RESULTS FOR YEAR ENDED 31 DECEMBER 2015

Transcription

1 RESULTS FOR YEAR ENDED 31 DECEMBER 2015

2 DISCLAIMER This presentation may contain forwardlooking 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 forwardlooking statements. These forwardlooking 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, marketrelated 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. Forwardlooking 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 forwardlooking statements, save in respect of any requirement under applicable law or regulation. Nothing in the presentation should be construed as a profit forecast. 2

3 AGENDA WELCOME KEVIN BEESTON KEY HIGHLIGHTS GUY WAKELEY STRATEGY GUY WAKELEY FINANCIAL RESULTS JOHN STIER OPERATIONAL & STRATEGIC REVIEW GUY WAKELEY SUMMARY & OUTLOOK GUY WAKELEY 3

4 4 KEY HIGHLIGHTS

5 2015 KEY HIGHLIGHTS A YEAR OF DELIVERY REVENUE 369m +26% ORGANIC GROWTH 7% EBITDA 86.2m +23% LEVERAGE 2.8x Selftrade & TPS acquisitions integrated Pipeline for new business strong 5

6 STRATEGY 6

7 DELIVERING THE GROUP STRATEGY GROW SALES TO EXISTING CLIENTS WIN NEW B2B CLIENTS DEVELOP AND ACQUIRE NEW CAPABILITIES OPERATING LEVERAGE REINVEST STRONG CASH FLOWS 5% ORGANIC GROWTH 2% ACQUISITIVE GROWTH 25 BPS PER ANNUM C.5% REVENUE REINVESTED IN CAPEX REGULATED SERVICES FOR UK BASED FTSE 350 AND GOVERNMENT 7

8 8 FINANCIAL RESULTS

9 DELIVERING ON OUR FINANCIAL COMMITMENTS REVENUE ( m) Investment Solutions Intelligent Solutions Pension Solutions Interest Income Reported Reported Reported Change % Organic Change % Equiniti Group EBITDA prior to exceptional items ( m) Investment Solutions Intelligent Solutions Pension Solutions Interest Income Central Costs (8.1) (3.8) Equiniti Group EBITDA margin prior to exceptional items (%) Investment Solutions Intelligent Solutions Pension Solutions (0.9)pt 4.8pt (2.6)pt Equiniti Group (0.5)pt See slide 17 for detail of exceptional items

10 INVESTMENT SOLUTIONS Reported 2015 Reported 2014 Reported Change % Organic Change % Revenue ( m) EBITDA prior to exceptional items ( m) EBITDA margin prior to exceptional items (%) (0.9)pt Strong revenue and EBITDA progress driven by organic growth and acquisitions Slight margin decrease reflecting change in product mix and investment in the regulated business Corporate actions revenue increased to 6.2m in 2015 (2014: 3.2m) Growth across all service lines Registration Services 100% FTSE 350 client retention rate and new mandates, e.g. Virgin Money, Shawbrook, Aldermore, Worldpay Investment Services strong growth in International Payments and a number of new corporate accounts, e.g. white label share dealing services for Saga Employee Services benefitted from changes to SAYE, allowing people to save more, and scheme maturities 10

11 INTELLIGENT SOLUTIONS Reported 2015 Reported 2014 Reported Change % Organic Change % Revenue ( m) EBITDA prior to exceptional items ( m) EBITDA margin prior to exceptional items (%) pt Revenue growth driven by prior year acquisitions (Pancredit and Invigia), and demand for complaints management and credit services Organic growth of 1.3% through strong software sales in complaints management and credit services offset by a small decline in the rest of the business, with strong increase in profitability EBITDA growth reflecting favourable change in mix, increasing sales of higher margin software licenses and focus on efficiency 11

12 PENSION SOLUTIONS Reported 2015 Reported 2014 Reported Change % Organic Change % Revenue ( m) EBITDA prior to exceptional items ( m) EBITDA margin prior to exceptional items (%) (2.6)pt Revenue growth driven by organic growth and consolidation of MyCSP Organic growth through project work, e.g. government career average schemes and Guaranteed Minimum Pensions (GMP) reconciliation; GMP project work continues to 2018 Margins reflect higher % of revenue from MyCSP joint venture 12

13 INTEREST INCOME/CENTRAL COSTS Reported 2015 Reported 2014 Interest Income ( m) Central Costs ( m) (8.1) (3.8) Interest revenue increased due to higher interest earning balances and treasury management Higher central costs Plc infrastructure Investment in growth, particularly sales and key account management Strengthened compliance and risk functions 13

14 GROUP NORMALISED PROFIT m Change % Revenue EBITDA prior to exceptional items Depreciation Amortisation software Net finance expense proforma 86.2 (4.4) (15.8) (13.0) 70.0 (3.8) (11.0) (14.9) (12.8) Normalised PBT Cash tax of 15% 53.0 (8.0) 40.3 (6.0) Normalised PAT Non controlling interest 45.0 (4.6) 34.3 (2.1) Normalised profit attributable to ordinary shareholders Proforma results adjust for IPO related costs and our ongoing funding structure Normalised profit excludes exceptional items and amortisation of acquisition related intangible assets and includes finance expenses on a proforma basis 14 See slide 17 for detail of exceptional items

15 REPORTED ( m) EBITDA prior to exceptional items Working capital movement Free cash flow Cash flow conversion (%) Capital expenditure Net interest costs Proceeds from issue of share capital Net increase in borrowings Repayment of loans (18.4) (29.4) (20.8) (31.0) (706.9) Exceptional items refinancing charges (14.8) Exceptional items/provisions other (24.2) (18.7) Investment in current year acquisitions (19.9) (30.3) Payment of deferred consideration (3.9) (0.7) Taxes paid Other CASH FLOW STATEMENT (1.5) (2.6) (1.7) 1.1 Net cash movement See slide 17 for detail of exceptional items

16 LEVERAGE REPORTED ( m) Cash and cash equivalents (76.5) (30.1) Senior debt Revolving credit facility Other Net debt Net debt/ebitda 2.8x 6.5x Significant reduction in net debt through strong cash flow and refinancing Net debt/ebitda of 2.8x from strong working capital management and timing of IPO costs Net debt/ebitda adjusted for timing of IPO costs was 3.0x at 31 December

17 EXCEPTIONAL ITEMS & TAX EXCEPTIONAL ITEMS ( m) Operating costs Acquisition related costs Restructuring and other costs Property costs Total exceptional operating costs IPO related costs IPO related exceptional operating costs IPO related exceptional finance costs Total exceptional IPO related costs 43.7 TAX c. 657m tax assets to be utilised (2014: 633m) Cash tax rate of c. 15% sustainable for the foreseeable future 17

18 FINANCIAL GUIDANCE MAINTAINED TARGET 5% organic revenue growth per annum Supplemented by acquisition revenue growth of 2% per annum GRADUAL MARGIN IMPROVEMENT 25bp per annum EXCEPTIONAL CHARGES IN 2016 < 5m AVERAGE CASH CONVERSION >95% pre capital expenditure; Capital expenditure at 55.5% of revenue MEDIUMTERM NET DEBT/EBITDA TARGET x CASH TAX RATE c15% expected for the foreseeable future as we utilise trading losses and unclaimed allowances in the Group 18 PROGRESSIVE DIVIDEND POLICY DISTRIBUTING 30% OF OUR NORMALISED PROFIT ATTRIBUTABLE TO ORDINARY SHAREHOLDERS

19 19 OPERATIONAL & STRATEGIC REVIEW

20 7% ORGANIC GROWTH UNDERPINNED RESULTS 1 EXISTING CLIENTS #1 market share maintained for registration and share plans, #2 or #3 in all other main markets Strong crossselling, with 12% growth from top 24 clients Charter customer service platform now deployed in Lloyds, Santander and MBNA Sharedealing portfolio migrated from Santander 2 NEW CAPABILITIES White label share dealing for Saga and CPN Foreign payments processing for MarTrust, CloudPay and Activepayroll Bereavement BPO sold to a major high street bank Personal loan platforms sold to six UK lenders 3 17 new share registration clients (e.g. Shawbrook, Aldermore, Virgin Money, Worldpay) Pensions software (e.g. Hannover Re and University of Oxford) Loan administration and credit origination (e.g. Telefonica, Provident) Customer service technology and resource (e.g. npower, Welsh Water) NEW CLIENTS 20

21 ENHANCED RETURNS 1 RESILIENT GROWTH Major client retention rates continue at 100% Revenue visibility of >90% for 2016 and >80% for 2017 Nondiscretionary services 2 OPERATIONAL EFFICIENCY Increased scale and resilience of our centre in Chennai Rationalised property footprint, closed 7 properties Introduced more automation and lean six sigma to working practices 3 WORKING CAPITAL/ CASH MANAGEMENT Increased operating free cash flow by 35% to 97.6m Operating cash conversion of 113%, up from 104% Capital expenditure maintained within % of revenue 21 4 FINANCIAL EFFICIENCY Reduced indebtedness from 458m to 246m Reduced blended cost of borrowing from 7.6% to c3% reducing interest charge from c 40m to c 12m on an annualised basis Interest costs fixed to 2018 Utilisation of tax assets

22 DRIVERS OF GROWTH 1 REGULATION Pensions regulation changes along with macro shifts in interest rates and longevity Reform of the annuity market driving first time BPO outsourcings Increase in SAYE limits Government policy to back share ownership Increasing regulation of financial services 2 COMPLIANCE Challenges for broker clients around custody, settlement, customer reporting and MIFID2 Challenges for banking clients around money laundering and know your customer, with record breaking fines in 2015 Growing demand for outsourcing in complaints and digitisation 3 DIGITISATION More than 50% of digital transactions now conducted on smartphones Hyperinterconnectivity of markets and consumers is the new norm Demands for improved customer service compels clients to outsource to deliver their digital strategies, especially when burdened by legacy technology 22

23 NEW CAPABILITIES IN COMPLIANCE FOR FINANCIAL SERVICES 2015 TWO ACQUISITIONS WITHIN INVESTMENT SOLUTIONS DIVISION Selftrade Significantly increased the scale of our executiononly share dealing platform TransGlobal Payment Solutions Transferred ownership of technology underpinning our foreign exchange payments business Q TWO ACQUISITIONS IN FINANCIAL SERVICES TECHNOLOGY UK based provider of credit decisioning and risk profiling software for commercial lending Deep client relationships Broad applicability across lending products Complements our other conduct risk capabilities within the Intelligent Solutions division Cutting edge workflow technology for onboarding and monitoring of commercial and retail clients Multitenanted technology operates as a SaaS, onpremise or managed service Broad applicability across financial services as well as retail, travel, legal services Initial consideration of c. 16m Earnout payment of up to c. 10m in 2019, driven by growth CONTRIBUTES TO GUIDANCE OF ACQUISITION GROWTH OF 2% PER ANNUM 23

24 24 SUMMARY & OUTLOOK

25 SUMMARY A year of strategic execution and delivery on our financial commitments Strong operating cash flow and cash conversion Robust ongoing demand for our products, structurally underpinned by increasing UK regulation and legislation 25

26 OUTLOOK Encouraging start to 2016 Encouraging rate of order intake and good revenue visibility Underlying fundamentals in complex administration, regulation and compliance WE AIM TO ACHIEVE ANNUAL ORGANIC REVENUE GROWTH OF 5% Maintaining financial guidance set out at IPO 26

27 Q&A Equiniti is a leading provider of technology and solutions for complex and regulated administration, serving bluechip enterprises and public sector organisations 27

28 28 APPENDIX

29 Bn INVESTMENT SOLUTIONS WHAT WE DO EQUINITI PROVIDES SERVICES AND SOLUTIONS THAT SUPPORT COMPLEX AND REGULATED PROCESSES THAT SHARE A SET OF COMMON CAPABILITIES MARKET POS. EST. MARKET SHARE KEY SERVICES 2015 REVENUE SHARE 1 REGISTRATION SERVICES #1 50% FTSE 100 REGISTERS Registration Shareholder services Corporate actions and dividends Technologyled EMPLOYEE SERVICES INVESTMENT SERVICES #1 #4 25% 7% Employee benefit schemes Employee share plans Retail investor services Executive share dealing Wealth management solutions White label share dealing International payments 32% Datadriven Payments Processing PENSION SOLUTIONS #2 #1 PUBLIC SECTOR 15% Pension administration to public and private sectors Pension administration software Data analytics 38% Regulated, Embedded Processes INTELLIGENT SOLUTIONS #4 10% COMPLAINTS, CASE MANAGEMENT, AND REGULATORY SERVICES Loan administration Enterprise workflow & case management Data analytics 27% Enduser Engagement 29 Source: Management information, management estimates 1. Interest income accounts for3% of 2015 revenue

30 OUR MARKETS ARE LARGE AND SUPPORTED BY SECULAR AND RESILIENT TRENDS INVESTMENT SOLUTIONS (32%) 1 REGISTRATION SERVICES EMPLOYEE SERVICES INVESTMENT SERVICES PENSION SOLUTIONS (38%) 1 INTELLIGENT SOLUTIONS (27%) Macroeconomic recovery driving capital markets activity, investor confidence and increase in interest rates Pension reform to address demographic changes 3 Regulation & compliance across all markets 4 5 Outsourcing of complex activities to technology partners Digitalisation driving channel shift 30 Source: Management estimates 1. Percentage contribution of 2015 total reported revenues (Interest Income contributed 3%) Total Addressable Market Size = 3.9bn

31 OUR KEY ASSETS SCALE PROVIDER OF SOLUTIONS TO LARGE CORPORATES AND GOVERNMENT, FACILITATING MIDDLEOFFICE INTERACTIONS WITH THEIR EMPLOYEES, SHAREHOLDERS, CUSTOMERS AND CITIZENS Source: Management information 1. Marketing rights to c. 4m further known individuals through Corporate Sponsored Nominee and Club Together 31

32 GROUP INCOME STATEMENT ( m) 2015 Statutory 2015 Adjustment Proforma 1 Statutory 2014 Adjustment 2014 Proforma 1 Revenue EBITDA prior to exceptional items Depreciation Amortisation software Amortisation acquired intangibles 86.2 (4.4) (15.8) (23.0) 86.2 (4.4) (15.8) (23.0) 70.0 (3.8) (11.0) (20.9) 70.0 (3.8) (11.0) (20.9) EBIT prior to exceptional items Exceptional items excluding IPO costs 43.0 (10.3) 43.0 (10.3) 34.3 (12.6) 34.3 (12.6) Reported EBIT prior to IPO costs IPO related exceptionals operating costs 32.7 (22.5) Reported EBIT IPO related exceptionals finance costs Net finance costs 2 Gain on disposal of associate Share of profit in associate 10.2 (21.2) (60.7) (13.0) 21.7 (71.8) (14.9) Profit before tax (71.7) Taxation (28.9) 19.7 (3.0) (38.6) (4.4) 18.3 (2.7) Profit / (loss) from continuing operations Noncontrolling interests (45.8) (4.6) (4.6) (36.9) (2.1) (2.1) Profit / (loss) attributable to ordinary shareholders (50.4) (39.0) Earnings per share (pence) Basic (0.93) (7.80) 1Proforma results adjusted for IPO related exceptional costs and to normalise finance costs to reflect our ongoing funding structure 2 Proforma net finance costs have been presented to better reflect the cost that would have been incurred had the Group s current debt structure been in place throughout the current and prior year 3 Proforma taxation has been presented to better reflect the tax charge that would have been incurred had the Group s current debt structure been in place throughout the current and prior year at an estimated effective tax rate for the Group of 15% 32