Results for Year Ended 31 December 2017 Sustained earnings growth - - PowerPoint PPT Presentation

results for year ended
SMART_READER_LITE
LIVE PREVIEW

Results for Year Ended 31 December 2017 Sustained earnings growth - - PowerPoint PPT Presentation

Results for Year Ended 31 December 2017 Sustained earnings growth and deleveraging Guy Wakeley John Stier Chief Executive Chief Financial Officer 1 Equiniti Group plc DISCLAIMER This presentation may contain forward -looking As a


slide-1
SLIDE 1

1 Equiniti Group plc

Results for Year Ended 31 December 2017

Sustained earnings growth and deleveraging Guy Wakeley Chief Executive John Stier Chief Financial Officer

slide-2
SLIDE 2

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

  • bjectives. Generally, words such as “may”, “could”,

“will”, “expect”, “intend”, “estimate”, “anticipate”, “aim”, “outlook”, “believe”, “plan”, “seek”, “continue”

  • r

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

  • nly

as

  • f

the date

  • n

which such statements are made. The Group undertakes no

  • bligation 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.

2 Equiniti Group plc

DISCLAIMER

slide-3
SLIDE 3

3 Equiniti Group plc

1 2 3 4 KEY HIGHLIGHTS FINANCIAL RESULTS OPERATIONAL & STRATEGIC REVIEW INTRODUCTION 5 6 SUMMARY & OUTLOOK Q&A AGENDA

slide-4
SLIDE 4

4 Equiniti Group plc

GROWTH DELEVERAGING EARNINGS Revenue £406.1m +6.1% Underlying EBITDA £98.5m +6.6% Underlying EPS* 16.9 pence +7.0% Underlying dividend** 5.05 pence +6.3% Underlying leverage ** 2.5x (0.2)x Operating cash flow conversion 93%

* Restated to reflect the bonus element of the rights issue. ** Restated to remove the impact of the rights issue dilution.

FINANCIAL HIGHLIGHTS

slide-5
SLIDE 5

5 Equiniti Group plc

100% retention of FTSE clients

  • 140 contract renewals with TCV of £115m

Growing UK Registration market share

  • 8 client wins from competitors
  • >70% new listings

Pension Solutions

  • Modest revenue growth in a challenging market

Intelligent Solutions

  • Strong revenue performance with growth across all service offerings

Rising interest rate environment Wells Fargo Shareowner Services completion RESILIENT CHARACTERISTICS ORGANIC PROGRESSION FAVOURABLE OUTLOOK

A YEAR OF STRONG PROGRESS

slide-6
SLIDE 6

FINANCIAL RESULTS

slide-7
SLIDE 7

7 Equiniti Group plc

£m 2017 2016 Change % Revenue

406.1 382.6 6.1

Underlying EBITDA Depreciation Amortisation – software Amortisation – acquired intangibles

98.5 (5.7) (18.3) (26.7) 92.4 (5.4) (16.0) (25.3) 6.6 5.6 14.4 5.5

EBIT Non-operating charges

47.8 (10.5) 45.7 (5.0) 4.6 110.0

Reported EBIT Finance costs

37.3 (11.7) 40.7 (12.2) (8.4) (4.1)

Profit before tax Tax

25.6 (10.0) 28.5 4.9 (10.2) (304.1)

Profit from continuing operations Non-controlling interest

15.6 (3.7) 33.4 (2.9) (53.3) 27.6

Profit attributable to ordinary shareholders

11.9 30.5 (61.0)

Earnings per share (pence) – Basic

3.6 9.5* (62.1)

Earnings per share (pence) – Underlying

16.9 15.8* 7.0

*Restated for bonus element of the Rights Issue

GROUP INCOME STATEMENT

slide-8
SLIDE 8

8 Equiniti Group plc

Reported 2017 Reported 2016 Reported Change % Organic Change % REVENUE (£m) Investment Solutions Intelligent Solutions Pension Solutions Interest Income 132.3 124.7 139.0 10.1 124.0 109.3 138.1 11.2 6.7 14.1 0.7 (9.8) 6.7 2.8 0.7 (9.8) Equiniti Group 406.1 382.6 6.1 2.9 Underlying EBITDA (£m) Investment Solutions Intelligent Solutions Pension Solutions Interest Income Central Costs 43.5 33.0 24.6 10.1 (12.7) 37.5 28.3 27.7 11.2 (12.3) 16.0 16.6 (11.2) (9.8) 3.3 Equiniti Group 98.5 92.4 6.6 Underlying EBITDA margin (%) Investment Solutions Intelligent Solutions Pension Solutions 32.9 26.5 17.7 30.2 25.9 20.1 2.7 0.6 (2.4) Equiniti Group 24.3 24.2 0.1

DELIVERING ON OUR FINANCIAL COMMITMENTS

slide-9
SLIDE 9

9 Equiniti Group plc

  • Revenue growth driven by high fidelity client base, increasing market share and win rates

– Corporate action revenue of £9.4m (2016: £7.9m)

  • Underlying EBITDA and margin expansion driven by strong revenue growth, good margin project work and

continued focus on operating leverage

  • 100% client retention in Share Registration with market share growth and traction from bereavement services
  • Growth in Shareplans Services client base with wins including Euromoney, Jardine Lloyd Thompson, J Sainsbury

and L’Oréal

  • Strong growth in International Payments adding new clients including international payment services white-

labelled for Santander

  • Good performance in share dealing with significant investment in on-line platforms and preparations for MiFID II

INVESTMENT SOLUTIONS

124.0 132.3 2016 2017 REVENUE £M 37.5 43.5 2016 2017 UNDERLYING EBITDA £M 30.2 32.9 2016 2017 UNDERLYING EBITDA MARGIN % +6.7% +2.7pts +16.0%

slide-10
SLIDE 10

10 Equiniti Group plc

  • Strong revenue performance with growth across all service offerings

– Acquisition of Gateway2Finance and Nostrum contributed to reported growth

  • Underlying EBITDA and margin progression driven by revenue growth, high margin project work and
  • perating leverage
  • EQ Credit secured new wins including Three, Green Deal Finance Company and Sainsbury’s Bank
  • EQ Data analytics cross-sold to Admiral and Green Deal Finance Company
  • Strong demand for customer remediation technology including wins with Home Retail Group, Lloyds and

Santander, reducing reliance on resourcing projects – Double digit growth in specialist resourcing and remediation in H2

INTELLIGENT SOLUTIONS

109.3 124.7 2016 2017 REVENUE £M 28.3 33.0 2016 2017 UNDERLYING EBITDA £M 25.9 26.5 2016 2017 UNDERLYING EBITDA MARGIN % +16.6% +0.6pts +14.1%

slide-11
SLIDE 11

11 Equiniti Group plc

  • Modest revenue growth with disciplined pricing in competitive market conditions
  • Underlying EBITDA and margin pressure due to reduction in higher margin project and software work
  • New wins included administration services with House of Fraser, Magnox and Shawbrook
  • GMP reconciliation and rectification projects won with Tayside, Clwyd Pension Fund and SSE plc

PENSION SOLUTIONS

27.7 24.6 2016 2017 UNDERLYING EBITDA £M 20.1 17.7 2016 2017 UNDERLYING EBITDA MARGIN % 138.1 139.0 2016 2017 REVENUE £M +0.7%

  • 11.2%
  • 2.4pts
slide-12
SLIDE 12

12 Equiniti Group plc

£m Reported 2017 Reported 2016 Interest income 10.1 11.2 Central costs (12.7) (12.3) Tax assets 616.0 649.0

  • Interest income decline due to impact from interest rate cut of 25pts in August 2016 and lower average cash

balances

  • ⅔ of interest bearing balances with instruments secured to August 2018 (£650m) and July 2020 (£380m)
  • Moving from a declining to rising interest rate environment creates momentum for the mid-term
  • Tax
  • c£616m tax assets to be utilised
  • UK cash tax rate of c13% sustainable for the foreseeable future (subject to impact of the Wells Fargo

Shareowner Services acquisition)

OTHER KEY METRICS

slide-13
SLIDE 13

13 Equiniti Group plc

£m Reported 2017 Reported 2016 Capital expenditure (31.0) (28.2) Non-operating charges (10.5) (5.0)

  • Capital expenditure of £31.0m driven by timing of projects such as MiFID II and launch of a new portal for our

Selftrade business

  • Non-operating charges of £10.5m principally relate to the acquisition and set up of the Wells Fargo Shareowner

Services business

  • No charges post year end 2019 expected once integration completes

CAPEX/NON-OPERATING CHARGES

slide-14
SLIDE 14

14 Equiniti Group plc

  • Interest payable rates fixed at 3% to October 2018

£m 2017 2016 Underlying EBITDA Working capital movement 98.5 (6.8) 92.4 0.2 Operating cash flow Operating cash flow conversion (%) Non-operating charges Capital expenditure Net interest costs Taxes paid Other 91.7 93 (8.3) (31.0) (9.0) (3.7)

  • 92.6

100 (10.0) (28.2) (9.5) (2.2) 0.1 Free cash flow to equity holders 39.7 42.4 Net reduction in borrowings Net proceeds from Rights Issue Investment in current and prior year acquisitions Payment of deferred consideration Dividends paid (56.7) 114.2 (19.1) (1.9) (17.7) (14.0)

  • (18.7)

(7.3) (10.3) Net cash movement 58.5 (19.9)

CASH FLOW STATEMENT

slide-15
SLIDE 15

15 Equiniti Group plc

  • Continued reduction in leverage
  • Underlying net debt/underlying EBITDA at 2.5x reflecting strong cash flow
  • Continued progress on leverage reduction from 3.25 at IPO in October 2015

£m Underlying 2017 Reported 2017 Reported 2016 Cash and cash equivalents (78.8) (115.2) (56.7) Senior debt 250.0 250.0 250.0 Revolving credit facility 70.0

  • 56.0

Other 1.7 1.7 1.9 Net debt 242.9 136.5 251.2 Net debt/Underlying EBITDA (times) 2.5 1.4 2.7 3.25 2.7 2.5 Oct-15 Dec-16 Dec-17 NET DEBT/UNDERLYING EBITDA X

LEVERAGE

1.4

NET DEBT/UNDERLYING EBITDA TARGET REMAINS AT 2.0 – 2.5X

slide-16
SLIDE 16

16 Equiniti Group plc

Key points

  • Effective for periods commencing 1 January 2018
  • 2017 will be restated in the 2018 accounts for a like-for-like comparison of trading
  • Overall impact on the Group results is not material

Areas of impact

  • Software licences

– Term licence revenue to be recognised at point in time under IFRS 15 compared with over time under IAS 18 where delivery

  • f the licence fulfils the performance obligation
  • Transitional services

– Where transitional services over a long life contract do not represent a distinct performance obligation, revenue from this service will be recognised over the life of the contract rather than over the transition period and the supporting costs will be deferred and also spread over the contract duration

2017 Impact

Revenue Stream Division Revenue (£m) Costs (£m) Reserves (£m) Software licences Intelligent / Pension Solutions (0.4)

  • 2.3

Transitional services Pension Solutions 0.3 0.2 (3.0) Total (0.1) 0.2 (0.7)

IFRS 15 – REVENUE FROM CONTRACTS WITH CUSTOMERS

ADOPTION OF IFRS 15 IS NON-MATERIAL IN THE CONTEXT OF THE GROUP RESULTS

slide-17
SLIDE 17

OPERATIONAL & STRATEGIC REVIEW

slide-18
SLIDE 18

18 Equiniti Group plc

1

PROTECT AND GROW CORE MARKETS

2

INTEGRATE AND GROW US SHARE REGISTRY CAPABILITY

3

SERVE GLOBAL CLIENTS

4

GROW SERVICE PORTFOLIO IN THE US

EXTENDING OUR CAPABILITIES

slide-19
SLIDE 19

19 Equiniti Group plc

Grow sales to existing clients Win new B2B Clients Develop & acquire new capabilities Operating leverage Reinvest strong cash flows

Organic growth Acquisitive growth Margin growth Continued reinvestment in CAPEX

Regulated platforms for FTSE 350 clients

EXTENDING OUR CAPABILITIES 1 PROTECT AND GROW CORE MARKETS

slide-20
SLIDE 20

20 Equiniti Group plc

  • Knowledge of business from formation of Global Share Alliance in 2011
  • Acquisition completed in accordance with timetable on 1 February 2018
  • Seamless transition to operation under new ownership, with customers and team

members retained

  • Work underway to transition existing operations to Equiniti proprietary share registration

and share plan platforms during 2018 and 2019

  • Encouraging new client wins since announcement of transaction in July 2017, with
  • rganic growth supported by growing pipeline

2 INTEGRATE AND GROW US SHARE REGISTRY CAPABILITY EXTENDING OUR CAPABILITIES

slide-21
SLIDE 21

21 Equiniti Group plc

3 SERVE GLOBAL CLIENTS

MULTIPLE OPPORTUNITIES TO BUILD US MARKET SHARE WHILST CONSOLIDATING UK POSITION

EXTENDING OUR CAPABILITIES

Eight major Equiniti US clients have UK listings managed by competing UK registrars, including Eight major Equiniti UK clients have US ADR listings serviced by Wells Fargo

  • perations, including

109 Equiniti UK clients have US ADRs serviced by US competitor depositaries / transfer agents, including

slide-22
SLIDE 22

22 Equiniti Group plc

Developing US revenue channels Accelerating US share registry growth

4 GROW OUR SERVICE PORTFOLIO IN THE US

  • Share Plan Administration
  • Asset Reunification
  • Proxy Solicitation
  • Financial Services Remediation
  • Risk & Fraud
  • Data & Analytics
  • Client Onboarding

EQUITY BASED PRODUCTS AND SERVICES REGTECH AND PLATFORM-BASED PRODUCTS AND SERVICES

EXTENDING OUR CAPABILITIES

slide-23
SLIDE 23

SUMMARY & OUTLOOK

slide-24
SLIDE 24

24 Equiniti Group plc

  • Organic growth continues from resilient UK base
  • Operating leverage continues to drive margin expansion
  • Strong cash flow and reduction in leverage
  • US market entry successfully delivered
  • Sustainable revenues in US and UK expected to continue
  • Low to mid single digit UK revenue growth in 2018
  • Positive outlook for interest rates
  • Market share opportunities in US registration services
  • Continuing demand for regulatory platform capability and

emerging regulatory trends in the US

SUMMARY OUTLOOK

SUMMARY & OUTLOOK

slide-25
SLIDE 25

QUESTIONS & ANSWERS