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 result, the Group’s actual future financial statements’ with respect to certain of the Group’s condition, performance and results may differ plans and its current goals and expectations relating materially from the plans, goals and expectations set to its future financial performance condition, forth in the Group’s forward looking statements. performance, results, strategic initiatives and objectives. Generally, words such as “may”, “could”, Forward-looking statements in this presentation are “will”, “expect”, “intend”, “estimate”, “anticipate”, currently only as of the date on which such “aim”, “outlook”, “believe”, “plan”, “seek”, “continue” statements are made. The Group undertakes no or similar expressions identify ‘forward -looking obligation to update any forward-looking statements, statements. save in respect of any requirement under applicable law or regulation. Nothing in the presentation should These forward-looking statements involve risk and be construed as a profit forecast. 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. 2 Equiniti Group plc
AGENDA 1 INTRODUCTION 2 KEY HIGHLIGHTS 3 FINANCIAL RESULTS OPERATIONAL & STRATEGIC REVIEW 4 SUMMARY & OUTLOOK 5 6 Q&A 3 Equiniti Group plc
FINANCIAL HIGHLIGHTS GROWTH Revenue £406.1m +6.1% Underlying EBITDA £98.5m +6.6% EARNINGS Underlying EPS* 16.9 pence +7.0% Underlying dividend** 5.05 pence +6.3% DELEVERAGING 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 RESILIENT CHARACTERISTICS Growing UK Registration market share • 8 client wins from competitors • >70% new listings Pension Solutions ORGANIC • Modest revenue growth in a challenging market PROGRESSION Intelligent Solutions • Strong revenue performance with growth across all service offerings Rising interest rate environment FAVOURABLE OUTLOOK Wells Fargo Shareowner Services completion 5 Equiniti Group plc
FINANCIAL RESULTS
GROUP INCOME STATEMENT £m 2017 2016 Change % 406.1 382.6 6.1 Revenue 98.5 92.4 6.6 Underlying EBITDA (5.7) (5.4) 5.6 Depreciation Amortisation – software (18.3) (16.0) 14.4 Amortisation – acquired intangibles (26.7) (25.3) 5.5 47.8 45.7 4.6 EBIT Non-operating charges (10.5) (5.0) 110.0 37.3 40.7 (8.4) Reported EBIT Finance costs (11.7) (12.2) (4.1) 25.6 28.5 (10.2) Profit before tax Tax (10.0) 4.9 (304.1) 15.6 33.4 (53.3) Profit from continuing operations Non-controlling interest (3.7) (2.9) 27.6 11.9 30.5 (61.0) Profit attributable to ordinary shareholders Earnings per share (pence) – Basic 3.6 9.5* (62.1) 16.9 15.8* 7.0 Earnings per share (pence) – Underlying 7 Equiniti Group plc *Restated for bonus element of the Rights Issue
DELIVERING ON OUR FINANCIAL COMMITMENTS Reported Reported Reported Organic 2017 2016 Change % Change % REVENUE (£m) Investment Solutions 132.3 124.0 6.7 6.7 Intelligent Solutions 124.7 109.3 14.1 2.8 Pension Solutions 139.0 138.1 0.7 0.7 Interest Income 10.1 11.2 (9.8) (9.8) Equiniti Group 406.1 382.6 6.1 2.9 Underlying EBITDA (£m) Investment Solutions 43.5 37.5 16.0 Intelligent Solutions 33.0 28.3 16.6 Pension Solutions 24.6 27.7 (11.2) Interest Income 10.1 11.2 (9.8) Central Costs (12.7) (12.3) 3.3 Equiniti Group 98.5 92.4 6.6 Underlying EBITDA margin (%) Investment Solutions 32.9 30.2 2.7 Intelligent Solutions 26.5 25.9 0.6 Pension Solutions 17.7 20.1 (2.4) Equiniti Group 24.3 24.2 0.1 8 Equiniti Group plc
INVESTMENT SOLUTIONS UNDERLYING EBITDA £M UNDERLYING EBITDA MARGIN % REVENUE £M +2.7pts +16.0% 32.9 43.5 +6.7% 30.2 132.3 124.0 37.5 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 white- labelled 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 UNDERLYING EBITDA MARGIN % REVENUE £M UNDERLYING EBITDA £M +0.6pts +16.6% +14.1% 33.0 124.7 26.5 25.9 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 UNDERLYING EBITDA MARGIN % REVENUE £M UNDERLYING EBITDA £M +0.7% 139.0 138.1 -11.2% 27.7 -2.4pts 20.1 17.7 24.6 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 Reported Reported £m 2017 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 Reported Reported £m 2017 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 13 Equiniti Group plc
CASH FLOW STATEMENT £m 2017 2016 Underlying EBITDA 98.5 92.4 Working capital movement (6.8) 0.2 Operating cash flow 91.7 92.6 Operating cash flow conversion (%) 93 100 Non-operating charges (8.3) (10.0) Capital expenditure (31.0) (28.2) Net interest costs (9.0) (9.5) Taxes paid (3.7) (2.2) Other - 0.1 Free cash flow to equity holders 39.7 42.4 Net reduction in borrowings (56.7) (14.0) Net proceeds from Rights Issue 114.2 - Investment in current and prior year acquisitions (19.1) (18.7) Payment of deferred consideration (1.9) (7.3) Dividends paid (17.7) (10.3) Net cash movement 58.5 (19.9) • Interest payable rates fixed at 3% to October 2018 14 Equiniti Group plc
LEVERAGE Underlying Reported Reported £m 2017 2017 2016 NET DEBT/UNDERLYING EBITDA X Cash and cash equivalents (78.8) (115.2) (56.7) Senior debt 250.0 250.0 250.0 3.25 Revolving credit facility 70.0 - 56.0 2.5 2.7 Other 1.7 1.7 1.9 1.4 Oct-15 Dec-16 Dec-17 Net debt 242.9 136.5 251.2 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
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