Payments fintech Equals Group has seen its profit weighed down by fees to financial advisers as it looks for a potential buyer, while revenue surged on the back of record transaction values.
The AIM-listed firm, which offers business-to-business payment services, reported a pre-tax profit of £6.5m for the first half of 2024, down from £5.8m during the same period last year.
On an adjusted basis, profit was up 32 per cent at £9.1m. Its shares gained 1.7 per cent in early trading on Tuesday.
Equals’ revenue for the six months jumped 33 per cent to £60m, driven by its solutions platform, while adjusted earnings before tax (EBITDA) came in 30 per cent higher at £12.7m.
However, its operating expenses swelled to £27.9m from £18.1m, partly driven by a £4m rise in staffing costs as Equals increased its headcount.
The firm said that revenue was averaging £549,000 per day so far in the third quarter, up from £383,000 during the same period in 2023. It added that year-to-date revenue was £86.9m, up 38 per cent.
The firm hailed record transaction values over the six months that were 44 per cent greater than a year ago and up 120 per cent on two years ago.
‘Another strong half’ for Equals
“This has been another strong half for Equals, which continues to process transactions at record levels with SME clients and larger corporates recognising the value of our well-invested proposition,” said Ian Strafford-Taylor, Equals’ chief executive.
“Our strategy to continue growing the total addressable market continues to be aided by the white labelling of our product suite, meaning clients can operate as distribution partners for our platform.
“Our offering in Europe provides another growth opportunity that we are capitalising on.
“Management’s laser focus on B2B as a route to market is fundamental to the growth of the business, not just at the top line but also in terms of profitability and cash generation.”
Equals announced an interim dividend of 1p per share, up from 0.5p a year before.
Its pre-tax profit was weighed down by £600,000 in professional fees incurred by a strategic review it launched in November 2023 that included contacting potential buyers. The review cost £700,000 in the second half of 2023.
The firm has received takeover proposals from both US private equity firm Madison Dearborn Partners (MDP) and a consortium comprising TowerBrook Capital Partners, JC Flowers, and London-based fintech Railsr, which is chaired by ex-Chancellor Philip Hammond.
MDP confirmed in June that it did not intend to make an offer for Equals. The deadline for a formal takeover offer from the consortium has been extended multiple times since its first proposal in March as the parties considered the financing and conditions of a potential deal.
The so-called “put up or shut up” deadline was most recently extended on 4 September. Under UK takeover rules, the consortium now has until 5pm on 2 October to either announced a firm offer for Equals or walk away.