Eql Pharma (Stockholm:EQL) — Interim Results

0:00 Good morning, ladies and gentlemen, and welcome to the EQUALS GROUP PLC Interim Results Investor Presentation. Throughout this presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time by the Q and A tab situated on the right hand corner of your screen. Simply type in your question and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so. These will be available via your investment company dashboard, and we'll notify

0:32 you by email when these are ready for your review. I'd also like to remind you that today's presentation is being recorded. Before we begin, I'd like to submit the following poll. And now I'd like to hand you over to Ian Strafford Taylor, CEO, and Richard Cooper. Good morning to you both. Good morning. Good morning. Thank you, Alexander. Welcome, everybody. Thanks for taking the time to listen to what we've got to say. So, without further ado, we'll crack on. If you could turn the slide, please. So, the theme of today's presentation, and, you know, I can assure you this wasn't deliberate in terms of our performance, but it's very much a a tale of two stories here. In the h one was very good, strong growth. I think I've said in the past that, the growth heartbeat of the business is 20 to 25% growth.

1:27 The second part of the story is really how we're performing, in q three, so from June 30 up to, the present day, and you'll see a marked difference. And that's because we, you know, unveiled a lot of functionality and new capabilities towards the end of h one. But, as I say, h one was was very good. Regardless, I think, the numbers you'll all have seen in the r and s, but some key ones there, revenue up 23% year on year, EBITDA up a 138%, and cash. This is a key part of, the story for the first half that we are now operationally cash generative. Actually, we were towards the end of last year, but more strongly now.

2:12 And that enables us to have a different outlook in terms of, you know, we can invest for growth. 2020, when the pandemic hit, was very much to start with, you know, survival, and conserve cash. Now where we see decent returns, we can push harder. I don't think that's important. Now what what led that? It was the operational growth was b two b, as you might expect, very much been our focus in the last couple of years. The investments and significant investments, particularly in 2019 that we made in, platforms, connectivity, are paying off significantly now with more to come. The cost cutting we did in 2020 and, in the first half, I've made the point several times in the deck. It's cost cutting, but not at the expense of growth. You know, this is very much an exciting period for the company where we need to be pushing forwards on growth as fast as we can.

3:12 The workforce radically reshaped, leaner, fitter, younger, more energetic. There's a lot of dynamism across the group. It's tangible. People are excited, to be working here and excited, where the business is going. Regulatory expertise and investment, we view this as a very important, area for the company. The fact of the matter is, especially since Wirecard's, demise a year and a bit ago, the f c a FCA are very, very hot on all things payments, and the whole industry is being, audited regularly, particularly in terms of safeguarding client money is a is a real hot topic.

3:59 And our experience is the more you invest in that area, if you view it as an overhead, it's an overhead. We don't view it that way. We view it as if you excel in it, then, be it the regulator, be it the the liquidity providing banks that you operate with, they can see, how good you are at it and, you know, allow you to do business that, maybe they wouldn't allow other people to do with with lesser controls. If we could turn the slide, please. In terms of some highlights for 2021, a tiny bit more detail, as I say, b two b focus revenues were robust in h one, but accelerating in h two, as you'll see in a bit. And underpinning quite a lot of what's going on here, and in fact, you know, a a key element of what we're doing is this whole concept of a own name, multicurrency, Iban. I appreciate that's a mouthful and a bit technical.

4:56 But in very, very simple terms, most foreign exchange companies and actually a lot of payment institutions, when you pay money to them, it goes into what's called a pooled account or, you know, not an account in your name. We have capability to give an own name account to all our customers now, be they corporates or, in fact, individuals. And better than that, just one account or one IBAM, international bank account number, which is the global identifier for an account. Now here, we're used to sort code and, account number. Actually, that's embedded into an IBAN if you look at the top of your statement. That IBAN here actually is a multicurrency account, so you can literally throw any currency at it. It will deal with it. So you only need to remember one number.

5:43 And for a business, you know, that's very, important in terms of dealing with suppliers, customers, whomever. And also for compliance, if you think about it, you know, let's say you hold money at some other company or it's been collected on your behalf. In an account in your name, you can pay it into an account in your name here. It's called first party to first party transaction, which is a lot easier to deal with. So that product or sorry, capability, I should say, underpins the EQUALS money platform, which is unified suite of our three underlying core products with international payments, card based solutions, and banking platform. EQUALS money brings those together for SMEs.

6:28 And on top of that, we have what we call EQUALS solutions, which is essentially doing the same thing but bigger, to larger corporates, and you'll hear more about that as we go through the deck. Also, on the board and governance, we further upgraded the board in in the first half. We added Chris Bones, who has a great background in, marketing, particularly digital marketing, b to b, as well as b to c, and also has a a background in, people slash human resources, and, he's heading up our remuneration committee. So he's a great hire. And also on ESG, very much embraced here, including, equality, diversity, and inclusivity on on the people side of things.

7:15 Costs, as I mentioned, strong cost culture. I think that's the right word, but we're not gonna cut into into bone and inhibit our ability to grow. Sales and marketing, we rolled out HubSpot at the beginning of the year, which is a a new CRM system. Any of you dealt with CRM know that you don't just turn on the system and it all works fine, and everyone knows how to use it. There's constant training, cleansing of data. To get the best out of that is a is a is a moving feast, but we're doing it. We've also invested more into, data in general.

7:51 Cash, we're well capitalized. We've got a decent amount of cash, and we're generating it now. Rich will take you through the details of cash as we get further through the deck. And compliance, as I mentioned earlier, we've made more investment into our compliance, capabilities, and, we can now onboard automatically what I'd call vanilla, be it b to c or b to b, clients. And so we can direct our, our internal resources towards the more complex or enhanced due diligence type clients as we go forward. Next slide, please. So EQUALS solutions. I apologize for the complexity of this.

8:37 In fact, there's a slide in a couple, that's even more complex. But I think for those of you, you know, that are listening, the complexity is part of the defendability of this capability. I it's not easy to do what we're doing. It's taken two plus years to assemble. You can make an argument that no one part of it is that complex. You know? Some bits of it actually are. But putting it all together in one platform is complex. And that that's another thing we need to remember here that what we have we still have our three main products, as I mentioned earlier, international payments, card solutions, banking, both b to b and b to c. And what EQUALS solutions is is bringing those all together in one overall platform, underpinned by the, own name multicurrency IBAN.

9:31 So what you've got there in that first bullet is FX and payment capabilities. And that long winded bit at the end, essentially, a lot of clients that want to use this platform have bespoke, and they are bespoke to each client, authorization protocols, I e, they might need, you know, person a and person b before they release a payment. It could be four layers of authorization before they release payment. And all of that can be, built for them easily into the platform so that they've got complete control as they want it, before payments are made out. All of this is underpinned through a series of, tier one banks that we deal with. We have four tier one banks that we currently deal with, and I'm looking always to add more. And so we can do payments both in The UK and internationally, and this is all connected via SWIFT through international payment networks.

10:25 Another key feature within solutions is, you know, an old name multicurrency I band could actually support multi entity or multi accounts beneath it. So it could be you have they have one account, but maybe a 100 subdivisions of that account. We can cope with all of that through the solutions platform. And they can get access to all of this via one login rather than, if you think about it, multiple logins or multiple, login tokens at banks. Banks generally don't give out multicurrency IVANs anyway, so you'd have literally one account per currency, and it gets very confusing. All of that's augmented internally with a dedicated account and onboarding team that can can onboard complex and high risk accounts way quicker than the competition. And by the way, the competition here is really the banks themselves, you know, as we've preached for many years, but in particular here, we're taking business away from the banks. I've heard from a couple of customers that it could take them two or three months to open an account, which we can do in two or three days, and you get some idea of the difference.

11:35 The other aspects of this that I love, you know, I've always liked businesses where, you know, when when no one's in the office, although increasingly post COVID, you know, it's not as frequent as it was, but you're still making money over the weekend when the lights are out. And on this EQUALS solutions piece, not only do do we make money via FX, but we also earn quite considerable amounts via transaction fees. So you're getting towards a more annuity based revenue stream for the company, which ultimately is high quality. In terms of scale, naught 300,000 of revenues in the first half. Actually, that was naught 300,000 of revenues in June, which is when we turned the capability on.

12:20 1,200,000 in the quarter to date up to, the September 10. And you get some idea of the direction of travel. Just a little segue there. The fact that we could know to such a level of detail, which you'll see later in the deck as well, what our revenues were,

12:44 line by line in in such a lot of detail on the Monday, what they were on the Friday is some indication of the advances that have been made in the finance function here under Richard's able leadership. If we could turn the slide, please. Just some softer things in terms of other achievements in h one. The pay platform, what is that? Pay platform is basically the customer facing international payments platform. We were historically, we would give the same level of service in terms of a dealer speaking to a customer for a customer that might pay us a £100 a year in terms of the revenue we could earn compared with someone that would pay us a £100,000 a year. And, clearly, that's not sustainable and not good business.

13:34 So the smaller customers, you know, where possible, you you'd like to push towards self serve. For lower volumes, it's more appropriate, to align the level of service with the level of, revenue we could generate. And to do that, you need, obviously, to have a very good online platform for customers to use. That is the paid platform. It's it's it's fantastic, and it's getting rave reviews and good adoption. Concurrently, because it's the same system, we implemented what we call internally the exchange platform, which is what the dealers use. So they're seeing exactly the same view that the customer sees, but obviously with more bells, whistles, and, functionality.

14:22 Even a customer that doesn't deal online at all and only speaks to a dealer will still be registered into the pay platform because all their beneficiaries are there. They can amend their beneficiaries, etcetera, rather than, you know, confirming a beneficiary over the phone and doing via email, which is, you know, a compliance nightmare. So, very proud of that platform. We have more to come from it. Data, we've built out our data science team, more. We're getting far better data out of that team. You'll see later that I emphasize that we're data informed, not data led. You know? What does that mean? It means we don't take the numbers from data team and blindly follow them. You overlay them with what you know about the business from other sources and make decisions accordingly.

15:09 CRM, I mentioned earlier, HubSpot platform. It's a great platform. We're continuing pushing the adoption and optimization of it. We have a team internally called the sales enablement team whose sole role is to do precisely that. It's a a team of three people pushing that forwards. Onboarding, we can now onboard vanilla b to b and b to c customers, automatically using a system called TrueNarrative. And on reconciliations, we've got, more reconciliations being done automatically. Both of those are little, examples of where there's a platform that exists from a good provider that will automate something fine. We could build it ourselves, but it's not our core differentiator or core value chain addition, then let's use the other platform. And then in both those suppliers, we've got, excellent solutions there that have helped us leap forwards.

16:10 We also deployed link cards in the first half, which is a augmentation to the b to c Fairfax card product. The important piece there is that we did that using functionality we built, for the, business expenses platform and just dropped it into the, b to c arena. On compliance, we had in common with everyone in the industry safeguarding audits, which are complete and are all good. And, we have actually, I call it a new head of compliance. We have a head of compliance, that we hired in who who is fantastic. And so that that talks to the investment in compliance in general. Next slide, please. This is the slide that, funny enough. I had a call with our chairman earlier. I was telling him that I mentioned him every time I put this slide up. He said that this slide was too complicated, and, he's right. But I want people to understand how complicated this is.

17:11 So how do we support the own name iBand and all this clever stuff we're doing? We have a concept internally or a system basically which is called boxes. And we call it a box because, we wanted to to define a receptacle you could put something of value into. It's not an account. It's not a wallet. You know? So a box is something you you put stuff in. So there you go. That's that's really it's no more scientific than that. And it's an internal name for a container that will hold a single currency or actually a single cryptocurrency if if if we choose to do so.

17:48 So each own name multicurrency I band has one box per currency. In fact, it could have a 100 boxes per currency if that's what the client ultimately wants and wants to subdivide the account that way, but it has a minimum one box per currency. And boxes is our internal name for the service that which creates auto creates a box. So let's give an example. We've got a customer doing dollars and euros with us, who suddenly gets some Hungarian Florence in. The system will auto create a box to receive that money. It will auto appear on the, on the platform for the customer who can either keep it, change it, send it, do whatever they need to do it. So this supports everything that happens in terms of multicurrency, I bands, the whole interface to swift, BACs, faster payments, set up all our boxes.

18:41 The focus to start with on terms of full automation was on the inbound side, so money into an account or the own name I band and the auto allocation thereof. That's when I say currently being rolled out, it's rolled out in terms of new customers are on it, and we'll move existing customers across as it suits us. So the functionality is live. Outbound is is less controversial, and so that was the second thing to do. Not controversial, probably the wrong word, but less there's more risk when you're taking money in. You know, the customers generally know what it is they want to pay, and, of course, paying money out is, is is the lesser priority. That will be live definitely in the first quarter next year. It could even be towards the end of this year, but, I didn't wanna come up with a deadline and then miss it.

19:33 This is all very clever and great, and straight through processing literally means that. But, you know, more and more transactions have no touch. Hand in hand with that is, you know, you need to be doing more transaction monitoring. Under an inefficient system where you've got people with eyes on each transaction, at least you have people with eyes on each transaction. So it could be they could spot problems, you know, or patterns, etcetera. So hand in hand with more automation is more investment into machine learning transaction monitoring. We've always had transaction monitoring. You need it, to become direct members of faster payments and all the good stuff that we've done. But that was in house built, and we're, you know, in in keeping with what I mentioned earlier, using best in class, and that is blackwin.ai if you want to, Google it and have a look at what they do.

20:28 But it's important to have that hand in hand with more automation. And, ultimately, boxes are the key building blocks to everything that we're doing here, and we're very proud of it. If we could turn over the slides, we're now gonna move, to Richard to take you through the numbers for the first half. Ian, thank you very much, and I'm delighted to be able to take investors through such a positive set of results

20:55 you know, given the background of COVID emerging, you know, from late late two thousand and nineteen. So before we get onto the slides, excuse me, just a few themes that I think come all the way through these. The first is that unlike a lot of fintech companies, we are operationally cash generative, and that just opens so many more doors for us. And I'll I'll come on to that in a in a moment. The second is, as Ian has mentioned already, our revenue is fast growing.

21:30 The third is within that revenue growth is that the b to b is massively accelerating, and that really goes to the heart of our repivot last year. The fourth, which is sort of repeat of of what Ian said about regulation and controls, You know, we're we're right on the money with all of those, or we we believe we are. And to give you a specific example, we run an out of the money report for those customers who do forward business with us and who we choose not to to take a margin from. We got the report this morning for yesterday at 11:21, so just seven minutes ago, and we had 47 credit lines utilized, and our net exposure in a forward position is £37,000.

22:30 The the the fifth point is that we maintain our optionality on the b to c business. It's not as though we have put our foot on the accelerator on it, but we've certainly taken our foot off the brake, which was necessary to do and make sure we put development and other resources back onto b to b, which has so successfully led to the, you know, the new revenue streams. And there's a particular slide that Ian's gonna talk to later, which is a really, really exciting slide. So at at that point, are you able to move the slides off, please? So

23:12 we just have a few slides here, and they should be read in conjunction with the r and s, really. And what I've chosen to do in this slide deck is to look at five separate half year reporting periods. And the purpose of that is to really go back to the pre adjusted, pre COVID set of numbers so you can see,

23:37 you know, some emerging trends, but also some optionality there. And, you know, one of the lines to immediately pick up on here is the the growth in turnover, you know, the the significant move up in in b to b, more optionality on the b to c revenue. You could see what it was in 2019. And, you know, our contribution margin, and for those who are not familiar with this term, contribution is gross profits less or below the line marketing spend. And there's quite an interaction between the two because within gross profits, there are affiliate commissions, which is particularly relevant in international payments, but also cuts across into other other areas of our business.

24:30 And, you know, our very talented marketing team will look at sort of weaving around to see what is best served by the affiliate channel or what is, you know, gonna be productive if we advertise below the line. Anyway, you know, delighted to report an adjusted EBITDA of just under 1,600,000. This will become much more obvious when we come to the cash flow slide because in the earlier periods, the adjusted EBITDA was, one could say, somewhat flattered by the capitalized software.

25:06 And we'll come on to that in a second. But in the meantime, if you don't mind turning the slide, please. So this is another snapshot of the gross profit and contribution by our business segments. And again, I want to sort of point out the optionality of the travel cash, which is the fifth line down, and just look at what it was in June 19 compared to June 21. And, you know, what what can what we what can we do there? Also, over the same period, you see that there's been a significant rise in international payments. And, you know, we're delighted to see the Spend platform really bounce back as our corporate clients, you know, reengage and and are doing very well in the in in the economy.

25:55 Bottom line here is that contribution over the last two years has gone up by £2,000,000, and, you know, most of that has dropped to the bottom line. So at that moment, may we move to the next slide, please? So we choose to do, you know, pretty transparent reporting, we think, and I don't apologize for there being lots of numbers. This overhead slide shows the gross gross costs that we're incurring, not what ends up in the p and l, but, you know, how much staff we are really how much money we're really spending on staff. Some gets capitalized, but this number here is the gross cost, how much I have to write out from my checkbook to pay everybody. And you you'll see how much we've driven down that number, the top line, the staff, and there is no element of subsidy in these numbers from the government on their furlough scheme.

26:50 This is the gross cost. You'll also see, you know, right at the bottom, how much lower it is in June 21 to December 20, you know, almost £2,000,000 lower. We do have some headwinds. We have some headwinds in some technical elements of staff. We have some headwinds with IT, and we continue to ensure that we are guided properly by our professional advisers in in the light of, you know, the numerous regulatory bodies that we have to report under. But the bottom line is the staff, you know, and how much the staff move by. It won't go down any further than that.

27:36 We are investing. We are bringing on more front office staff, but it's all way outrun by the increase in revenue. May we move to the next slide, please? So cash flow. So I'm gonna try and draw your attention to a couple of columns on the right hand side of the page first, which is at relatively similar levels of adjusted EBITDA to what we have now, you can see how much we capitalized, and that goes on the balance sheet. The amortization of that is actually higher now than our spend. We said to the market we guided the market that our capitalized software this year would be in the region of £3,000,000.

28:26 It's likely to be south of three, which is a very significant drop from where it was in the real build period in 2019 and the the tailing off in 2020. There are some exceptional items in the half. We said goodbye to three senior members of staff, and we thank very much for their, you know, work with us. But it was natural that they would move on, and we've appropriately settled them out. And that leads us all to this, you know, great turnaround of our net operational cash flow from, you know, minus 2,700,000 two years ago to plus 800,000 now, 3,500,000 delta.

29:12 So we're very proud of that and the the cost control that sits beneath it. And so if we then go to the next slide, please, which is some elements of our balance sheet, And I would ask you to to read this in conjunction with the the r and s, not just my comments on the balance sheet there, but the, you know, the back end of the of the statement. So at the June 30, we had 10,100,000 in cash that moved to 12,300,000 on the September 10. And the September 10 figure includes what we had accrued for at the December 31, namely $1,400,000 of R and D credits owed or anticipated to be owed to us by the government and now collected.

30:00 We've done quite well with this over the last couple of years. The finance team has done a fantastic job at looking at every element that we could claim. But going forward, we're unlikely to get more than about 600,000 a year, and that's a combination of us moving into some sort of profitability and also the decline, the planned decline in development expenditure. What else sits on the balance sheet that's, you know, really important for us and how we look at it? Well, the next two lines, you know, aggregate to 4,000,000, and those are balances held with liquidity providers. These are our counterparties for our foreign exchange trading, and they are they they move around, but they certainly include Barclays Bank, Citibank, and some lesser known but equally regulated institutions as well.

30:56 We also have money tied up with our card provider, and that that money again, it's it's it's regulated, and we almost have to prefund what we anticipate our customers spending. And it's a timing differences. Typically, maybe one or two days. We do have some credits. We owe some money to the people we bought businesses from. That's repayable over the next twenty four months. It's all planned. And then we took advantage in December last year of drawing down 2,000,000 from the government on the CBILS loan. It's for the first year, it's interest free. Subsequently, it's slightly north of 2%, but it's not repayable until 2026 and can be repaid without penalty at any time.

31:46 So if we may next we'll move to the next slide, please, which I think talks about liquidity position. And this is how we monitor, you know, pretty much daily what's going on in the business and and maximizing our our ability to free up cash for investment and hiring and marketing plans. So we look at our cash at bank. We look at the other balances that we have with either those liquidity providers or card providers, and then we deduct from that the customer margins. And that moves around, you know, very, very significantly, pretty much every day according to what forward contracts mature for our customers. And the the forward contract business is one we like. We're very good at it. We give service to our customers on it. It gives them much more certainty, and we are certainly securing much more forward business. And in the in the r and s, there's a a separate section about the split of the business between the spot and forwards on international payments. I'd urge you to have a look at that.

32:50 And on that point, maybe we can turn the page again. And then I will pass you back to to Ian to talk about current trading and our outlook. Thank you, Richard. Yes. This is comes on to my favorite slide. Richard's favorite slide is the cash one. I think that was highly appropriate. If you could turn again. Next slide, please. Here, the top half is h one as per RNS and the analysis you've just seen in the bottom half is the fifty one working days up to the September 10. So let's just deal with the top half first, should all be familiar. What we've tried to do here is extract what we will describe as the core business lines or the product driven, revenues, I. E, international payments, banking, corporate expenses, and then the cash and retail card businesses and then other.

33:47 And x out of that, the anything we've made from the solutions platform that I described earlier. You can see the result there. We do like the concept, which I think is good for investors to talk about this revenue per day metric. It's a sort of tangible number that you can relate to. You can see it went up from a £110,000 per working day last year to a 136 in the first half, and 16.6 of revenue from core and 300 k from the solutions p and l. Flip forward to the the fifty one days, up to a week ago, and you can see a massive acceleration here. Let's let's put some of these numbers into context.

34:33 Our previous record quarter in total was 8,600,000, which we did last quarter, of which 300 k was solutions as we know. So, actually, the core business' record quarter was 8.3. You can see from these numbers that as per last Friday, we, were already at eight. So the business the underlying business, you want to call it that, doing very well and continuing to grow at the same sort of pace that we saw in the first half. Clearly, we'd have a record quarter without solutions. Bolt Solutions p and l on top of it, and we get a a very encouraging picture. 9,200,000 for the quarter to date as of last Friday, with, still a significant number of working days to go.

35:20 In terms of revenue per day, that's a 180 k per day compared to a 114 this time last year for the same period, a 136 in the first half. Very, very steep growth. 58% up this period, compared to the same period last year. I think that tells us all on this call everything we need to know in terms of the trajectory the business is now on. If you could turn the page, please. So what do we focus on the next six months? Just by the way of of telling you when we're likely to speak to shareholders excluding anything, you know, new and exciting that that we may announce, we will probably give a trading indication in early December of how the year has gone up to then to give people some idea of the flight path towards the end of the year, and then we'll do a trading statement in January, normally quite as early as we can in January.

36:21 Historically, we've done our full year numbers in April. We could do them earlier, and we'll try and do them earlier, but it actually dependent on getting the auditors to give us a a slot in all of that planning, which is not the easiest thing in the world to do. But we will endeavor to do them as early as we can. We're definitely in a good place to get that done. So next six months, revenue growth clearly has to be a key priority. Well, the own name iBank capability is key to that. Driving platform based revenues, as I mentioned earlier. CRM, more effort to to be put there, more investment in terms of, the sales enablement team, which actually leads me to that growth team that I mentioned here.

37:06 We have a recently incorporated growth team, which includes sales enablement and marketing, and it's focusing on the entire customer experience and the entire customer interface with the company, which will almost be like a sort of a SAS running around the company to, push growth where we can see opportunity. We've revised the sales structure, simplified it. Richard mentioned some high level departures. You know, we've leaned down the exec promoting from within, and we've got better KPIs there. We're also increasing our use of affiliates. If you can't get the customer directly, then get someone else to get the customer for you and pay them by a commission is is a good way to do it.

37:53 We're data informed, not data led. Interpret the numbers. Data, particularly when it comes to customers, can only tell you about the customers you've got, not about the customers you don't have. So you have to view it in context. Investment, we will continue to invest. As Richard said, in terms of capitalization of internally generated software, that's at a lower level, but there's a healthy heartbeat there. We still have a decent sized engineering team, and we'll continue to do so. And we've got lots of stuff we want to do. Further implementation of boxes, as I described earlier, and the whole straight through processing agenda hand in hand with the machine learning transaction monitoring. Our card products are all currently prepaid cards.

38:44 We'll be moving them all to self issue. We'll be the issuer, and they'll all be debit. There's some quite sophisticated things we can do. Once we do that, we can replicate how a prepaid card operates on the debit platform, but also offer the debit functionality, which is just way more powerful and provides more options for the customer. Equals money and EQLS solutions, we'll be adding more functionality and more connectivity, more direct plumbing, you know, which just drives efficiency, which moves me onto cost and efficiency. We're gonna carry on with our focus on costs. It's, it's got us to where we are as part of it, but not at the expense of growth. We can, as Richard said, now look forwards rather than, you know, over our shoulders.

39:31 We can look forwards and invest where we think it's appropriate. I do wanna upgrade further our sales capabilities. I know that we have an opportunity now, with the products we we've assembled and the platforms that we've assembled to go at this quite hard, and, we need to carry on with that process. We will look for additional efficiency gains. At the pace of growth we're currently under, you know, you could run out of capacity quite quickly. We don't look forward to make sure you reinvest in capacity, and, a lot of that efficiency gains will be you will be used to drive more capacity rather than necessarily get rid of, staff numbers. I I see our staff numbers, as Richard mentioned, drifting up somewhat, but we are at a phase now, and I think it's clear to see, of operational gearing. If we doubled in size, clearly, our cost would be nowhere near doubling, and we're at a good fighting weight. But we'll add heads where we need.

40:32 Hand in hand with that is using outsourcing, be it using other platforms, be it, even in engineering rather than have every engineer internally employed. You know, we'll use offshore where applicable. We've done some in India with mixed results in the you know, the, the cost per person there is way cheaper, but, some of the technical capabilities were not quite where we needed them to be. Having more success with nearshoring in Poland. We've actually, my CTO and CPO are in their own Warsaw today. And so we're gonna increase that as we move forward. I think the the healthy balance is to have key engineering staff internal and have nearshore outsourcing to sort of do some of the heavy lifting in terms of technical development under their guidance.

41:32 We can flip the slide, please. So in summary, in conclusion, h one, strong performance, b to b led, increasing and accelerating in q three as we've seen. Cost reductions, cost culture is embedded, but without compromise to growth potential. We're in a good position cash wise, cash generative, opens up more options for us. The product road map, that's you know, stretches out a year, what we're intending to build and when and in what order and who's doing what. With a leaner, fitter exec than we had than we now sorry, that we do now have. We can and we do amend that road map frequently. We see an opportunity to make, considerable money, let's say, in the solutions line, and it was to by putting in functionality we'd plan to do in three months time, we'll do it now.

42:30 So we can move that around. That's what you want in a company this size. Part of the advantages we have is, that we can be nimble, but you must be nimble, to extract that. EQUALS solutions, as I mentioned, it's a new revenue stream, platform driven, significant growth potential there. People, there's no doubt. You see it in in the papers with record vacancies and employment levels, whatever you wanna blame it on. The labor market is tight, particularly in fintech and engineering in particular. There's, you know, all sorts of crazy numbers being paid, and we we had a developer who's okay, who left for literally double the money. So we have to fight that.

43:17 So we look at remuneration, obviously. We're looking at retention in terms of more sort of share based retention tools and the softer side of the people agenda, sort of, with the whole diversity, inclusivity, equality agenda, and other levers that we can pull to, tie people into the company, is a clear focus for us. The revenue per day by quarter, you can see there the the evolution. I think that trend is clear and encouraging. At the same time, we're looking for we will extract more efficiency gains, more capacity for growth over the next, six months and going forwards. So, that puts the business on a very, very good footing, going forwards.

44:08 That concludes the presentation. So we will now be moving over to answer, questions that have been submitted. Apologies if we don't answer all the questions. We have a certain amount of time constraint as you might expect. So it's been quite a crazy week since we announced. I'll attempt to answer as many as I can. Sorry. Richard and I will attempt to answer as many as I can. And some, you know, maybe repetitions of previous questions, so, apologies, if every question is not answered. Ian, Richard, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions using the q and a tab situated on the top right hand corner of your screen. But just while the company take a few moments to review those investor 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 dashboard on the investment company platform.

45:10 We received two pre submitted questions from investors and I want to start off the q and a with these. The first one reads, with all efforts made on restructuring the business over the last couple of years, what is management's view towards a potential bidder coming along to buy this business? And the second part of the question reads as follows. What market cap would management put on the fair value compared to current market cap? Obviously, current shareholder institutional support by Crystal Amber would suggest a much higher market cap. Yeah. I mean, that's that's quite an an amusing question. Clearly, if someone made an approach to buy the business, we'd have to take it seriously, and that would require, board approval and shareholder approval. And, one hesitates to put a number on that, and that's the process through which we would go.

46:03 You know, as we sit here now, we're quite more than happy to carry on growing the business as we're doing. And if those sorts of approaches happen, then then then great. Equally, we don't need them to happen. So there's a a clear process for anything anything like that that may occur. I think that's pretty much all I can say unless you've got anything to add, Richard. No. Not not at all. We think the company is significantly undervalued, and they're gonna continue to to build it and press the press the flesh, meet investors, talk the story, deliver it through the results. And, you know, this is this is stage one. Thank you very much. The next question reads as follows.

46:53 Please please could you explain or expand a little bit more on the overseas acquisition opportunities which you refer to in the statement? I think to be pedantic or that we didn't refer to overseas acquisitions opportunities. We refer to the possibility of overseas expansion and concurrently in the same sentence or paragraph we refer to that we would be open to make acquisitions. So overseas, clearly, with everything that's going on Brexit wise, it would be good to have more of a foothold in a an operational company in the Eurozone just, you know, depending on how things will shake out, particularly in financial services, which seems to be a bit of a bargaining chip.

47:41 And there's opportunities for what we do across Continental Europe. We already have the the ability to do more in The US as as shareholders will know from previous RNSs. We have soft pedaled out over the last two years ever since COVID hit. And so we could and will probably next year, we'll have our card platform, live in the early part of next year in The US, so we can push forwards there. So we're open to overseas expansion. I think we're at a stage now where we can look to do it. On acquisitions, I think the point is there over the last year and a half, when we were very much in cash preservation mode, most transactions we've done in the past involve some upfront cash.

48:30 And so we were quite clear that we weren't looking to to do any deals that involve that. We now have more flexibility to do stuff like that. So that's, as much as anything, letting potential sellers of businesses know that we're open for that level of business, and we'll see where that falls. Thank you for giving a bit more clarity then answering those presubmitted questions. Investors have also submitted a number of questions during the presentation today. And I wondered if I could hand back to you to respond to those where it's appropriate to do so. Could I please ask you to read out the question and then say who it is from? Yes. I will do that. So I have a question, actually two from Mark w, but I'll do the first one first. How is your unified product suite, own name Iband, different to Revolut that seems to be offering something similar? I mean, Revolut have invested a lot in capabilities that are similar to ours. So you're right.

49:26 It is similar. However, Revolut is very much, geared towards self serve only. You know, you don't have human interaction. Whether they, choose to sort of say that they are are looking at businesses. It's not their core focus. Their investors are looking for x million b to c users. They see a b to b element as being something where they can actually make some money rather than giving it away. But it's not really their core focus, not what they're known for. So, could they do what EQUALS money does? Yes. Or some of it, EQUALS solutions hard enough to crack. Because as I as I tried to clarify, it's not just the own name iBAN and the product. It's the authorization protocols and the ability to support multi accounts or multi entities within one account that differentiate it.

50:25 And another question from also from Mark w. Are there some determining factors that are temporarily boosting transaction levels, meaning current trends are not sustainable? That's a fair fair question. I think the short answer is no. The if anything, you would expect in q three when you have a b to b focus that, you know, actually, almost particularly this year when all of a sudden people could get away in August in The UK, you'd expect the business activity to drop, and, that hasn't happened. You know, we take the, corporate spend platform as a bellwether. Then July was a record month on that platform. August, slightly down, but still strong.

51:11 September, we've had a record week, and it's moving along, very briskly. So, no. I think the honest answer, to that is no. Nothing at all. Then sorry. I have to scroll here. Apologies. I have a question from Seneca P. How large is the sales team currently, and what's the geo geographical reach focus? Sales team, not big enough, gonna get bigger. If you add in all the disciplines and, you know, you can kind of make a decent argument that the, dealers are also sales because a lot of them are what we call three sixty and do sales then. We're we're at about 45, 50 salespeople, but I will be increasing it further. And the geographical reach and focus, is, if anything, very much myopic UK. You know, we can take inbound inquiries from anywhere in the world, but, you know, we are fishing in The UK pond, and we need to expand that more as we go forwards.

52:20 The next question comes from Richard W. Am I right to say that EQUALS GROUP looks significantly operational geared? What fur what factors will further turbocharge future growth apart from the return of travel? Actually, return of travel, whilst nice, you know, it's not the the absolute be all and end all now, for the business. You know? Someone asked me, you know, if things got back to normal, what would that mean? And that if, you know, the order of magnitude of an additional 2 or maybe 3,000,000 of revenue, I think, is is the answer to that question. So we'd prefer it came back, but I think we could make bigger strides by growing the EQUALS solutions revenue line as fast as we can.

53:15 So turbocharged future growth will be equal solutions and equals money. And if we get return of travel on over and above that, fantastic. And I think that's, like, almost a free option for for shareholders and investors on that on that point. Then we have Simon w. What is the company's intention vis a vis dividends? Richard, do you wanna tackle that one? Yes. I'll I'll deal with that one. I and it has an answer in two parts. The the first bit would be that, currently, the company doesn't have distributable reserves in which to to to pay a dividend. It could get there. It would have to go to the court and do a restructuring, and that would cost the best part of £200,000.

54:04 The the second point is I think that most investors would expect us to consider plowing money back into growth to increase shareholder value. And if there comes a point where shareholder value is increased less by growing and more by paying dividends, then that's a very key inflection point, but I don't see that at least within the next twenty four months. Yeah. Okay. I I I would hope that shareholders in general would rather see us reinvesting currently cash into growth. And, clearly, we'd like to return value to investors via dividend at the right time and as soon as we can. But for now, it's not core. And by the way, there was another question from a Harry w on exactly the same topic. So, hopefully, Harry, that answers your question.

55:04 And I have a question from, Ben g. There have been many reports of an increase in online fraud during the pandemic. Have you seen any evidence of this? I mean, fraud is a it's and I remember way back in 2012, you know, when we really just had the the travel card business, and, we almost got criticized by the banks, because we were sort of overzealous about turning business away on on fraud. Fraud is it's a difficult topic. I mean, if you think about it, the company can be attacked in three main ways, either fraud perpetrated on us, fraud perpetrated on our customers, and fraud where could be a customer of I of ours happens to be the fraudster.

55:51 And, we treat, all the all three of those, cases with the same sort of exactly the same vigor because at the end of the day, an instance of fraud, someone somewhere is losing some money, and, none of us want that to happen. So it is a fact of life, I'm afraid. You know? We try to get obviously, we would like fraud to be zero. Practically impossible to do, and you have but you have to strive for that. It has to be your objective. And that is our objective, and and we seek to get there where we can. We do work extremely closely with our partner banks. They may see patterns or trends or highlight a fraudster, and and we may do the same back to them.

56:36 As soon as that happens, we see an instance of it, then accounts are automatically blocked, so that, any any fraud stops, and we communicate with relevant law enforcement and regulatory bodies as soon as that occurs. To put this into context, in the first half of the year, we had three instances of fraud and, you know, relatively minor in terms of quantum, which I think compared to the volume of activity that we do, as you all know, you can see is a is a very low level. Also, we've done extensive research about where we sit compared to our peers, and our fraud levels are literally three times better, I. E, lower, than the industry average.

57:29 It doesn't mean to say we wouldn't rather it was zero. Of course, we would, and we'll continue to strive to do so. But, I think we're, investing way more in anti fraud measures than literally any of our competitors. Next question. This is another interesting one. Maybe, Richard, you can tackle this one. Jason N, thank you for your reply to my question. When you say the company is currently undervalued with a market cap of 120,000,000, what percentage would you say you are undervalued to your peers? A thousand percent. You know, it's, yeah, it's so difficult. It partly you know, your valuation can can can be restricted or not depending on who I don't I don't want to insult investors.

58:17 But, like, if you're backed by PE and they follow their money at crazy valuations, then that's your valuation, if you see what I mean. And, you know, we've seen instances of a, you know, of a taxi company floating with a investment prospectus saying that it'll never make a profit, but being worth billions of dollars. Equally, you know, there are listed businesses not too dissimilar to ours, that are trading on 12 times revenue. You know? And that puts a different complexion on us. If we were on even six times revenue, we'd be probably double the, double the valuation we are now. I think what we've seen in the last week, and hopefully continues, is that the investor base institutional investor base and and retail are acknowledging that, you know, there's a a revenue stream that's growing here. There's a platform base as well as product based.

59:19 Over time, you know, that'll take care of itself. We we do feel that, our market cap ought to be harder than it is now, but, obviously, it's it's a lot better than it was six even six months ago. So all we can do is carry on producing as we are, I feel, and communicating clearly with the market and the investor community such that they understand exactly what it is we're doing and give frequent updates. So, hopefully, then everything will take care of itself. If I may add, Ian, that, you know, the really seismic change over the last twelve months has been to move into operational cash generative position, which which means that, you know, we can go out and hire now. And this interim statement has been a very, very important step in being able to portray ourselves in a much more positive light, not just for investors, but also for quality candidates so we can continue to grow, continue to build the revenue, widen the product set, and, you know, just increase the talent pool that will increase the value of the company going forward.

1:00:35 You you know, we've got a very, very energetic, fired up team, and, you know, we look forward to that continuing. Indeed. Another question from Mantis Peer. Quite like this question. You mentioned big things are coming on Twitter. Any chance to get some more details? The, you know, the Twitter feeds and social, and what you're seeing there is more a marketing, you know, the marketing effort to win b to b business. So that's more equals money, equals solutions. That's the big things that are coming there in terms of functionality that a b to b, potential client may be using rather than rather than, some exciting numbers, although I expect the two to go hand in hand.

1:01:23 We are excited where we are. You know, it's been a tough couple of years. I make no, apology for saying that. We've had to do we've pivoted the business from b to c to b to b in the glare of being listed on AIM. It's not the easiest thing to do, but you've gotta carry on producing in the meantime. And I think the market can see now that, you know, that investment was worth it, and things are starting to to pay off. We have a question now from Tim w. Has Brexit benefited the business, or has it created issues with UK companies doing business in Europe? I think more the latter, to be honest with you. Tim, you know, we had instances where, you know, companies said, well, we can't get a container. We can't do this. We can't do that. It was more acute. It's becoming less acute.

1:02:16 People adapt. Businesses adapt. So we're seeing that, but, it's not been we could have done without it. But, think I I now that sort of that headwind's sort of abating. And I think that's it because the last two things I've got on there are oh, thank you for your for your answers, which is nice. Thank you. Thank you. Thank you. Ian, Richard, thank you very much. You've been very generous with your time. I think you actually managed to answer all the questions from investors today. And, of course, the company will review any further questions submitted and published responses where it's appropriate to do so. Ian, just before redirecting investors' feedback, I wondered if maybe you could give a few closing comments.

1:03:01 Yeah. I'd be delighted to. Firstly, I'd like to thank everyone for their time, listening to Richard and myself. Hopefully, we've presented where the business is, where it's going, and answered your questions. Personally, speaking for myself and everyone that works here, you know, we're extremely excited with where the business now currently sits. We've got a motivated workforce here that's looking forward in everything that we're doing, the functionality we already have and what's coming in the next six, nine, twelve months, and the opportunities for the company are are really, really exciting. It's so much more enjoyable working in a business that's in that position than, you know, let's say, last year when, when we were all entering into the into the COVID, nightmare and that, you know, steps into the unknown.

1:04:00 I'd like to thank any shareholders on the call for their support. I know it's been a bumpy ride, but, we can now see the direction of travel of the business. And thank you for your time, and hope to communicate with you again soon. Thank you. Ian, Richard, thanks again for updating investors today. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order that the management team can better understand your views and expectations? This will only take a few moments to complete. However, it's of great value to 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 good afternoon to you all.