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EQS Group
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== Sensitivities == The key sensitivity currently is the success or otherwise of the conversion of the sales pipeline for the whistleblowing and subsequent conversion into broader client status, as illustrated in Exhibit 5. Delays to the roll-out of this legislation across the EU have already had a short-term negative impact on revenues and the exact timing will influence EQS’s quarterly financial results over the next year or so. While all businesses have been affected by the COVID-19 pandemic, the effect on EQS was not entirely detrimental. The transition to working from home was comparatively straightforward, as might be expected. While there were some drawbacks in terms of slower sales conversion cycles, there were also benefits. These included the boost to virtual meeting hosting within the IR offering, with virtual AGMs allowed for the first time under German company law. Management anticipates some benefit from this experience to be retained as conditions revert, given the advantages of cost and additional reach. There are various other factors that will influence EQS’s financial performance, each of which may vary considerably across the operating territories. These include: * The number of listed companies, itself a factor of the environment for de-listings and/or IPOs. The European IPO market remains challenging, following a stronger, catch-up year in FY21. Q122 saw just 28 IPOs raising £2.7bn versus 89 in Q121 raising £23.1bn (Source: PwC). * The number of companies of sufficient scale to benefit from automation of reporting. * Corporate activity that prompts the need for information dissemination. * The regulatory environment – the more complex the system and the greater the number and extent of changes to those systems, the greater the requirement for corporates to access relevant expertise. The introduction of additional regulation, such as that for whistleblowing and that proposed for ESG reporting, can create a new market, while others like market abuse regulations can reinvigorate previously dull markets. * Requirements for corporates to make information available in a digital format, either through regulation or user demand. * Data security, including the General Data Protection Regulation, can restrict competition from providers that do not have similar levels of auditory clearance, or which may not hold their data within the relevant jurisdiction, and sets a higher barrier to entry. * Currency: around 28% of revenues are generated in currencies other than the euro, mostly in hard currencies such as the Swiss franc, sterling, Hong Kong dollar and the US dollar. Expenses are predominantly in Euro. Currency exposure is not hedged, as the main impact is on valuation, a non-cash item. In FY21, the net financial benefit from currency translation was €722k, versus a loss of €205k in FY20.
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