Equiniti Group PLC

Equiniti Group remains well positioned

FTSE News FTSE 250

Equiniti Group (LON:EQN), an international technology-led services and payments specialist, has issued the following trading update for the period 1 July 2019 to 18 November 2019.

TRADING

The Group’s performance in the period has been reassuring and we expect 2019 full year results to be towards the upper end of market expectations* for revenue and towards the lower end for underlying EBITDA due to weaker higher margin UK corporate activity.

Client retention remained strong across the Group and we have continued or extended all relationships including ALLETE Inc., BT, Centrica, Fidelity and Hewlett Packard Enterprise.  New client wins have also been encouraging and we are pleased to have secured new clients across all of our divisions.  Investment Solutions continued to take market share with new share register wins including Marshall of Cambridge and Vitec Group.  Remediation services and software sales remain the drivers of growth in Intelligent Solutions with software sales to DXC, MBNA and Yorkshire Building Society.  Pension Solutions secured client wins in the period including a significant pension administration contract and, with the cost efficiency actions completed in the first half, underlying EBITDA in Pension Solutions is expected to stabilise for full year 2019.  EQ US continued to build upon the momentum in the prior period with further success in cross-selling new products into the client base, most notably equity compensation services to BT’s US employee base, Dorman Products and Johnson Outdoors. 

After completion of the US separation in the first half of 2019, there are no further non-operating charges in the second half of the year.  Operating cash conversion is expected to be comparable to that of the first half of the year with leverage at or slightly above the higher end of the range of market expectations due to timing of business in the fourth quarter.  Our medium term guidance remains at c.95% operating cash flow conversion.

2019 market expectations*

Revenue                       :           £550 – £567m

Underlying EBITDA      :           £136 – £142m

Leverage                      :           2.3 – 2.5x

*Source: Company Compiled; post IFRS 16

FINANCIAL CALENDAR

12 March 2020             Full year results announcement

7 May 2020                   AGM and trading update

30 July 2020                  Interim results announcement

OUTLOOK

Whilst we expect the uncertainty in the macro environment to continue, Equiniti remains well positioned. We expect further organic growth in the UK as we build on our relationships with our exceptional client base. The US offers a platform for accelerated growth based on market opportunity, the potential to take market share and the opportunity to cross-sell digitised services into our blue-chip client base. 

Equiniti’s business model gives us good forward visibility of revenues. Our operations are scalable with platform characteristics, and actions undertaken in the first half will serve to increase efficiency and reduce marginal costs.  This, along with progressive deleveraging and further operational improvements, will allow us to grow underlying profits and earnings ahead of revenue.