Equiniti (EQN) delivered sales growth ahead of expectations in 2018, with top-line growth up by close to a third in the year. Much of this was linked to the acquisition of Wells Fargo Shareholder Services, but organic growth was also its strongest ever at 7.3 per cent.
All divisions won clients in the period, but the UK businesses were especially impressive. The group retained all of its FTSE clients, gaining 11 new share registration transfers and 21 new clients through IPOs.
Intelligent solutions saw a marked uptick in demand, driving a 22 per cent increase in underlying cash profits. However, UK banks’ demand for remediation services drove much of this, which constrained margins in the division.
The US business is starting to show promise. It suffered some attrition among smaller clients immediately following the acquisition announcement last year, but stabilised and began to grow in the second half of 2018, winning new clients and having some success cross-selling UK credit services to US clients.
In its outlook, management warned its operating environment was likely to be uncertain, but reiterated its guidance for 3-7 per cent organic sales growth annually. Analyst Panmure Gordon upped its forecasts following the announcement and now expects EPS of 19.5p, from 17.9p in 2018.
| EQUINITI (EQN) | ||||
| ORD PRICE: | 190p | MARKET VALUE: | £694m | |
| TOUCH: | 190-191p | 12-MONTH HIGH: | 330p | LOW: 169p |
| DIVIDEND YIELD: | 2.8% | PE RATIO: | 40 | |
| NET ASSET VALUE: | 138p* | NET DEBT: | 61% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014** | 292 | -38.6 | na | na |
| 2015** | 369 | -71.7 | -92.8 | 0.68 |
| 2016 | 382 | 28.5 | 9.50 | 4.75 |
| 2017 (restated)† | 406 | 25.3 | 3.50 | 4.37 |
| 2018 | 531 | 24.6 | 4.80 | 5.32 |
| % change | +31 | -3 | +37 | +22 |
| Ex-div: | 11 Apr | |||
| Payment: | 16 May | |||
| *Includes intangible assets of £836m, or 229p a share **Pre-IPO figures †EPS and DPS restated to reflect rights issue | ||||
