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INFORMATION PACK CORPORATE PRESENTATION DISCLAIMER This presentation may contain forward - looking statements with As a result, the Groups actual future financial condition, respect to certain of the Groups plans and its current goals
This presentation may contain ‘forward-looking statements’ with respect to certain of the Group’s plans and its current goals and expectations relating to its future financial performance condition, performance, results, strategic initiatives and objectives. Generally, words such as “may”, “could”, “will”, “expect”, “intend”, “estimate”, “anticipate”, “aim”, “outlook”, “believe”, “plan”, “seek”, “continue” or similar expressions identify ‘forward-looking statements. These forward-looking statements involve risk and uncertainty because they relate to future events and circumstances which are beyond the Group’s control, including amongst other things, UK domestic and global economic business conditions, market-related risks such as fluctuation in interest rates, the policies and actions of regulatory authorities, the impact of competition, inflation, deflation, the timing impact and other uncertainties of future acquisitions or combinations within relevant industries, as well as the impact of tax and other legislation or regulations in the jurisdictions in which the Group operates. As a result, the Group’s actual future financial condition, performance and results may differ materially from the plans, goals and expectations set forth in the Group’s forward looking statements. Forward-looking statements in this presentation are currently only as of the date on which such statements are made. The Group undertakes no obligation to update any forward-looking statements, save in respect of any requirement under applicable law or regulation. Nothing in the presentation should be construed as a profit forecast.
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DISCLAIMER
INTRODUCTION TO EQUINITI
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Equiniti is a leading provider of technology and solutions for complex and regulated administration, serving blue-chip enterprises and public sector organisations
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2015 REVENUE SHARE1
INVESTMENT SOLUTIONS REGISTRATION SERVICES Registration Shareholder services Corporate actions and dividends EMPLOYEE SERVICES Employee benefit schemes Employee share plans INVESTMENT SERVICES Retail investor services Executive share dealing Wealth management solutions White label share dealing International payments
BnPENSION SOLUTIONS Pension administration to public and private sectors Pension administration software Data analytics INTELLIGENT SOLUTIONS Loan administration Enterprise workflow & case management Data analytics
EQUINITI PROVIDES SERVICES AND SOLUTIONS THAT SUPPORT COMPLEX AND REGULATED PROCESSES…
MARKET POS.
27% - £98.9m 38% - £142.5m 32% - £118.3m
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Technology-led End-user Engagement Data-driven Payments Processing Regulated, Embedded Processes
Source: Management information, management estimates
- 1. Interest income accounts for 3% (£9.3m) of 2015 revenue
#1 #1 #4 #2
…THAT SHARE A SET OF COMMON CAPABILITIES
- EST. MARKET
SHARE 50% 25% 7% 15%
#1 #4
10% KEY SERVICES
FTSE 100 REGISTERS
PUBLIC SECTOR
COMPLAINTS, CASE MANAGEMENT, AND REGULATORY SERVICES
WHAT WE DO
INVESTMENT SOLUTIONS
INVESTMENT SOLUTIONS - PRODUCTS AND SERVICES
- Company secretarial services
- Investor relations services
- Investor analytics services
- Servicing the initial notification of
death and account closing process
- Share registration service
- Administration and payment of
dividends
- Management of AGMs, EGMs, other
corporate events
Registration
- Management of corporate actions,
e.g. rights issues, M&A, corporate activity
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- SIP, bespoke Executive and Discretionary
share plans
- Tax-efficient way of owning a stake in
the company through share incentive plans
- Allows employees to save a portion
- f their gross salary
- Option to invest in their company’s
shares
SAYE (Sharesave)
- Direct management of flexible benefits
plans
- Provides ability for staff to shape benefit
selections
25% MARKET SHARE #1 IN UK EMPLOYEE SHARE PLANS
- Executive and Employee share dealing
services
- Certificated and online investment
dealing
- Foreign exchange services for corporates
and individuals
- “White labelled’ online execution-only share
dealing platform with custody and settlement solutions
- Execution-only trading services
- Provision of trading services from
nominee, ISA, and SIP accounts
7% MARKET SHARE #4 EXECUTION ONLY RETAIL SHARE DEALING 50% OF FTSE 100 AND 40% OF FTSE 350 #1 IN SHARE REGISTRATION
REGISTRATION SERVICES EMPLOYEE SERVICES INVESTMENT SERVICES
Flexible Benefits Specialist Share Dealing Co Sec & Investor Relations Bereavement Services Corporate Actions SIP & Executive Share Plans Retail Share Dealing International Payments & Wealth
PROPRIETARY TECHNOLOGY PLATFORM
Xanite Payfac
INVESTMENT SOLUTIONS – REVENUE MODEL
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REGISTRATION SERVICES EMPLOYEE SERVICES INVESTMENT SERVICES
Investment Solutions Reported 2015 Reported Change % Organic Change % Revenue (£m) 118.3 24.7 9.8 EBITDA prior to exceptional items (£m) 35.5 21.2 EBITDA margin prior to exceptional items (%) 30.0 (0.9)pt
- Trading commissions
- ISA administration fee
- Inactivity fee
- Day rate and running fees
(contracted)
Registration Co Sec & Investor Relations Bereavement Services Corporate Actions
- Fixed fee
- Based on No. of shareholders
- Contract of 3-7 years
- Fees per transaction for shareholder
services
- Transactional fee
- Bereavement BPO – corporate fee
paid by financial institution
- Project fee
SAYE (Sharesave) Flexible Benefits SIP & Executive Share Plans
- Interest earned on balances
- Dealing fee
- Admin fee paid by corporate client
- Dealing fee paid by employee
Specialist Share Dealing Retail Share Dealing International Payments & Wealth
- FX margin and transaction fees
- Share trading commissions
- Assets under administration charges
- Platform hosting and maintenance
- Dealing commissions
- Foreign exchange
- Custody fee
- Contracted
- Paid by the corporate client
CONTRACTED REVENUE
- c. 60%
CONTRACTED REVENUE
- c. 80%
TRANSACTIONAL REVENUE
- c. 80%
REVENUE VISIBILITY
PENSION SOLUTIONS
PENSION SOLUTIONS - PRODUCTS AND SERVICES
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DESCRIPTION
Pension Administration:
- Outsourced administration and software services for a number of public and
private sector pension schemes Life & Pensions:
- Prudential administered schemes outsourced to Equiniti
- Administering annuity books
NHS:
- Provide software and specialist admin services
MyCSP
- Pension administration services to the Civil Service
- 51% owned JV with government
Data Solutions:
- Data analytics, complex and bulk calculation services to pension schemes and
life insurance companies Pension Software:
- Customised software to efficiently and effectively manage the rules of all
pension schemes
Proprietary Technology Platform:
CONTRACTED PROJECT & SOFTWARE
#2 THIRD PARTY ADMINISTRATION ~15% MARKET SHARE
MARKET POSITION
#1 PUBLIC SECTOR
- Resilient core business
– Visible, high margin and cash generative
- Market leadership, brand &
reputation
– Long heritage with services since 1836
- High client fidelity
– Long-standing customer relationships with some of the largest UK companies
- Supportive macroeconomic and
regulatory trends
- Platform for cross-selling of additional
services
– Strong expansion in add-on services
PENSION SOLUTIONS – REVENUE MODEL
11 Transactional Project Contracted
REVENUE MODEL
- Pension Administration and Life & Pensions:
– Fixed yearly fee for core administration – Most contracts include variable components based on members or administrative tasks
- Data Solutions:
– Project fees charged on ongoing basis for services provided
- Pension Software:
– License fees (perpetual or recurring) – Maintenance fees (fixed) – Specific fees for implementation / development projects
MyCSP
- Fixed fee contract with yearly fees agreed
upfront
- Project income charged on a time and
materials basis
CONTRACTED PROJECT & SOFTWARE
- NHS:
– Payroll admin revenue based on number
- f pensioners
– Software project income charged on a time and materials basis – Ancillary income charged as cost + pricing
PENSION SOLUTIONS Reported 2015 Reported Change % Organic Change % Revenue (£m) 142.5 40.7 8.0 EBITDA prior to exceptional items (£m) 26.8 23.5 EBITDA margin prior to exceptional items (%) 18.8 (2.6)pt
CONTRACTED REVENUE
- c. 70%
REVENUE VISIBILITY
REVENUE TYPE
INTELLIGENT SOLUTIONS
INTELLIGENT SOLUTIONS - PRODUCTS AND SERVICES
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DESCRIPTION
- Manages large and very sensitive content using proprietary technology
Specialist Public Sector Technology
- Full range of HR and payroll services and software to private / public
sector clients Complex HR Solutions
- Provides specialist software, people and process know-how to financial
institutions and large corporates for complaints processing and case management
- Services related to asset reunification and identity validation
- Handling and cleansing of large data for corporates
Loan Administration Data Analytics
- End-to-end loan servicing through Pancredit platform
OTHER CASE MANAGEMENT
COMPLAINTS, CASE MANAGEMENT AND REGULATORY SERVICES
Proprietary technology platforms:
Charter Pancredit
#4 COMPLAINTS, CASE MANAGEMENT, AND REGULATORY SERVICES ~10% MARKET SHARE
MARKET POSITION
- Proprietary software platforms to enable
end to end outsourced remediation and lending solutions
- Emerging challenger in fragmented markets
- Leverages existing relationships to cross-
sell into established customer base
- Large pipeline of acquisition opportunities
- Two completed in Q1 2016
- KYCNET
- RiskFactor
REVENUE TYPE
INTELLIGENT SOLUTIONS – REVENUE MODEL
14 Contracted Transactional Project
REVENUE MODEL
- Complaints handling software (Invigia):
- Upfront licensing fee
- Project execution and product
implementation fees
- Recurring support fees
- Hazell Carr: Fees charged per placement
- f administrators and actuaries at clients
- n a transactional basis
- Upfront licensing fee
- Project execution and product
implementation fees
- Recurring support fees
- Depending on the product/service, fees are
charged on a contract and/or project basis
- Upfront licensing fee
- Project execution and product implementation
- Recurring support / maintenance
- Service fees charged as % of the value of
shares reunited with owners
- Transaction fees for each customer tracing
and screening Specialist Public Sector Technology and Complex HR Solutions Loan Administration Data Analytics
OTHER
COMPLAINTS, CASE MANAGEMENT AND REGULATORY SERVICES
INTELLIGENT SOLUTIONS Reported 2015 Reported Change % Organic Change % Revenue (£m) 98.9 10.4 1.3 EBITDA prior to exceptional items (£m) 22.7 39.3 EBITDA margin prior to exceptional items (%) 23.0 4.8pt
PROJECT REVENUE
- c. 70%
REVENUE VISIBILITY
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FINANCIALS
2015 KEY HIGHLIGHTS – A YEAR OF DELIVERY
+26%
REVENUE
£369m +23%
EBITDA
£86.2m
ORGANIC GROWTH
7%
LEVERAGE
2.8x
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Reported 2015 Reported 2014 Reported Change % Organic Change % REVENUE (£m) Investment Solutions Intelligent Solutions Pension Solutions Interest Income 118.3 98.9 142.5 9.3 94.9 89.6 101.3 6.5 24.7 10.4 40.7 43.1 9.8 1.3 8.0 Equiniti Group 369.0 292.3 26.2 6.8 EBITDA prior to exceptional items (£m) Investment Solutions Intelligent Solutions Pension Solutions Interest Income Central Costs 35.5 22.7 26.8 9.3 (8.1) 29.3 16.3 21.7 6.5 (3.8) 21.2 39.3 23.5 43.1 113.2 Equiniti Group 86.2 70.0 23.1 EBITDA margin prior to exceptional items (%) Investment Solutions Intelligent Solutions Pension Solutions 30.0 23.0 18.8 30.9 18.2 21.4 (0.9)pt 4.8pt (2.6)pt Equiniti Group 23.4 23.9 (0.5)pt
DELIVERING ON OUR FINANCIAL COMMITMENTS
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INVESTMENT SOLUTIONS REGISTRATION SERVICES
- Win new customers, primarily through IPOs and contract renewals
‒ Benefit from increase in corporate activity
- Up-sell, expanding to add-on services (CoSec, IR)
- Launch and roll-out of new services (e.g. Bereavement Services or non-conventional opportunities such as
unlisted registers)
bENEMPLOYEE SERVICES
- Increase in SAYE intermediary revenues
‒ Increase in SAYE balances driven by regulatory changes ‒ Increase in intermediary fees driven by increase in interest rates
- Win new customers, primarily through natural cross-sell from Registration Services
- Upsell additional services
INVESTMENT SERVICES
- Win new customers in Wealth Solutions and International Payments
- Grow D2C Business by cross-selling into B2B customer base and by targeting new customers
- Benefit from continued product development
- Increasing demand for white label services
PENSION SOLUTIONS
- Expand complex project based activity
- Cross-sell and up-sell by leveraging strength of relationships and key market trends
- Leverage award winning technology (Compendia) to access consumer self-service opportunities
INTELLIGENT SOLUTIONS
- Win new customers, for specialised outsourced solutions
- Cross-sell recently acquired capabilities into customer base
- Large government outsourcing contracts
‒ MyCSP contract provides strong track record for winning other large contracts INTEREST
- Increase in interest rates
GROWTH DRIVERS
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- rganic revenue
growth per annum
5%
TARGET
FINANCIAL GUIDANCE MAINTAINED
Supplemented by acquisition revenue growth of 2% per annum
GRADUAL MARGIN IMPROVEMENT
25bp per annum < £5m
EXCEPTIONAL CHARGES IN 2016
pre capital expenditure;
AVERAGE CASH CONVERSION
Capital expenditure at 5-5.5% of revenue
MEDIUM-TERM NET DEBT/EBITDA TARGET
2.0 – 2.5x
CASH TAX RATE
c15%
expected for the foreseeable future as we utilise trading losses and unclaimed allowances in the Group
PROGRESSIVE DIVIDEND POLICY DISTRIBUTING
30%
OF OUR NORMALISED PROFIT ATTRIBUTABLE TO ORDINARY SHAREHOLDERS
>95%
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APPENDIX
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GROW SALES TO EXISTING CLIENTS WIN NEW B2B CLIENTS DEVELOP AND ACQUIRE NEW CAPABILITIES OPERATING LEVERAGE REINVEST STRONG CASH FLOWS
5% ORGANIC GROWTH 2% ACQUISITIVE GROWTH 25 BPS PER ANNUM C.5% REVENUE REINVESTED IN CAPEX
REGULATED SERVICES FOR UK BASED FTSE 350 AND GOVERNMENT
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OUR STRATEGY
2 3 4 5
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Source: Management information
- 1. Marketing rights to c. 4m further known individuals through Corporate Sponsored Nominee and Club Together
SCALE PROVIDER OF SOLUTIONS TO LARGE CORPORATES AND GOVERNMENT, FACILITATING MIDDLE-OFFICE INTERACTIONS WITH THEIR EMPLOYEES, SHAREHOLDERS, CUSTOMERS AND CITIZENS
OUR KEY ASSETS
Custody and settlement, investment and wealth management Compendia pension administration and payroll Share registration, dividend and shareplan administration Enterprise workflow & Case and complaints management
FOUR MAIN PLATFORMS
WELL-INVESTED £100m+ investment between 2007 and 2015 has strengthened Equiniti’s market-leading platforms SCALABLE Capacity across all platforms results in low marginal costs as growth accelerates FLEXIBLE Proprietary platforms can be adapted and white– labelled to facilitate provision of diverse data- intensive solutions SECURE AND RESILIENT Data centres that have been configured for security, resilience and scale
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OUR TECHNOLOGY
OUR TECHNOLOGY IS AN ENABLER TO DRIVE US FORWARD IN A WORLD INCREASINGLY FOCUSED ON DIGITAL TRADING AND STRATEGIC USE OF DATA
Nat West Exec Dealing
Executive share dealing
ICS Computing
Case management, payroll services, near-shore BPO services
Hazell Carr
Regulatory resources
ProSearch
Asset Reunification services
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Investment Solutions Pension Solutions Intelligent Solutions
David Venus
Company secretarial services
Xafinity Group
Pension solutions
360 Clinical
Medical revalidation platform and services
Peter Evans
Financial services software
Prism CoSec
Company secretarial services
Invigia
Complaints handling software
2008 2009 2010 2011 2012 2013 2014 2015
Pancredit
Loan Administration
JP Morgan CDS
Executive corporate dealing services
Killik Global Share Plans
Executive share plans
Transglobal Payment Solutions
International Payments
Selftrade
Online share execution platform
OUR STRONG M&A TRACK RECORD
2016
KYCNET
On-boarding commercial & retail clients
RiskFactor
Credit decisioning & risk profiling
BOARD OF DIRECTORS
KEVIN BEESTON NON-EXECUTIVE CHAIRMAN Joined in September 2011 JOHN STIER CHIEF FINANCIAL OFFICER Joined in June 2015 VICKY JARMAN
- SR. INDEPENDENT NON-
EXECUTIVE DIRECTOR Joined in May 2014 SIR ROD ALDRIDGE OBE INDEPENDENT NON- EXECUTIVE DIRECTOR Joined in March 2010
- Strong NEDs and senior NED Vicky Jarman
- Chairman Kevin Beeston also Chairman of Taylor Wimpey, a FTSE 100 company
- Separate CEO & Chairman
TIM MILLER INDEPENDENT NON- EXECUTIVE DIRECTOR Joined in February 2015 JOHN PARKER INDEPENDENT NON- EXECUTIVE DIRECTOR Joined in January 2014 HARIS KYRIAKOPOULOS ADVENT NON-EXECUTIVE DIRECTOR Joined in August 2013 25 GUY WAKELEY CHIEF EXECUTIVE OFFICER Joined in January 2014