Equiniti defies bears

Panmure’s concerns centered around the administration software provider’s dwindling cash generation and disappointing organic growth. Management must have taken some satisfaction, then, in unveiling organic revenue growth of 7.7 per cent in the period and upgrading full-year earnings expectations to the top end of guidance (which the analyst puts at £123m in cash profits).

A results day update from Panmure highlights a 6 per cent organic decline in EQ USA, the US-based division created with the acquisition of Wells Fargo Shareholder Services in February. Management attributes this to the attrition of smaller clients prior to completion of the deal, but notes it has retained all major clients and that underlying cash profits grew on an expanded margin.

The growth strategy in the US is based on capturing more of the shareholder services market and cross-selling its other services to its new, US-based clients. Market share remains flat around 15 per cent but the group has had some early success with its credit services business, bringing in clients such as Baron Finance and Capital Business Credit.

In the UK, the growth strategy is more defensive, and the group has succeeded in retaining all FTSE clients and steadily building out its range of services. That includes shareholder stewardship services business, Boudicca – which the group acquired in April – and “tell us once”, an estate management tool currently being tested in six UK banks, which streamlines the process of notifying the bank of a death and the subsequent closure of accounts.

More bullish analysts at Peel Hunt are forecasting adjusted pre-tax profit of £78.3m, giving EPS of 15.4p in 2018 (from £62.8m and 14.7m in 2017).