Equiniti sees 2018 results at top end of market expectations

Technology and payments specialist Equiniti said on Thursday that 2018 results are likely to be at the upper end of market expectations following "encouraging" organic revenue momentum into the second half, with continuing revenue tailwinds.

The company’s compiled consensus puts revenue at between £491m and £505m and underlying earnings before interest, taxes, depreciation and amortisation at between £118m and £123m.

In an update for 1 July to 21 November, Equiniti said it has continued to build on the momentum established in the first half of the year in the UK, with a "pleasing" level of new client wins, including 15 registration transfers over the 12 months, and encouraging new name wins in the US.

The group said it continues to be the registrar and share plan provider of choice for UK main market IPOs, with new mandates including Aston Martin, Avast and Funding Circle.

In addition, it has continued to retain and develop its "strong" client relationships in the UK and US, and has extended the existing relationship between MyCSP and the Civil Service, its largest contract, until the end of December 2021.

The integration of its US business is proceeding in accordance with guidance, with trading and profitability accelerating in the second half of 2018.

"We remain confident in our ability to grow sustainably in the UK where we have a differentiated business underpinned by dependable revenues from many blue chip clients. Our first nine months of trading in the US have reaffirmed our investment case, the strength of our franchise and presented significant opportunities for us to leverage our core strengths and grow market share, whilst adding value for clients through the cross-sell of EQDigital services.

"Our objective remains to deliver sustainable organic growth whilst maintaining our disciplined focus on regulation and payments. The dependability of our revenues, the platform nature of our operations and the differentiation of our technology counter the uncertainties in our operating environment."

Liberum said: "We see this momentum as encouraging and it confirms the key virtues of the business model.

"Although risks remain over the integration of the WFSS business, we believe that these, and the market’s concerns over the group’s accounting policies, are overdone. With 48% total shareholder return potential to our unchanged target price of 320p we reiterate our buy rating."

At 0810 GMT, the shares were up 3.2% to 227p.