Results for Year Ended 31 December 2017 Sustained earnings growth and deleveraging Guy Wakeley Chief Executive John Stier Chief Financial Officer 1 Equiniti Group plc
DISCLAIMER 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. 2 Equiniti Group plc
AGENDA 1 INTRODUCTION 2 KEY HIGHLIGHTS 3 FINANCIAL RESULTS 4 5 OPERATIONAL & STRATEGIC REVIEW SUMMARY & OUTLOOK 6 Q&A 3 Equiniti Group plc
DELEVERAGING EARNINGS GROWTH FINANCIAL HIGHLIGHTS 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. 4 Equiniti Group plc
A YEAR OF STRONG PROGRESS 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 5 Equiniti Group plc
FINANCIAL RESULTS
GROUP INCOME STATEMENT 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 7 Equiniti Group plc
DELIVERING ON OUR FINANCIAL COMMITMENTS REVENUE ( m) Investment Solutions Intelligent Solutions Pension Solutions Interest Income Reported 2017 132.3 124.7 139.0 10.1 Reported 2016 124.0 109.3 138.1 11.2 Reported Change % 6.7 14.1 0.7 (9.8) Organic Change % 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 6.7 2.8 0.7 (9.8) 8 Equiniti Group plc
INVESTMENT SOLUTIONS REVENUE M +6.7% 132.3 124.0 UNDERLYING EBITDA M +16.0% 43.5 37.5 UNDERLYING EBITDA MARGIN % +2.7pts 32.9 30.2 2016 2017 2016 2017 2016 2017 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 whitelabelled for Santander Good performance in share dealing with significant investment in on-line platforms and preparations for MiFID II 9 Equiniti Group plc
INTELLIGENT SOLUTIONS REVENUE M +14.1% 124.7 UNDERLYING EBITDA M +16.6% 33.0 UNDERLYING EBITDA MARGIN % +0.6pts 25.9 26.5 28.3 109.3 2016 2017 2016 2017 2016 2017 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 operating 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 10 Equiniti Group plc
PENSION SOLUTIONS REVENUE M +0.7% 138.1 139.0 UNDERLYING EBITDA M -11.2% 27.7 24.6 UNDERLYING EBITDA MARGIN % -2.4pts 20.1 17.7 2016 2017 2016 2017 2016 2017 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 11 Equiniti Group plc
OTHER KEY METRICS 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) 12 Equiniti Group plc
CAPEX/NON-OPERATING CHARGES m Capital expenditure Non-operating charges Reported 2017 Reported 2016 (31.0) (28.2) (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 13 Equiniti Group plc
CASH FLOW STATEMENT m 2017 2016 Underlying EBITDA Working capital movement Operating cash flow Operating cash flow conversion (%) Non-operating charges Capital expenditure Net interest costs Taxes paid Other 98.5 (6.8) 91.7 93 (8.3) (31.0) (9.0) (3.7) - 92.4 0.2 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) Interest payable rates fixed at 3% to October 2018 14 Equiniti Group plc
LEVERAGE m Underlying 2017 Reported 2017 Reported 2016 Cash and cash equivalents (78.8) (115.2) (56.7) NET DEBT/UNDERLYING EBITDA X Senior debt 250.0 250.0 250.0 Revolving credit facility 70.0-56.0 Other 1.7 1.7 1.9 3.25 2.7 2.5 1.4 Net debt 242.9 136.5 251.2 Oct-15 Dec-16 Dec-17 Net debt/underlying EBITDA (times) 2.5 1.4 2.7 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 NET DEBT/UNDERLYING EBITDA TARGET REMAINS AT 2.0 2.5X 15 Equiniti Group plc
IFRS 15 REVENUE FROM CONTRACTS WITH CUSTOMERS 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 of 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 Pensions Solutions 0.3 0.2 (3.0) Total (0.1) 0.2 (0.7) ADOPTION OF IFRS 15 IS NON-MATERIAL IN THE CONTEXT OF THE GROUP RESULTS 16 Equiniti Group plc
OPERATIONAL & STRATEGIC REVIEW
EXTENDING OUR CAPABILITIES 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 18 Equiniti Group plc
EXTENDING OUR CAPABILITIES 1 PROTECT AND GROW CORE MARKETS 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 19 Equiniti Group plc
EXTENDING OUR CAPABILITIES 2 INTEGRATE AND GROW US SHARE REGISTRY CAPABILITY 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 organic growth supported by growing pipeline 20 Equiniti Group plc
EXTENDING OUR CAPABILITIES 3 SERVE GLOBAL CLIENTS 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 operations, including 109 Equiniti UK clients have US ADRs serviced by US competitor depositaries / transfer agents, including MULTIPLE OPPORTUNITIES TO BUILD US MARKET SHARE WHILST CONSOLIDATING UK POSITION 21 Equiniti Group plc
EXTENDING OUR CAPABILITIES 4 GROW OUR SERVICE PORTFOLIO IN THE US Developing US revenue channels Accelerating US share registry growth 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 22 Equiniti Group plc
SUMMARY & OUTLOOK
SUMMARY & OUTLOOK SUMMARY 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 OUTLOOK 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 24 Equiniti Group plc
QUESTIONS & ANSWERS