Results for 6 Months Ended 30 June 2018 Delivering on our long-term - PowerPoint PPT Presentation

Results for 6 Months Ended 30 June 2018 Delivering on our long-term strategy

Agenda 01 02 03 Introduction Key Highlights Group Financials 04 05 06 Divisional Review Outlook Q&A 2 | Equiniti Group plc 2018

Strong Financial Performance Underpins Expectations for FY 2018 Growth Earnings Cash Revenue Underlying EPS Operating cash flow conversion £254.0m 7.7p 102% + 30.4% +13.2% (7)pts Underlying EBITDA Dividend Leverage £55.0m 1.83p 2.8x + 31.6% + 11.6% – 3 | Equiniti Group plc 2018

Group Financials 4 | Equiniti Group plc 2018

Group Income Statement £m Reported H1 2018 Reported H1 2017 Reported Change % Reported FY 2017 Revenue 254.0 194.8 30.4 406.3 Underlying EBITDA 55.0 41.8 31.6 98.2 Depreciation (3.1) (3.0) 3.3 (5.7) Amortisation - software (11.6) (7.7) 50.6 (18.3) Amortisation – acquired intangibles (15.6) (13.3) 17.3 (26.7) EBIT 24.7 17.8 38.8 47.5 Non-operating charges (14.1) (3.9) 261.5 (10.5) Reported EBIT 10.6 13.9 (23.7) 37.0 Finance costs (6.9) (5.4) 27.8 (11.7) Profit before tax 3.7 8.5 (56.5) 25.3 Tax (1.0) (1.5) (33.3) (10.0) Profit from continuing operations 2.7 7.0 (61.4) 15.3 Non-controlling interest (1.8) (1.6) 12.5 (3.7) Profit attributable to ordinary shareholders 0.9 5.4 (83.3) 11.6 Earnings per share (pence) – Basic 0.2 1.7 (88.2) 3.6 Earnings per share (pence) - Underlying 7.7 6.8 13.2 16.9 5 | Equiniti Group plc 2018

Divisional Performance £m Reported H1 2018 Reported H1 2017 Reported Change % Organic Change % Revenue Investment Solutions 68.9 64.2 7.3 6.7 Intelligent Solutions 78.3 55.2 41.8 34.8 Pension Solutions 65.4 70.7 (7.5) (7.5) Interest Income 6.0 4.7 27.7 27.7 Total UK & Europe 218.6 194.8 12.2 10.3 EQ USA 35.4 - - (6.3) Total Revenue 254.0 194.8 30.4 7.7 Underlying EBITDA Investment Solutions 22.2 20.2 9.9 Intelligent Solutions 17.6 13.2 33.3 Pension Solutions 9.6 10.5 (8.6) Interest Income 6.0 4.7 27.7 Total UK & Europe 55.4 48.6 14.0 EQ USA 7.5 - - Divisional Total 62.9 48.6 29.4 Central Costs (7.9) (6.8) 16.2 Total Underlying EBITDA 55.0 41.8 31.6 Underlying EBITDA margin % 21.7 21.5 0.2 6 | Equiniti Group plc 2018

Trading Performance Revenue Underlying EBITDA Reported growth 30.4% / organic growth 7.7% Reported growth 31.6% 7.5 55.0 35.4 254.0 4.4 1.3 (1.1) 23.1 1.3 2.0 4.7 194.8 41.8 (0.9) (5.3) Investment Solutions Investment Solutions Intelligent Solutions Intelligent Solutions Pension Solutions Pension Solutions Central Costs H1 2018 H1 2017 H1 2018 H1 2017 Interest Interest EQ USA EQ USA Investment Solutions Intelligent Solutions Pension Solutions Interest EQ USA Central Costs • Strong corporate • Very good • Revenue contraction • Benefit of UK rate • Benefit of rising • Increased share- action activity across a performance in large as anticipated rise in 2017 interest rate based payments range of clients scale remediation following contract environment, but charge (£8.1m vs. £4.7m), projects and new loss (Mineworkers) muted corporate action double-digit growth in client wins in and reduction in activity has resulted in international customer on- scope (NHS) in 2017 a (6.3)% pro-forma payments and growth boarding and credit reduction in revenue in share trading services • EBITDA growth of 5.6% 7 | Equiniti Group plc 2018

Cash Flow £m Reported H1 2018 Reported H1 2017 Reported FY 2017 Underlying EBITDA 55.0 41.8 98.2 Working capital movement 0.9 4.0 (6.5) Operating cash flow prior to non-operating charges 55.9 45.8 91.7 Operating cash flow conversion (%) 102 109 93 Non-operating charges (11.4) (1.9) (8.3) Capital expenditure (18.1) (16.4) (31.0) Net interest costs (4.3) (4.5) (9.0) Taxes paid - (2.5) (3.7) Other - (0.4) - Free cash flow to equity holders 22.1 20.1 39.7 Net financing cash flows 133.6 20.1 (56.7) Net proceeds from Rights Issue - - 114.2 Investment in current and prior year acquisitions (170.4) (14.9) (19.1) Payment of deferred consideration (2.0) - (1.9) Dividends paid (including payment to non-controlling interest) (13.6) (12.4) (17.7) Net cash movement (30.3) 12.9 58.5 8 | Equiniti Group plc 2018

Cashflow Generation and Distribution Since IPO (2016 – H1 2018) 246 240 (5) (30) 117 (77) (6) (10) (23) (55) (32) 8 EBITDA Working Capital Operating Cash Non-operating Charges Capital Expenditure Tax Paid Minority Dividends Net Cash Generation Net Interest Costs Rights Issue/Borrowings/ Acquisitions Ordinary Dividends Net Cash Movement • Non-Operating charges: £12.5m WFSS integration costs, £11.5m WFSS transaction costs, £5.7m restructuring and transformation costs and excludes IPO related costs in 2016. Rounding to nearest £1m for 9 | Equiniti Group plc 2018 simplicity

Working Capital £m Reported H1 2018 Reported H1 2017 Reported FY 2017 Underlying EBITDA 55.0 41.8 98.2 Working capital movement 0.9 4.0 (6.5) Operating cash flow 55.9 45.8 91.7 Operating cash flow conversion (%) 102 109 93 • Receivable financing facility balance reduced from £19.9m to £14.0m with downward trend 100 70 • Accrued income represents amounts recognised as revenue but not yet billed 90 60 60 • No income is accrued without a contract in place 80 55 54 50 • Given the blue chip nature of client base, there are minimal bad debts (H1 2018: 70 46 £0.1m; FY 2017: £0.3m) 60 40 50 • Accrued income increased in 2018 due to 33 30 28 40 • Expansion into the US market 30 20 • An increase in remediation projects which are invoiced a month in arrears 20 38 29 29 10 • Growing software sales with billing milestones, e.g. 1/3 on signing, 1/3 on 10 - - software configuration, 1/3 on go-live FY 2016 FY 2017 H1 2018 • Growth in corporate action income Trade receivables - £'m Accrued income - £'m Days Sales Outstanding 10 | Equiniti Group plc 2018

Non-Operating Charges and Capital Expenditure Reported Reported Reported Reported Reported Reported £m £m H1 2018 H1 2017 FY 2017 H1 2018 H1 2017 FY 2017 Transaction costs (5.2) (3.0) (6.3) Property (1.0) (0.8) (1.1) Integration costs (8.9) (0.4) (3.6) Software development (13.8) (15.6) (29.2) Restructuring and transformation costs - (0.5) (0.6) EQ USA Integration (3.3) - (0.7) Contingent consideration release - - - Total capital expenditure (cash) (18.1) (16.4) (31.0) Total Non-Operating Charges (14.1) (3.9) (10.5) As % of Group revenues 7.1% 8.4% 7.6% • Transaction costs reflect deal advisory and legal fees which were contingent on • Property spend driven by the consolidation and improvement of our sites successful completion of the WFSS transaction supporting the Credit Services business in Intelligent Solutions • Integration costs only relate to the US and include programme delivery, the • Internal software development reduction due to lower regulatory spend development of standalone functions and delivery of systems and processes to following the successful completion of MiFID II run the business • US Integration spend reflects IT server purchases and software development to • Previously announced FY 2018 restructuring and transformation costs of £2m in enable the business to operate on a standalone basis respect of Pensions Solutions absorbed into underlying EBITDA • Post completion of the US integration programme, the expectation is that capex • In H1 2018, £0.8m of this charge was absorbed into Pension Solutions EBITDA will stabilise to 6-7% of revenue each year • Post completion of the US integration programme, expectation is that non- operating charges will be zero in the absence of any transformational transactions 11 | Equiniti Group plc 2018

Tax Assets £m H1 2018 Future tax deductions on tax losses carried forward 229.0 Future tax deductions on intangible assets 516.0 Future tax deductions on property, plant and equipment 33.0 Total tax assets 778.0 • The Group has £778.0m of tax attributes that reduce the cash tax effective rate compared to the profit and loss account effective rate • The tax impact of these attributes is recognised as deferred tax on the balance sheet, for which tax relief is available • Included within the intangible assets tax attribute is the customer relationship and goodwill intangibles related to the acquisition of the trade and assets of EQ USA from 1st February 2018 • The forecast cash tax effective rate over the next few years is estimated to be c13% for 2018 and 2019 and c17% from 2020 onwards, reflecting completion of the integration and growth in EQ USA • We consider the cash tax effective rate to be an appropriate measure to use as it best reflects the economic flows from the business, taking into account our assessment of how our tax attributes will unwind and reduce our overall tax liabilities 12 | Equiniti Group plc 2018