Cornerstone FS plc (AIM: CSFS), the cloud-based provider of international payment, currency risk management and electronic account services to SMEs, provides an update on trading for the six months ended 30 June 2021 ahead of announcing its unaudited interim results in September 2021. The Company was admitted to trading on AIM on 6 April 2021.
Results
As noted in its final results announcement on 8 June 2021, trading volumes have increased in the first half of 2021 following the contraction, particularly in the second half of 2020, due to the impact of COVID-19. As a result, the Group expects to report sequential revenue growth of 6% for the first half of 2021 over the second half of 2020 to approximately £837k (H2 2020: £792k). This represents a near-return to pre-pandemic levels (H1 2020: £872k).
The majority of revenue for the six months to 30 June 2021 was generated by clients the Group serves via white label partners. However, there was a significant increase in revenue from clients that the Group serves directly, which accounted for 28% of total revenue compared with 12% for both the first and second halves of 2020. As a result of the greater contribution to revenue from direct clients, the Group expects to report a substantial improvement in gross margin to approximately 38% for the first half of 2021, representing a five percentage point increase sequentially and 11 percentage point increase compared with the first half of 2020.
The improvement in gross margin enabled the Group to achieve growth in gross profit compared with both the sequential period and the first half of the prior year. However, this was offset by increased administration expenses in the period associated with the Company’s IPO and other public company requirements.
By client type, corporate clients contributed approximately 84% of revenue (H2 2020: 85%; H1 2020: 94%) and high net worth individuals contributed approximately 16% (H2 2020: 15%; H1 2020: 6%). Spot trades continued to account for the majority (83%) of the Group’s revenue by product (H2 2020: 82%; H1 2020: 91%) with the remainder being contributed by forward contracts.
Cornerstone also continued to successfully execute on its strategy during the first half of the year, in particular with its IPO on AIM in April 2021. The Company’s IPO is a key element in its strategy to grow the business through acquisition as well as continuing development of its own highly scalable, cloud-based software platform. Since the IPO, the Group has actively commenced pursuing acquisition opportunities and will update the market as appropriate in due course.
Outlook
Looking ahead, with the increased momentum in trading volumes, the Board is confident of delivering revenue growth for full year 2021 compared with 2020. In addition, as the Group executes on its strategy of acquisitive growth together with an increased proportion of direct sales, the Board is confident of delivering further significant gross margin improvement in future periods.
The Company will provide further detail in its interim results announcement.
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