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
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
1 Equiniti Group plc
Sustained earnings growth and deleveraging Guy Wakeley Chief Executive John Stier Chief Financial Officer
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
“will”, “expect”, “intend”, “estimate”, “anticipate”, “aim”, “outlook”, “believe”, “plan”, “seek”, “continue”
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
as
the date
which such statements are made. The Group undertakes no
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
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1 2 3 4 KEY HIGHLIGHTS FINANCIAL RESULTS OPERATIONAL & STRATEGIC REVIEW INTRODUCTION 5 6 SUMMARY & OUTLOOK Q&A AGENDA
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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
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100% retention of FTSE clients
Growing UK Registration market share
Pension Solutions
Intelligent Solutions
Rising interest rate environment Wells Fargo Shareowner Services completion RESILIENT CHARACTERISTICS ORGANIC PROGRESSION FAVOURABLE OUTLOOK
A YEAR OF STRONG PROGRESS
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£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
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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
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– Corporate action revenue of £9.4m (2016: £7.9m)
continued focus on operating leverage
and L’Oréal
labelled for Santander
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%
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– Acquisition of Gateway2Finance and Nostrum contributed to reported growth
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%
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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%
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£m Reported 2017 Reported 2016 Interest income 10.1 11.2 Central costs (12.7) (12.3) Tax assets 616.0 649.0
balances
Shareowner Services acquisition)
OTHER KEY METRICS
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£m Reported 2017 Reported 2016 Capital expenditure (31.0) (28.2) Non-operating charges (10.5) (5.0)
Selftrade business
Services business
CAPEX/NON-OPERATING CHARGES
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£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)
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)
(7.3) (10.3) Net cash movement 58.5 (19.9)
CASH FLOW STATEMENT
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£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
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
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Key points
Areas of impact
– Term licence revenue to be recognised at point in time under IFRS 15 compared with over time under IAS 18 where delivery
– 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)
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
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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
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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
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members retained
and share plan platforms during 2018 and 2019
2 INTEGRATE AND GROW US SHARE REGISTRY CAPABILITY EXTENDING OUR CAPABILITIES
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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
109 Equiniti UK clients have US ADRs serviced by US competitor depositaries / transfer agents, including
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Developing US revenue channels Accelerating US share registry growth
4 GROW OUR SERVICE PORTFOLIO IN THE US
EQUITY BASED PRODUCTS AND SERVICES REGTECH AND PLATFORM-BASED PRODUCTS AND SERVICES
EXTENDING OUR CAPABILITIES
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emerging regulatory trends in the US
SUMMARY OUTLOOK
SUMMARY & OUTLOOK