Equiniti profit soars following revenue growth
Equiniti Group on Friday reported a leap in interim profits as revenue was propelled higher by revenue growth even after a poor performance from the pension solutions division.
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The outsourcer reported profit before tax of £11.6m for the six months ended 30 June, storming 222% higher than the same period last year, as revenue climbed 8% higher to £275.1m.
The jump in revenue came as growth of 10.7% in EQ US, 7.2% in intelligent solutions and 5.0% in investment solutions offset an 8.6% decline in pension solutions, as the FTSE 250-listed company said it enjoyed strong client retention and new wins across all divisions.
As such, Equiniti saw fit to hike its interim dividend by 7% to 1.95p per share.
Guy Wakeley, chief executive of Equiniti, said: "We are pleased with the performance in the first half and despite the current uncertainty of the UK economy, the strength of our franchise and the non-discretionary nature of our services underpin our confidence in delivering market expectations for the full year. Prudent allocation of capital remains a key priority and we are pleased to have reduced leverage year-on-year and the completion of the integration costs in North America pave the way for accelerating deleverage in the future."
For the full-year, the company is targeting organic revenue growth of 3% to 7% supplemented by capability-enhancing acquisitions and a gradual margin improvement of around 25 base percentage points.
Analysts from Liberum said: "We believe that the 1H19 results demonstrate a number of the virtues of Equiniti’s business model. The highly recurring nature of its revenues, combined with an attractive margin profile, helped the group deliver 4% EBITDA growth, despite the challenging environment in the UK. The performance of EQ US was particularly impressive, with double digit organic growth being delivered alongside a number of new client wins."
"This dynamic, combined with the expected improvements in efficiency achieved via the separation from Wells Fargo, provides the business with an attractive platform for future growth."
Equiniti Group's shares were down 1.46% at 206.54p at 0831 BST.