When financial services group Equiniti (EQN) floated in October 2015 it received a tepid response. Volatile equity markets and concerns over its large debt pile were cited by investors. Equity markets may still be volatile, but these results suggest debt worries are easing.
Equiniti churned out £18.5m of free cash flow after exceptionals, capital expenditure, interest costs and taxes - more than double last year's amount. That and the IPO refinancing meant net debt at the end of the period was 44 per cent lower year on year. That leaves net debt to cash profits (a measure of a company's leverage) looking a little more comfortable at 2.9 times, down from 5.5 times a year earlier.
Chief executive Guy Wakeley says Equiniti has a degree of insulation from economic uncertainty thanks to its focus on non-discretionary services. Its platforms manage dividend payments and pensions for half the UK population each year - payments that take place regardless of market volatility.
Analysts at Liberum expect pre-tax profit of £60.6m (£5.3m in 2015) for the full year, giving EPS of 16.2p, with a 4.8p dividend.
| EQUINITI (EQN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 181p | MARKET VALUE: | £543m | |
| TOUCH: | 180-181p | 12-MONTH HIGH: | 196p | LOW: 128p |
| DIVIDEND YIELD: | 1.3% | PE RATIO: | na | |
| NET ASSET VALUE: | 124p* | NET DEBT: | 67% | |
| Half-year to 30 June | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015** | 181 | -25.3 | -562 | nil |
| 2016 | 192 | 8.8 | 2 | 1.64 |
| % change | +6 | - | - | - |
Ex-div: 25 Aug Payment: 26 Oct *Includes intangible assets of £654m, or 218p a share **Equiniti floated in October 2015 | ||||
