our cash balance at the the sort of start of COVID and were we worried about it? And our cash balance was 7,000,000. So, you know, since that period, with all the overheads and everything else, you know, we've increased our balance to to 13 and and more, because we're on a, you know, almost April now.

23:39 Next slide is the mix of revenue in numbers, and then we've got some slides that illustrate that. So core international payments includes the material trade that we announced last year. It includes the the core businesses that you may be more familiar with if you followed us, CASCO effective, Hermex, and Citi forex. White label is rebranded. EQLS Connect solutions we've we've spoken about. The corporate card platform previously known as Spend. Banking services came from the the legacy of CardOne Money. So, again, you know, very significant increase. And what we can see is that pictorially here and I'll just skip over this, but it it a picture tells a thousand words as as does this one.

24:33 The right answer from bottom left to top right, you can see the transaction amounts on on the left hand side of the screen with solutions coming in, you you know, really just at the tail end of the first quarter. And it's been an astonishing success, 3,600,000 with 1,800,000 in the last quarter of the year. We've already done 2,600,000 in the first quarter of this year. So this is just a walk through of really our p and l, then we come on to cash and liquidity, and then a bit about our our largest cost, which is staffing. So I proposed just to really focus on the notes at the side of the screen because this is all available to you, this deck, and there's more detail, obviously, in the r and s itself.

25:27 So, you know, what what are our gross profits? Well, it's the transaction costs, affiliate commissions, and staff commissions that come off the revenue. And we managed to hold marketing very, very tightly in the year to give us the figure of contribution, again, fantastically increased from the previous year. We have seen the gross profit margin as a percentage dip, and there's a very good explanation for that, which I'll come on to when we look at some of the sub slides on revenue. It's not a permanent diminution either. So staff costs, again, you know, those are the gross numbers of staff costs there.

26:14 You know? So we've lowered the number in the year. We've capitalized less. You can see what we've done in other expenses. We've really, really held the checkbook very tightly, giving us a a very significant turnaround in adjusted EBITDA. And we know that some people like to look at adjusted EBITDA after rent, so there it is as a memorandum item at the bottom of the slide. So So if we then go from adjusted EBITDA into some of, you know, the revenue slides, the purpose of these next sort of four or five slides is just to give a bit more color behind what's behind the, you know, the revenue silos. So here we have international payments, a total of 29,500,000.

27:00 The core revenue, so that's excluding Connect and the solutions of 18,200,000 compared to 15,000,000 the year before, so up 21%. It did reflect the material trade, but it's it's within the core business. It also reflected a series of nine forward transactions with a hedge fund, very reputable hedge fund, who who chose to do 70,000,000 of forward business with us. Not a huge profit turn, again, it it plays to our our credibility. So 88 over 88,000 of transactions, average transaction size just under 30 k up on the previous year. You know, spot percentage stock spot dominates still 78%.

27:49 B2B, we mentioned earlier, over 80%. And, you know, some some of the margins, you know, marginally down on the the margin for trade and marginally down on the gross profit margin as we will come to discuss on one of the next slides. So EQUALS Connect, the white label business, you know, acquired November 2019. Surge in in revenue in the year, very, very spot dominated, all b to b. Quite a difference in transaction size between spot and forward. Very decent trading margin and, you know, 1,100,000 of gross profits. And out of that, we have one significant affiliate that generated about 200,000.

28:41 We don't envisage that they will hold such a large percentage going forward, the overall book. But, again, it's a wonderful bit of credibility that we've held that affiliate for so long. EQUALS solutions. So, you know, this is the real granularity of of the the product here, and it's split between what we're doing in currency trading and the platform trading. And the the principal difference is really that the, you know, the the volumes are different and the gross profit is different, but so is the margin. So we earn less per per trade on the platform because it is a, you know, not not quite doesn't kick the tires.

29:28 But the gross profit on that, you know, is much less pay away. So so these are two fantastic revenue streams, which, you know, generated 3,600,000 in in the year. Moving on to corporate cards, which you're probably gonna be more familiar with. You know, still in a tough environment, we increased the revenue by 70%. We increased the average revenue per transaction. That gives you some sort of flavor of how much we make. You know, not not quite 500,000 worth of number of card loads from, you know, a third of a billion loaded onto the cards and from just over 3,000,000 transactions. So, you know, up up up up up right across the the business there.

30:19 Legacy product personal cards, I mean, remarkable that we've managed to increase the revenue on personal cards because because it's largely a travel product, and we all know the impediments that COVID presented to us in the year. We've also been able to drive up the average revenue per transaction. The value of loads was slightly lower, but the the number of transactions again was over 1,000,000 in in in the year, you know, from 250,000 loads. So, you know, we're very, very pleased with that performance, and it's it's holding up very well still. So lastly, on the sort of product set, just a little note about current accounts or the banking, the card one money legacy product.

31:11 Of that revenue, just slightly more than 50% is is business. We're making little shy of £400 per account from 14 and a half thousand accounts and, you know, 1,300,000,000 of deposits that that we took in the year, five five and a half million transactions. So moving on to our largest cost, and this is quite an interesting slide if you've been following us. So, you know, we were capitalizing a lot of development costs. We've reduced that in quantum, reduced that in the percentage of our staff costs as well on a lower staff number. So, you know, the heavy lifting was done in '18, '19, and and and '20, less so '20, but we're on a bit of a roll there. You can see what's happening to staff numbers. We've dropped from three zero three to two fifty five. Current payroll is about that amount.

32:13 You You know, know, we we are are we are hiring. We've got some great open positions. I'm really proud of this and so is Ian. You know, the revenue per employee has gone from 96,000 per person to a 173 in a year, And the value added is, yeah, again, likewise, gone from 46,000 to a 121. We're often asked about contractors and, you know, can you reduce your your staff costs, particularly in developers? How many people have you got? And in products and developer development, we've got about 40 people. So 12 are contractors, but we've moved more to often nearshoring as you can see from from that mix there. Just some some accounting type slides here to keep everyone in the picture, you know, taking ourselves from firstly adjusted EBITDA to EBIT and then from EBIT to result after tax.

33:10 So significantly lower exceptional items. Prior year was COVID and Wirecard. This year was some a management layer was removed. Amortization, we are now in a position where the charge for amortization is actually significantly higher than the real spend that we are we're going through. So we've we've come through that sort of pain barrier of spend. Adjusted intangibles, I think some analysts take that out of the equation. And the only other thing to mention really on this slide is that we had a close look at the the bureau business whose revenue naturally with travel restrictions was highly highly restricted, and we decided just to impair the goodwill on that. So there's no more goodwill for the bureau, but we do have some underlying assets that are still there for the bureau.

34:07 It's about 600,000. Moving to, you know, results after tax. Again, a lot of these are just accounting numbers with the exception of, you know, the r and d accrual that does convert into into cash. We did receive the 1,400,000 that we booked in 2020 in 2021. We should receive the 400,000 accounted for for 2021 in this current year. And, anyway, the and the final number at the bottom there is yeah. If it hadn't have been for the rising corporation tax, that number would be nil, which is a staggering turnaround from the year before.

34:55 And, obviously, if we didn't impair the bureau, it it would be positive on adjusted adjusted loss for the year. Just a quick slide on cash flow. This is my favorite slide. I think it speaks to everyone who can read this. It's pretty straightforward. We've taken the EBITDA after rent, ducted the cash outs on exceptional items. What we've capitalized, again, significantly lower than the year before. Purchase of noncurrent assets is exactly as even. Acquisition earn outs, where they're performing very well. This year, we have 1,600,000 to to settle, and we've settled half of that already.

35:43 And I've spoken about the r and d credit. So overall, you know, our cash balance moved very nicely higher. I think it it gives us a very strong position to to do all sorts of things this year if if market conditions change. And then we can quickly look at liquidity and how we look at liquidity, which is a composition of the cash at bank, what we have at liquidity providers that that include Barclays and and and other people, What we have at the card provider that moves daily that number. And and really, the year end didn't fall on them a weekend or a bank holiday, that number might be half of what it is. We have to usually preload at just in front of a weekend.

36:31 We do have non non safeguarded balances with customers. They deposit margin with us, we drew down the the CBLS loan that is on a repayment basis, and there is the 2,000,000 there. Track cash, you know, 1.2, very, very static compared to the the previous year, and we we don't worry too much about that. It's it's really quite working capital light, our business now. So at at that point, I'm gonna pass back to to Ian. And if you do have any questions, do start posting them there when when you're ready about the financial the factual results. Thank you, Richard.

37:16 So how are we doing q one to date? Well, actually, it was up to the twenty eighth of of March. I think the results for 2021 were fantastic, and the challenges, you know, could we build on that and push forwards again as we move into this year? And, clearly, we have and we are doing. I'm extremely proud of the performance we've done so far this quarter. I mean, as you can see, 13,600,000 as of March 28. Twenty ninth, was good. Today looks good. So we're clearly gonna push through 14, for the quarter. So a a stellar result. And I'm particularly enthused because I know, as I alluded to earlier, some of the stuff we're building for the solutions product in particular, but also across EQLS money, in fact, everything we're doing.

38:15 There's a lot coming this year that's only gonna make it easier for us to sell to new customers and extract more money from existing customers. So I'm optimistic about the future. That said, as always, post missing the numbers slightly in for 2019, you know, we're cautious. Anything could happen. Events of March have shown anything could happen. So, you know, we're our AGM ought to be somewhere around the middle of May, and we'll have more to say then. I think we'll have, you know, 4.5 under our belt. But, we're happy very happy with where we are. The solutions revenue just in this quarter as of the twenty eighth being 2,600,000. You can get some idea of the trajectory there. Mean, that's not too far away from what we made in the, you know, in the the whole of last year. And this the graph there, if we showed it, would be the right answer, as Richard puts it, in terms of the the slope of the graph as we're going from January, February, March.

39:21 We have a strong pipeline in new business there. Corporate cards literally running at double the volume they were this time last year. Admittedly, This time last year, there was a certain amount of of lockdowns and stuff still going on. But, nevertheless, they are motoring ahead. This month will be another record month. And the appetite for that product, which I'll get to in a minute, especially especially in in the The USA, is phenomenal. So there's a lot to play for there. International payments so far this quarter or this quarter was pretty much done. The conflict in Ukraine has created volatility. There wasn't much volatility in January and February. There's been quite a lot in in March.

40:07 And volatility means people that may have been just seeing what happened or didn't have to do the transaction now could wait a couple of weeks. Will get off their hands and do a trade now. You know? So pound going up, pound going down, it it dislodges sellers and buyers. So we generally have a pickup in international payments revenues during those sorts of periods. So as a quarter as a whole, it's a great result aided by that in March. And, you know, we're seeing, as I mentioned earlier, the success of the sales restructuring we did during the course of last year. Headcount, pretty stable. In fact, the number's two fifty five still, which is what it was at year end. But it will go up, this year as we grow. We'll be adding more salespeople, and it's inevitable we'll have to add some people.

40:59 As efficient as we are, we can't double again in in transaction size and not add any operational people at all. So I expect that to go up, but by no means in the same ratio as as revenues would be going up. And that applies across the whole cost base, you know, despite the fact we're doing very well, Richard and myself, through the exec and direct to all all all the staff here. You know, I keep a very close control on all of our costs because you can let that get away from you if you're not careful. That said, you know, if we see the opportunity for investment that's gonna drive tangible revenues, then we will go after a case in point. And not in the millions, but in the, you know, a 100 k here or a couple 100 k there type of size. So for instance, you know, we're feedback from solutions customers is some of the larger ones would like to connect, integrate with us, if you will, via APIs, which we had slated to develop that capability towards the end of the year. We've bought it forwards by hiring a couple of extra engineers to do that now. So, actually, it will be done in q two. So, you know, of course, we're about to start. It's not a big bang thing, and we'll be doing that in stages. So selective investment with good ROI within year, we will do, which, you know, I would hope you would all want us to do.

42:30 Let me flip the slide, Richard. So what are we gonna do for the balance of the year in terms of products on the payment side, more emphasis on faster processing and delivery, so shortening the lead time again, such that when, our customers receive money, they see it instantly. When they send money, it goes out instantly, speeding all of that up, which allows them to control their working capital better. Bulk payments so we can process many thousands of FXs, one customer on one transaction rather than lots of individual ones. Widening the forward type types of four contracts you can do. So as a vanilla forward, you can have early drawdowns. You can have window forwards. There's lots of variations that we will build into the platform. And generally improving the UX and deploying a mobile app for the payments module.

43:26 On cards, we have physical and virtual now. The debit and prepaid functionality is coming during the course of the year. We have prepaid already single and multiple user. So one user or multiple users using the same card. We actually have that capability as well right now, all put into the EQUALS money platform. That will be fully rolled out during the course of the year. International expansion. We in the last two months since a lot of COVID restrictions fell away, we've been able to travel. We've been able to attend trade shows. We went to c f some of the exec went to a CFD conference in Dubai a couple of months ago.

44:13 So much demand for solutions product from that industry vertical. And we were sent I sent a couple of exec members and some other team members to The States a couple of weeks ago. First to New York, see our partner bank there, Metropolitan Commercial Bank, and Mastercard, and then to a trade show in Austin, Texas, and then on to LA where the film industry obviously is mostly based. Not for the Oscars, I might hasten to add. And the demand for the EQUALS money or the corporate card product in particular out there is stratospheric. And that is not something to get you all quaking your boots about some massive beachhead being breached in in The US. You know, many of the customers that use the corporate card now are US companies, you know, using it for their overseas stuff that would use it in The US. So we have a a good route to penetrate the market, and also Mastercard, a very enthusiastic product that we have.

45:18 So we can do this without, a massive investment. And the good news about The US card industry is that the interchange levels there are much higher. So we can actually afford to pay people to use the platform and or pay affiliates to resell it for us. So and another good thing about that is that the infrastructure to do cards in The US is exactly the same infrastructure that we have here in terms of the processor, Marketa, Our platform, the same platform. So all the same tech. The only difference is Metropolitan Commercial Bank will be the issuing bank, but they don't actually have to do anything. They just sit it just flows across their books and across their regulated entities.

46:04 So it's not a big development cost there. And we were the physical trips that we can now make and the trade shows we can go to validate the potential of the business, not just solutions, but also the EQUALS money proposition that we've been building out over the last few years. We'll do more connectivity. We announced SEPA recently, as you'll have seen. Sorry. Directly into faster payments, directly into SEPA. That means if you're doing a a sterling euro transaction either way, it's instant, not, like, quick. It's instant. ACH in The US is the equivalent. That's automated clearance house. We already have that, but it's manual via via MCB.

46:49 But that will be done via an API, so it will be automatic and instant again. So bit by bit, country by country, depending on where the volume is, you know, we're going direct, which is all part of the same thing. We're also gonna integrate into accounts platforms. That will be another it'll both be a sale selling route where we can sell our wares through it as well as widening the customer base we can get to. So for instance, you know, QuickBooks or Xero or the various other accounting packages that you see, if we're an accredited partner and our system talks to theirs, then they, in effect, resell for you, like, you know, recommend to their customers or you're on their list of of providers.

47:37 Also, you'll find that some SMEs, the first question they'll ask when you're trying to sell them products like ours is, oh, we're on on QuickBooks. Can you interface to that? And if you say no, then they'll put the phone down. So we're not interfacing directly to each one. We're we're using, in effect, an aggregator that is connected to it to all of them. So we plumb into that provider, a company called Codat, c o a d a t, and they do the integrations for us on the other side. So that'll also be an exciting development for us. We will continue to invest in tech. I think the the tech levels of spend you've seen in 2021 will are kinda like the the heartbeat of the business. I'm not expecting that to balloon up as we go forwards. You know, we went through the heavy spend cycle in, you know, eighteen, nineteen, twenty.

48:35 So we're over that hump now and as you can see that from the numbers that Rich presented earlier. I mentioned earlier, platform as a service, increasingly, we'll be building out the API capability such that we can resell EQLS money and solutions to third parties, be they are the financial institutions or, you know, any anybody that can make use of it. And we'll put more investment into the boxes infrastructure, which is almost like the operating system. You wanna think of it that way that underpins everything that we do and drives efficiency as well as the stuff that we can show to customers. And continue to invest in people. So retention, productivity, all all of that good stuff. You saw the ESG slide earlier.

49:26 We did the LTIP and SIP programs last year. So, you know, the vast majority of employees here are now shareholders. I'll look to repeat the the SIP process, if I can this year. It's actually if people stay here, they start to accumulate a decent shareholding, which I think is is excellent for retention. So you can't do it all in one one go, but they see the the pattern, then it'll it'll help your team. You can slip the flip the slide, Richard. Also, on the growth side, sales and marketing, you know, gap in our capabilities was, obviously, we had lots of affiliates, but we didn't have a a decent affiliate portal or partners portal. So if you can't find customers yourself via your own sales team, then having affiliates find them for you and paying them something for it is a great way to do it.

50:20 Also, giving your current customers who love the product the ability to, in effect, refer a friend or sell for you is another great way to do it. You know, we do a survey of particularly on the b two c side, for instance, you know, up to a third of our new customers come from referrals from existing ones. So the more we can facilitate that, the better. Data, we finally have a fully staffed data team. We build that over the course of 2021. We're you know, we've got so much data and mining it such that, you know, we want to be data informed, not necessarily data led because that can lead you to the wrong conclusions. We wanna take the data learnings, apply them to what we know about the business, and make the right decisions from there.

51:09 I think still fair to say that we need to a KPI for us is the APPU, average product per user. We're still very near to one, and we need it to be higher. And as we push out EQLS money as a platform, it will obviously go up because it's so much easier to use more than one product at a time. And that data capability will drive more marketing automation such that the system will automatically, on an event driven basis, communicate with customers in a highly personalized way, which, again, leads to more revenue. Client tiering, very important. Historically, we've offered the same level of service to a dealing customer, speaking to a dealer that might we might earn £50,000 a year out of to one where we earn a £100, and that's clearly bonkers. So we are tiering the clients based on their revenue potential.

52:06 And, you know, if, let's say, they're we'd only earn £500 a year maximum out of them, then we will push them towards the self serve platform rather than having giving them a dealer to speak to. That kind of striation or stratification of of your customers. We've also got a ton of new features coming out this year, which gives you a reason to speak to customers, both existing and potential. So that will help in terms of the growth. Pricing, kind of hand in hand with client tiering. We've typically charged for what we do in one way. So for instance, on cards, we'll charge an FX spread. But, you know, some of our competitors will charge no FX spread, but we'll charge a per month per card fee.

52:52 Our billing didn't allow us to do that. So, we're we're building out the billing engine to allow us to do that and other forms of charging via fee based or, you know, monthly account fees, etcetera, etcetera. The website automation is kind of obvious, but anything you can do to improve the flow from someone landing on the site to becoming a customer, minimize the time, and minimize the amount of dropout of the funnel, clearly drive straight through to increased revenues. In industry targeting, I mean, I talked earlier about going to attend trade shows. The best way to get customers, particularly in b to b, is to go to places that they congregate, and trade shows are exactly that. So we will have a fair chunk of our sales force on the road a lot attending those types of things. We've got a very eye catching stand now. We've got good marketing collateral, good merchandise, that sort of thing that attracts people over.

53:50 And all the trade shows we've been to so far this year have literally been fantastically received, so we'll be doing more of it. Next slide, please. So in summary, as a business, we're growing, and we are growing strongly, and we've got operational gearing. So more and more of that will drop through to profits as we move along. Scalability, it's inherent in everything that we've built. You know? Fine. We've almost doubled what we did in a year, but, you know, our ambitions are set way higher than that. And we can start to really, really push on. And the the tech is built with that in mind. So it's a scalable business. We're not gonna trip over ourselves. We're throwing off cash. We're operationally cash flow positive, strongly positive.

54:37 So that allows us to do m and a where before we couldn't really because normally involve some upfront cash. I'm not saying that anything's imminent, but it gives us the flexibility to do it if if things come up. And it gives us the flexibility to, you know, turbocharge something if we we see an opportunity by spending a bit more money. It's now very much a tech led platform business. It's not a vanilla FX business by any stretch of the imagination. It's increasingly you know, every month that passes, that's becoming more obvious, hopefully, to the investment community as well. So it's a payments platform incorporating everything that I've said, either directly or via API. Whilst we're growing super strongly, we are growing with at least, you know, a very strong eye on compliance and control and operations in general. We're not gonna, you know, trip over ourselves.

55:34 That's one of our key USPs, as I mentioned earlier, is the whole compliance function. And, you know, here we sit on the March 30. You know, this time last year, we were doing our results as we've done historically, typically towards the end of April. You know, we're able to do that. You know, the difference that Rich and his team in finance have made since he came in a couple of years ago, you know, is is night and day. We're we're a very well controlled, well governed company, which drives the last point there. You know, we've got a proven track record over the last two and a half years, strong, stable team, delivering consistently. We're beating what, you know, the market expectations, and we expect to keep doing that. So thank you, everybody, for your support. If you could flip the slide, Richard.

56:27 So thank you, everybody. That's the end. We're gonna open to questions, but I'll hand back to the That's great, Ian and Richard. Thank you very much indeed for updating investors this evening. Ladies and gentlemen, please do continue to submit your questions using the Q and A tab situated on the right hand corner of your screen. But just while Ian and Rich take a few moments to review those questions submitted already, I'd like to remind you that a recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor meet company dashboard. I know, Ian, you've given a very comprehensive summary of everything, and I think you have touched on a number of these questions. But perhaps if I could hand back to to you, Richard, to read out the questions and give a response where it's appropriate to do so. And, of course, I'll pick up from you at the end. Yes. I mean, having a quick read through.

57:15 Some some are going to be very quick answers, and others are gonna be a little bit longer. So we have a presubmitted question, which is really relating to, is there an annual cost saving from having joined SEPA? I'm sure there is. To be honest with you, that wasn't the motivation. I mean, what the the liquidity providing banks would charge to do a separate transaction wasn't much anyway. It's more about the fact that it's instant. You don't have cutoff times. You know? Oh, Bob. Oh, it's after 01:00. It's gonna be tomorrow now. So it's it's about the speed of movement of money rather than the the cost implication. There would be you know, it's but we're talking pennies per transaction. So it wouldn't be material in the bigger scheme of things given where we are now. Okay. There's another question about the holding from Crystal Ambran. Is it a is it a threat to us, the fact that it's it's gone down?

58:22 Well, let's just consider where we've come from. You know? Crystal Ambran at the peak was almost getting up to 30%, and more recently, it was around over just over 20%. And their continuation vote, which was voted down, you know, and, obviously, there was a threat of having to liquidate. Since then, they came out with a statement that they had, you know, two years or more to wind down their positions. And around the same time, not long after that, we did a you know, when we came out with our r and s in January about the trading update. And we saw a few non holders at that time, and there was significant demand.

59:08 And a, you know, 7% in effect of Crystal Amber was placed out to institutional holders. I think I would hope, and it seems to me the market has interpreted that as, you know, that's not an overhang anymore. For sure, he'll need to sell it at some point, but there's two years to do it. He doesn't have to pay a dividend to his underlying shareholders in Crystal Am for for a considerable period of time now and seems to have control of the situation. And, you know, it will be placed, you know, to institutional buyers, not drip drabbed out to retail buyers as as we move along. So we've broken the back of that. Clearly, you know, if we have institutional buyers in size, then we will ask Crystal Amber if they will sell to those institutional buyers.

1:00:02 So I'm a lot happier with where we are now than where we were. You know, he sold a a big chunk then and then a little bit more more recently. So he's down to about 12% now. So, broadly, I'm happy with where it is now. Very good. There's a question here about management delayering and have those three individuals that left the business gone to competitors? Well, the first thing to say is that we chose to let them go, not the other way around. So it doesn't point to churn. The second thing to say to answer that question quite binary is no. So and the third thing to say was would be that if they had, it wouldn't worry me unduly. You know, we we look after ourselves. We're doing we're doing what we're doing.

1:00:58 And it's all very well to say, oh, I know what EQUALS are doing, but to rep replicate it is not easy, and that gives us confidence. Okay. There's a question that I'm gonna answer directly, which is what investment has been allocated to further develop your platform infrastructure and functionality? Well, since 2018, the answer is 20,000,000. We give some guidance notes of of going forward, which we we think that capitalized software this year will be maybe about 3,600,000 and possibly a little higher in in 2023. Some of that reflects speed of development, and others reflect a little bit of labor market pressure. There's a question about expanding outside The UK into an an m and a related to that.

1:01:49 Yeah. Well, I think I covered a lot of this in the presentation. You know? We are have been historically very UK focused. We have a route into Europe. We have a route into The US. We don't need to spend a ton of money to do that. It's really making sure that we can offer our wares, you know, electronically via the platform, via API in those jurisdictions rather than having massive amounts of boots on the ground. So I think we covered that. The m and a side, we're open for business, whereas before we weren't. But to be candid, you know, it would have to be a good deal for us to allocate resource to that when we're growing as fast as we are organically.

1:02:35 So it somewhat changes the lens through which you view an acquisition when, you know, you've got something on your hands that's growing as fast as as we currently have. Okay. As a question here about how do you think rising inflation will impact the business? It's it's could answer this by talking for an hour or but I'll try and do it justice by talking for less time. You know, on the one hand, you can say, okay. Well, if someone's buying widgets and the widgets get more expensive, the FXs they do will be bigger and therefore make more money. That holds water. Equally, if, someone's buying widgets, they get more expensive, maybe they go out of business. So it could be that there's less people buying. I think the more interesting side of that, which is a byproduct of inflation, is the interest rate environment.

1:03:26 Right now, for instance, if someone deposits euros with us and we safeguard it for them, we're actually paying banks to hold euros. If interest rates go up to three or 4%, that's pretty good environment for us. We'll be getting additional revenues from, you know, interest earned on balances that we hold. Because we're an e money institution, we can't pay interest on deposits. If rates go higher than that, then it could be that customers start thinking, well, I'd rather not deposit money with you because I earn interest elsewhere. So at that point, maybe you have you start thinking about whether it pays to become a full banking license. Although there's other ways to recompense a customer for for loss of interest. So I think it's the interest element more than the inflation element that that that might be more interesting for us. But at at the basic margin, if people have to pay more for stuff, then the FX they'll be doing will be bigger.

1:04:27 Okay. The next question is more about the flip side of the m and a. Given the unique and valuable propositions provided in the rapid growth of the business, how do you prevent EQUALS becoming a cheap takeout target given its lowly rating? Well well, for a start, everyone on the call could keep buying and drive drive the rating up. I think partly, you know, we need to keep preaching the message about what we're doing, what we're building in the platform here. And the the rating we have now is better than it was, but still feels like the stock is underrated. I think that's a very fair point. Ultimately, you know, if someone tried to take the business over, it has to go through shareholder vote, board vote, all the various things.

1:05:14 And it depends on how we all whether we all agree it is lowly rated. But I think the best way to prevent someone taking it out cheaply is to carry on doing what we're doing, producing the results that we're doing, improving the shareholder register as fast as we can also. And that's the best defense, I think. Okay. We've just got two more questions that I think we're gonna be able to to answer. I think the next one is quite a quick response because it really looks at, I think, retail competitors rather than the the b two b, which is how do your charges compare to Wise? Yeah. A a good question. Fair question. Wise basically charge 50 basis points or point 500% on everything broadly.

1:06:02 Point three five on some currency pairs. And but Wise is self serve only. Wise doesn't do forwards. Wise doesn't have dealers. You know, our average spread, as you showed on the international payment slide, is around 70 basis points. So not that much more than Wise on their standard, for a way more service. And, really, that's the, you know, the difference between shopping at Baulding or Waitrose kind of analogy. So we we stand against them based upon the service levels and and not least the forward contracts, which actually drives our average spread up quite a lot. We look at the spot trades, which is what they do. I don't think we'd be far off their spreads, if I'm honest. Yeah.

1:06:49 So our last question, I I think can have two answers, and I'll answer it factually and and let Ian put some color around it. The question is what stakes do you both personally earn in the company? The the technical answer to this is is actually published on our website under shareholder information. Ian owns just under 2,200,000 shares, and I bought a 150,000 shares. And we have options and deferred shares as well as that, which is, again, not disclosed. I think also, I would say the stake I have more than what Richard just outlined is emotional. You know, I've I've been with this business since the beginning of it.

1:07:38 It we you know, it's been a hard slog at times, but we're just on the cusp of something great here. So, you know, that's my stake is, you know, I have unfinished business. I've hired every single person that works here. So, you know, I wanna I wanna see them achieve what I know they're capable of. And, Richard, if I may, I'll just jump in as we come up to ten minutes past the hour. And just thank you for your time and your generosity in taking the questions. And thank you to all the investors that submitted questions. I'll shortly redirect investors, if I may, to give you their thoughts and expectations and give you their feedback. But before doing so, Ian, if I could ask you just for a few closing comments to wrap up with. And then as I say, I'll redirect investors to give you their feedback.

1:08:26 Yes. Yeah. I'd like to thank everybody for their for their time and their evening. We're delighted with the results we've managed to put out. Results at the end of the day are a snapshot of what we did last year and where we are right now. I hope that you can interpret from those results how excited the company is, not just Richard and I, but the company. You know, if you walked around the office here, then it's tangible. So, you know, the company's got itself into a very, very good position, has some USPs, which are not easy to imitate, take time to assemble. Even if we had unlimited resources, take time to to assemble what we've managed to do here. So I'd like to thank any shareholders for their support, And, hopefully, we can continue to outperform, market expectations as this year goes on and beyond.

1:09:32 That's great. Ian, Richard, thank you once again for your time this evening. Leisherman, please do not close this session as we'll now automatically redirect you for the opportunity to provide your feedback in order that the company can better understand your views and expectations. This will only take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of EQUALS GROUP PLC, we'd like to thank you for attending today's presentation. That now concludes today's session, and I'll get it right this time. Good evening to you all.