ANNUAL REPORT 2014
HIGHLIGHTS
Adjusted revenue
£292.3m
(2013: £264.4m)
Adjusted pre-exceptional EBITDA
£70.0m
(2013: £67.5m)
Free cash flow*
£72.5m
(2013: £71.0m)
* EBITDA less working capital movement
(both excluding exceptional items)
Free cash flow conversion*
104%
(2013: 93%)
*Free cash flow pre-exceptional EBITDA
2
CONTINUED PROGRESS
AGAINST STRATEGY
IMPROVED OPERATIONAL
EFFECTIVENESS
• Invested £16.9m in our technology
platforms and £3.8m in enhancing
our infrastructure capacity
• Acquired Pancredit Systems and
Invigia, the assets of Selftrade, J.P.
Morgan’s Corporate Dealing Services
business and an additional 11% of
MyCSP, taking our holding to 51%
• Retained 100% of our FTSE 100
clients, demonstrating the strength
of our customer relationships
• Launchedsignificantnew
technology products; including
Compendia mobile for pensions;
the PeopleSpace portal, providing
anintegratedviewofemployee
benefits;andmycustomerfeedback.com,
asolutiontoallowbusinessesto
improve customer satisfaction and
manage their reputations on
social media
Making complex
things simple
• Established Equiniti India in Chennai,
to strengthen in-house IT development,
testing and support, and deliver
costsavingswhilebuildingscaleable
operations capability
• Establishedfivecentresofexcellenceat
Group level for operations, technology,
project management, HR and marketing,
to standardise delivery and achieve
greaterefficiencies
• Invested in acquired businesses, to build
on the Equiniti operating platform and
generatenewrevenueopportunities
2014 has been a transformative
yearforEquiniti,inwhichwe
have successfully enhanced the
capabilitiesandscaleoftheexisting
businesswhilecontinuingto
improveouroperatingefficiency.
This has been achieved through a
combination of direct investment
in the business and strategic
acquisitions,thebenefitsofwhich
have already started to feed
through into revenue. We are very
pleasedwiththeprogresswehave
made over the course of the year,
andwebelievethatourenhanced
offeringcombinedwithastrong
salespipelineleavesuswellplaced
to sustain this momentum.”
GuyWakeley,ChiefExecutiveOfficer
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ENCOURAGING OUTLOOK
Equinitiremainsfocusedongrowing
relationshipswithexistingclients,winning
newbusinessandusingtechnologyto
help organisations respond to challenges
inhigh-riskandcomplexenvironments.
Wewillcontinuetodomoreforour
loyalcustomerbase,whichincludeshalf
of the FTSE 100, by investing in talent
and technology to diversify the services
weofferandstrengthenourpositionin
coreandemergingmarkets.Ourdriveto
integrateoperationseffectivelywillensure
wemaximisethebenefitsforourclients
and for the business.
We anticipate increased market
opportunities for our specialist business
processing services, in both the public
and private sectors.
Legislative changes continue to
increase the administrative burden and
complexityfororganisations,particularly
inthepensions,bankingandfinancial
services sectors.
Increased sales activity and targeted
acquisitions are delivering our strategy
of consolidation in our core markets
whileunlockingnewopportunities.
OuracquisitionofSelftradewillallow
us to deliver direct-to-consumer services,
including share trading to the 27 million
peoplewehavecontactwithonbehalf
of our clients.
Looking ahead, the sales pipeline,
client retention and levels of recurring
contracted income remain robust.
Themomentumwithinthebusiness
continuestoincreaseandweareexcited
abouttheopportunitieswesee.
Adjusted performance
Revenue
Pre-exceptional EBITDA
Investment Solutions
Intelligent Solutions
Pensions Solutions
Interest
Central
Total Group
2014
2013 Change%
2014
2013 Change%
94.9
89.6
101.3
6.5
–
100.5
-5.6%
81.5
76.9
5.5
–
9.9%
31.7%
18.2%
–
292.3
264.4
10.6%
29.3
16.3
21.7
6.5
(3.8)
70.0
35.1
16.4
12.2
-16.5%
-0.6%
77.9%
5.5
18.2%
(1.7)
123.5%
67.5
3.7%
Reported performance
Revenue
Pre-exceptional EBITDA
Investment Solutions
Intelligent Solutions
Pensions Solutions
Interest
Central
Total Group
2014
2013† Change%
2014
2013† Change%
94.9
89.6
101.3
6.5
–
107.2
-11.5%
81.5
76.9
9.9%
31.7%
9.1
-28.6%
–
–
292.3
274.7
6.4%
29.3
16.3
21.7
6.5
(3.8)
70.0
40.3
16.4
12.2
-27.3%
-0.6%
77.9%
9.1
-28.6%
(1.7)
123.5%
76.3
-8.3%
†AdjustedrevenueandEBITDAexcludetheLloydsTSBStockbrokingcontract,whichwasdiscontinuedin
2013,andnormalises2013interestincomefortheimpactofinterestrateswaps.Theadjustmentreduces
revenueandpre-exceptionalEBITDAby£10.3millionand£8.8millionrespectivelyfortheyearended31
December 2013.
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3
The Hazell Carr Academy launched in 2012, to partner
withclientstohelpmanageremediationinfinancialservices
by mobilising more than 1,000 graduates.
4
On20November2007,SirDavidWalker
published his “Guidelines for Disclosure and
Transparency in Private Equity” (the “Walker
Report”). Funds advised by Advent International
have a controlling interest in the Company and
Equiniti Group Limited is considered a portfolio
companyasdefinedbytheWalkerReport.This
annual report and accounts has been prepared
inthecontextofthoserecommendations.
ADVENT INTERNATIONAL
Equiniti Group Limited is a company owned
by funds managed by Advent International
Corporation.
Founded in 1984, Advent International is one
ofthelargestandmostexperiencedglobal
privateequityinvestors.Thefirmhasinvested
in 300 private equity transactions in 40 countries
and as of September 30, 2014, had €25 billion
inassetsundermanagement.Withoffices
on four continents, Advent has established
a globally integrated team of over 180
investment professionals across North America,
Europe,LatinAmericaandAsia.Thefirmfocuses
oninvestmentsacrossfivecoresectors,including
businessandfinancialservices;healthcare;
industrial; retail, consumer and leisure; and
technology, media and telecom. After
30 years dedicated to international investing,
Adventremainscommittedtopartneringwith
management teams to deliver sustained revenue
andearningsgrowthforitsportfoliocompanies.
James Brocklebank and Haris Kyriakopoulos
aretheAdventexecutiveswithoversightof
the Equiniti Group and serve as Board Directors.
CONTENTS
Strategic report
Governance
01
BUSINESS OVERVIEW
BUSINESS MODEL
OUR MARKETS
STRATEGY AND
OBJECTIVES
KEY PERFORMANCE
INDICATORS
CHAIRMAN’S
INTRODUCTION
CHIEF EXECUTIVE’S
STATEMENT
CASE STUDIES
OPERATIONAL REVIEW
FINANCIAL REVIEW
RISKS AND
UNCERTAINTIES
CORPORATE SOCIAL
RESPONSIBILITY
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18
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24
30
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41
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02
BOARD OF DIRECTORS
CORPORATE
GOVERNANCE
STATEMENT
DIRECTORS’ REPORT
AUDITOR’S REPORT
54
58
66
68
Financial statements
03
FINANCIAL
STATEMENTS
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01 STRATEGIC
REPORT
BUSINESS OVERVIEW
BUSINESS MODEL
OUR MARKETS
STRATEGY AND OBJECTIVES
KEY PERFORMANCE INDICATORS
CHAIRMAN’S STATEMENT
CHIEF EXECUTIVE’S STATEMENT
CASE STUDIES
OPERATIONAL REVIEW
FINANCIAL REVIEW
RISKS AND UNCERTAINTIES
CORPORATE RESPONSIBILITY
08
10
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18
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24
30
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BUSINESS OVERVIEW
Equiniti keeps things running
smoothly for some of the UK’s
best-known brands and public
sector organisations. We specialise
in providing finely-tuned finance
and administration services, as
well as smart technology solutions,
that leave our clients free to get
on with growing their businesses.
Our services are delivered by over 3,500 employees
across 29 locations, enabling us to offer solutions
that are flexible, adaptable and scalable.
We are acknowledged leaders in the pension,
loan administration software, share registration and
investment services markets, where our clients across
the Group include around 70% of the FTSE 100.
OPERATING SEGMENTS
Investment Solutions
Share registration, payment services, retail
investing, dealing and custody technology
solutions, employee share plans.
Pension Solutions
Pension administration, insurance and payment
technology and services for 8 million scheme
members.
Intelligent Solutions
Specialist technology and service solutions,
targeting complex or regulated processes such
as loan servicing and complaints management.
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REVENUE
£292.3m
WE PERFORM
52m LOAN
CALCULATIONS
PER MONTH
WE PAY
20%
OF UK
PENSIONERS
WE PROCESS
£90 billion
OF PAYMENTS PER YEAR
WE INTERACT WITH
27 million
CUSTOMERS ON
BEHALF OF OUR
1,700
CLIENTS
WE HAVE
1,200+
SPECIALIST CONTRACTORS ON
ASSIGNMENT
WE WORK WITH OVER
50%
OF THE FTSE 100
EXPERIENCED TEAM, AVERAGE SERVICE
10 YEARS
ACROSS THE EQUINITI GROUP
WE SUPPORT
20%
OF WORK BASED
PENSION SCHEME
MEMBERS
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Business
model
WHAT WE DO
Equiniti makes complex things simple
We provide sophisticated administration,
processing and payments services to clients
in sectors ranging from financial services to
government.
THE VALUE WE ADD
Ouractivitiesareoftenmission-
critical to our clients but not
core to their business models,
encouraging them to outsource.
They rely on us for highly
accurate,flexibleandeffective
services, helping them to manage
increasing regulation and
complexity,andtomeettheir
stakeholders’ evolving needs.
By combining market-leading
technologywithexperienced
andspecialistpeople,weassure
excellentdeliverytoourclients,
and in turn to their customers,
whoaretypicallytheiremployees,
pensioners, shareholders and
consumers. We also have
significantexperienceofoperating
in regulated environments,
helping our clients to meet their
regulatory obligations and protect
their stakeholders’ interests.
The quality of our delivery creates
long-termrelationshipswithour
clients’ senior decision makers.
Wecanthenworkwiththemto
identify other issues or non-core
activities,wherewecanbenefit
their businesses by providing an
improved solution. The scale of
ouroperationsmeanswecan
make investments in technology
and people that our clients
could not make themselves.
Thisallowsustodeliverservices
moreefficientlythantheycould
in-house, saving them money
andgivingthemtheflexibilityto
adjust the resources deployed
throughout the year.
Wehavesignificant
experienceofoperatingin
regulated environments
10
TECHNOLOGY
PEOPLE
SUSTAINING OUR ADVANTAGE
Uniquely,weownallofthe
technology,softwareand
infrastructure required to run
ourcoreoperations.Our
technology platforms give us
a distinct competitive advantage.
They underpin our service delivery
and form a barrier to entry,
giventhesubstantialexperience,
time and money required to build
them. We continually invest in
our platforms to add functionality
andensuretheykeeppacewith
changingregulatoryandfiscal
requirements, thus satisfying
client needs.
to develop our people and offer
clear career paths and interesting
work,helpingusachievehigh
retention rates.
Toensureweareasefficientas
possible,wehavesignificantly
expandedouroffshorecapability
in India, strengthening our
technology development
capabilitiesandprovidinglow-
costprocessing.Wewilldevelop
this further in 2015.
The acquisition of innovative
technology platforms remains an
important strategic priority.
Ourpeoplearealsovital.Their
expertiseandexperienceenable
us to provide sophisticated, high-
margin services that are protected
from commoditisation. We look
ACQUISITIONS
DELIVERING RETURNS
Extendingtherangeofservices
weprovidetoexistingclientsisa
keydriverofourtoplinegrowth.
Ourmarketleadershippositions
also make us a natural choice for
newclients.Multi-yearcontracts
and long-term relationships give
us very high visibility of future
revenues.
Ourtechnologyplatforms
providesignificantoperational
leverage,thatwillallowusto
increaseprofitsaswegrow
revenue.The business also has
attractivecashflowcharacteristics,
withhighfreecashflow
conversion providing funds to
investingrowthandtoreduce
our leverage.
Ourpeoplearevital.Their
expertiseandexperience
enable us to provide
sophisticated, high-margin
services
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OUR MARKETS
Long-term drivers of demand
Demand for our products and services
is underpinned by a number of powerful
trends, which we expect to continue into
the long term. These include:
GROWING
COMPLEXITY
INCREASING
REGULATION
Astheworldbecomes
increasinglycomplex,
companies and public
sector organisations
are looking to simplify
their operating
models by outsourcing
functions that are
important to them
but not core to
their businesses.
Thiscomplexityis
often the result of
newregulationand
legislation, particularly
in sectors such as
pensions, banking
andfinancialservices.
In the drive to
improve services
for end customers,
Governmental
bodies are increasing
regulation and
expandingthenumber
of investigations they
conduct. This provides
uswithopportunities
to support remediation
activities. Clients
are also looking to
outsource regulatory
aspects of their back
officesystems,given
thegrowingcostof
regulation and the
need to upgrade their
technology.
INCREASING
DEMANDS FOR
GOOD SERVICE
GREATER
FINANCIAL
PRESSURE
Ourclients’end
customers–whether
they are pensioners,
shareholders,
employees or
consumers – are
increasingly
demanding about
the quality of service
theyreceiveandhow
our clients handle
complaints. They
alsowantnewways
tointeractwithour
clients, such as apps
and mobile optimised
websites,requiring
investment our clients
finddifficulttomake
themselves.
Ourclientsneedto
findefficienciesand
waystodomorewith
less. They can save
money by outsourcing
toapartnerwith
market-leading
technology,aflexible
resourcing model and
the scale to continue
investing in it.
Structural changes
in the pensions
sector,alongwith
alowinterestrate
environment, has
created demand
forflexibleon-line
investment products,
as investors take
advantage of digital
and mobile technology
to manage their
financialfutures.
1212
Equiniti Data
Services carried out
39.7million data
searches, tracing
2.28 million people
and reuniting them
with£600million.
OUR MARKETS IN 2014
Equiniti’s markets continued to evolve during 2014.
The key developments are summarised below.
Investment Solutions
Themarketforinitialpublicofferings(“IPOs”)
wasveryactive,withmanycompaniestakingthe
opportunitytolist.SupportforIPOs,togetherwith
ongoing changes to regulation and legislation,
continued to create demand for company secretarial
services.However,thecorporateactionsmarket
wasquieterthanin2013,andwithnolargescale
activities, this impacted on our revenues.
The doubling of the amount employees can put into
HMRC approved sharesave schemes, to £500 per
month,willencouragemorepeopletoparticipate
andwillgrowthefundswemanageonourclients’
behalf.Themarketinseniorexecutiveshare
schemeswaslessbusythanin2013,whenmany
executivescashed-inawardstheyhadreceived
atlowpricesduringtherecession.
TheintroductionoftheRetailDistributionReview
hadasignificantimpactontheinvestmentservices
market.Withfinancialadvisorsincreasinglyfocused
onhigh-net-worthindividuals,manyconsumersare
looking to manage their investments themselves,
creatingdemandforexecution-onlybrokerage.
Changes in pension legislation are also likely to
haveanimpact,asindividualswithdrawlumpsums
from their funds and look to invest them to provide
an income.
Intelligent Solutions
NewregulationofpaydaylendersbytheFinancial
ConductAuthority(“FCA”)wasapositive
developmentforus,givenourexperienceof
operating in FCA-regulated environments and our
growingcustomerbaseofregulatedbusinesses.
Supporting remediation activities continues to
absorbresources,withthehighlevelofPayment
ProtectionInsuranceworkcontinuingforlonger
thanwehadexpected.Otherremediationactivity
continuestoemerge,wherewearewellplacedto
provideourclientswiththesupportandflexibility
they need.
Organisationshavealsobecomemoreawareof
thebenefitsofcomplaintsmanagement,seeingit
asapowerfultoolforobtainingconstantfeedback
on their products and services. This helps them to
continuallyimprovethewaytheywork.
More generally, both the public and private sectors
arecollectingvastamountsofdata,whichtheyneed
help to unlock. This is creating demand for our data
and analytical services.
Pension Solutions
Regulationwasakeyfeatureofthepensionsmarket
in2014,withmorereformthaneverbefore.This
isrequiringorganisationstochangetheirworking
practices and upgrade their systems, particularly in
thepublicsectorwherethePensionReformchanges
are due to come into force in April 2015. Many are
findingitdifficulttofundinvestmentintheirsystems
or to get the specialist people they need to manage
pensions effectively in-house. This is pushing them
to outsource or to bolster their in-house functions
withexternalsupport.Financialconstraintsinthe
public sector are also important in the drive to
outsource pension administration.
Manycompanieshavealreadyclosedtheirdefined
benefitschemesandarelookingtocontainthecost
andminimisetheriskassociatedwiththeseclosed
books. This is leading them to sell the books to
insurance companies, creating opportunities for
us to administer them on the insurers’ behalf.
Anotherdevelopmentduringtheyearwasthe
increasingacceptanceofoffshoringback-office
functionsinpensionadministration.Thisreflects
agrowingneedamongclientstodriveefficiencies.
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STRATEGY AND OBJECTIVES
Our objectives
Get closer to our clients through
strong account management,
increasing digital access via mobile
apps, minimising complaints and
tracking satisfaction
CUSTOMER
GROWTH
We have a
defined set of
objectives for the
next three years.
We aim to:
Deliver organic growth from
newandexistingchannels,
further developing our product
offering and making selective
acquisitionswhichadd
to our capabilities
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Deliver organic revenue growth,
attractive margins and strong cash
conversion, to enable investment
and strengthen the balance sheet
Achieving these
objectives will, in
turn, enable us to
meet our financial
goals:
FINANCIAL
OPERATIONS
Enhance our operating platform by
investing in technology led solutions,
driving efficiencies, strengthening
compliance and managing talent
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Our strategy
Our strategy for achieving our objectives is
summarised below, along with our progress
over the last year
STRATEGY
Strengthen client focus
Thismeans:helpingourexistingclientstoimprovetheir
operations, by enhancing our account management and
identifyingwaysourproductsandservicescansolvemore
of their issues.
PROGRESS IN 2014
We enhanced our account management and developed
a key account plan for each of our major clients. We also
strengthenedourrelationshipteam,toensurewehave
therightpeopleengagingwiththerightclients.
Theseinitiativeshelpedustodriveorganicgrowthinour
key accounts, particularly in the second half of the year.
Develop new products
Thismeans:creatingnewproductsinexistingandadjacent
markets,whichwillallowustoleverageourtechnology
platformsandspecialistcapabilitiesincomplexoutsourcing.
We continued to invest in our technology platforms, to
add functionality for our clients, and launched a number
ofnewproductsacrossthebusiness.
More details of our technology and product developments
canbefoundintheoperationalreview,onpages30to35.
Target new channels
This means: build on our strengths in the business-to-
business-to-consumer channel to offer a set of retail
investment products of relevance directly to the 18.7m
shareholders and more than 8m pension scheme
memberswithwhomwedeal.
Enhance operational effectiveness
This means: having a single operating platform for all service
lines, consolidating operations and leveraging our offshore
capabilitytoimproveefficiency,simplifyingandautomating
processes to improve quality, and strengthening our
compliance.
See pages 44 to 46 for more on our people strategy.
Make complementary acquisitions
Thismeans:acquiringbusinessesthatbringnewand
complementary capabilities, including technology platforms,
whichwecangrowbyofferingtoourclients.
InJune2014,weannouncedthatwewereacquiringthe
assetsofSelftrade,anonlineexecution-onlystockbroker.
ThisgivesusSelftrade’s104,000clients,whohold£3.9
billion in assets, and provides a capability in D2C broking.
TheacquisitioncompletedinJanuary2015andwehave
developedanewinvestmentandproductplatformto
support it.
OuroffshorefacilityinChennai,India,isnowfullyoperational
and housed over 300 staff at the year end. It strengthens
ourin-houseITcapabilitiesandprovideslow-costbusiness
processing,helpingtoimprovequalityforclientswhile
offering cost savings for us. We also brought in-house a
number of processes that had been provided by third-party
Indian outsourcers, improving our control over and delivery
of the services to our clients.
Otherinitiativesintheyearincludedenhancingour
compliance, centralising complaint handling and developing
our talent and performance management of our people.
InadditiontoSelftrade,during2014weacquired:
•PancreditSystems,whichextendsourabilitytoprovide
unsecured loan administration
• Invigia,whichprovidescomplaints,caseandfeedback
managementacrossfinancialservicesandthepublicsector
• JP Morgan’s Corporate Dealing Services (“JPM CDS”),
whichstrengthensourexistingpositioninthissector,and
• A further 11% stake in MyCSP, our mutual joint venture
withtheUKgovernment,givingusa51%interest.
The remaining shares are held by the government
(24%) and employees (25%).
16
Throughourloancomparisonbusiness,Pancredit,weconduct
over 52 million calculations a month. These include: 227,000
quote calculations, 1.7 million active agreements and 114,000
settlement calculations.
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KEY PERFORMANCE INDICATORS
We use the following key performance
indicators to track our strategic progress:
KPI
DATA
DEFINITION
RELEVANCE TO STRATEGY
PERFORMANCE
ADJUSTED
REVENUE
ADJUSTED PRE-
EXCEPTIONAL
EBITDA
2014
2013
2014
2013
£292.3m
£264.4m
Theinvoicedvalueofservicesandsoftwareprovided
toclientsduringtheyear,excludingtheLloydsTSB
Stockbrokingcontract,whichwasdiscontinuedin
2013, and normalising interest income for the impact
ofinterestrateswaps.
Adjustedrevenueshowsourabilitytogrow
the business organically and through making
complementary acquisitions.
Adjustedrevenuewasup10.6%in2014,despitelowercorporate
action activity, through a combination of strong client retention,
additionalprojectworkwithexistingcustomers,theacquisitionof
Killik’s Employee Services business in 2013, the 2014 acquisitions
of Pancredit, JPM CDS and Invigia, and our increased holding
in MyCSP. Together, these acquisitions contributed £18.4m to
adjusted revenue in 2014.
£70.0m
£67.5m
Earningsbeforeinterest,tax,depreciation,
amortisationandexceptionalitems,adjustedfor
the items described above under adjusted revenue.
Adjustedpre-exceptionalEBITDAshowsoursuccessin
Adjustedpre-exceptionalEBITDAgrewby3.7%to£70.0m,with
sellingcomplex,high-marginserviceswhileenhancing
growthfrommajorpensionprojectswithexistingcustomersplus
ouroperationalefficiency.
astrongcontributionfromacquisitions,offsetbylowercorporate
action activity and increased costs for service level improvements
and sales resource.
OPERATING
PROFIT
2014
2013
£21.6m
£14.8m
Profitbeforeinterest,taxandcontributionfrom
associates.
Operatingprofitshowsourabilitytogrowprofitafter
Operatingprofitgrewby45.9%to£21.6m,primarilydueto
taking account of the costs of capital investment and
lowerexceptionalcostsin2014followingtherefinancingof
acquisitions,whicharereflectedinourdepreciation
the Group in 2013.
FREECASHFLOW
FREE CASH
CONVERSION
2014
2013
2014
2013
£72.5m
£71.0m
104%
93%
Pre-exceptionalEBITDAlesschangeinworking
capitaladjustedfortheimpactofexceptionalitems.
ThecalculationisshownintheFinanceReview
section.
Adjustedoperatingcashflowshowsourabilityto
Freecashflowimprovedasaresultofacontinuedfocus
generate cash for investment in the business and to
onworkingcapitalmanagement.
Freecashflowasapercentageofpre-exceptional
EBITDA.
Freecashconversionshowsourabilitytoturnprofits
Theincreaseinfreecashconversionto104%reflects
into cash and is a good indicator of the quality of the
ourcommitmenttoworkingcapitalmanagement.
and amortisation.
paydowndebt.
profitswegenerate.
CAPEXRATIO
Capitalexpenditureasapercentageofrevenue.
2014
7.1%
2013
7.0%
CLIENT
SATISFACTION
COMPLAINTS
2014
2013
90%
91%
2014
0.019%
2013 0.023%
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The average percentage of returned client surveys,
based on a client satisfaction scoring of one to ten.
Clientsatisfactionshowshowwellwearemeetingtheir
Ourperformanceremainedsteady,demonstratingthatweare
needs,whichisessentialforprotectingourexisting
meeting the needs of our clients.
businessandourabilitytogrow.
The number of upheld complaints as a percentage
of transactions processed.
Thelevelofcomplaintsshowshowwellwearemeeting
Numberofcomplaintsremainsextremelylowandhasimproved
theneedsofourclients,customers,whichinturn
year-on-year.Thisdemonstratesthatwearemeetingtheneeds
results in a greater level of client satisfaction.
of our clients, customers.
Thecapexratioshowshowmuchweareinvestingin
Thecapexratioremainsinlinewiththeprioryear,showingour
the platforms that underpin our client service and our
commitment to enhancing our customer service and offering
abilitytogrow.
market-leading technology.
KPI
DATA
DEFINITION
RELEVANCE TO STRATEGY
PERFORMANCE
Theinvoicedvalueofservicesandsoftwareprovided
toclientsduringtheyear,excludingtheLloydsTSB
Stockbrokingcontract,whichwasdiscontinuedin
2013, and normalising interest income for the impact
ofinterestrateswaps.
Adjustedrevenueshowsourabilitytogrow
the business organically and through making
complementary acquisitions.
Earningsbeforeinterest,tax,depreciation,
amortisationandexceptionalitems,adjustedfor
the items described above under adjusted revenue.
Adjustedpre-exceptionalEBITDAshowsoursuccessin
sellingcomplex,high-marginserviceswhileenhancing
ouroperationalefficiency.
Adjustedrevenuewasup10.6%in2014,despitelowercorporate
action activity, through a combination of strong client retention,
additionalprojectworkwithexistingcustomers,theacquisitionof
Killik’s Employee Services business in 2013, the 2014 acquisitions
of Pancredit, JPM CDS and Invigia, and our increased holding
in MyCSP. Together, these acquisitions contributed £18.4m to
adjusted revenue in 2014.
Adjustedpre-exceptionalEBITDAgrewby3.7%to£70.0m,with
growthfrommajorpensionprojectswithexistingcustomersplus
astrongcontributionfromacquisitions,offsetbylowercorporate
action activity and increased costs for service level improvements
and sales resource.
Profitbeforeinterest,taxandcontributionfrom
associates.
Operatingprofitshowsourabilitytogrowprofitafter
taking account of the costs of capital investment and
acquisitions,whicharereflectedinourdepreciation
and amortisation.
Operatingprofitgrewby45.9%to£21.6m,primarilydueto
lowerexceptionalcostsin2014followingtherefinancingof
the Group in 2013.
Pre-exceptionalEBITDAlesschangeinworking
capitaladjustedfortheimpactofexceptionalitems.
ThecalculationisshownintheFinanceReview
Adjustedoperatingcashflowshowsourabilityto
generate cash for investment in the business and to
paydowndebt.
Freecashflowimprovedasaresultofacontinuedfocus
onworkingcapitalmanagement.
section.
EBITDA.
Freecashflowasapercentageofpre-exceptional
Freecashconversionshowsourabilitytoturnprofits
into cash and is a good indicator of the quality of the
profitswegenerate.
Theincreaseinfreecashconversionto104%reflects
ourcommitmenttoworkingcapitalmanagement.
CAPEXRATIO
Capitalexpenditureasapercentageofrevenue.
Thecapexratioshowshowmuchweareinvestingin
the platforms that underpin our client service and our
abilitytogrow.
Thecapexratioremainsinlinewiththeprioryear,showingour
commitment to enhancing our customer service and offering
market-leading technology.
The average percentage of returned client surveys,
based on a client satisfaction scoring of one to ten.
Clientsatisfactionshowshowwellwearemeetingtheir
needs,whichisessentialforprotectingourexisting
businessandourabilitytogrow.
Ourperformanceremainedsteady,demonstratingthatweare
meeting the needs of our clients.
The number of upheld complaints as a percentage
of transactions processed.
Thelevelofcomplaintsshowshowwellwearemeeting
theneedsofourclients,customers,whichinturn
results in a greater level of client satisfaction.
Numberofcomplaintsremainsextremelylowandhasimproved
year-on-year.Thisdemonstratesthatwearemeetingtheneeds
of our clients, customers.
ADJUSTED
REVENUE
ADJUSTED PRE-
EXCEPTIONAL
EBITDA
OPERATING
PROFIT
FREECASHFLOW
FREE CASH
CONVERSION
CLIENT
SATISFACTION
COMPLAINTS
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Making complex things simpleSECTION 01Equiniti Annual Report 2014
CHAIRMAN’S
STATEMENT
This was a good year for Equiniti,
with robust financial performance
that gives us momentum going
into 2015. We grew adjusted
revenue by 10.6% and adjusted
pre-exceptional EBITDA by 3.7%,
and continued to convert a large
proportion of our profits into
operating cash providing funds
to invest in future growth. The
business is soundly financed,
giving us the financial flexibility
to execute our strategy.
Equiniti International Payments makes more than 30,000
payments,withatotalvalueofover£285millionacross
130 countries and in 90 different currencies.
Equinitihasexcellentpositionsingrowingmarkets
andattractiveopportunitiestomoveintonew
areas.Ourstrengthenedexecutiveteamhasput
the building blocks in place for further success,
withaclearstrategyandasimpleroperatingmodel
thatwillfocusoureffortsandhelpusdeliverfor
our clients. To support our sharpened strategy and
operationalfocus,wehaveputconsiderableeffort
into enhancing our governance and compliance,
both at a Board level and in our day-to-day business.
More information on our performance can be
foundintheChiefExecutive’sstatementon
pages 22 and 23.
20
InJanuary2014,weweredelightedtoappoint
GuyWakeleyasEquiniti’sChiefExecutive.Guyhas
brought strong leadership to the business and has
inturnrefinedourstrategyandstrengthenedthe
executivemanagementteam.
Also at the start of the year, John Parker joined
theBoardasanon-executiveDirector.Johnwas
Managing Director of our share registration business
untilhisretirementattheendof2013andwewere
pleasedtoretainhisknowledgewithintheGroup.
We further increased the number of independent
directors on the Board. Vicky Jarman joined us in
Mayasanon-executiveDirectorandchairofthe
AuditCommittee.Shehassubstantialexperiencein
thefinancialservicesindustry,gainedthroughsenior
roles at Lazard. She also chairs the Audit Committee
ofHaysplcandisanon-executiveDirectorof
The Investment & Projects
Committeemakessurethatwe
effectively deploy our limited
capitalresources,sowecan
maximisereturns…’
De La Rue plc.
InFebruary2015,werecruited
Tim Miller as an independent
non-executiveDirectorand
chair of the Remuneration
Committee. Tim brings
extensiveBoardexperienceacrossarangeofsectors
and during his 14 years at Standard Chartered Bank
heldanumberofDirectorlevelpositionswithglobal
responsibility for areas including human resources,
compliance,audit,assurance,financialcrime,and
legal functions.
AlsoinFebruary2015,weappointedLucyDimes
totheBoardasanexecutiveDirector.Sincejoining
usasChiefOperatingOfficerinMarch2014,Lucy
has brought additional focus on IT, operational
excellenceanddrivingtheGroup’scapital
investment programme, to deepen our technology
servicesandfintechmarketleadership.
InFebruary2015MartynHindleyresignedfollowing
twoyearsasCFO,Iwouldliketoplaceonrecordour
thankstoMartynforhissignificantcontributionto
Equiniti.RichardGuest,ahighlyexperiencedfinance
professional, has been appointed interim Chief
FinancialOfficeraheadoftheappointmentofJohn
StieraspermanentCFO.JohnStierwilljoinusfrom
Northgate on 1 June 2015.
Enhancing our governance structures
During2014,wesplittheresponsibilitiesofthe
Audit and Risk Committee, creating a separate
Risk Committee under John Parker’s chairmanship.
Thenewcommitteereflectstheimportancewe
placeonmanagingriskandisinlinewithregulatory
best practice. The Board has also had training from
our advisors on regulatory and compliance issues.
Inaddition,toallowhimtofocusonhisroleas
GroupComplianceandRiskDirector,GavinDowns
hassteppeddownasCompanySecretary.Doug
Armour, a director of Equiniti David Venus, has
taken up this position.
Meeting our regulatory requirements is a vital part
of protecting our clients’ interests, particularly as
wegrowinthedirect-to-consumermarket.Wehave
thereforeidentifiedtwoindependentnon-executive
appointees,MarkLundandTimMiller,who,subject
toFCAapproval,willjointheboardofourregulated
entity, Equiniti Financial Services Limited. Guy
Wakeleywillalsojointhisboard,againsubject
to regulatory approval.
Itisalsoessentialthatwehaveeffectiveoversight
and controls embedded in our operations. In 2014,
wethereforecreatedtwonewexecutivecommittees.
The Sales & Bids Committee enables us to drive
organicrevenuegrowth,whileensuringthatwe
fully understand the opportunities and risks each
opportunity presents. The Investment & Projects
Committeemakessurethatweeffectivelydeploy
ourlimitedcapitalresources,sowecanmaximise
returns.Wealsoreconstitutedourotherexecutive
committees and refreshed their terms of reference.
These committees have vital functions, overseeing
compliance and risk, strategy and M&A, and monthly
performanceandquarterlybusinessreviews.
Since the end of the year, our advisors completed
areviewoftheeffectivenessofourrisk,internal
auditandcomplianceprocesses.Thishasshown
uswhereweperformwellandalsohighlightedareas
forfurtherimprovement,whichwewillimplementin
the coming months.
Looking forward
Equiniti is well positioned as we enter 2015. Our work
to strengthen our governance and compliance will
enhance our oversight and control of the business and
ensure we continue to put clients first, which in turn will
help our business performance. We are confident of
significant further progress in 2015.
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Making complex things simpleSECTION 01Equiniti Annual Report 2014
CHIEF EXECUTIVE’S
STATEMENT
Revenue was
£292.3mthis year
A YEAR OF BUILDING MOMENTUM
The actions we took and
investments we made during
2014 saw Equiniti build momentum
throughout the year, as we
increasingly benefited from our
capability enhancing acquisitions
and our sharpened focus on our
clients, which helped us to drive
organic growth.
Asaresult,weincreasedrevenueby6.4%to£292.3m(2013:£274.7m)
despite a fall in the level of corporate actions. Adjusting for the
discontinued Lloyds TSB Stockbroking contract and the impact of
interestrateswaps,toplinegrowthwas£27.9m(10.6%).Intotal,
acquisitions contributed £18.4m to revenue this year.
EBITDApre-exceptionalitemswas£70.0m(2013:£76.3m).Adjusted
EBITDAwasalso£70.0m,anincreaseof3.7%(2013:£67.5m),withthe
benefitofpensionprojectsandacquisitionsbeingoffsetbylower
corporate action activity and increased costs to improve service and
resourceoursalesefforts.Theadjustedpre-exceptionalEBITDA
marginwas23.9%,comparedwith25.5%in2013.
MEETING OUR CLIENTS’ NEEDS
Lookingafterourclientswasakeythemein2014.Weinvested
significantlyinourtechnologyplatforms,addingcapabilitiesto
address our clients’ problems in the digital age, such as increased
member self-service and the development of smartphone applications
for sharedealing and pension statements. We also invested in
improvingouroperationsandservice,creatingaGroup-wideaccount
managementplatformtogiveusasingleviewofeachclientand
their needs.
Theresulthasbeenhighlevelsofclientsatisfaction,whichstandsat
90%, and 100%FTSE100clientretention.Wesecured£201mofnew
salesandrenewals,withanaveragerelationshiplengthof27years
for our FTSE 100 clients. Thisprovidesexcellentforwardvisibility
of revenues, in addition to our project and transactional income.
Lookingafterourclientswasa
key theme in 2014. We invested
significantlyinourtechnology
platforms…”
22
Delivering adjusted top line growth of
We purchased another
10.6% 100% 11%
FTSE 100
client retention
of MyCSP
ENHANCING OUR CAPABILITIES
AND GROWTH POTENTIAL
Duringtheyear,wecompletedtheacquisitionsof
Pancredit, a credit origination and management
platform, and Invigia, an integrated complaints,
customer service and remediation product set.
ThesebringnewcapabilitiestotheGroup,which
wecanoffertoourexistingclientsanduseasthe
basisofnewproductsandservices,buildingout
technology sales into a broader suite of end-to-
endmanagementsolutionsforcomplexregulated
problems. We also acquired the JPM CDS business
during2014,whichaddstoourexistingstrengths
in dealing services for share-based remuneration
schemes and makes us number one in that market.
The purchase of Selftrade from Societe Generale,
whichcompletedshortlyaftertheyearend,opens
up the direct-to-consumer retail share-dealing
channelforus.Thisallowsustoleverageour
proprietarycustodyplatformtobuildanexecution-
only stockbroker of scale, and offer a set of retail
investment products of relevance to the nearly 19m
shareholders and more than 8m pension scheme
memberswithwhomwedeal.
Inaddition,wepurchasedafurther11%ofMyCSP,
ourground-breakingmutualventurewiththeUK
government.Wenowown51%ofthisventure,which
continuestogrowwell,achievingrevenuesof£38.3m
for the nine months ended 31 December 2014 and
continuingtogrowemployeedividends.
A SIMPLER OPERATING MODEL
We continued to simplify our operating model,
organising the Group into three segments that
betterreflectthewaywemanageouractivities:
Investment Solutions, Intelligent Solutions and
Pension Solutions, each supplemented by interest
income interest.
Wesupportedthiswiththerecruitmentof
senior leaders. These included Lucy Dimes as
ChiefOperatingOfficer,RodAldertonasChief
InformationOfficer,MattPorterasManaging
Director of Intelligent Solutions, and David
Beresford as Director of Strategy and Business
Development.WealsopromotedPaulMatthews
totheexecutiveleadershipteam,intheroleof
Managing Director, Corporate Markets.
Atthesametime,wehavecontinuedtoaddtoour
operationsinChennai,India,wherewenowemploy
morethan300staff.OffshoringenhancesourIT
capabilitiesandincreasestheefficiencyandquality
ofourback-officeprocessing,resultinginbetter
client service and reduced costs for us.
A POSITIVE OUTLOOK FOR 2015
Weexpectourmomentumfrom2014tocontinue
into2015,aswemaintainourfocusonorganic
growthsupportedbynewproductswehave
launched this year, as described in the operational
review.Thisyear’sacquisitionswillalsoaddtogrowth
in2015,makingusconfidentofdeliveringsizeable
upliftsinrevenueandcashflow.
Ourabilitytosustainexcellentmarginswhile
deliveringorganicgrowthdependsonasimple
strategy: understanding our clients’ needs and
developingnewmodelsandtechnologiestoadd
valueincomplexandregulatedareas.Continuing
todifferentiateEquinitithroughexcellentservice,
great people and the application of technology
willcreategrowthfor2015andbeyond.
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CASE STUDIES
Using technology to
build smart solutions
Equiniti is a leading provider of technology-enabled payment
services and software platforms. That puts technology at the
heart of our business. We use up-to-the-minute technology to
build smart solutions for our clients and their customers, based
on proprietary platforms that can process large and growing
volumes of transactions and payments.
24
These platforms are a key
competitive advantage for us.
They represent a substantial
investment of time, money
andexpertise,makingithardfor
others to replicate them. Through
our in-house development and
testcapabilities,wecontinually
enhance their functionality, for
examplebyaddingmobile
apps and online services that
improvetheuser’sexperience
and engagement.
Technology is critical for
efficiency.Asweprocessever-
largervolumes,webenefitfrom
significantoperationalleverage.
Atthesametime,weoffergreater
efficiencytoourclientsthanthey
couldachievebyusingtheirown
systems.
Ourplatformsarealsoakey
enablerofourgrowth.Theyallow
ustoscaleupourexistingservices
andtooffernewservices,which
wedevelopourselvesorbring
in through acquisitions. We also
seeexcitingpotentialinusingour
analytical capabilities to derive
freshinsightsfromthedatawe
hold,allowingustocreatenew
services and add even more
value for our clients.
OUR KEY PLATFORMS
We have 25 platforms across the Group,
supporting our wide-ranging product offering.
Three of these – Sirius, Xanite and Compendia –
underpin some of our most important services.
Sirius is our share registration
platform. It supports all our
registration, dividend payment
and share plan administration.
The platform is able to handle
vast processing volumes. We
use it to manage the records
of 18.7 million shareholders and
tomakepaymentsinexcessof
£39 billion each year, on behalf of
nearly 50% of FTSE 100 companies
and numerous others. Sirius
also receives 1 million internal
websitehitseachday,delivering
an average response time of less
than 0.5 seconds.
Xanite is our custody, investment
andwealthmanagementplatform,
whichsupportssharedealingfor
retail investors and corporate
clients,andourBPOservices
forwealthmanagers.
Compendia is our pension
administration and payroll
platform.Throughit,wemanage
records and payments for millions
of UK pension scheme members
on behalf of our clients.
The platform enables us to deliver
custody services for £18.7 billion
of assets. It also plays a key role in
ourgrowingdirect-to-consumer
business.Asexplainedonpage
30,wehavelaunchedanewweb
and mobile offering to service
EquinitiSelftrade,whichwe
acquired in January 2015. This
gives consumers greater choice
and control over their investments,
to suit demands for services that
fittheirlifestyle.
See page 30 for more information
The system supports services for
our clients,whocanuseitattheir
premises or as a managed service.
Compendia also enables access
toself-service,throughournew
mobile app and our responsive
webdesign,whichintuitively
adapts to the user’s desktop or
mobile device. This offers a better
experienceforschememembers,
helping them to plan their
retirements and increasing their
engagementwiththescheme.
Italsooffersgreaterefficiency
and a streamlined service for the
schemes themselves.
Ourrecentinvestmenttoenhance
Compendia has led to it being
shortlistedforsixtechnology
awardsduring2014.
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23,000
PARTICIPANTS
ANDAVALUEOF
MORETHAN
£1.1BILLION
EQUINITI AND BT
Simplifying complexity
for BT’s employees
Most people selected more than one option,
putting our team under huge pressure to
quickly and accurately turn around their choices.
SupportedbyourSiriusplatform,wedelivered
on time and to our service level agreements,
resultinginasatisfiedclient.
AsFrancisO’Mahony,HeadofEmployeeShare
PlansatBTsaid:“TheEquinititeamwasmost
responsivetoourneeds.Weworkedinpartnership
to build the choices, map each user journey and
communicateeffectivelywiththeparticipants.
Thefactthateverythingwentsosmoothly,and
that the BT share price remained stable,
istestamenttoterrificteamwork.”
Equiniti has provided employee shareplan services
to BT since 2004. This year, we supported BT
through one of its biggest challenges yet – the
most recent maturity of its “saveshare” plan.
Thematuritywasoneofthelargestandmost
complexeverseen,witharound23,000participants
and a value of more than £1.1 billion. The average
participant stood to gain almost £42,000, rising
toalmost£76,000forthosewhohadsavedthe
maximumeachmonth.Participants’optionsranged
from holding or selling shares to transferring them
to their spouse, ISA or pension. This meant they
neededtounderstandfinancialissuestheymight
notbefamiliarwith,suchasthepotentialtax
implications of their choices.
WeworkedwithBTonayear-longcommunications
strategy,sopeoplecouldmakewell-informed
choices.Weresearchedwhen,howandinwhatform
peoplewouldbestabsorbtheinformation,resulting
in a monthly series of personalised emails on key
topics,withlinkstofurtherinformation.Highlighting
each individual’s potential gain encouraged them
tounderstandtheiroptions.Theemailswere
combinedwithaseriesofeducationaltools,from
booklets and Q&As to a live question session.
26
The Equiniti team was most
responsive to our needs.
We worked in partnership
to build the choices, map each
user journey and communicate
effectively with the participants.”
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We have always prided ourselves
on innovation, and see outsourcing
as one of the primary ways in which
we’ll retain our market-leading
position…
Charlie Nicholls, founder of Money on Toast
EQUINITI AND MONEY ON TOAST
Supporting clients through
new product development
A fundamental part of our strategy is to develop
new products that leverage our technology and
our specialist capabilities. In 2014, we announced
that Money on Toast was the first customer for
our Wealth Solutions service, which is built on our
Xanite platform. We see this service as a ‘game
changer’ for wealth managers, helping them
to succeed in a highly competitive market.
Money on Toast is a leading provider of online
investment advice and discretionary management,
withthousandsofsatisfiedcustomers.Itistheonline
distribution arm of CPN Investment Management,
whichwasfoundedin1986toofferdiscretionary
investmentmanagementservicestohigh-net-worth
individualsintheUK.Outsourcingitsinvestment
administrationandtechnologyservicestouswill
allowMoneyonToasttofocusonitscorebusiness
objectivesofcustomerservice,businessgrowth
and innovation.
MoneyonToast’sclientswillalsobenefit,through
accesstoawiderrangeofinvestmentoptions
andlowerfees.Theseresultfromtheelimination
of platform costs, reduced administration and
theabilitytoscaleupthebusinesswithouta
corresponding increase in overheads.
As Charlie Nicholls, founder of Money on Toast,
said: “As the leading algorithm-based advice and
discretionarymanagementsystem,wehavealways
prided ourselves on innovation, and see outsourcing
asoneoftheprimarywaysinwhichwe’llretainour
market-leading position. Using Equiniti Wealth
Solutionswilldelivermeaningfulbenefits.Itwill
notonlyallowustokeeppacewithtechnological
change,butwillalsointroducecostefficiencies
whichwecanthenpassontoourclients.”
28
MyCSP’s success demonstrates what
can be achieved by working together
MYCSP
Transforming MyCSP into a
trusted partner to Government
MyCSP is the first mutual joint venture to come
out of central Government. It provides pension
services to 1.5 million members of the Civil Service
pension scheme, on behalf of more than 250
employers ranging from the Department for
Work and Pensions to the Scottish Government.
In2014,weincreasedourholdinginMyCSPto51%,
withemployeesholding25%andtheGovernment
retaininga24%stake.Employeeownershipis
avitalpartofthemodel.Researchshowsthat
employee-ownedcompaniesoutperform,with
betterproductivityandengagementandlower
staffturnover.In2014,employeesbenefittedfroma
dividend of £2,600 each, as they shared in the value
of the business improvements they had created.
FollowingMyCSP’screationin2012,weembarked
onatwo-yeartransformationprogramme,investing
in its technology, operations, service and culture.
This has vastly improved processing accuracy,
employee engagement and customer satisfaction.
The transformation included consolidating from
11 sites to four and completely upgrading the IT
infrastructure.InSeptember2014,wecompleted
the transfer of MyCSP’s administration to our
Compendia platform, a substantial project that
required thousands of training days and long hours
from more than 100 developers and testers.
AswellastransformingthewayMyCSPworks,
themutualmodelallowsittobidforcontractsto
administer other pension schemes. Its enhanced
offeringisenablingittoshowcaseitscapabilities,
generating interest from employers across the public
sector.Thisgrowthbenefitsus,providesgreater
rewardsforemployeesandaddsvaluefortaxpayers.
MyCSP’ssuccessdemonstrateswhatcanbe
achievedbyworkingtogetherandusingthe
bestofpublicandprivatesectorexpertiseto
transformpublicservices.Itisnowthemodel
for mutualisations of other public services.
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Making complex things simpleSECTION 01Equiniti Annual Report 2014
OPERATIONAL REVIEW
Investment Solutions
Registration Services, Retail Investment Services, International
Payments and Employee Services, including executive share
dealing and execution-only stockbroking.
Although revenue in the year declined by £12.3m
(11.5%) to £94.9m (2013: £107.2m), mainly driven by
ahighlevelofcorporateactionsin2013,significant
progress has been made in building the foundations
forfuturegrowth.Adjustedrevenue,whichexcludes
the Lloyds TSB Stockbroking contract that ended
in2013,was5.6%lower.TheacquisitionsofKillik
EmployeeServiceson1October2013andJPMCDS
on 1 September 2014 added an incremental £3.3m
to 2014 revenue.
EBITDA fell by 27.3% to £29.3m (2013: £40.3m).
Adjustedpre-exceptionalEBITDAwas16.5%lower.
Thisrepresentedanadjustedpre-exceptional
EBITDA margin of 30.9% (2013: 34.9%).
Registration Services,whichsupportsaroundhalf
of FTSE 100 companies, had a good year across
most of its operations. It retained all its registration
contractsthatcameupforrenewal,gained26newly
listed clients, including TSB, Just Eat, Zoopla, Jimmy
ChooandVirginMoney,andwonfivecontractsfrom
establishedcompanies,includingOldMutualand
SABMiller.However,thelackofcorporateactionsby
clientswithsizeableshareholderbasesresultedina
decline in revenue against a strong comparative for
2013,whichincludedtheflotationofRoyalMailand
a major rights issue by Barclays.
Thebusinessbeganpilotinganewservicein
partnershipwithKingsCourtTrust,whichwill
help bereaved families to obtain probate on their
relatives’ estates. We see opportunities to provide
thisdirectlytoconsumersandasawhite-label
service to large corporates, such as banks and
financialservicescompanies.
meettheneedsofwealthmanagersandannounced
itsfirstwealthmanagementcustomer,Moneyon
Toast,inNovember.Wewillprovideallinvestment
administration and technology services to Money
onToast,reducingitscostswhileallowingittoscale
up its business. Investment Services also signed a
contracttoprovidewhite-labelservicestoSaga,
whichwillcommencein2015.
In the International Payments market, Investment
ServicessignedasignificantcontractwithMarTrust
Corporation, to provide payment services for ships
arrivingatportsaroundtheworld.Wealsowona
number of other international payments contracts,
reflectingourabilitytoservicemedium-sized
companies in this area.
Investment Services completed a major upgrade
toXaniteandlaunchedanewwebandmobile
platform to service Equiniti Selftrade –
www.selftrade.co.uk.TheacquisitionofSelftrade
wascompletedon26January2015andbrings
withit104,000newcustomers,addingtothe
existing320,000retailcustomersthatInvestment
Solutions supports.
Employee Services had a solid year. Highlights
includedrenewingimportantcontractswithBTand
Diageo,andwinningacontractwithTSBtoprovide
employeeshareplansandflexiblebenefits.The
business completed the integration of the Killik
operationsweacquiredin2013,whichcontinuedto
meetourexpectations.JPMCDS,whichprovides
dealingservicesforexecutivesinallformsofshare-
based remuneration schemes, further increases our
UK market presence.
ThequalityofRegistrationServices’workwasagain
reflectedintheprestigiousindustryawardsitwon.
Equinitiwonallthree“BestRegistrar”awardsin
2014, at the Investors Chronicle and FT Wealth
ManagementAwards,theSharesAwardsandat
theUKStockMarketAwards.
During2014,welaunchedPeopleSpace,aunique
portalthatallowsemployeestoreviewandmanage
theirflexiblebenefitsonline,andwhichwillimprove
employers’ understanding of their employees’
benefituse.Otherdevelopmentsincludedaglobal
nomineeproduct,whichwewillrolloutin2015.
Retail Investment Services delivered underlying
revenuegrowth,afteradjustingfortheimpactof
the Lloyds TSB Stockbroking contract. The business
has invested in developing its Xanite platform to
Asinpreviousyears,EmployeeServices’clientswon
anumberofprizesattheifsProshareannualawards.
Thisyear’swinnersincludedBT,TSB,LandSecurities,
DS Smith and TalkTalk.
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We launched PeopleSpace, a
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benefitsonline
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Making complex things simpleSECTION 01Equiniti Annual Report 2014
Intelligent Solutions
Specialist technology and service solutions targeting complex
or regulated processes, such as loan servicing and complaints
management.
IntelligentSolutionsgrewrevenueby9.9%to
£89.6m(2013:£81.5m).Thispartlyreflectedthe
acquisitionsofPancreditSystems,whichwe
boughton18March2014,andInvigia,whichwas
consolidated from 1 September 2014. Together,
they contributed revenue of £6.5m during the year.
Revenuealsobenefitedfromhighercomplaints
management activity, although a change in the
mixofthisworkmeantitwasatalowermargin.
Thisrevenuegrowthwaspartiallyoffsetbya
reductioninprojectincome,with2013having
included a large, one-off assignment.
Pre-exceptionalEBITDAdeclinedby0.6%to
£16.3m(2013:£16.4m).Thiswastheresultofthe
lowermarginoncomplaintsmanagementwork.
IntelligentSolutions’pre-exceptionalEBITDA
marginwas18.2%(2013:20.1%).
Pancredit provides innovative loan administration
andoriginationsoftwaretobanks,intermediaries
andpricecomparisonwebsites.Wehavealready
beguntoleveragethistechnologytooffernew
services.Duringtheyear,welaunchedstandby
servicing,providingclientswithawaytomitigate
the risk of failure of their loan servicing
arrangements. We also rolled out loan
administration services, to collect repayments
and resolve issues on behalf of our clients. In
addition,Pancreditsignedanewcontractwith
a major telecoms provider, to deliver interest-free
creditservicesforhandsetsandhardware.
Invigia offers complaints, case and feedback
managementsoftwareandservicestoawiderange
offinancialservicesandpublicsectororganisations.
It broadens our range of solutions to help clients
dealwithregulationandchange.Italsoopensup
opportunitiesinnewconsumer-facingsectors,such
as utilities and telecoms. Invigia’s services include
mycustomerfeedback.com,whichallowsusto
provide customer feedback services to SMEs, in
additiontoourexistingenterprise-scaleplatform.
Invigia’s other division is responsible for gathering,
storingandsharinghighlysensitiveinformationwith
authorisedpoliceforceusers.Weworkwithcirca
50% of the UK’s police forces on this.
Duringtheyear,welaunchedPeopleAX, an HR and
payroll solution based on the Microsoft Dynamics
AXplatform.ItallowsfullintegrationofHRand
payroll functions in one system, so organisations
canworkwithcomplexdatasetssuchascross-
departmentalinformationonbenefitspackages,
pensions and employee engagement. This is
currently being implemented for the Royal National
LifeboatInstitute,togetherwithanumberofsmall
clients.Othernewproductsincludedadataanalysis
platform,whichcaningestlargevolumesofdata
from multiple sources, cleanse it and turn it into a
singleviewofthecustomer,andanew360-degree
feedback tool for the healthcare industry.
Hazell Carr provides high-calibre resourcing and
outsourcingexpertisetoregulatedindustries.It
endedtheyearwith1,200consultantsdeployed
for clients, a record number for the company.
ItalsowoncontractswithBarclaysandHSBC,the
onlytwomajorbanksthatwerenotalreadyclients.
WebelievethatthecombinationofHazellCarrwith
several other Intelligent Solutions business units
creates a disruptive and compelling proposition
across people/process/technology/data, making
it the ‘one stop shop’ solution for several different
customer requirements.
Asthebusinessmodelevolves,withmoreclients
lookingforatotaloutsourcedsolution,wehave
investedinnewpremisesinCardiff.Thesehave
come on stream in February 2015, to ensure the
capabilities are immediately available to support
our clients’ requirements.
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Making complex things simpleSECTION 01Equiniti Annual Report 2014
Pension Solutions
Pension administration, insurance and payment technology
and services for 8 million scheme members.
Aswellasinvestinginourtechnology,wehave
investedinourpeople.Werecruitedexperienced
pensions people into our business development
and client management teams, and appointed a
newPensionsStrategyDirector.Thisinvestment
hasstartedtodeliverasignificantnumberof
opportunitiestobidfornewwork,whichwe
expecttocontinueinto2015.
MyCSP,withtheongoingsupportofthewider
Equiniti Group, has continued to transform the
administration of the Civil Service Pension Scheme.
During2014,wecompletedtheimplementation
of Compendia and migrated the scheme’s payroll
administration from the previous provider. Work is
wellprogressedtomeettherequirementsofthe
2015 Pension Scheme reforms.
PensionSolutionshadastrongyear,growing
revenue by 31.7% to £101.3m (2013: £76.9m).
Organicrevenuegrowthcamelargelyfrommajor
projectswithexistingclients.Ouracquisitionofan
additional 11% holding in MyCSP also meant that
weconsolidatedthisbusinessasasubsidiaryfrom
30 September 2014. This added £11.1m to Pension
Solutions’revenuebetweenthatdateandthe
year end.
Pre-exceptionalEBITDAroseby77.9%to£21.7m
(2013:£12.2m),withrevenuegrowthpartiallyoffset
byhighercostsassociatedwithimprovingservice
levelsinexistingpensionadministrationcontracts.
Thisrepresentedanpre-exceptionalEBITDAmargin
of 21.4% (2013: 15.9%).
WewererecognisedasPensionsTechnology
FirmoftheYearintherecentPensionsAgeawards.
Thisresultedfromoursignificantinvestmentin
our pension administration platform, Compendia,
to make it more user friendly, intuitive and visually
appealing. This included a smartphone app to
help pension scheme members manage their
retirementplanning,reflectingthefactthatmember
engagement is an increasingly important part of
ourservice.Compendiawasalsothetopranked
Pensions Administration Platform in the 2014
Professional Pensions survey.
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FINANCIAL REVIEW
Adjusted revenue grew by 10.6%, through a combination of
organic growth and earnings enhancing acquisitions in 2014.
OVERVIEW
Revenuegrewby6.4%to£292.3m(2013:
£274.7m)andoperatingprofitafterexceptional
items increased by 45.9% to £21.6m (2013:
£14.8m).Adjustedrevenueandpre-exceptional
EBITDA increased by 10.6% and 3.7%
respectively. The adjustments have been
madeto2013onlyandexcludetheLloydsTSB
Stockbrokingcontract,whichwasdiscontinued
in 2013, and adjusts for the impact of a step
downintheinterestratehedgeinthesecond
halfof2013,resultinginalowerinterestrate
being earned. These adjustments reduce 2013
revenue and EBITDA by £10.3m and £8.8m
respectively.TheGroup’sfreecashflowwas
£72.5m,resultinginacashflowconversion
of 104% as the Group has continued to
focusonworkingcapitalmanagement.
INCOME STATEMENT
EBITDA (PRE-EXCEPTIONAL)
The key lines of Equiniti’s income statement
fortheyeararesummarisedbelowandinclude
analysisofrevenue,pre-exceptionalEBITDA,
exceptionalitems,operatingprofit,netfinance
costsandprofitbeforetax.
REVENUE
£m
2014
2013 Change
Adjusted revenue
292.3
264.4
10.6%
Adjustments
–
10.3
Reported revenue
292.3
274.7
6.4%
Revenue increased by 6.4% to £292.3m.
Onanadjustedbasis,revenuegrewby10.6%,
principally attributable to the performance of
the Pensions Solutions and Intelligent Solutions
divisions(seebelowforfurtherdiscussionof
growthdriversbydivision).
£m
2014
2013 Change
Adjusted EBITDA
(pre-exceptional)
Adjustments
Reported EBITDA
(pre-exceptional)
70.0
–
70.0
67.5
3.7%
8.8
76.3
(8.3%)
EBITDApre-exceptionalitemsisakey
performanceindicator.Itreflectsprofitbefore
financecosts,taxation,depreciationand
amortisationandexceptionalitems.Adjusted
pre-exceptionalEBITDAof£70.0mrepresents
a3.7%increasecomparedto2013,reflecting
the impact of acquisitions made in the year
andanincreaseinprojectworkwithinPensions
Solutions. This represents a margin of 23.9%,
whichisadecreaseof1.6percentagepoints
comparedtotheprioryear,as2013benefitted
fromsignificantcorporateactionactivity.
3636
REPORTABLE SEGMENTS
Pension Solutions
As a result of the management changes made
during the year, the operating segments have
beenrefinedtobetterreflectthewaythat
Group’s activities are managed. The Group has
identifiedfoursegments:InvestmentSolutions,
Intelligent Solutions, Pension Solutions and
Interest Income, supported by central functions.
The comparative information has been restated
toreflecttherevisedsegments.
£m
2014
2013 Change
Adjusted revenue
Investment Solutions
Intelligent Solutions
Pensions Solutions
Interest
94.9
89.6
101.3
6.5
100.5
(5.6%)
81.5
76.9
9.9%
31.7%
5.5
18.2%
Total adjusted revenue
292.3
264.4
10.6%
Adjusted revenue increased by £24.4 million
to £101.3m, primarily attributable to long-term
project income and discontinuance remediation
workplustheimpactoftheincreased
shareholdinginMyCSP,whichcontributed
£11.1m since 30 September 2014. Adjusted pre-
exceptionalEBITDAincreasedby£9.5m
to£21.7m,asaresultofthisrevenuegrowth.
Interest
Interest income represents interest earned on
clientbalances.Revenueandpre-exceptional
EBITDA have fallen to £6.5m in 2014 from £9.1m
in2013,duetoastepdowninourinterestrate
hedge in 2013. Adjusting for the interest rate
hedge,adjustedrevenueandpre-exceptional
EBITDA increased by £1.0m (2013: £5.5m).
Central
Central costs are general overheads incurred by
the Group. Costs have increased by £2.1m to
£3.8m, representing additional investment
in developing the Group’s sales force.
Adjusted EBITDA (pre-exceptional)
OPERATING PROFIT
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Intelligent Solutions
Pensions Solutions
Interest
Central costs
Total adjusted EBITDA
(pre-exceptional)
Investment Solutions
29.3
16.3
21.7
6.5
(3.8)
70.0
35.1 (16.5%)
16.4
(0.6%)
£m
12.2
77.9%
5.5
18.2%
(1.7) 123.5%
67.5
3.7%
Reported EBITDA
(pre-exceptional)
Exceptionalitems
Depreciation &
amortisation
2014
2013 Change
70.0
76.3
(8.3%)
(7.7)
(40.7)
(25.0)
(69.2%)
(36.5)
11.5%
Adjusted revenue fell by 5.6% to £94.9m,
comparedto2013,withsignificantlylower
corporate action activity more than offsetting
thecontributionfromacquisitions.Operating
costsremainedinlinewiththeprioryear,
resultinginadjustedpre-exceptionalEBITDA
being£5.8mdown.
Intelligent Solutions
Adjusted revenue increased by £8.1m to
£89.6m, driven by the contribution from the
Pancredit and Invigia acquisitions and increased
complaints management placement contracts
withfinancialserviceclients,offsetbylower
project income.
Adjustedpre-exceptionalEBITDAfortheyear
was£16.3m,broadlyinlinewith2013(£16.4m),
asthebenefitsfromtheInvigiaandPancredit
acquisitionswereoffsetbylowerproject
incomeandachangeinthemixofcomplaint
managementwork.
Operatingprofit
21.6
14.8
45.9%
Operatingprofitremainsakeyperformance
indicator,reflectingprofitbeforefinancecosts
andtaxation.Fortheyearended31December
2014,operatingprofitwasup£6.8mcompared
to the prior year, primarily attributable to a
£17.3mdecreaseinexceptionalitems.
Exceptional items
£m
Set up costs
Restructuring costs
Acquisitionrelatedexpenses
Property costs
Gain on investment
Refinancingcosts
Integration project
Contract costs
2014
2013
3.0
5.1
2.6
1.9
(4.9)
–
–
–
1.2
6.0
0.3
–
–
10.2
2.9
4.4
7.7
25.0
37
Equiniti Annual Report 2014Making complex things simpleSECTION 01
70.0
2.5
72.5
104%
(20.8)
(31.0)
20.7
45.2
–
(18.7)
(2.5)
0.4
1.7
76.3
(5.3)
71.0
93%
(19.3)
(29.9)
21.8
(90.6)
(16.9)
(17.2)
(4.0)
0.4
0.5
(0.7)
(1.6)
(2.6)
1.5
14.7
1.8
74.3
(42.4)
CASH FLOW
Onapre-exceptionalbasis,theGroup
generatedfreecashflowof£72.5m(2013:
£71.0m) representing a conversion of pre-
exceptionalEBITDAtofreecashflowof104%
(2013:93%).Themainmovementsincashflow
aresummarisedbelow:
£m
2014
2013
Exceptionalitemsof£7.7m(2013:£25.0m)
include costs incurred in respect of establishing
the Indian off-shore facility, costs of
restructuring the management team, onerous
leasesonpropertiesandcostsinvolvedwith
the acquisitions recognised in the year. An
exceptionalgainof£4.9mwasrecognisedon
the Group’s investment in Euroclear PLC. The
significantexceptionalitemsin2013related
totheGroup’srefinancingexercise(£10.2m),
costs incurred to integrate the Equiniti and
Xafinitybusinesses(£2.9m),therestructureof
the management team (£6.0m) and contract
costs (£4.4m).
NET FINANCE COSTS
Netfinancecostswere£71.8m(2013:£78.1m).
Ofthis,anetinterestcostof£31.0m(2013:
£29.9mexcludingexceptionalitems)waspaid
in cash.
LOSS BEFORE TAX
£m
2014
2013 Change
EBITDA(pre-exceptional)
Working capital movement
Freecashflow
Cash flow conversion
Capitalexpenditure
Net interest costs
Freecashflowafterinterest
Netfinancingcashflows
Exceptionalitems-refinancing
Exceptionalitems
Investment in MyCSP
Operatingprofit
21.6
14.8
45.9%
Dividend from investment
Netfinancecosts
(71.8)
(78.1)
(8.1%)
MyCSP dividend
Gain on disposal of
associate
Shareofprofitin
associate
9.8
1.7
–
Investment in current year
acquisitions
(30.3)
(10.9)
1.6
6.3%
Payment for prior year
acquisitions
Lossbeforetax
(38.7)
(61.7)
(37.3%)
Taxespaid/received
The Group made a loss for the year from
continuing operations of £38.7m, compared
to £61.7m in 2013. Acquiring a further 11% of
MyCSP on 29 September 2014 resulted in an
accounting, non-cash gain of £9.8m. Prior to
thistransaction,MyCSPwasaccountedforas
anassociateandtheGroup’sshareofprofits
up to 29 September totalled £1.7m. Since this
date, the results of MyCSP have been fully
consolidatedintotheGroup’sresultswiththe
recognition of a minority interest, being £1.4m
for the three months to 31 December 2014.
3838
DisposalofXafinitiyConsulting
Net cash movement
Free cash flow
Themovementinworkingcapitalof£2.5m
excludescashflowsrelatingtoexceptionalitems
and is indicative of the Group’s commitment to
improveworkingcapitalmanagementthrough,
forexample,automatinginvoicegenerationand
improving payment terms.
Capital expenditure
Netexpenditureontangibleandintangible
assetswas£20.8m(2013:£19.3m).This
represents 7.1% of revenue (2013: 7.0%)
demonstrating the Group’s continued
commitment to developing our industry
leading technology platforms.
Net interest costs
Net interest paid increased by £1.1m to £31.0m
(2013:£29.9m)asaresultofdrawingdownon
theRevolvingCreditFacility(“RCF”)tofinance
our strategic acquisitions. Interest on the PIK
loan and preference shares is accrued and is
a non-cash item.
Net financing cash flows
Duringtheyear,£45.5mwasdrawnontheRCF
tofundtheacquisitionsmade.£0.3mwasrepaid
onfinanceleases.
Investment in MyCSP
Up until the Group took control of MyCSP in
September2014,£2.5m(2013:£4.0m)waspaid
in respect of the original investment in the
associate.
Investment in current year acquisitions
Duringtheyear,£30.3mwaspaidas
considerationtoexecutestrategicand
capabilityenhancingacquisitions(seebelow
for a summary of these acquisitions).
Tax paid
TaxespaidrelatetotaxpayablebyMyCSP
Limited and our business in India.
BANK BORROWINGS
At the end of December 2014, net bank
borrowingswere£458.2m(2013:£427.1m).
£m
Cash and cash equivalents
Senior debt
Revolving credit facility
Finance lease
Accrued interest
2014
30.1
2013
15.4
(440.0)
(440.0)
(45.5 )
(0.7)
(2.1)
–
(1.0)
(1.5)
(458.2)
(427.1)
Net debt has increased by £31.1m, primarily due
toanetcashoutflowonacquisitionsof£30.3m.
ACQUISITIONS
During the year, the Group made a number
of strategic capability enhancing acquisitions:
• On18March2014,PancreditSystems
Limitedwasacquired.Pancreditsupports
softwaretomanageunsecuredloan
administration.Thiscompanysitswithin
the Investment Solutions segment.
• On1September2014,J.P.Morgan’s
CorporateDealingServicesbusinesswas
acquired.Thisbusinesssitswithinthe
Intelligent Solutions segment.
• On1September2014,InvigiaGroupLimited,
a customer feedback and complaints
managementserviceproviderwasacquired.
ThiscompanysitswithintheIntelligent
Solutions segment.
• On29September2014,anadditional11%
ofMyCSPLimitedwasacquiredbringingthe
total shareholding to 51%. MyCSP is reported
under the Pensions Solutions segment.
A summary of assets purchased during 2014,
andassociatedcashflows,isshownbelow:
Acquisitions
Goodwill
Intangible assets
Othernetassets
Total consideration
Deferred consideration
Non-controlling interests
Total payable
Proceeds from disposal of associate
Cash acquired
Cashoutflow
2014
38.9
51.3
15.4
105.6
(9.2)
(16.3)
80.1
(26.6)
(23.2)
30.3
• On23January2015,theGroupcompleted
the acquisition of the trade and assets of
Selftrade, an online trading platform provider.
RETIREMENT BENEFITS
TheGroup’sdefinedbenefitschemesarethe
Paymaster Pension Scheme, the ICS Pension
Schemeand,witheffectfrom29September
2014, the MyCSP Limited Pension Scheme.
The movements in the pension scheme
liabilityisshownbelow:
Defined benefit liability
2014
2013
At 1 January
Net DB assets acquired
Current service cost
Contributions received
Interest
Change in actuarial assumptions
10.0
(0.2)
1.2
(1.8)
0.5
5.8
6.3
–
0.8
(1.1)
0.3
3.6
At 31 December
15.5
10.0
Thenetdefinedbenefitliabilityhasincreased
by £5.5m during 2014. This is due to a change in
actuarial assumptions, primarily as a result of a
lowerdiscountratebeingused.
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RISKS AND UNCERTAINTIES
Details of our approach to risk
management can be found
in the Corporate Governance
Statement page 62 to 65.
We have a robust and well-embedded approach to identifying,
managing and mitigating the risks facing our business.
OUR PRINCIPAL RISKS AND OUR MITIGATIONS FOR THEM ARE AS FOLLOWS:
RISK
Regulatory
We trade in regulated sectors. In particular, key parts
of our business are regulated by the FCA. This means
wemustcomplywithalltheregulationsthatapplyto
ouroperationsandensureweanticipateandadapt
to any changes to regulation.
Operational
We may suffer direct or indirect losses resulting from
inadequate or failed internal processes, people and
systems,orfromexternaleventsarisingfromour
day-to-day operating activities.
Contractual
Wehavecontractualarrangementswithallofour
clients.Theselastbetweenoneandfiveyearsandare
essential to our business. We also develop key supplier
partnerships, to support our long-term aims and those
ofourclients.Itisthereforecriticalthatwenegotiate
prices for these long-term contractual relationships
appropriately,todeliverearningsgrowth.
MITIGATION
The regulated business undertakes regular assessments involving
acomprehensivereviewofrisks,inordertoassessthelevel
of capital required to support all relevant current and future
risks under an internal capital adequacy assessment process
(“ICAAP”). In addition, under the Client Asset Sourcebook
(“CASS”) regime, supervised by the FCA, the regulated
businesseshascomprehensivepoliciesandprocedurestoallow
theidentification,assessmentandmitigationofrelevantrisks,to
ensureclientscanbeconfidentthattheirassetsareheldsubject
to client asset controls and a strong risk management culture.
We have invested in training and put in place processes and
procedures to reduce the likelihood of these risks occurring.
We also have tested mitigation plans, to minimise the impact
iftheserisksoccur.Inaddition,wemaintainacomprehensive
insurance programme, tailored to the demands of our business.
WehaveestablishedaSales&BidCommittee,sowefullyassess
the opportunities and risks each contract presents. We establish
tradingarrangementswithsuppliersfollowingopen,non-
discriminatory and competitive bidding processes.
Information technology infrastructure
Ouroperationsdependuponthecontinuedavailability
andintegrityofourITsystems,includingourwebsites.
We have full back-up and business continuity procedures,
comprisingbothinternalandthird-partyresources,which
weregularlyreview,testandupdate.
People
Attracting and retaining the right people is key
to delivering our objectives.
Wehavebuilttalentpipelines,havingundertakenaformalreview
of our talent pool in 2014, put in place competitive remuneration
plansandexpandedourdevelopmentprogrammestodefine
career paths.
Other risks
Thenatureofourservicesmeansthatwecan
occasionally receive claims for professional service
shortcomings,whichcouldresultinushavingtopay
compensation.
We maintain professional indemnity insurance
across the Group.
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Making complex things simpleSECTION 01Equiniti Annual Report 2014
CORPORATE RESPONSIBILITY
Equiniti is committed to being a
responsible business. Our behaviour
is based on sound business ethics and
aligned with the expectations of our
clients, investors, employees, suppliers,
communities, regulators and society
as a whole.
We recognise that being responsible protects our brand
and reputation and helps us to win work. It also encourages
staff loyalty and engagement.
Managing our impact on the world and the people
around us is therefore a core part of our business.
We define our responsibilities around four pillars,
each supported by our business policies.
THE FOUR PILLARS ARE:
People
Environment
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In managing our corporate responsibilities,
we aim to ensure that we:
• comply with, and where practicable
exceed, all applicable legislation,
regulations and codes of practice;
• integrate corporate responsibility
considerations into every business
decision, where possible;
• make all staff fully aware of our corporate
responsibility approach and our commitment
to implementing and improving it;
• minimise the impact of our office
activities and transport use;
• make clients and suppliers aware of our
policies and encourage them to adopt
sound and sustainable management
practices; and
• review our performance, so we can
continually improve.
Charity
Communities
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People
People are at the heart of the sophisticated services we offer to clients.
This means that our business success depends on attracting the best
people and enabling them to reach their potential within Equiniti.
We therefore need to effectively manage talent, succession and
performance, drive engagement and ensure we share common
values that inform our behaviour.
OUR PEOPLE STRATEGY
Assuring excellence
During2014,wedevelopedapeoplestrategythat
supports our overall business strategy. This people
strategyhasthefollowingelements:
• becoming a high-performance organisation;
• assuringexcellence;
• building capability; and
• leveraging talent.
Becoming a high-performance organisation
We are embedding a robust performance
management approach throughout the Group,
usingaframeworkthatassesseswhatpeopledo
andhowtheydoit.Thismeansmeasuringtheir
performance against business objectives and
assessinghowtheirbehavioursaligntoourvalues.
We do this through observation by line managers,
feedbackfromcolleaguesanddiscussionwiththe
individual.
Akeypartofourapproachistoensurethatwe
addressissuesidentifiedduringperformance
management and link them to the individual’s
developmentneeds.Ourapproachwillalsoallow
us to strengthen the link
betweenperformance
andreward,toensurewe
appropriately recognise
good performance.
Ourapproachwillalsoallowus
tostrengthenthelinkbetween
performanceandreward…
During2014,wemoderatedtheperformanceof
the top three levels of management using this
framework,aswellasotherpeopleeligibleforthe
management bonus or sales incentive schemes. In
2015,weintendtorollthisouttootherlevelsofthe
organisation.
Assuringexcellencemeanseffectivelymanaging
costsandreward,andensuringstronggovernance
aroundHR.In2015,wewillmoveourHRfunction
onto our PeopleAX platform (see page 32) for more
details).Combinedwithmanagerandemployee
self-service,thiswillgiveusmorevisibleand
accurate people management information.
Animportantbenefitwillbetoincreasevisibility
ofpayandgradingacrosstheGroup,sowecan
ensurethatpeopleatsimilarlevelsarerewarded
consistently and appropriately.
Todriveoperationalefficiencies,wearemoving
moreofourHRadministrationtoChennai.Thiswill
allowustoreinvestthecostsavingsinbuildingour
specialistHRcapabilityintheUK.Itwillalsogiveus
a reference site for providing HR shared services
to clients.
Building capability
We aim to enhance our capability through effective
resourcing, learning and development. This means
buildingourtalentpipelines,forexamplethrough
graduate recruitment, and providing the training
and development opportunities our people need,
forexamplethroughe-learningprogrammes.We
are also considering graduate, sales and leadership
academies.Allofthiswillhelpustoarticulatecareer
pathswithinEquiniti,whichisvitaltoemployee
engagementandretention,andwillenableusto
develop our people through the organisation.
Another important element is to recruit more
people directly, rather than through agencies.
By using social media, LinkedIn, job boards and
otherchannels,wecanfindbetterpeoplewhile
substantially reducing our costs. We are currently
buildingourrecruitmentteamandwillfullylaunch
direct recruitment in 2015.
44
We are also considering graduate,
sales and leadership academies. All
ofthiswillhelpustoarticulatecareer
pathswithinEquiniti,whichisvitalto
employee engagement and retention.
Leveraging talent
Toreachourgrowthtargets,weneedtomake
the most of our talent. This means moving talent
through the business, having the right leadership
development and learning culture, and putting in
place mentoring and coaching programmes.
During2014,wecarriedoutatalentreviewto
identifyourcurrenttalent.Thereviewalsoinformed
our plan to build three talent pipelines over the
next12to18months:exceptionaltalent,withthe
potentialtobecomeanexecutiveteammember;
highpotentials,whocouldrunanEquinitibusiness;
andtalentfurtherdowntheorganisation,whocan
reach senior management positions.
We also put succession planning in place for the
executiveteamanditsdirectreports.Thisidentified
emergencycoverforthoseroles,peoplewhocould
fitthoseroleswithin12months,andpeoplewho
needtwoormoreyearstodevelop.Weprovide
specialisedkeyskillsdevelopment,whichisspecific
to the regulated environment and technology.
Thisincludesworkingwithemployeestoengage
them in a self-discovery process, to identify their
unique skills and competencies. We help employees
prepare for success by providing training and
development opportunities, including e-enabled
skills development and self-managed learning.
Thenextstageistocreateanactionplan,whichlinks
to development programmes for these talent groups
and helps us to address gaps in our talent pipelines.
Details of
our PeopleAX
platform can
be found on
page 32.
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Engagement
Diversity
Employeeengagementwillbeanimportantpart
ofour2015agenda.Expandeddevelopment
programmesanddefinedcareerpathswillhelpus
toengageandretainourpeople.Wewillworkhard
tocommunicateourbusinessplan,soweenthuse
our people about the Group’s prospects and their
part in achieving our goals.
Wealsoknowthatengagementrequireseffective
leadership,sowewillprovideourleaderswiththe
tools and support they need to engage their teams.
OurintentionistoconductaGroup-wideemployee
surveyduring2015,sowecanunderstandwhatour
employeesvalueaboutworkingforEquinitiand
wherewecanimprove.
Weareproudtohaveintroducedthelivingwage
during the year.
Werecognisethevalueofadiverseworkforce
and look to offer equal opportunities to everyone.
Equiniti has a good gender balance across the
Group,with51%ofourpeoplebeingfemale
and49%male.However,womenremainunder-
represented at senior levels and in certain parts
of the business, notably Intelligent Solutions and
our IT function.
Weexpectthatourtalent,developmentand
recruitmentprogrammeswillhelptoaddress
this,aswellasourcoachingandmentoring
initiatives.Equinitihasalsojoinedeverywoman,
anorganisationthatworkswithmanyblue-chip
companies and provides development programmes
andforumstohelpwomenprogressintheircareers.
The table below shows our current gender diversity.
A
living wage
EMPLOYER
Human rights
Equiniti recognises the importance of protecting
humanrightsbutwedonotbelieveitisa
significantissueforourbusiness.Weensurewe
protect the rights of our people by adopting
suitable employment practices, as described in the
Employees section of the Directors’ report. We also
aim to act ethically in all our business dealings.
Board
Senior
management
Other
employees
Total
Men
Women
2013 (%)
Men Women
2014 (%)
Men
Women
100
66
47
49
0
34
53
51
82
69
50
52
18
31
50
48
2013
2014
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OUR VALUES
Trust
We act with integrity and
openness in our dealings
with others
Excellence
We work hard to get
it right first time and
keep our promises and
commitments to others
Client focus Belief
We add value and build
true partnerships
We have passion and
belief in what we do and
who we are
People
We are positive,
enthusiastic and
supportive of one
another
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Making complex things simpleSECTION 01Equiniti Annual Report 2014
Environment
We recognise the importance of protecting the environment and
the impact of commerce on environmental issues. This means we
are committed to continual improvement in energy efficiency and
preventing waste.
IN PARTICULAR, WE LOOK TO
Avoidtravellingwhere
practical alternatives are
available, such as using
teleconferencing or video
conferencing
Reduce our energy
consumption by purchasing
energyefficientequipment,
using motion-activated
lighting, thermostatically
controlling heating and hot
water,andthroughgood
housekeeping
Minimise the use of
paperandotheroffice
consumables,forexample
by introducing multi-
functionaldeviceswhich
can print double-sided to
save paper
Reducewaterconsumption,
byfittingpneumatictapsin
washrooms
Arrange for the reuse or
recyclingofofficewaste,
including paper, computer
supplies and redundant
equipment
Equiniti has Carbon Trust
accreditation
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Charity
In 2013, we asked our people to select a national charity partner for us
to support from 1 January 2014. They chose Winston’s Wish, the UK’s
largest charity providing services to bereaved children, young people
and their families. It helps young people re-adjust to life after the death
of a parent or sibling. During the year, we raised in excess of £4,000 for
Winston’s Wish.
Tosupportourcultureofteamworking,wesigned
up to the UK Challenge. This is one of the UK’s
leadingcorporateteambuildingevents,forwhich
ourteamof18volunteerswenttoSnowdoniato
compete against 67 other teams. The Challenge
combinedphysicaladventurewithstrategicdecision
making and problem solving, helping our people to
develop their skills and relationships.
Aswellassupportingournationalcharitypartner,
our people raise money for organisations that have
personal relevance to them or their communities.
Whilewedonotalwayscentrallyrecordtheselocal
initiatives,weestimatethatourofficesaroundthe
country raised over £20,000 for causes ranging from
primary schools to Children in Need.
We raised in excess of
£4,000
FOR WINSTON’S WISH
Our offices raised over
£20,000
FOR OTHER CHARITABLE CAUSES
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Making complex things simpleSECTION 01Equiniti Annual Report 2014
Communities
We support local community projects and
initiatives, including a number of schools.
Weaimtopromoteeconomicandsocialwellbeingaroundallof
our locations. This includes our commitment to providing equal
and fair opportunity for all third-party suppliers. Where practicable,
wethereforeseektoworkwithsmalltomediumenterprises(SMEs)
that are local to our establishments. SMEs currently make up 30%
of our top 50 suppliers by value.
IN ADDITION, WE BENEFIT
OUR COMMUNITIES BY:
• Supporting community projects
• Providingworkexperience
and initiatives, including a
numberofschoolswhereour
staff introduce students to
professional and career choices
and support their aspirations.
andworkshadowingtoyoung
peoplethroughourlinkswith
schoolsandcolleges,with
agrowingapprenticeship
programme across Equiniti.
• Workingwithyoungpeople
to engage them in business
principles and functional
expertise,withafocuson
developing and investing in
young talent, such as Young
Enterprise.
• Providing practical support
to local charities and support
groups.
As our approach to corporate
responsibilityevolves,wewillalso
explorehowwecansupportlocal
communities in India.
STAFF INTRODUCE STUDENTS
TO PROFESSIONAL AND CAREER
CHOICES AND SUPPORT THEIR
ASPIRATIONS
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Thestrategicreportwasapproved
by order of the Board
Guy Wakeley
Chief Executive
25 March 2015
Registered Number: 07090427
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BOARD OF DIRECTORS
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CORPORATE
GOVERNANCE
STATEMENT
DIRECTORS’ REPORT
AUDITORS’ REPORT
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Board of
Directors
GUY WAKELEY
CHIEF EXECUTIVE OFFICER
KEVIN BEESTON
CHAIRMAN
GuyjoinedtheEquinitiBoardasChiefExecutive
OfficerinJanuary2014.
Kevin joined the Equiniti Board as Chairman
in September 2011.
Career
Guy joined from Morrison plc, the property
services provider to the public and private sector,
wherehewasCEOforfiveyears.Duringhistenure,
he transformed the level of client service and
innovation,grewthebusinessrapidlyand
delivered consistently strong cash generation.
Priortothis,GuywasManagingDirectorofthe
Built Environment division at Amey, the infrastructure
services provider to the public and private sector.
GuypreviouslyworkedforTheBerkeleyGroup,
General Electric and Rolls-Royce. He holds an
MA in Engineering Science from the University
ofCambridge,aPhDinapplicationsofartificial
intelligence, and is a Chartered Engineer. Guy sits on
theCBI’sPublicServicesStrategyBoard,isaFellow
of the Royal Institution of Chartered Surveyors, and
isacommercialpilotandflightinstructor.
Committees
GuyisamemberoftheOperationsCommittee.
Career
Kevin is also Chairman of FTSE 100 developer and
homebuilder Taylor Wimpey plc and of Domestic
andGeneral,theinternationalproviderofextended
warrantyservices.Inaddition,KevinisanOperating
PartnerofEquiniti’sowner,AdventInternational.
From2002to2010,KevinwasChairmanofSerco
Groupplc,havingpreviouslybeenChiefExecutive
and Finance Director during a 25-year career
withSerco.Hewasanon-executiveDirectorof
engineering group IMI plc from 2005 to 2012,
Chairman of Partnerships in Care, a specialist
provider of secure mental health services from
2007to2014,andaDirectorofIpswichTown
Football Club from 2003 to 2008.
Kevin’s other previous roles include Chairman of
the CBI’s Public Services Strategy Board, promoting
the role of business in transforming the UK’s public
services.HewasalsoaCommissionerfortheTUC’s
Commission on Vulnerable Employment. Kevin is
an accountant by background.
Committees
KevinisChairmanoftheOperationsandNomination
& Governance Committees, and a member of the
Remuneration and Audit Committees.
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JAMES BROCKLEBANK
NON-EXECUTIVE DIRECTOR
(INVESTOR REPRESENTATIVE)
JamesjoinedtheEquinitiBoardasanon-executive
Director on 8 December 2009.
Career
James joined Advent in 1997, moving from the
LondonofficeofinvestmentbankBaringBrothers,
whereheadvisedclientsonvariousinternational
mergers and acquisitions. James led or has
participated in a number of Advent’s investments
includingEquiniti,Worldpay,NetsMonext,Tertio
Limited and MACH. James co-heads Advent’s
European activities and is head of Advent’s
Europeanbusinessandfinancialservices
sector team.
James has an MA in geography, specialising in
economic and political geography, from Cambridge
University.Heisannon-executiveDirectorof
Worldpay and Nets.
Committees
JamesisamemberoftheOperationsand
Nomination & Governance Committees.
SIR RODNEY ALDRIDGE, OBE
NON-EXECUTIVE DIRECTOR
SirRodjoinedtheEquinitiBoardasanon-executive
Director on 25 March 2010.
Career
SirRodwasthefounderofCapitaGroupandits
Chairman until his retirement in 2006. During his
tenure, he led the Group from its formation in 1984
withintheCharteredInstituteofPublicFinanceand
Accountancy (CIPFA) to being a FTSE 100 company.
SirRodwasChairmanoftheCBI’sPublicServices
Strategy Board from its inception in 2003 until 2006.
PriortoCapita,SirRodworkedinlocalgovernment
fortenyears,wherehequalifiedasachartered
public accountant.
He joined CIPFA in 1974, ultimately becoming its
Technical Director. In 2006, Sir Rod established
theAldridgeFoundationtocontinuehisworkon
public service reform and to focus on his charitable
activities involving educational underachievement
andsocialexclusion.
SirRodisaPatronofthePrince’sTrustandwasthe
inaugural chair of Vinspired, a charity launched by
Government in May 2006 to encourage volunteering
intheyoungandwhichnowengageswithover
onemillionnewyouthvolunteers.HeisalsoChair
ofTheLowry,theartsandentertainmentvenuein
Salford and is a Director of Cornerstone, a company
delivering property solutions to public bodies.
Committees
Sir Rod is a member of the Audit Committee.
LUCY DIMES
CHIEF OPERATING
OFFICER
Lucy joined Equiniti as Chief
OperatingOfficerin2014.
VICKY JARMAN
NON-EXECUTIVE
DIRECTOR AND
CHAIR OF THE AUDIT
COMMITTEE
TIM MILLER
NON-EXECUTIVE
DIRECTOR AND CHAIRMAN
OF THE REMUNERATION
COMMITTEE
Career
Lucy joined Equiniti from Alcatel-
Lucent,whereshewasChief
ExecutiveUK&Ireland.Prior
to that she had a 19 year career
atBT,whichculminatedintherole
of Managing Director Group
&OpenreachOperations.
ShewasawardedtheCorporate
Leader of the Year at the 2013
FDMEverywomaninTechnology
Awardsandthe‘FirstWoman’
AwardinScience&Technology
atthe2013CBIAwards.
Lucyisanon-executiveDirector
of Berendsen PLC and a member
of its Audit, Remuneration and
Nomination Committees. She
is also a Trustee for the Garden
Bridge Trust.
Committees
Lucy is a member of the
OperationsCommittee.
Vicky joined the Equiniti Board
asanon-executiveDirectoron
1 May 2014.
Tim joined the Equiniti Board
asanon-executiveDirector
on 1 February 2015.
Career
Vickyisaqualifiedchartered
accountant,withanearlycareer
at KPMG and latterly 11 years in
corporatefinanceatLazard,where
shewasChiefOperatingOfficer.
During her time at Lazard, she
successfully led the restructuring
of its UK operations. She sat
on the Lazard London Board
and European Management
Committee, and opened Lazard’s
Dubaioffice.
Sheholdsnon-executive
directorships at De La Rue plc
andHaysplc,whereshechairs
the audit committee, and holds
a Mechanical Engineering degree
from Leicester University.
Committees
Vicky is the Chairman of the
Audit Committee and a member
of the Risk and Nomination
& Governance Committees.
Career
Timhasextensiveexperience
asaBoard-levelexecutiveacross
a range of sectors. During his 14
years at Standard Chartered Bank,
he held a number of Director-
levelpositions,withglobal
responsibility for areas including
human resources, compliance,
audit,assurance,financialcrime,
and legal functions.
Hisnon-executiveDirectorroles
include Chairman of the Girls Day
School Trust, Chairman of the
Governing Body of the School of
OrientalandAfricanStudiesand
ChairmanofOptituneplc,
a cleantech company.
Hewaspreviouslyanon-executive
Director of recruitment services
provider Michael Page Group
plc. Tim is also visiting Professor
of Business Management and
Strategy at the Nottingham
Business School and is the
general secretary responsible
for the London Society of Rugby
Football Union Referees.
Committees
Tim is the Chairman of the
Remuneration Committee and a
member of the Risk Committee.
56
HARIS KYRIAKOPOULOS
NON-EXECUTIVE
DIRECTOR
(INVESTOR
REPRESENTATIVE)
Haris joined the Equiniti Board
asanon-executiveDirectoron
1 August 2013.
Career
Haris joined Advent International
in August 2008. Prior to Advent,
heworkedininvestmentbanking
inLondonwithGoldmanSachs’
UK Mergers and Acquisition team,
instrategyconsultinginNewYork
withFirstManhattanConsulting
Group,andinAthenswithTellas,
thefixedlinetelecomstartupthat
wassubsequentlyacquiredby
Wind Hellas.
HarisholdsaBScwithhonours
in Electrical Engineering from
the University of Pennsylvania,
and an MBA.
Committees
Haris is a member of the
Operations,Remuneration
and Risk Committees.
JOHN PARKER
NON-EXECUTIVE
DIRECTOR
John joined the Equiniti Board
asanon-executiveDirector
on 1 January 2014.
Career
JohnwasManagingDirector
of Equiniti Shareholder Solutions,
withresponsibilityforour
share registration, employee
benefitsandinvestmentservices
businesses. He joined the
companyin1999whenitwas
Lloyds TSB Registrars and has
held a number of senior positions
during that period.
HewaswithLloydsTSBGroup
for 30 years, holding a range
of management roles in retail
banking. He held senior positions
asHeadofOffshoreTreasury
and as National Sales Manager,
Wealth Management before
joining Lloyds TSB Registrars
(nowEquiniti).Heisafellowof
the Chartered Institute of Bankers
Committees
John is Chairman of the
Risk Committee.
OLIVER NIEDERMAIER, PHD
NON-EXECUTIVE
DIRECTOR
OliverjoinedtheEquinitiBoardas
anon-executiveDirector
on 25 March 2010.
Career
OliveriscurrentlyChairman
andCEOofTauInvestment
Management,aninvestmentfirm
he founded in 2012 focusing on
turnaroundandgrowthequity
investments in the transformation
of global supply chains. Prior to
that,hewasamemberofthe
ComputershareGlobalExecutive
BoardandafounderandCEOof
KingWorldwideandearlierinhis
career of Pepper Technologies
(acquired by Computershare).
OlivergraduatedfromLudwig-
MaximiliansUniversity,Munich,
Germany,withaPhDinStrategic
Management (magna cum
laude).In2010hewashonoured
by the World Economic Forum
as Young Global Leader and
heservesonseveralnon-profit
boards, including the World
Policy Institute and the National
Museum of the American Indian in
NewYork.
Committees
Oliverisamemberofthe
Nomination & Governance and
Remuneration Committees.
JohnStierwillbejoiningthe
boardasChiefFinancialOfficer
on 1 June 2015.
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Making complex things simpleSECTION 02Equiniti Annual Report 2014
CORPORATE GOVERNANCE
STATEMENT
THE BOARD’S ROLE
The Board provides leadership to the Group.
It is responsible for strategy and oversees implementation,
risk management, financial performance and corporate
governance. It ensures that the right people and resources
are in place to deliver long-term value to shareholders
and benefits to our wider stakeholders.
Thediagrambelowshowourcorporategovernance
structure,includingourBoardandExecutive
Committees.
EQUINITI’S CORPORATE GOVERNANCE STRUCTURE
EGL Board
COMMITTEESOFTHEBOARD
Remuneration
Nomination &
Governance
Risk
Audit
Operating
EXECUTIVECOMMITTEES
Executive Committee
Sales and Bids
Investment and
Projects
Compliance and
Risk
Strategy and
Mergers and
Acquisitions
Quarterly
Business Reviews
Monthly
Performance
Review
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BOARD COMMITTEES
ToallowtheBoardtooperateeffectively,wehave
established a number of Board Committees. During
theyear,wereplacedtheAudit&Riskcommittee
withtheAuditCommittee,whichischairedbyVicky
Jarman, and the Risk Committee, chaired by John
Parker. Summaries of each Board Committee’s terms
ofreferencearesetoutbelow.
Remuneration
TheCommitteereviewstheGroup’sremuneration
policy and makes recommendations to the Board,
includingtheremunerationoftheexecutive
Directors and the Chairman. It also sets and
monitors performance criteria for all incentive
schemes.Thenon-executiveDirectors’remuneration
isreservedtotheBoardasawhole.Inadditionto
remuneration, the Committee oversees any major
changesinemployeebenefitsstructuresthroughout
the Group.
Nomination & Governance
TheCommitteereviewsthestructure,sizeand
composition of the Board, Board Committees and
subsidiary boards, including their balance of skills,
knowledge,experienceanddiversity,andmakes
recommendationstotheBoardwithregardto
any changes. The Committee is also responsible
forestablishingandreviewingplansandpolicies
covering succession plans for Directors and other
seniorexecutives,ourBoarddiversitypolicyand
our staff vetting policy.
Risk
TheCommitteeexercisescompetentand
independentjudgementwhenmaking
recommendations to the Board, to ensure that
the Group establishes, implements and maintains
effective, comprehensive and proportionate policies
and processes to identify, manage, monitor and
reporttheriskstowhichtheGroupisormight
beexposed.
Audit
The Committee monitors the integrity of the
Company’sfinancialstatements,includingits
annual reports, interim management statements
and any other formal announcement relating to its
financialperformance.Italsoreviewsandreports
totheBoardonsignificantfinancialreporting
issues and judgements, having regard to matters
communicatedtoitbytheexternalauditor.
The Committee recommends to the Board the
appointment, re-appointment and removal of the
externalauditor.Iftheexternalauditorwereto
resign,theCommitteewouldinvestigatetheissues
leadingtothisandtakeactionwhererequired.
TheCommitteereviewstheadequacyand
effectivenessoftheGroup’sinternalfinancial
controls and internal control and risk management
systems,includingthemannerinwhich
management ensures and monitors the adequacy
ofthenature,extentandeffectivenessofour
internal controls.
TheCommitteereviewstheGroup’swhistleblowing
policyandtheadequacyofarrangementstoallow
proportionate and independent investigation and
followupofanymattersreported.
Operating
The Committee is the main day-to-day decision
making forum, subordinate to the Board. Its
principal duty is to create shareholder value, by
overseeing implementation of our strategy. It has
responsibility for the Group and for ensuring that
theCompanycomplieswithallapplicablestatutory,
regulatory and governance requirements. Members
promotetheCompany’ssuccessbyexercising
prudentindependentjudgementwithskill,care
anddiligence,whilekeepinginviewthelong-term
consequences of their decisions.
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Making complex things simpleSECTION 02Equiniti Annual Report 2014
BOARD COMPOSITION AND ROLES
At the date of this report, the Board comprised the Chairman, two executive
Directors, four independent non-executive Directors and three other non-executive
Directors, two of whom are investor representatives. Their key responsibilities are
summarised below:
ROLE
Chairman
INDIVIDUAL(S)
Kevin Beeston
ChiefExecutive
Officer
Guy Wakeley
ChiefOperating
Officer
Lucy Dimes
Non-executive
Directors
Sir Rodney Aldridge, Olivier
Niedermaier, Vicky Jarman,
Tim Miller, James Brocklebank,
Haris Kyriakopoulos and
John Parker
RESPONSIBILITIES
Responsible for leading the Board, its
effectiveness and governance, setting the
tone for the Company, and ensuring effective
linksbetweentheshareholders,theBoardand
management
Responsible for the day-to-day management
of the Group’s operations, for recommending
the Group’s strategy to the Board and for
implementing the strategy agreed by the Board
SupportstheChiefExecutiveindevisingand
implementing strategy and in relation to the
operations of the business
ConstructivelychallengetheexecutiveDirectors
andmonitorthedeliveryofthestrategywithin
theriskandcontrolframeworksetbytheBoard
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS
The table below shows the number of Board and committee meetings each director
attended during the year. The number of meetings they were eligible to attend is
shown in brackets.
Director
Kevin Beeston
Guy Wakeley
Martyn Hindley†
Sir Rodney Aldridge
Oliver Niedermaier
James Brocklebank
Haris Kyriakopoulos
Nick Rose
John Parker
Vicky Jarman
COMMITTEE MEETINGS
Board
meetings
Remuneration Nomination
Risk
Audit Operating
& Governance
6 (6)
6 (6)
6 (6)
6 (6)
6 (6)
5 (6)
6 (6)
2 (2)
6 (6)
4 (4)
2 (2)
2 (2)
4 (4)
2 (2)
2 (2)
2 (2)
2 (2)
2 (2)
2 (2)
4 (4)
1 (1)
3 (3)
2 (2)
2 (2)
2 (2)
3 (3)
3 (3)
3 (3)
3 (3)
3 (3)
In addition to scheduled meetings, the Board met on a quorate basis four times, approving formal
completion minutes and internal share transfers.
†MartynHindleyresignedasChiefFinanceOfficeronthe20February2015.
60
Board activities
Board training and induction
During the year, the Board considered and approved
the acquisitions of:
• Pancredit Systems Limited – an innovative and fast
growingsoftwarebusiness,whichsupportsbanks,
intermediariesandpricecomparisonsiteswith
intelligent loan administration and origination
services.
ToensuretheBoardkeepsuptodatewith
developments in the Group’s business, its markets
and corporate governance, the Directors received
thefollowingupdatesduringtheyear:
• Sessions on directors’ duties and responsibilities,
under legislation and corporate governance best
practice; and
• Selftrade’s customer portfolio – the migration of
itscustomersandtheirassetsontoanewtrading
platform completed successfully in January 2015,
involving the transfer of 104,000 customer records
andapproximately£3.9bnofclientassets.
• J.P. Morgan’s corporate dealing services business
– the acquisition provides dealing services
for participants in all forms of share based
remuneration schemes and increased Equiniti’s
presence in the UK market.
• Invigia Ltd – a provider of complaints, case and
feedbackmanagementsoftwareandservicesfor
awiderangeofentities.Theacquisitionadds
to the services offered through Hazell Carr, as
wellasexistingtechnologysolutionsincase
management, data analysis and reporting.
• A further 11% stake in MyCSP, increasing our
holdingto51%.Theacquisitionwillstrengthen
the partnership and help accelerate MyCSP’s
growth,intheinterestsofitsclients,shareholders
and employees.
• A site visit to our Belfast businesses.
WhennewDirectorsjointheBoard,weensure
they receive a full induction so that they have a
thorough understanding of the business and their
responsibilities as Directors.
Board process
The agenda for each Board meeting is prepared
bytheCEO,inconjunctionwiththeChairmanand
company secretary. Papers are collated centrally
and accessible online using a Board portal. A typical
Boardpackcomprisesofexecutivesummaries
relating to business performance, risk and
compliance,internalaudit,HRandfinance,together
withappropriatesupportingpapersandotherkey
information, such as details of any standalone special
projects or proposed acquisitions. All directors have
access to the company secretary. The Board is kept
up to date on legal, regulatory and governance
matters by regular papers and presentations from
bothinternalsubjectmatterexpertsandexternal
advisers.
The Board’s activities also included:
Conflicts of interest
• Approving appointments to the Board to
strengthentheexecutiveteamandoverall
governance structure, through the appointments
ofGuyWakeleyasCEO,LucyDimesasCOOand
PaulMatthewstotheexecutiveteam,together
withJohnParker,VickyJarmanandTimMilleras
non-executiveDirectors.
• Overseeingasignificantinvestmentin
IT infrastructure, by the insourcing of IT
development and support services and creation
androlloutofaGroup-wideITnetworkto
support all the Group’s businesses.
• Introducing a key account programme, to
underpintheGroup’sgrowthplansandprovide
an improved service offering to clients and their
customers and investors.
TheBoardoperatesapolicytoidentifyand,where
appropriate,manageconflictsorpotentialconflicts
ofinterest.Whereanyconflictsarenotifiedor
disclosed, these are considered by the remaining
Directors on a case by case basis.
Relations with investors
TheCompanyactivelyengageswithitsinstitutional
debt investors and analysts. During the year:
• OurChiefFinancialOfficerheldmeetingswith
debt investors and analysts, to discuss our
performance; and
• OurChiefExecutiveOfficerandChiefFinancial
Officermadequarterly,half-yearandfull-year
results presentations.
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Making complex things simpleSECTION 02Equiniti Annual Report 2014
AUDIT COMMITTEE REPORT
Whistleblowing
Committee membership
Chair: Vicky Jarman
Members: Sir Rod Aldridge, Kevin Beeston,
and Nick Rose (part of year only)
Meetings and agenda
The Audit Committee met four times during
the year. The committee meetings are routinely
attendedbytheCEO,CFO,COOandGroup
Directorofcomplianceandrisk,togetherwith
representativesoftheexternalauditorandinternal
audit team by invitation.
The key agenda items that the Committee
considered in 2014 included:
• Reviewingandapprovingtheinterimandfullyear
results announcements and the annual report;
• Reviewingandapprovinginternalandexternal
audit plans for 2015;
• ReviewingtheGroup’sEnterpriseWideRisk
Management (“EWRM”) risk assessment and risk
appetite;
• Reviewinginternalauditreportsintoanumberof
internalandexternalprocesses,includingoutof
pocketexpenses,securityofthird-partysupplier
bank details, pension administration payment
processes, payroll administration and third-party
print and mail processes; and
• Commissioninganexternalreviewintothe
structure and operation of the internal audit,
compliance and risk function.
Significant judgements, assumptions
and estimates
The Audit Committee’s responsibilities include
reviewingandapprovingsignificantjudgements,
assumptions and estimates made in preparing the
financialstatements.In2014,theseincluded:
• Treatmentofexceptionalitems,includingproject
costs, costs relating to the restructuring and
refinancingin2013.
• Impairmentreviewofgoodwill,usingnetpresent
valueofdebtfreecashflowprojections.
• Reviewoftheassessmentofthegoingconcern
statement and the underlying assumptions
consideredinthatreview.
TheAuditCommitteeoverseesawhistleblowing
facility to enable employees to raise issues on a
confidentialbasis.Allconcernsaboutmalpractice
are treated seriously. The Group is committed to
ensure that all reports are thoroughly investigated
and appropriate action taken. Any investigations
are conducted by an appropriate person or
department not involved in the alleged malpractice.
Investigations may be independently overseen
by Compliance, to ensure a consistent approach.
Where an employee feels unable to report any
concerns internally, they are recommended to report
their concerns to the independent charity Public
ConcernatWork,whichisarecognisedauthority
onwhistleblowing.
RISK COMMITTEE REPORT
Committee membership
Chair: John Parker
Members: Vicky Jarman and Haris Kyriakopoulos
Meetings and agenda
TheRiskCommittee,whichwasestablishedduring
theyear,mettwice.Thecommitteemeetingsare
routinelyattendedbytheCEO,CFO,COOand
Group Director of compliance and risk by invitation.
The key agenda items that the Committee
considered in 2014 included:
• Reviewingroutineupdatesofgrouppolicies
relatingtoanti-briberyandgifts,whistleblowing
and competition;
• Reviewingthe2015internalauditandcompliance
testing plans;
• Reviewingandreviewingreportsandfollowup
actions on the effectiveness of fraud mitigation
controlsandtheriskcontrolframeworkand
EWRM structure;
• Reviewofreportsfrominternalauditandfollow
up actions into complaint handling processes,
dataprotectionawareness,internalHRandpayroll
disciplines,andinternalstaffexpenses;and
• Receivingreportsrelatingtocyberriskexposure
and future changes to EU data protection
legislationwhicharelikelytoimpacttheGroup’s
activities and in particular its big data initiative.
62
Risk management and internal control
Duringtheyear,weseparatedtheAudit&Risk
Committeeintotwocommittees.WiththeGroup’s
growthgenerally,andinparticularthegrowthof
theregulatedbusiness,wefeltitwasimportant
to separate the oversight of the risk function,
the assessment of risk and the development of
operational procedures from the internal audit
andcompliancefunctions,whichmonitorthe
effectiveness of those risk mitigation and
operational processes.
Having restructured audit and risk oversight in this
way,ourexternalauditorperformedaformalreview
of our internal audit, risk and compliance functions.
Thishasshownuswhereweperformwellandalso
highlightedareasforfurtherimprovement,which
wewillimplementinthecomingmonths.
The Group has established risk management policies
andtheAuditandRiskCommitteesoverseehow
management monitors our compliance. With these
policiesandprocedures,wereviewtheadequacy
ofourriskmanagementframeworkinrelationto
the risks the Group faces.
TheCEOandCFOformpartoftheGroup’sfirstline
of defence and attend Audit and Risk Committee
meetings, to respond to any matters that arise. They
areresponsiblefortakingforwardactionsthatthe
Committees delegate to them. The Compliance &
Risk Director oversees the closure of these actions.
The Audit Committee is assisted in its oversight
role by Internal Audit and Compliance Monitoring
functions. Internal Audit undertakes both regular
andadhocreviewsofriskmanagementcontrols
andprocedures,whileComplianceMonitoring
undertakesthemedregulatoryreviewsandreports
the results to the Audit and Risk Committees.
Various aspects of our activities are regulated,
either directly or indirectly. As such, the Group’s
risk management systems are longstanding,
standardised and robust. We have a strong risk
managementframework,whichusesa“threelines
of defence” model, namely:
• operational management’s application of systems
and controls;
• the development and deployment of business
conduct rules and regulatory policies; and
• theindependentassessmentofthesetwo
defences by the Group’s independent Internal
Audit and Compliance Monitoring functions.
TheGroupassessesitsriskandriskprofileusing
anEWRMmodel,whichcoversstrategy,change,
customertreatment,financialsoundness,market
andcreditexposure,legalandregulatory
compliance,internalandexternalfraudexposure,
change and operations.The combination of these
risk assessments supports our formulation of our
risk assessment.
Inaddition,wehaveawell-establishedbusiness
continuitymanagement(“BCM”)framework,which
determineshowbusinesscriticaleachactivityisto
clients,theircustomers,otherexternalstakeholders
andtheGroup.Onceassessedandindependently
challenged,werequireeachbusinessunittoapply
arangeofbusinesscontinuitytests,whichincrease
inlinewiththelevelofcriticalactivityundertaken.
WeactivelytrackourcompliancewiththisBCM
testing programme.
Ourprincipalrisksandourmitigationsforthem
are discussed in the Strategic Report on page 41.
TheGroup’sapproachtofinancialriskmanagement
isdiscussedbelow.
Financial risk management
OuroperationsexposetheGrouptoavarietyof
financialrisks,includingcreditrisk,liquidityrisk
and the effects of changes in interest rates on
debt. We have a risk management programme that
seekstolimittheadverseeffectsonourfinancial
performance,bymonitoringlevelsofdebtfinance
andtherelatedfinancecosts.
TheGroup’sprincipalfinancialinstrumentscomprise
sterling cash and bank deposits, bank loan and
overdraftsandotherloans,togetherwithtrade
debtors and trade creditors that arise directly from
our operations.
Cash flow interest rate risk
TheGroupisexposedtointerestrateriskinthree
mainrespects.First,floatingratesaregenerally
earnedonclientandcorporatebalances,whichare
mitigatedbyaninterestratederivativewhichruns
toOctober2016.Commencinginearly2015,wewill
enhance this interest rate derivative and ultimately
replaceitwitharollinginterestratehedgingstrategy.
Second,expenserelatingtotheUKSharesave(SAYE)
productandultimatelypayabletosaversatfixed
ratesisprotectedbyfixedrateincomeagreements.
Third,wemitigateinterestexpensearisingonthe
floatingratenotesviaaninterestratederivative,
whichrunstoOctober2018.
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Making complex things simpleSECTION 02Equiniti Annual Report 2014
Credit risk
Capital risk management
Creditriskistheriskoffinanciallossifacustomeror
counterpartytoafinancialinstrumentfailstomeetits
contractualobligationstous.Ourprincipalfinancial
assets are bank balances, cash and trade debtors.
Theserepresentourmaximumexposuretocredit
riskinrelationtofinancialassets.
We have strict controls around, and regularly
monitor,thecreditratingsofinstitutionswithwhich
weentertransactions,eitheronourownbehalfor
for clients. Although our credit risk arises mainly
from our receivables from clients, this risk is not
significantbecauseitisspreadacrossalargeand
diverse client base and the majority of our trade
receivablesarewithFTSE350companiesandpublic
sector organisations. The amounts presented in
theconsolidatedstatementoffinancialposition
arenetofallowancesfordoubtfuldebts,which
are estimated by management based on prior
experienceandanassessmentofthecurrent
economic environment. Losses have only
occurred infrequently in previous years.
Foreign currency risk
TheGroupisexposedtoforeigncurrencyrisk.
Ourpolicyistohedgeagainstmaterialcurrency
fluctuations,wherewefeelthisisadvantageous.
Price risk
Price risks result from changes in market prices such
asinterestrates,foreignexchangeratesandequity
dealingprices,whichimpacttheGroup’sincomeor
thevalueofitsfinancialinstruments.
Ourfinancialinstrumentsaremainlyinsterling,which
meansthatforeignexchangemovementsdonot
have a material effect on the Group’s performance.
We do not hold positions in traded securities and
are only involved in receiving and transmitting
transactions on behalf of clients.
The Group earns income in relation to client
andinvestordeposits,aswellasinterestonits
owndeposits.TheGroupisthereforeexposed
to movements in the interest rate in both its
intermediaryfeerevenueandnetfinancecosts.
Intermediary fee revenue is linked to bank base rate,
whileboththeGroup’sseniordebtandthePIKloan
rates of the Group are linked to Libor.
In 2011, the Company hedged the monthly
intermediaryfeeincomeatexistingmarketrates
byreceivingafixedrateagainstbaseratethat
continuesuntil2016.Thiswasagainstanunderlying
level of £400m of assets, reducing by £80m over
the term.
Asaresultofthe2013re-financing,aswapwastaken
out,matchingthetermsofthenew£190mfloating
rate notes.
Wecontinuallyreviewtheserisksandidentify
suitableinstrumentswhereapplicable.
Incommonwithotherprivateequityportfolio
companies, the Group carries a high level of net
debt compared to equity. Total capital is calculated
astotalequity,asshownintheconsolidated
statementoffinancialposition,plusnetdebt.
Net debt is calculated as the total of “other
interestbearingloansandborrowings”,asshown
intheconsolidatedstatementoffinancialposition,
less cash and cash equivalents.
Ourobjectiveswhenmanagingcapitalareto
maximiseshareholdervaluewhilesafeguarding
the Group’s ability to continue as a going concern.
Wewillcontinuetoproactivelymanageourcapital
structure,whilemaintainingflexibilitytotake
advantageofopportunitiestogrowourbusiness.
Oneelementofourstrategyistomaketargeted,
value-enhancing acquisitions. The availability
of suitable acquisitions, at acceptable prices is,
however,unpredictable.
Prudential Capital Risk
TwoGroupentitiesaresubjecttoFCAregulatory
capitalrequirementswhereeachisrequired,as
set against its regulated trading permissions, to
maintain minimum levels of capital in order to
manage its affairs. Equiniti Financial Services Limited
(EFSL)iscategorisedasaP2prudentiallysignificant
firm,whichmeansthatitsdisorderlyfailurewould
haveasignificantimpactonthefunctioning
ofthemarketinwhichitoperates.Paymaster
(1836) Limited (“P(1836)L”)is categorised as a P3
prudentiallynon-significantfirm,whichmeansthat
itsfailure,evenifdisorderly,wouldbeunlikelyto
haveasignificantimpact.
AsanIFPRUMiFIDqualifyingfirm,(“EFSL”)must
complywiththeCapitalRequirementsDirective
anddoessoundertheFCAframeworkconsisting
ofitsthree“Pillars”approach,whereEFSL
assesses its minimum capital requirement for its
credit,marketandoperationalriskandwhetherits
minimum capital is adequate to meet its risks, and
disclosesspecificinformationrelatingtounderlying
risk management controls, capital position and
remuneration at equiniti.com.
AsaMiFIDexemptfirm,P(1836)Lmustcomply
withtheCapitalRequirementsDirective.Thefirm
does,however,assessitscapitalrequirementsand
is subject to the Group’s EWRM and three lines of
defence risk management model.
Liquidity risk and going concern
LiquidityriskistheriskthattheGroupwillbeunable
tomeetitsfinancialobligationsastheyfalldue.Our
approach to managing liquidity is to ensure, as far
asispossible,thattheGroupwillhavesufficient
liquiditytomeetitsliabilitieswhendue,underboth
normal and stressed conditions.
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Wehaveusedourfive-yearbusinessplanasthe
basisforprojectingcashflowsandmeasured
the resulting outcomes on cash availability and
bank covenant test points. The Group has a very
highlevelofclientretention,whichgivesusa
high degree of comfort about the certainty of our
revenue income.
The Group’s principal uncertainties about its income
relatetoactivitiesthataremoredifficulttopredict,
such as corporate action income. These depend
onthespecificactivitiesofcorporateclients,which
mayinturnbeinfluencedbyunderlyingmarket
conditions.
Duringtheplannedperiod,theGroupexpectto
remaincompliantwithallcovenants.Assuch,the
DirectorsaresatisfiedthattheGrouphasadequate
resourcestocontinueinoperationalexistencefor
the foreseeable future. For this reason, the going
concern basis has been adopted in the preparation
of these accounts.
NOMINATIONS & GOVERNANCE
COMMITTEE REPORT
Committee membership
Chair: Kevin Beeston
• LucyDimes,whojoinedusinMarch2014asChief
OperatingOfficer,wasappointedtotheBoardin
February 2015; and
• Tim Miller joined the Board as an independent
non-executiveDirectorandchairofthe
Remuneration Committee in February 2015.
The appointments of Guy Wakeley and John Parker
weresetoutinourannualreportfor2013.
Vicky Jarman and Tim Miller bring additional
independent oversight to the Board and have
significantexperienceinarangeofcriticalareas,
suchasfinance,humanresourcesandcompliance,
whichwillbevaluabletoEquinitiasthebusiness
continuestogrow.
LucyDimesbringsawealthofdirector-level
experienceacrossarangeofoperationalandcontrol
functions, adding to the Board’s strength in depth
Resignations
NickRose,whowasaninvestorrepresentative,
resignedasanon-executiveDirectorinMay2014.
Martyn Hindley resigned from the Board and his role
asChiefFinancialOfficerinFebruary2015.
Board diversity
Members: James Brocklebank,
Haris Kyriakopolous, and Oliver Neidermaeir
Meetings and agenda
The Committee meets as required. During the year,
itmettwice.TheCEOattendedboththemeetings
at the request of the Committee.
The key agenda items that the Committee
considered in 2014 included:
We believe that diversity among Directors
contributestowardsahighperforming,effective
Board.TheBoardthereforeworkshardtoensure
that it is able to recruit Directors from different
backgrounds,withdiverseexperience,perspectives,
personalities,skillsandknowledge.
REMUNERATION COMMITTEE REPORT
Committee membership
• The Board’s composition and its balance of skills
Chair: James Brocklebank
andexperience;and
• Therequirementsfornewindependentnon-
executiveDirectors,andthesubsequent
identificationandrecommendationofsuitable
candidates.
Board appointments and resignations
Appointments
Therewereanumberofappointmentstothe
Board during the year and since the year end:
• GuyWakeleyjoinedtheBoardasChiefExecutive
OfficerinJanuary2014;
• JohnParkerjoinedtheBoardasanon-executive
Director in January 2014;
• Vicky Jarman joined the Board as an independent
non-executiveDirectorandchairoftheAudit
Committee in May 2014;
Members: Kevin Beeston, Oliver Neidermaeir
and Haris Kyriakopolous.
Meetings and agenda
TheRemunerationCommitteemettwiceduringthe
year.TheCEOattendedboththemeetingsatthe
request of the Committee.
ThekeymattersreviewedbytheCommitteewere
• The scheme parameters and performance
criteria for bonus and incentive programmes and
the individual remuneration, including bonus
payments,toseniorexecutivesandthetop
earnerswithinthebusiness;and
• The general pay policy across the Group
and the general pay increase.
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Directors’
report
The Directors present their Directors’ report and
financial statements for the year ended 31 December
2014. The Group’s performance for the year is discussed
in the Strategic Report on pages 7 to 50.
PRINCIPAL ACTIVITIES OF THE GROUP
DIRECTORS
The principal activities of Equiniti Group Limited and
its subsidiaries (“the Group”) comprise the provision
ofcomplexadministration,processingandpayment
services, supported by leading technology to assure
delivery to the Group’s clients, their employees,
pensioners and consumers. The Company acts as
a holding company for the Group.
TheDirectorsoftheCompanywhowereinoffice
during the year and up to the date of signing the
financialstatementswereasfollows:
Sir Rodney Aldridge
Kevin Beeston
James Brocklebank
Lucy Dimes
Appointed 1 February 2015
Martyn Hindley
Resigned 20 February 2015
Victoria Jarman
Appointed 1 May 2014
Tim Miller
Appointed 1 February 2015
OliverNiedermaier
Nick Rose
Resigned 6 May 2014
Haris Kyriakopoulos
John Parker
Guy Wakeley
Appointed 20 January 2014
66
TheDirectorshavethebenefitofanindemnity,
whichisaqualifyingthird-partyindemnityprovision
asdefinedbySection234oftheCompaniesAct
2006.Theindemnitywasinforcethroughoutthe
lastfinancialyearandiscurrentlyinforce.The
Group also purchased and maintained throughout
thefinancialyearDirectorsandOfficers’liability
insurance in respect of itself and its Directors and
Officers.
PROPOSED DIVIDEND
The Directors do not recommend the payment of a
dividend on ordinary shares but there are amounts
accruingonpreferencesharesincludedinfinance
expenses.
EMPLOYEES
The Equiniti Group is committed to providing an
environmentwhichfostersinvolvementbyallour
employees.Regularbriefingsthroughmeetingsand
publicationskeepallemployeesuptodatewith
employmentpractices,healthandsafetyaswellas
the business objectives of the Equiniti Group. The
Equiniti Group gives full and fair consideration to
employment applications from disabled persons,
having regard to their particular aptitude and
abilities.Whereexistingemployeesbecome
disabled, it is the Equiniti Group’s policy to provide
continuing employment under normal terms and
conditionswhereverpracticable,providingtraining,
career development and promotion to disabled
employeeswhereappropriate.
GOING CONCERN
ThedirectorsaresatisfiedthattheEquinitiGroup
has adequate resources to continue in operational
existencefortheforeseeablefuture.Forthisreason,
the going concern basis has been adopted in
preparing the accounts.
POLITICAL DONATIONS
The Equiniti Group did not make any political
donationsorincuranypoliticalexpenditureduring
the year.
FUTURE DEVELOPMENTS
TheGroup’sexpectedfuturedevelopmentsare
discussedintheChiefExecutive’sstatementinthe
Strategic Report, on page 22.
DISCLOSURE OF INFORMATION
TO AUDITORS
TheDirectorswhoheldofficeatthedateof
approvalofthisDirectors’reportconfirmthat,so
farastheyareeachaware,thereisnorelevantaudit
informationofwhichtheEquinitiGroup’sauditors
areunaware;andeachDirectorhastakenallthe
steps that he ought to have taken as a Director to
makehimselfawareofanyrelevantauditinformation
and to establish that the Equiniti Group’s auditors
areawareofthatinformation.
DIRECTORS’ RESPONSIBILITIES
The Directors are responsible for preparing the
annualreportandthefinancialstatementsin
accordancewithapplicablelawandregulations.
CompanylawrequirestheDirectorstoprepare
financialstatementsforeachfinancialyear.Under
thatlawtheDirectorshavepreparedtheGroupand
parentcompanyfinancialstatementsinaccordance
withInternationalFinancialReportingStandards
(“IFRSs”) as adopted by the European Union.
Undercompanylawthedirectorsmustnotapprove
thefinancialstatementsunlesstheyaresatisfiedthat
theygiveatrueandfairviewofthestateofaffairs
oftheGroupandthecompanyandoftheprofitor
loss of the Group for that period. In preparing these
financialstatements,theDirectorsarerequiredto:
• select suitable accounting policies and then
apply them consistently;
• make judgements and accounting estimates that
are reasonable and prudent;
• statewhetherapplicableIFRSsasadoptedby
the European Union and IFRSs as issued by
the International Accounting Standards Board
(“IASB”),havebeenfollowed,subjecttoany
materialdeparturesdisclosedandexplainedin
thefinancialstatements;
• preparethefinancialstatementsonthegoing
concern basis unless it is inappropriate to
presumethatthecompanywillcontinuein
business.
The Directors are responsible for keeping adequate
accountingrecordsthataresufficienttoshowand
explainthecompany’stransactionsanddisclose
withreasonableaccuracyatanytimethefinancial
position of the company and the Group and
enablethemtoensurethatthefinancialstatements
complywiththeCompaniesAct2006and,as
regardstheGroupfinancialstatements,Article4
of IAS Regulation. They are also responsible for
safeguarding the assets of the company and the
Group and hence for taking reasonable steps
for the prevention and detection of fraud and
other irregularities.
The Directors are responsible for the maintenance
andintegrityofthecompany’swebsite.Legislation
in the United Kingdom governing the preparation
anddisseminationoffinancialstatementsmaydiffer
from legislation in other jurisdictions.
By order of the Board
Guy Wakeley
Chief Executive
25 March 2015
Registered Number: 07090427
Future
developments
are discussed
in the Strategic
Report on
page 22.
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INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF EQUINITI
GROUP LIMITED
REPORT ON THE GROUP FINANCIAL
STATEMENTS
Our opinion
OPINION ON OTHER MATTER
PRESCRIBED BY THE COMPANIES
ACT 2006
In our opinion, Equiniti Group Limited’s group
financialstatements(the“financialstatements”):
• giveatrueandfairviewofthestateofthegroup’s
affairs as at 31 December 2014 and of its loss and
cashflowsfortheyearthenended;
• have been properly prepared in accordance
withInternationalFinancialReportingStandards
(“IFRSs”) as adopted by the European Union; and
• havebeenpreparedinaccordancewiththe
requirements of the Companies Act 2006.
What we have audited
Equiniti Group Limited’s financial statements
comprise:
• theconsolidatedstatementoffinancialposition
as at 31 December 2014;
• the consolidated statement of comprehensive
income for the year then ended;
• theconsolidatedstatementofcashflows
for the year then ended;
• the consolidated statement of changes in
equity for the year then ended; and
• thenotestothefinancialstatements,which
includeasummaryofsignificantaccounting
policiesandotherexplanatoryinformation.
Thefinancialreportingframeworkthathas
beenappliedinthepreparationofthefinancial
statementsisapplicablelawandIFRSsasadopted
by the European Union.
Inapplyingthefinancialreportingframework,
the directors have made a number of subjective
judgements,forexampleinrespectofsignificant
accounting estimates. In making such estimates,
they have made assumptions and considered
future events.
In our opinion, the information given in the Strategic
ReportandtheDirectors’Reportforthefinancial
yearforwhichthefinancialstatementsareprepared
isconsistentwiththefinancialstatements.
OTHER MATTERS ON WHICH WE ARE
REQUIRED TO REPORT BY EXCEPTION
Adequacy of information and explanations received
UndertheCompaniesAct2006wearerequiredto
reporttoyouif,inouropinion,wehavenotreceived
alltheinformationandexplanationswerequirefor
ouraudit.Wehavenoexceptionstoreportarising
from this responsibility.
Directors’ remuneration
UndertheCompaniesAct2006wearerequiredto
report to you if, in our opinion, certain disclosures
ofdirectors’remunerationspecifiedbylawarenot
made.Wehavenoexceptionstoreportarisingfrom
this responsibility.
RESPONSIBILITIES FOR THE FINANCIAL
STATEMENTS AND THE AUDIT
Our responsibilities and those of the directors
AsexplainedmorefullyintheDirectors’
Responsibilities set out on page 67, the directors
areresponsibleforthepreparationofthefinancial
statementsandforbeingsatisfiedthattheygivea
trueandfairview.
Ourresponsibilityistoauditandexpressanopinion
onthefinancialstatementsinaccordancewith
applicablelawandInternationalStandardson
Auditing (UK and Ireland) (“ISAs (UK & Ireland)”).
Thosestandardsrequireustocomplywiththe
Auditing Practices Board’s Ethical Standards
for Auditors.
68
OTHER MATTER
We have reported separately on the company
financialstatementsofEquinitiGroupLimited’s
for the year ended 31 December 2014.
Graham Lambert (Senior Statutory Auditor) for
andonbehalfofPricewaterhouseCoopersLLP
Chartered Accountants and Statutory Auditors
Gatwick
March 2015
This report, including the opinions, has been
prepared for and only for the company’s members
asabodyinaccordancewithChapter3ofPart16
of the Companies Act 2006 and for no other
purpose. We do not, in giving these opinions,
accept or assume responsibility for any other
purposeortoanyotherpersontowhomthisreport
isshownorintowhosehandsitmaycomesave
whereexpresslyagreedbyourpriorconsentin
writing.
What an audit of financial statements involves
WeconductedourauditinaccordancewithISAs
(UK & Ireland). An audit involves obtaining evidence
abouttheamountsanddisclosuresinthefinancial
statementssufficienttogivereasonableassurance
thatthefinancialstatementsarefreefrommaterial
misstatement,whethercausedbyfraudorerror.
This includes an assessment of:
• whethertheaccountingpoliciesareappropriate
to the group’s circumstances and have been
consistently applied and adequately disclosed;
• thereasonablenessofsignificantaccounting
estimates made by the directors; and
• theoverallpresentationofthefinancial
statements.
Weprimarilyfocusourworkintheseareasby
assessing the directors’ judgements against
availableevidence,formingourownjudgements,
andevaluatingthedisclosuresinthefinancial
statements.
Wetestandexamineinformation,usingsampling
andotherauditingtechniques,totheextentwe
consider necessary to provide a reasonable basis
forustodrawconclusions.Weobtainauditevidence
through testing the effectiveness of controls,
substantive procedures or a combination of both.
Inaddition,wereadallthefinancialandnon-
financialinformationintheAnnualReportto
identifymaterialinconsistencieswiththeaudited
financialstatementsandtoidentifyanyinformation
that is apparently materially incorrect based on,
ormateriallyinconsistentwith,theknowledge
acquired by us in the course of performing the
audit.Ifwebecomeawareofanyapparentmaterial
misstatementsorinconsistenciesweconsiderthe
implications for our report.
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Making complex things simpleSECTION 02Equiniti Annual Report 2014
70
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03 FINANCIAL
STATEMENTS
S
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71
EQUINITI GROUP LIMITED
CONSOLIDATED INCOME STATEMENT FOR
THE YEAR ENDED 31 DECEMBER 2014
CONTINUING OPERATIONS
Revenue
Operating costs before exceptional costs, depreciation
and amortisation
Earnings before interest, tax, depreciation
and amortisation (EBITDA) prior to exceptional items
Operating costs – exceptional items
Earnings before interest, tax, depreciation
and amortisation (EBITDA)
Depreciation of property, plant and equipment
Amortisation of intangible assets
Total operating costs
Profit from operating activities
Finance income
Finance costs before exceptional items
Finance costs – exceptional items
Net finance costs
Gain on disposal of associates
Share of profit of associates
Loss before income tax
Income tax credit
Loss for the year from continuing operations
DISCONTINUED OPERATIONS
Profit for the year from discontinued operations
(attributable to owners of the parent)
Loss for the year
Loss attributable to:
– Owners of the parent
– Non-controlling interests
The notes on pages 78 to 123 form part of these financial statements.
7272
Note
5,7
7
6
7
14
15
8
11
11
11
12
12
13
22
2014
£m
292.3
(222.3)
70.0
(7.7)
62.3
(3.8)
(36.9)
2013
£m
274.7
(198.4)
76.3
(25.0)
51.3
(4.0)
(32.5)
(270.7)
(259.9)
21.6
0.6
(72.4)
–
(71.8)
9.8
1.7
(38.7)
1.7
(37.0)
–
(37.0)
(39.1)
2.1
(37.0)
14.8
1.0
(66.7)
(12.4)
(78.1)
–
1.6
(61.7)
4.3
(57.4)
3.7
(53.7)
(53.7)
–
(53.7)
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME FOR THE YEAR
ENDED 31 DECEMBER 2014
Note
Loss for the year
Other comprehensive income
Items that may be subsequently reclassified to profit or loss
Fair value movement through hedging reserve
Share of other comprehensive income of associates
Items that will not be reclassified to profit or loss
Defined benefit plan actuarial loss
25
Deferred tax credit on other comprehensive income
Other comprehensive loss for the year
Total comprehensive loss for the year
Loss attributable to:
– Owners of the parent
– Non-controlling interests
The notes on pages 78 to 123 form part of these financial statements.
2014
£m
(37.0)
1.5
–
1.5
(5.8)
1.0
(4.8)
(3.3)
(40.3)
(42.4)
2.1
(40.3)
2013
£m
(53.7)
1.7
(0.2)
1.5
(3.8)
0.8
(3.0)
(1.5)
(55.2)
(29.5)
–
(29.5)
73
Equiniti Annual Report 2014Making complex things simpleSECTION 03FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF FINANCIAL
POSITION AS AT 31 DECEMBER 2014
ASSETS
Non-current assets
Property, plant and equipment
Intangible assets
Investments in associates
Other financial assets
CURRENT ASSETS
Trade and other receivables
Agency broker
Other financial assets
Cash and cash equivalents
Total assets
EQUITY AND LIABILITIES
Equity attributable to owners of the parent
Share capital
Share premium
Hedging reserve
Accumulated deficit
Non-controlling interest
Total equity
LIABILITIES
Non-current liabilities
Interest-bearing loans and borrowings
Deferred consideration
Employee benefits
Provisions for other liabilities and charges
Other financial liabilities
Deferred income tax liabilities
7474
Note
14
15
12
17
20
17
21
27
27
23
25
26
18
19
2014
£m
12.6
681.4
–
11.0
705.0
64.7
19.5
0.2
30.1
114.5
819.5
5.0
3.5
(0.2)
(234.7)
(226.4)
17.7
(208.7)
901.5
4.0
15.5
5.8
0.3
7.7
934.8
2013
£m
10.7
605.7
14.3
6.1
636.8
56.7
8.2
1.6
15.4
81.9
718.7
5.0
3.5
(1.7)
(190.8)
(184.0)
–
(184.0)
816.3
–
10.1
7.0
0.6
3.5
837.5
CURRENT LIABILITIES
Trade and other payables
Agency broker
Employee benefits
Income tax payable
Provisions for other liabilities and charges
Other financial liabilities
Total liabilities
Total equity and liabilities
Note
24
25
26
18
2014
£m
68.5
19.5
0.4
0.8
3.4
0.8
93.4
1,028.2
819.5
2013
£m
49.0
8.2
0.4
–
3.9
3.7
65.2
902.7
718.7
The notes on pages 78 to 123 form part of these financial statements.
The financial statements on pages 72 to 123 were approved by the Board of directors on and were signed on its behalf by:
G Wakeley
Chief Executive
75
Equiniti Annual Report 2014Making complex things simpleSECTION 03FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF CHANGES
IN EQUITY FOR THE YEAR ENDED 31
DECEMBER 2014
Share capital
£m
Share premium
£m
Hedging
reserve
£m
Accumulated
deficit
£m
Non-
controlling
interest
£m
Balance at 1 January 2013
5.0
3.5
(3.4)
(133.9)
Comprehensive income
Loss for the year per the
statement of
comprehensive income
Other comprehensive income
Changes in fair value of cash flow
hedges
Share of other commprehensive
income of associates
Actuarial losses on defined
benefit pension plans
Deferred tax on defined benefit
pension plans
Total comprehensive income
Balance at 31 December 2013
Balance at 1 January 2014
Comprehensive income
(Loss) / profit for the year per the
statement of comprehensive
income
Other comprehensive income
Changes in fair value of cash flow
hedges
Actuarial losses on defined
benefit pension plans
Deferred tax on defined benefit
pension plans
Total comprehensive income
Non-controlling interest arising
on business combination
Transactions with non-controlling
interests
Transaction with owners
–
–
–
–
–
5.0
5.0
–
–
–
–
–
–
–
–
–
–
–
–
–
3.5
3.5
–
–
–
–
–
–
–
–
–
(53.7)
1.7
–
–
1.7
(1.7)
(1.7)
–
1.5
–
–
1.5
–
–
–
–
(0.2)
(3.8)
0.8
(56.9)
(190.8)
190.8
(39.1)
–
(5.8)
1.0
(43.9)
–
–
–
Total
equity
£m
(128.8)
(53.7)
1.7
(0.2)
(3.8)
0.8
(55.2)
(184.0)
(184.0)
–
–
–
–
–
–
–
–
2.1
(37.0)
–
–
–
2.1
16.3
(0.7)
15.6
1.5
(5.8)
1.0
(40.3)
16.3
(0.7)
15.6
Balance at 31 December 2014
5.0
3.5
(0.2)
(234.7)
17.7
(208.7)
The notes on pages 78 to 123 form part of these financial statements.
7676
Note
33
4
12
CONSOLIDATED STATEMENT OF CASH
FLOWS FOR THE YEAR ENDED 31
DECEMBER 2014
CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated from operations
Net cash inflow from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received
Dividends from investment
Dividends from associate
Business acquisitions net of cash acquired
Proceeds from disposal of a business
Acquisition of an associate
Payment relating to prior year acquisition
Acquisition of property, plant and equipment
Acquisition of software
Net cash (outflow)/inflow from investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of loans
Increase in borrowings
Payment of finance lease liabilities
Interest paid
Loan fees paid and other finance costs
Refinancing fees paid
Net cash inflow/(outflow) from financing activities
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
The notes on pages 78 to 123 form part of these financial statements.
2014
£m
51.2
51.2
0.2
0.4
1.7
(30.3)
1.5
(2.5)
(0.7)
(3.8)
(17.0)
(50.5)
–
45.5
(0.3)
(29.3)
(1.9)
–
14.0
14.7
15.4
30.1
2013
£m
59.6
59.6
0.6
0.4
0.5
(10.9)
74.3
(4.0)
(1.6)
(3.9)
(15.4)
40.0
(530.7)
440.0
–
(30.5)
(5.8)
(15.0)
(142.0)
(42.4)
57.8
15.4
77
Equiniti Annual Report 2014Making complex things simpleSECTION 03FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014
1. ACCOUNTING POLICIES
Equiniti Group Limited (the “Company”) is a
limited company incorporated and domiciled in
the UK. The principal activity of the Company is
that of a holding company. The registered office
is Sutherland House, Russell Way, Crawley, West
Sussex, RH10 1UH. The group financial statements
consolidate those of the Company and its
subsidiaries (together referred to as the “Group”).
Basis of preparation
These financial statements have been prepared in
accordance with International Financial Reporting
Standards as adopted by the European Union (IFRSs
as adopted by the EU), IFRS – IC Interpretations and
the Companies Act 2006 applicable to companies
reporting under IFRS. The consolidated financial
statements have been prepared under the going
concern basis.
The preparation of financial statements in conformity
with IFRSs requires the use of certain critical accounting
estimates. It also requires management to exercise
its judgement in the process of applying the Group’s
accounting policies. The areas involving a higher
degree of judgement or complexity, or areas where
assumptions and estimates are significant to the
financial statements, are disclosed at the end of
this section.
Accounting policies have been consistently applied
and disclosed in the financial statements.
Measurement convention
The financial statements are prepared on the
historical cost basis except that liabilities for cash-
settled share based payment arrangements and
hedging agreements are stated at their fair value.
Basis of consolidation
Subsidiaries are all entities (including special
purpose entities) over which the Group has the
power to govern the financial and operating policies
generally accompanying a shareholding of more
than one half of the voting rights. The existence and
effect of potential voting rights that are currently
exercisable or convertible are considered when
assessing whether the Group controls another entity.
Subsidiaries are fully consolidated from the date on
which control is transferred to the Group. They are
deconsolidated from the date that control ceases.
Going Concern
The Group refinanced its bank facilities in June
2013 following the sale of Xafinity Consulting
Limited for £74.3m, issuing £440m of fixed and
floating rate notes repayable in 2018. This removed
all maintenance covenants and extended the
repayment date on the Group’s debt. The Group
also raised a £75m revolving credit facility of which
£45.5m has been drawn at the year end date.
Whilst a total comprehensive loss of £40.3m arose
increasing net liabilities to £208.7m during the course
of the year, the Group traded strongly, generating
£51.2m of cash inflow from operating activities in the
year. This current level of cash generation, combined
with the three year business plan assessment provides
the Directors with the comfort and expectation that
the Group will be able to meet all of its commitments
as they fall due both during the year and in the three
year business plan and, as such, allow the financial
statements to be presented on a going concern basis.
The Directors are satisfied that the Group has
adequate resources to continue in operational
existence for the foreseeable future. For this reason,
the going concern basis has been adopted in
preparing the financial statements.
Classification of financial instruments issued
by the Group
Under IAS 32, financial instruments issued by the
Group are treated as equity only to the extent that
they meet the following two conditions:
(a) they include no contractual obligations upon the
Group to deliver cash or other financial assets or
to exchange financial assets or financial liabilities
with another party under conditions that are
potentially unfavourable to the Group; and
(b) where the instrument will or may be settled in the
Group’s own equity instruments, it is either a non-
derivative that includes no obligation to deliver
a variable number of the Group’s own equity
instruments or is a derivative that will be settled
by the Group’s exchanging a fixed amount of cash
or other financial assets for a fixed number of its
own equity instruments.
To the extent that this definition is not met, the
proceeds of issue are classified as a financial liability.
Finance payments associated with financial liabilities
are dealt with as part of finance expenses. Finance
payments associated with financial instruments that
are classified in equity are treated as distributions
and are recorded directly in equity.
78
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014
Derivative financial instruments and hedging
Property, plant and equipment
Derivative financial instruments
Derivative financial instruments are recognised at
fair value. The gain or loss on remeasurement to
fair value is recognised immediately in profit or
loss. However, where derivatives qualify for hedge
accounting, recognition of any resultant gain or loss
depends on the nature of the item being hedged
(see below).
The fair value of interest rate swaps is the estimated
amount that the Group would receive or pay to
terminate the instruments at the statement of
financial position date, taking into account current
interest rates and the current creditworthiness of the
swap counterparties.
Third party valuations are used to fair value the
Group derivatives. The valuation techniques use
inputs such as interest rate yield curves and currency
prices/yields, volatilities of underlying instruments
and correlations between inputs.
Cash flow hedges
The effective portion of changes in the fair value of
derivatives that are designated and qualify as cash
flow hedges is recognised in other comprehensive
income. The gain or loss relating to the ineffective
portion is recognised immediately in the statement
of comprehensive income within finance costs.
Amounts accumulated in equity are reclassified to
profit or loss in the periods when the hedged item
affects profit or loss (for example, when the forecast
sale that is hedged takes place). The gain or loss
relating to the effective portion of interest rate swaps
hedging variable rate borrowings is recognised
in the statement of comprehensive income within
finance costs. When a hedging instrument expires or
is sold, or when a hedge no longer meets the criteria
for hedge accounting, any cumulative gain or loss
existing in equity at that time remains in equity until
the hedged item occurs.
Investments in subsidiaries
Investments in subsidiaries are carried at cost less
any provisions for impairment.
Property, plant and equipment are stated at cost
less accumulated depreciation and impairment
losses. For items acquired as part of a business
combination, cost comprises the deemed fair
value of those items at the date of acquisition.
Depreciation on those items is charged over their
estimated remaining useful lives from that date.
Depreciation is charged to the statement of
comprehensive income on a straight-line basis
over the estimated useful lives of each part of an
item of property, plant and equipment. Land is
not depreciated. The estimated useful lives are as
follows:
• Leasehold improvements
2 – 50 years
• Office equipment
• Fixtures and fittings
3 – 10 years
3 – 20 years
Intangible assets and goodwill
IFRS 3 (revised), ‘Business combinations’ is effective
prospectively to business combinations for which the
acquisition date is on or after the beginning of the
first annual reporting period beginning on or after
1 July 2009. The revised standard continues to apply
the acquisition method to business combinations
but with some significant changes compared with
IFRS 3. For example, all payments to purchase a
business are recorded at fair value at the acquisition
date, with contingent payments classified as debt
subsequently re-measured through the statement
of comprehensive income. There is a choice on an
acquisition-by acquisition basis to measure the non-
controlling interest in the acquiree either at fair value
or at the non-controlling interest’s proportionate
share of the acquiree’s net assets. All acquisition-
related costs are expensed.
Goodwill represents amounts arising on acquisition,
being the difference between the cost of the
acquisition and the net fair value of the identifiable
assets and liabilities acquired. Identifiable intangibles
are those which can be sold separately or which
arise from legal rights regardless of whether those
rights are separable.
When there is a step acquisition, moving an investment
in an associate to a subsidiary, the cost of investment
is made up of the fair value of the investment of
associate plus the price paid for any additional
shareholding.
Goodwill is stated at cost less any accumulated
impairment losses. Goodwill is allocated to cash-
generating units for the purposes of impairment
testing and is not amortised. It is tested annually
for impairment.
Other intangible assets that are acquired by
the Group are stated at cost less accumulated
amortisation and impairment losses.
79
Making complex things simpleSECTION 03Equiniti Annual Report 2014FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014
1. ACCOUNTING POLICIES (CONTINUED)
Software is valued based on replacement costs
valuations where identifiable or where this has not
been ascertainable, using relief from royalty valuation
over the estimated useful life.
Customer relationships are valued based on the net
present value of the excess earnings generated by
the revenue streams over their estimated useful lives.
Order books are valued based on expected revenue
generation and Brand valuation is based on net
present value of estimated royalty returns.
Costs associated with maintaining computer
software programmes are recognised as an expense
as incurred. Development costs that are directly
attributable to the design and testing of identifiable
and unique software products controlled by the
group are recognised as intangible assets when the
following criteria are met:
• it is technically feasible to complete the software
product so that it will be available for use;
• management intends to complete the software
product and use or sell it;
• there is an ability to use or sell the software product;
• it can be demonstrated how the software product
will generate probable future economic benefits;
• adequate technical, financial and other resources
to complete the development and to use or sell
the software product are available; and
• the expenditure attributable to the software
product during its development can be
reliably measured.
Directly attributable costs that are capitalised as
part of the software product include the software
development employee costs and an appropriate
portion of relevant overheads. Other development
expenditures that do not meet these criteria are
recognised as an expense as incurred. Development
costs previously recognised as an expense are not
recognised as an asset in a subsequent period.
Amortisation is charged to the statement of
comprehensive income on a straight-line basis over
the estimated useful lives of intangible assets. Other
intangible assets are amortised from the date they
are available for use. The estimated useful lives are
as follows:
• Shareholder registration system 15 years
• Other software
• Customer relationships
• Brands
3 – 10 years
4 – 20 years
5 – 10 years
Impairment of non-financial assets
Assets that have an indefinite useful life, for example
goodwill or intangible assets not ready for use, are
not subject to amortisation and are tested annually
for impairment. Assets that are subject to amortisation
are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss
is recognised for the amount by which the asset’s
carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset’s
fair value less costs to sell and value in use. For
the purposes of assessing impairment, assets are
grouped at the lowest levels for which there are
separately identifiable cash flows (cash-generating
units). Non-financial assets other than goodwill that
suffered an impairment are reviewed for possible
reversal of the impairment at each reporting date.
Other financial assets
Other financial assets include loans and receivables,
derivatives and investment in shares. Derivatives are
explained above. Loans and receivables are non-
derivative financial assets with fixed or determinable
payments, that are not quoted in an active market.
They are recognised initially at fair value and
subsequently measured at amortised cost using
the effective interest method, less provision for
impairment and are included in non-current assets
as their maturity is greater than 12 months after the
end of the reporting period. Investment in shares
are non-derivative available for sale financial assets
recognised initially at fair value with any subsequent
changes in fair value being recognised through
other comprehensive income. They are included in
non-current assets as management do not intend to
dispose of them within 12 months of the end of the
reporting date.
Trade receivables
Trade receivables are stated initially at fair value
then measured at amortised cost less provisions
for impairment. Provisions for impairment are
recognised when there is objective evidence that
the Group will not be able to collect all amounts due
according to the original terms of the receivables.
The impairment recorded is the difference between
the carrying value of the receivables and the
estimated future cash flows discounted where
appropriate. Any impairment required is recorded
in the statement of comprehensive income within
operating costs.
80
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014
of, and having maturity dates approximating to the
terms of the Group’s obligations. The calculation is
performed by a qualified actuary using the projected
unit credit method.
When the calculation results in a benefit to the
Group, the recognised asset is limited to the
present value of benefits available in the form of any
future refunds from the plan, reductions in future
contributions to the plan or on settlement of the
plan and takes into account the adverse effect of any
minimum funding requirements.
Actuarial gains and losses arising from experience
adjustments and changes in actuarial assumptions
are charged or credited to equity in other
comprehensive income in the period in which they
arise. Past-service costs are recognised immediately
in income.
Short-term benefits
Short-term employee benefit obligations are
measured on an undiscounted basis and are
expensed as the related service is provided. A
provision is recognised for the amount expected
to be paid under short-term cash bonus or profit-
sharing plans if the Group has a present legal or
constructive obligation to pay this amount as a result
of past service provided by the employee and the
obligation can be estimated reliably.
Share-based payment transactions
The fair value of the amount payable to employees
in respect of share appreciation rights, which are
settled in cash, is recognised as an expense, with a
corresponding increase in liabilities, over the period
in which the employees become unconditionally
entitled to payment. The liability is remeasured
at each reporting date and at settlement date.
Any changes in the fair value of the liability are
recognised as personnel expense in statement of
comprehensive income.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances
and call deposits. Bank overdrafts that are repayable
on demand and form an integral part of the Group’s
cash management are included as a component of
cash and cash equivalents for the purpose only of
the statement of financial position and the statement
of cash flows.
Interest-bearing borrowings
Interest-bearing borrowings are recognised initially
at fair value less attributable transaction costs.
Subsequent to initial recognition, interest-bearing
borrowings are stated at amortised cost with any
difference between cost and redemption value
being recognised in the statement of comprehensive
income over the period of the borrowings on an
effective interest basis. On borrowings extinguished,
any difference between the cash paid and the
carrying value is recognised in the statement of
comprehensive income.
Trade payables
Trade payables represent liabilities for goods and
services received by the Group prior to the end of
the financial year which are unpaid. The amounts
within trade payables are unsecured.
Agency broker deposits
Where the Company acts as an agency broker for
retail investors, balances owed by or to the retail
investor and the market maker are recognised
within other receivables and other payables until the
settlement date when these balances are eliminated.
Employee benefits
Defined contribution plans
Obligations for contributions to defined contribution
pension plans are recognised as an expense in the
statement of comprehensive income as incurred.
Defined benefit plans
A defined benefit plan is a post-employment benefit
plan other than a defined contribution plan. The
Group’s net obligation in respect of defined benefit
pension plans is calculated by estimating the amount
of future benefit that employees have earned in
return for their service in the current and prior
periods; that benefit is discounted to determine its
present value, and the fair value of any plan assets (at
bid price) are deducted. The liability discount rate is
the yield at the statement of financial position date on
AA credit rated bonds denominated in the currency
81
Making complex things simpleSECTION 03Equiniti Annual Report 2014FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014
1. ACCOUNTING POLICIES (CONTINUED)
losses and payments on account. The statement of
comprehensive income reflects the proportion of the
work carried out at the accounting date.
Revenues also comprise fixed periodic administration
fees, transaction processing fees, fees for managing
corporate actions, fees for professional and IT
services and fees earned on the administration of
client funds and are stated net of value added tax.
Periodic administration fees are recognised evenly
over the contract period. Transaction based fees
are recognised at the time of processing the related
transactions. Revenues from corporate actions are
recognised in line with the stage of completion and
fees in relation to administration of client funds are
recognised as they accrue.
Revenues includes variable margin fee income
earned on funds under administration of the Group.
Out of pocket expenses recharged to clients are
recognised in revenue when they are recoverable
from the client, net of the related expense.
Segment reporting
Operating segments are reported in a manner
consistent with the internal reporting provided
to the chief operating decision-maker. The chief
operating decision-maker, who is responsible for
allocating resources and assessing performance of
the operating segments, has been identified as the
Group’s chief executive officer.
Government grants
Grants that compensate the Group for expenses
incurred are recognised in profit or loss in the
statement of comprehensive income in the same
periods in which the expenses are recognised.
Grants relating to employment are recognised in
profit and loss in the statement of comprehensive
income as they are earned. Grants relating to
intangible assets are netted against the related
expenditure prior to capitalisation and amortisation
over the useful life of the asset.
Provisions
A provision is recognised in the statement of
financial position when the Group has a present
legal or constructive obligation as a result of a past
event, and it is probable that an outflow of economic
benefits will be required to settle the obligation. If
the effect is material, provisions are determined by
discounting the expected, risk adjusted, future cash
flows at a pre-tax risk-free rate.
Dilapidations provisions relate to estimated cost
to put leased premises back to required condition
expected under the terms of the lease. These include
provisions for wear and tear along with provisions
where leasehold improvements have been made that
would require reinstatement back to original status on
exit. These are uncertain in timing as leases may be
terminated early or extended. To the extent that exits
of premises are expected within 12 months of the end
of the year they are shown as current.
Share capital
Ordinary shares are classified as equity. Incremental
costs directly attributable to the issue of new shares
or options are shown in equity as a deduction, net of
tax, from the proceeds.
Revenue
Revenue, which excludes value added tax, represents
the invoiced value of services and software supplied
and is almost entirely attributable to the United
Kingdom. The Group is one of the largest providers
of outsourced financial services in the UK, covering
pension administration, pensions payroll, annuity
services, complaints handling and resourcing services.
Professional services revenue is recognised
when earned.
Sales of software licences are recognised when
goods and licences are delivered. Technical support
revenues are recognised rateably over the term of
the maintenance agreement.
Amounts recognised as revenue but not yet billed
are reflected in the statement of financial position as
accrued income. Amounts billed in advance of work
performed are deferred in the statement of financial
position as deferred income.
In the case of long term contracts, revenue is
recognised proportionately as the contract is
performed. Total costs incurred under contracts in
progress net of amounts transferred to the statement
of comprehensive income, are stated less foreseeable
82
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014
Expenses
Operating lease payments
Payments made under operating leases are
recognised in the statement of comprehensive
income on a straight-line basis over the term of the
lease. Lease incentives received are recognised
in the statement of comprehensive income as an
integral part of the total lease expense.
Exceptional items
Exceptional items are items which due to their size,
incidence and non-recurring nature have been
classified separately in order to draw them to the
attention of the reader of the financial statements
and, in management’s judgement, to show more
accurately the underlying profits of the group.
Such items are included within the statement of
comprehensive income caption to which they relate,
and are separately disclosed either in the notes to
the consolidated financial statements or on the face
of the consolidated statement of comprehensive
income. This includes costs in relation to business
integration / reorganisation as well as potential and
aborted acquisitions and includes all costs incurred
against investigated and completed acquisitions.
Net finance costs
Net finance costs comprise interest payable,
interest receivable on own funds, dividend income
and foreign exchange gains and losses that are
recognised in the statement of comprehensive
income and the interest cost of defined pension
scheme liabilities net of the expected return on
plan assets.
Interest income and interest payable is recognised
in the statement of comprehensive income as
it accrues, using the effective interest method.
Dividend income is recognised in the statement of
comprehensive income on the date the entity’s right
to receive payment is established.
Taxation
Tax on the loss for the year comprises current and
deferred tax. Tax is recognised in the statement of
comprehensive income except to the extent that it
relates to items recognised directly in equity, in which
case it is recognised in equity.
Current tax is the expected tax payable on the
taxable income for the year, using tax rates enacted
or substantively enacted at the statement of financial
position date, and any adjustment to tax payable in
respect of previous years.
Deferred tax is provided on temporary differences
between the carrying amounts of assets and
liabilities for financial reporting purposes and
the amounts used for taxation purposes. The
following temporary differences are not provided
for: the initial recognition of goodwill, the initial
recognition of assets or liabilities that affect neither
accounting nor taxable profit other than in a business
combination and differences relating to investments
in subsidiaries to the extent that they will probably
not reverse in the foreseeable future. The amount
of deferred tax provided is based on the expected
manner of realisation or settlement of the carrying
amount of assets and liabilities, using tax rates
enacted or substantively enacted at the statement
of financial position date.
A deferred tax asset is recognised only to the extent
that it is probable that future taxable profits will be
available against which the asset can be utilised.
New standards and interpretations not
yet adopted
a) New and amended standards adopted by
the Group
The following standards have been adopted by
the Group for the first time for the financial year
beginning 1 January 2014 and have a material
impact on the Group:
Amendment to IAS 32, ‘Financial instruments:
Presentation’ on offsetting financial assets and
financial liabilities. This amendment clarifies that
the right of set-off must not be contingent on a
future event. It must also be legally enforceable for
all counterparties in the normal course of business,
as well as in the event of default, insolvency or
bankruptcy. The amendment also considers
settlement mechanisms. The amendment did not
have a significant effect on the group financial
statements.
Amendments to IAS 36, ‘Impairment of assets’, on
the recoverable amount disclosures for non-financial
assets. This amendment removed certain disclosures
of the recoverable amount of CGUs which had been
included in IAS 36 by the issue of IFRS 13.
Amendment to IAS 39, ‘Financial instruments:
Recognition and measurement’ on the novation
of derivatives and the continuation of hedge
accounting. This amendment considers legislative
changes to ‘over-the-counter’ derivatives and the
establishment of central counterparties. Under IAS
39 novation of derivatives to central counterparties
would result in discontinuance of hedge accounting.
83
Making complex things simpleSECTION 03Equiniti Annual Report 2014FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014
1. ACCOUNTING POLICIES (CONTINUED)
The amendment provides relief from discontinuing
hedge accounting when novation of a hedging
instrument meets specified criteria. The group has
applied the amendment and there has been no
significant impact on the group financial statements
as a result.
Other standards, amendments and interpretations
which are effective for the financial year beginning
on 1 January 2014 are not material to the group.
b) New standards and interpretations not
yet adopted
A number of new standards and amendments to
standards and interpretations are effective for annual
periods beginning after 1 January 2014, and have not
been applied in preparing these financial statements.
None of these is expected to have a significant effect
on the financial statements of the Group, except the
following set out below:
IFRS 9, ‘Financial instruments’, addresses the
classification, measurement and recognition
of financial assets and financial liabilities. The
complete version of IFRS 9 was issued in July 2014.
It replaces the guidance in IAS 39 that relates to
the classification and measurement of financial
instruments. IFRS 9 retains but simplifies the mixed
measurement model and establishes three primary
measurement categories for financial assets:
amortised cost, fair value through OCI and fair value
through P&L. The basis of classification depends
on the entity’s business model and the contractual
cash flow characteristics of the financial asset.
Investments in equity instruments are required to be
measured at fair value through profit or loss with the
irrevocable option at inception to present changes
in fair value in OCI not recycling. There is now a
new expected credit losses model that replaces
the incurred loss impairment model used in IAS
39. For financial liabilities there were no changes
to classification and measurement except for the
recognition of changes in own credit risk in other
comprehensive income, for liabilities designated at
fair value through profit or loss. IFRS 9 relaxes the
requirements for hedge effectiveness by replacing
the bright line hedge effectiveness tests. It requires
an economic relationship between the hedged item
and hedging instrument and for the ‘hedged ratio’
to be the same as the one management actually use
for risk management purposes. Contemporaneous
documentation is still required but is different to
that currently prepared under IAS 39. The standard
is effective for accounting periods beginning on or
after 1 January 2018. Early adoption is permitted
subject to EU endorsement. The Group is yet to
assess IFRS 9’s full impact.
IFRS 15, ‘Revenue from contracts with customers’
deals with revenue recognition and establishes
principles for reporting useful information to users of
financial statements about the nature, amount, timing
and uncertainty of revenue and cash flows arising
from an entity’s contracts with customers. Revenue
is recognised when a customer obtains control of a
good or service and thus has the ability to direct the
use and obtain the benefits from the good or service.
The standard replaces IAS 18 ‘Revenue’ and IAS 11
‘Construction contracts’ and related interpretations.
The standard is effective for annual periods beginning
on or after 1 January 2017 and earlier application is
permitted subject to EU endorsement. The Group is
assessing the impact of IFRS 15.
There are no other IFRSs or IFRS – IC interpretations
that are not yet effective that would be expected to
have a material impact on the Group.
Accounting estimates and judgements
Equity-settled share based payments
Measured as the higher of amount subscribed plus
the attributable share or the fair value of the business
on an exit event, over the expected vesting period.
The valuation at the date of grant and the probability
of an exit event are therefore key judgements.
The value is based on an estimate of a multiple of
adjusted EBITDA, based on an equivalent market
value for a “debt free” private company.
Fair values of intangible assets
Fair values of intangibles have been calculated
by estimating the net present value of future
revenues generated by the assets over their
estimated useful lives.
Third party valuations are used to fair value the
Group’s derivatives. The valuation techniques use
inputs such as interest rate yield curves and currency
prices / yields, volatilities of underlying instruments
and correlations between inputs.
Exceptional items
Exceptional items are recognised to the extent
that they meet the definition outlined in the
accounting policy above. This requires a certain
amount of judgement that is applied consistently
by management.
84
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014
Provisions
Dilapidations provisions have been made for
properties which the Group currently lease based
upon the cost to make good the property in
accordance with lease terms where applicable, if
we were to vacate at 31 December 2014 as assessed
by a chartered surveyor with reference to current
market rates.
The constructive compliance provision is
management’s best estimate of the cost of meeting
the change in requirement of payment systems of
which the Group is contractually required. The exact
requirements are uncertain as to the timing and so
could require additional or less cost.
Provisions for deferred consideration has been made
in relation to acquisitions the Group has made. There
are various criteria that need to be satisfied in order
for a payment to be made, the Group have made
provisions as appropriate based on the relevant
accounting standards and management’s best
estimate of the criteria for settlement being fulfilled.
Provisions for contract costs have been made for
the exceptional irrecoverable costs associated
with a complex long-term contract that has been
terminated by mutual agreement.
Deferred tax
Under IAS 12 “Income taxes” deferred tax assets are
recognised to the extent that taxable profits will be
available against which the deductible temporary
differences can be utilised. As at the year end the
directors consider that the IAS 12 recognition criteria
are satisfied.
Pension assumptions
Assumptions used in calculating the net defined
benefit pension obligation are set out in note 25,
Employee benefits. The calculation of the defined
benefit obligation is sensitive to the mortality
assumptions set out in that note. As the actuarial
estimates of mortality continue to be refined, an
increase of one year in the lives shown in note 25
is considered possible in the next financial year.
The effect of this change would be to increase the
employee benefit liability by £1.8m (2013: £1.5m).
A 0.5% decrease in the discount rate used would
increase the employee benefit liability by £5.4m
(2013: £4.1m).
85
Making complex things simpleSECTION 03Equiniti Annual Report 2014FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014
2. FINANCIAL RISK MANAGEMENT
finance costs. Intermediary fee revenue is linked to
Bank Base Rate, whilst both the senior variable loan
notes and the PIK loan rates are linked to Libor. The
Group also earns fee income in relation to client and
shareholder deposits as well as interest income on
its own deposits.
Exposure to interest rate fluctuations are partly
managed through the use of interest rate swaps.
Objectives are established by the board so as to
seek to reduce the impact of variations in interest
rates on the group’s profit and cash flow.
A movement in interest rates which negatively
affects the net finance costs, would have a positive
effect on revenue, and vice versa.
During the year a significant proportion of the
group’s bank debt was covered by fixed interest
rates for varying periods up to three years, achieved
by way of a financial instrument (interest rate swap).
The balance of bank debt interest is at current
market rates.
The group does not engage in holding speculative
financial instruments or derivatives. Further
quantitative disclosures are included throughout
these consolidated financial statements.
The Group has exposure to the following risks from
its use of financial instruments:
• credit risk
• liquidity risk
• market risk
Risk management policies are established for
the Equiniti Group Limited group of companies
(the “Group”) and the Group Audit Committee
oversees how management monitors compliance
with these policies and procedures and reviews the
adequacy of the risk management framework in
relation to the risks faced by the Group. The Group
Audit Committee is assisted in its oversight role by
Internal Audit and Compliance Monitoring. Internal
Audit and Compliance Monitoring undertakes both
regular and ad hoc reviews of risk management
controls and procedures, the results of which are
reported to the Group Audit Committee.
Credit risk
Credit risk is the risk of financial loss to the Group
if a customer or counterparty, including brokers, to
a financial instrument fails to meet its contractual
obligations, and arises principally from the Group’s
receivables from customers.
Due to the nature of the business the majority of
the trade receivables are with large institutions,
including many FTSE 350 companies and losses
have occurred infrequently over previous years.
Liquidity risk
Liquidity risk is the risk that the Group will not be
able to meet its financial obligations as they fall due.
The Group’s approach to managing liquidity is to
ensure, as far as possible, that the Group will have
sufficient liquidity to meet its liabilities when due,
under both normal and stressed conditions.
Market risk
Market risk is the risk that changes in market prices
such as interest rates, foreign exchange rates and
equity prices will affect the Group’s income or the
value of its financial instruments.
The Group’s financial instruments are currently in
sterling, hence foreign exchange movements do not
have a material effect on the Group’s performance.
The Group does not hold its own position in
trading securities, being involved only in arranging
transactions on behalf of its clients.
The Group is exposed to movements in interest
rate in both its intermediary fee revenue and its net
86
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014
3. CAPITAL RISK MANAGEMENT
The Group is focused on delivering value for its
shareholders whilst ensuring the Group is able
to continue effectively as a going concern. Value
adding opportunities to grow the business are
continually assessed, although strict and careful
criteria are applied.
As is common with many other private equity
portfolio companies, the Group carries a high
level of net debt to total equity; total capital
comprises total equity plus net debt, as shown in the
consolidated statement of financial positions. Net
debt equates to the total of other interest bearing
loans, less cash and cash equivalents, as shown in
the consolidated statement of financial position.
The policies for managing capital are to increase
shareholder value by maximising profits and cash.
The policy is to set budgets and forecasts in to the
short and medium term that the Group ensures are
achievable. The process for managing capital are
regular reviews of financial data to ensure that the
Group is tracking the targets set and to reforecast as
necessary based on the most up to date information
whilst checking that future covenant test points are
met.
The revolving credit facility requires the Group to
comply with one covenant; the maintenance of a
minimum level of earnings before interest, taxes,
depreciation and amortisation. The loan notes
issued do not contain any maintenance covenants.
87
Making complex things simpleSECTION 03Equiniti Annual Report 2014FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014
4. ACQUISITIONS OF BUSINESSES
Pancredit
On 18 March 2014, the Group purchased the entire issued share capital of Pancredit Systems Limited for
£14.7m, with £12.0m payable in cash on completion and the balance one year later. The company had net
assets of £2.6m on that date with a cash balance of £2.9m. Since the date of acquisition the company has
contributed revenue of £4.1m and net profit of £1.3m. If the company had been acquired on 1 January 2014
it would have contributed an additional £1.1m of revenue and £nil net profit to the Group’s reported results.
The company sells and supports software to manage unsecured loan administration. The acquisition has
been funded by drawing on the revolving credit facility.
On acquisition intangible assets have been recognised relating to customer contracts and related
relationships as well as software with a combined attributable value of £9.0m with a corresponding deferred
tax liability of £1.8m. The amounts relating to the intangible assets and goodwill are provisional and subject
to further evaluation and adjustment, in accordance with accounting standards.
Recognised amounts of identifiable assets acquired and liabilities assumed
Property, plant and equipment
Intangible assets
Cash
Trade and other receivables
Trade and other payables
Deferred tax
Net identifiable assets and liabilities
Goodwill on acquisition
Total consideration
Cash acquired
Deferred consideration
Net cash outflow in the period
£m
0.1
9.0
2.9
1.5
(2.0)
(1.7)
9.8
4.9
14.7
(2.9)
(2.7)
9.1
J.P. Morgan’s Corporate Dealing Services
On 1 July 2014, the Group announced the acquisition of the assets of J.P. Morgan’s Corporate Dealing Services
business. The acquisition completed on 1 September 2014. Consideration of £13.0m was paid on completion
with £3.0m (discounted to £2.5m at Group’s WACC) payable two years later. Since the date of acquisition the
business has contributed revenue of £0.8m and net profit of £0.3m. If the business had been acquired on 1
January 2014 it would have contributed an additional £3.0m of revenue to the Group results. As this was a trade
and asset acquisition, it is impracticable to calculate the impact on net profit from this acquisition.
On acquisition intangible assets have been recognised relating to customer contracts and related relationships
with a combined attributable value of £9.8m. The amounts relating to the intangible assets and goodwill are
provisional and subject to further evaluation and adjustment, in accordance with accounting standards.
Recognised amounts of identifiable assets acquired and liabilities assumed
Intangible assets
Net identifiable assets and liabilities
Goodwill on acquisition
Total consideration
Contingent consideration
Net cash outflow in the period
88
£m
9.8
9.8
5.7
15.5
(2.5)
13.0
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014
4. ACQUISITIONS OF BUSINESSES (CONTINUED)
MyCSP Limited
On 29 September 2014, the Group acquired an additional 11% of the share capital of MyCSP Limited
for £8.0m, £4.0m of which has been deferred until June 2016, increasing the shareholding from 40% to
51%. The additional shareholding and resulting control of the business has meant that the investment is
consolidated in the Group’s results as a subsidiary from 30 September 2014, in accordance with IFRS10.
On the date of acquisition, the business had net assets of £16.9m with a cash balance of £13.5m. Since the
date of acquisition the business has contributed revenue of £11.1m and net profit of £3.8m. If the company
had been acquired on 1 January 2014 it would have contributed an additional £30.6m of revenue and £4.9m
net profit to the Group’s reported results.
On acquisition intangible assets have been recognised relating to customer contracts and related
relationships as well as software with a combined attributable value of £20.2m. The amounts relating to
the intangible assets and goodwill are provisional and subject to further evaluation and adjustment, in
accordance with accounting standards.
Recognised amounts of identifiable assets acquired and liabilities assumed
Property, plant and equipment
Software
Intangible assets
Cash
Trade and other receivables
Provisions
Employee benefits asset
Trade and other payables
Deferred tax
Net identifiable assets and liabilities
Non-controlling interest
Goodwill on acquisition
Total consideration
Proceeds from disposal of associate
Net consideration*
Cash acquired
Deferred consideration
Net cash outflow in the period
* Net consideration is the amount payable
to acquire an additional 11% in MyCSP
Limited
£m
0.5
5.2
20.2
13.5
15.7
(0.4)
0.2
(17.8)
4.0
33.1
(16.3)
17.8
34.6
(26.6)
8.0
(13.5)
4.0
(9.5)
89
Making complex things simpleSECTION 03Equiniti Annual Report 2014FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014
4. ACQUISITIONS OF BUSINESSES (CONTINUED)
Invigia Group Limited
On 16 October 2014, the Group purchased the entire issued share capital of Invigia Group Limited and its
subsidiaries for £24.5m. However, the Group effectively took control of the Invigia Group on
1 September 2014 and therefore the results have been consolidated from this date. The business had net
assets of £4.2m on that date with a cash balance of £6.8m. Since the date of acquisition the company and its
subsidiaries have contributed £2.3m of revenue and £0.7m of net profit. If it had been acquired on 1 January
2014 it would have contributed an additional £6.4m of revenue and £1.2m net profit to the Group’s reported
results. The business provides customer complaints and feedback management services. The acquisition has
been funded by drawing on the revolving credit facility.
On acquisition intangible assets have been recognised relating to customer contracts and related
relationships as well as software with a combined attributable value of £12.3m with a corresponding
deferred tax liability of £2.6m. The amounts relating to the intangible assets and goodwill are provisional and
subject to further evaluation and adjustment, in accordance with accounting standards.
Recognised amounts of identifiable assets acquired and liabilities assumed
Property, plant and equipment
Intangible assets
Cash
Trade and other receivables
Trade and other payables
Deferred tax
Net identifiable assets and liabilities
Goodwill on acquisition
Total consideration
Cash acquired
Net cash inflow in the period
Selftrade
£m
0.3
12.3
6.8
1.6
(4.6)
(2.4)
14.0
10.5
24.5
(6.8)
17.7
On 3 June 2014, the Group announced the intention to acquire the trade and assets of Selftrade, an online
execution-only stockbroker. The acquisition completed on 23 January 2015. See note 32 for further details.
The value of goodwill on each acquisition reflects the expectation of the ability to generate new streams of
revenue, expected synergies, future market development and the assembled workforces of the companies
and businesses acquired.
5. REVENUE
Included in the loss for the year are the following:
Revenue from continuing operations:
Rendering of services
Revenue from discontinued operations
Total revenue
90
2014
£m
292.3
–
292.3
2013
£m
274.7
3.2
277.9
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014
6. EXCEPTIONAL ITEMS
Included in the loss for year are the following:
Set up costs
Restructuring costs
Acquisition related expenses
Property costs
Gain on investment
Integration project costs
Refinancing costs
Contract costs
Total exceptional costs
2014
£m
3.0
5.1
2.6
1.9
(4.9)
–
–
–
7.7
2013
£m
1.2
6.0
0.3
–
–
2.9
10.2
4.4
25.0
Set up costs relate to the establishment of the Indian offshore facility.
Restructuring costs relate to the restructuring of the management team.
Acquisition related expenses represent fees paid to third party advisors and transaction fees in respect
of acquisitions completed in the period, as well as costs incurred on further potential acquisitions and
disposals not completed.
Property costs relate to the provision for rent and related expenses on onerous leases.
A gain on investment has been recognised on the revaluation of the Group’s investment in Euroclear plc.
The shares have been revalued based on the trade price of recent market transactions.
Integration project costs included costs incurred by the Group relating to resources applied in a major
Group programme of integration activities between Equiniti and Xafinity businesses. These principally
comprised consulting, property and IT rationalisation and severance costs, together with rationalisation of
off shore activities.
Refinancing costs were expenses incurred in connection with the Group’s refinancing which completed in
June 2013. These included incremental staff costs and advisor fees that were not capitalised or treated as
finance costs.
Contract costs were in relation to a complex long-term contract to provide new services in the UK pensions
market that was terminated by mutual agreement. A provision had been made for the exceptional
irrecoverable costs associated with that contract.
91
Making complex things simpleSECTION 03Equiniti Annual Report 2014FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014
7. OPERATING SEGMENTS
In accordance with IFRS 8 ‘Operating Segments’, an operating segment is defined as a business activity
whose operating results are reviewed by the chief operating decision maker (‘CODM’) and for which
discrete information is available. The Group’s CODM is the Board of Directors.
The Group’s operating segments have been identified as Investment Solutions, Intelligent Solutions,
Pension Solutions, Interest and Central. Central costs principally includes corporate overheads. The EBITDA of
each segment is reported after charging relevant corporate costs based on the business segments’ usage
of corporate facilities and services.
2014
£m
94.9
89.6
101.3
6.5
292.3
2014
£m
29.3
16.3
21.7
6.5
(3.8)
70.0
2014
£m
70.0
(7.7)
62.3
(3.8)
(36.9)
(71.8)
9.8
1.7
(38.7)
2013
£m
107.2
81.5
76.9
9.1
274.7
2013
£m
40.3
16.4
12.2
9.1
(1.7)
76.3
2013
£m
76.3
(25.0)
51.3
(4.0)
(32.5)
(78.1)
–
1.6
(61.7)
Revenue
Investment Solutions
Intelligent Solutions
Pensions Solutions
Interest
Pre-Exceptional EBITDA
Investment Solutions
Intelligent Solutions
Pensions Solutions
Interest
Central
Pre-Exceptional EBITDA
Reconciliation to loss before tax and
discontinued operations
Pre-Exceptional EBITDA
Exceptional items
EBITDA
Depreciation
Amortisation
Finance costs – net
Gain on disposal of associates
Share of profits from associates
Loss before tax and discontinued operations
92
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014
7. OPERATING SEGMENTS (CONTINUED)
Segmental assets and liabilities
Investment Solutions
Intelligent Solutions
Pensions Solutions
Central
Total
Other profit and loss disclosures
31 December 2014
Investment Solutions
Intelligent Solutions
Pensions Solutions
Central
Total
31 December 2014
31 December 2013
Assets
£m
496.0
33.6
79.4
210.5
819.5
Liabilities
£m
(76.9)
(21.1)
(47.8)
(882.4)
(1,028.2)
Assets
£m
497.5
14.8
57.1
149.3
718.7
Liabilities
£m
(33.4)
(6.8)
(32.5)
(830.0)
(902.7)
Depreciation
and amortisation
Exceptional
items
Share of profit
on associates
Capital
expenditure
£m
3.6
1.6
5.6
29.9
40.7
£m
(8.6)
(0.1)
(2.5)
3.5
(7.7)
£m
–
–
1.7
–
1.7
£m
3.2
2.5
6.9
9.4
22.0
31 December 2013
Depreciation
and amortisation
Exceptional
items
Share of profit
on associates
Capital
expenditure
Investment Solutions
Intelligent Solutions
Pensions Solutions
Central
Total
£m
1.6
1.2
4.5
29.2
36.5
£m
(4.5)
(0.6)
(5.9)
(14.0)
(25.0)
£m
–
–
1.6
–
1.6
£m
10.6
2.1
6.5
0.4
19.6
93
Making complex things simpleSECTION 03Equiniti Annual Report 2014FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014
8. SUMMARY RESULTS AND OPERATING COSTS
Included in the loss for year are the following:
Expenses by nature
Employee benefit expense (note 9)
Depreciation and amortisation (notes 14 and 15)
Direct costs
Bought in services
Premises costs
Other general business costs
Exceptional items (note 6)
Total operating costs for continuing operations
Auditors’ remuneration
Audit of the Company and its subsidiaries
Tax services
All other services
2014
£m
113.4
40.7
54.6
7.7
14.2
32.4
7.7
270.7
2014
£m
0.4
0.2
0.3
0.9
2013
£m
98.7
36.5
46.9
12.7
12.3
27.8
25.0
259.9
2013
£m
0.3
0.3
0.7
1.3
94
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014
9. STAFF NUMBERS AND COSTS
The average monthly number of persons employed by the Group (including directors) during the year was 3,289 (2013: 2,736).
By function*
Operations
Administration
Sales and marketing
By business type*
Shareholder Solutions
Intelligent Solutions
Pensions Solutions
Central
Number of employees
2014
2,799
408
82
3,289
Number of employees
2014
1,186
388
1.163
552
3,289
2013
2,396
281
59
2,736
2013
1,141
367
1,043
185
2,736
Within the central segment 314 employees (2013: 90 employees) are employed in India. 550 employees have joined the Group
by way of acqusitions.
* The number of colleagues quoted in the Strategic Report section of the annual report are the number of employees as at 31
December 2014, as stated, the figures above are the monthly average.
The aggregate payroll costs of these persons were as follows:
Wages and salaries
Social security costs
Other pension costs
2014
£m
98.9
9.1
5.4
113.4
2013
£m
85.2
8.8
4.7
98.7
10. DIRECTORS’ REMUNERATION
The following costs are either paid by the subsidiary Equiniti Limited, Equiniti Holdings Limited or Equiniti Services Limited;
Directors’ emoluments
(including compensation for loss of office)
Company contributions to money purchase
pension plans
2014
£m
1.6
–
2013
£m
4.0
0.1
Retirement benefits are accrued under money purchase schemes to 1 of the directors (2013: 2 of the directors).
The emoluments of the highest paid director was £0.6m (2013: £2.2m). Company contributions to defined contribution pension
schemes for the highest paid director amounted to £nil (2013: £0.1m).
95
Making complex things simpleSECTION 03Equiniti Annual Report 2014FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014
11. FINANCE INCOME AND COSTS
Interest income
Dividend income
Finance income
Amortised fees
Other fees and interest
Interest cost on loans from related parties
Interest cost on senior secured loan notes
Interest cost on revolving credit facility
Interest cost on senior secured borrowings
Interest cost on payment in kind (“PIK”) loan
Interest on preference shares classified as liabilities
Finance cost relating to pension scheme
Unwinding of discounted amount in provisions
Cost of interest rate swap against financial liabilities
Finance costs – ordinary
Exceptional finance costs
Write off of unamortised fees of previous finance
arrangement
Other fees and interest
Interest cost on senior secured borrowings
Finance costs – exceptional
Finance costs – total
2014
£m
2013
£m
0.2
0.4
0.6
2.9
1.1
5.6
29.9
0.8
–
15.4
15.1
0.5
0.4
0.7
72.4
–
–
–
–
72.4
0.6
0.4
1.0
3.1
0.8
5.2
16.4
–
10.3
13.3
14.0
0.2
0.4
3.0
66.7
6.6
5.3
0.5
12.4
79.1
Exceptional finance costs were expenses incurred in connection with the Group’s refinancing exercise that completed in June
2013. The charge for the prior year included the write off of unamortised fees under the previous finance arrangement plus
noncapitalised fees and interest associated with the set up of the new finance arrangement.
96
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014
12. INVESTMENTS IN ASSOCIATES
At 1 January
Additions
Share of profit
Other comprehensive income
Dividend received
Deemed disposal of associate
At 31 December
2014
£m
14.3
2.5
1.7
–
(17.7)
(16.8)
–
2013
£m
9.4
4.0
1.6
1.6
(0.5)
–
14.3
Associate investments are initially recorded at cost which is the fair value of the consideration paid.
On 29 September 2014, the Group increased its investment in MyCSP Limited from 40% to 51%. In accordance with IFRS10
MyCSP Limited is now consolidated as a subsidary and the investment in associate has been treated as a disposal, creating a
non-cash accounting gain of £9.8m.
97
Making complex things simpleSECTION 03Equiniti Annual Report 2014FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014
13. INCOME TAX CREDIT
Recognised in the statement of comprehensive income
Current tax charge for the Group
Current year
Prior year
Deferred tax credit
Origination and reversal of temporary differences
Adjustment for prior years
Total income tax credit
Represented by:
Continuing operations per the statement of comprehensive income
Reconciliation of effective tax rate
Loss for the year
Total tax credit
Loss excluding taxation
Tax using the UK corporation tax rate of 21.5% (2013: 23.25%)
Non-deductible expenses
Non taxable income
Unrecognised tax assets
Adjustment for prior years
Effect of tax rate change
Total income tax credit
2014
£m
1.0
0.1
(0.3)
(2.5)
(1.7)
(1.7)
(1.7)
2014
£m
(37.0)
(1.7)
(38.7)
(8.3)
4.8
(3.8)
8.1
(2.5)
–
(1.7)
2013
£m
–
–
(0.4)
(0.3)
(4.3)
(4.3)
(4.3)
2013
£m
(53.7)
(4.3)
(58.0)
(13.5)
2.0
–
8.1
(0.3)
(0.6)
(4.3)
The standard rate of corporation tax in the UK changed from 23% to 21% with effect from 1 April 2014. Accordingly the Group’s profits for this
accounting year are taxed at an effective rate of 21.5%.
98
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014
14. PROPERTY, PLANT AND EQUIPMENT
Leasehold
improvements
£m
Office
equipment
£m
Fixtures &
fittings
£m
Cost
Balance at 1 January 2013
Acquisition of business
Additions
Balance at 31 December 2013
Balance at 1 January 2014
Acquisition of business
Additions
Disposals
Balance at 31 December 2014
Accumulated depreciation
Balance at 1 January 2013
Depreciation charge for the year
Balance at 31 December 2013
Balance at 1 January 2014
Depreciation charge for the year
Disposals
Balance at 31 December 2014
Net book value
Balance at 31 December 2013
Balance at 31 December 2014
5.1
–
0.3
5.4
5.4
0.2
0.5
–
6.1
2.3
0.6
2.9
2.9
0.8
–
3.7
2.5
2.4
18.0
–
3.4
21.4
21.4
0.2
4.1
(3.6)
22.1
12.5
2.8
15.3
15.3
2.6
(3.6)
14.3
6.2
7.8
4.2
0.1
0.2
4.5
4.5
0.5
0.2
(0.4)
4.8
1.8
0.6
2.4
2.4
0.4
(0.4)
2.4
2.1
2.4
Total
£m
27.3
0.1
3.9
31.3
31.3
0.9
4.8
(4.0)
33.0
16.6
4.0
20.6
20.6
3.8
(4.0)
20.4
10.8
12.6
Included within office equipment are assets held under finance lease with a cost of £1.8m (2013: £1.8m). As at the year end these
assets had a net book value of £0.7m (2013: £1.0m).
99
Making complex things simpleSECTION 03Equiniti Annual Report 2014FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014
15. INTANGIBLE ASSETS
Goodwill
Software
development
Cost
Balance at 1 January 2013
Acquisition of business
Additions
Balance at 31 December 2013
Balance at 1 January 2014
Acquisition of business
Additions
Balance at 31 December 2014
Accumulated depreciation
Balance at 1 January 2013
Amortisation for the year
Balance at 31 December 2013
Balance at 1 January 2014
Amortisation for the year
Balance at 31 December 2014
Net book value
Balance at 31 December 2013
Balance at 31 December 2014
£m
354.8
8.2
–
363.0
363.0
38.9
–
401.9
–
–
–
–
–
–
363.0
401.9
£m
127.6
–
15.7
143.3
143.3
16.1
17.2
176.6
49.7
14.7
64.4
64.4
16.0
80.4
78.9
96.2
Other
intangible
assets
£m
253.2
2.6
–
255.8
255.8
40.4
–
296.2
74.2
17.8
92.0
92.0
20.9
112.9
163.8
183.3
Total
£m
735.6
10.8
15.7
762.1
762.1
95.4
17.2
874.7
123.9
32.5
156.4
156.4
36.9
193.3
605.7
681.4
Other intangible assets relates to the fair value of assets acquired including customer relationships and brands.
The amortisation charge is shown as a separate line item in the statement of comprehensive income.
Impairment testing
Goodwill initially arose on the acquisition of the Lloyds TSB Registrars business and subsequent equity and
trade and asset acquisitions in prior years. For goodwill on current year acquisitions, see note 4. Goodwill is
tested annually for impairment, the recoverable amount of cash-generating units for the above periods has been
determined in accordance with IAS 36 “Intangible assets”. This is determined by assessing the present value of
net cash flows generated by the business over the period over which the management expects to benefit from
the acquired business.
The recoverable amounts of the cash generating units (“CGUs”) are determined from value in use
calculations. The key assumptions for the value in use calculations are those regarding discount rates and
growth rates. The Group derives cash flows from its most recent business plans over a three year period. The
projected cash flows are discounted using a weighted average cost of capital, reflecting current market
assessments on debt/equity ratios of similar businesses and risks specific in the CGUs. The outcome of the
impairment assessment has been that the directors do not consider that the goodwill has been impaired,
given that the fair value less costs to sell is greater than the carrying value of goodwill.
Period on which management approved forecasts are based
3 years
Growth rate applied beyond approved forecast period
Discount rate pre tax
3.0%
9.0%
2014
2013
3 years
3.0%
9.0%
In the opinion of the Directors there are no reasonably possible changes to key assumptions which would
cause the carrying value to exceed the recoverable amounts.
100
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014
16. INVESTMENTS IN SUBSIDIARIES
The directors consider the value of the investments to be supported by their underlying assets. The Group has the following
investments in subsidiaries:
Country of
Incorporation
Class of
shares held
Principal activities Ownership
2014
%
Ownership
2013
%
Name of controlled entity
Direct Investments
Equiniti Enterprises Limited
Equiniti X2 Enterprises Limited
Indirect Investments
Equiniti X2 Mezz Cleanco Limited
Equiniti X2 Holdings Limited
Equiniti PIK Cleanco Limited
Equiniti PIKco Limited
Equiniti Cleanco Limited
Equiniti Debtco Limited
Equiniti Holdings Limited
Equiniti Limited
Equiniti Financial Services Limited
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
Ordinary
Holding company
Ordinary
Holding company
Ordinary
Holding company
Ordinary
Holding company
Ordinary
Holding company
Ordinary
Holding company
Ordinary
Holding company
Ordinary
Holding company
Ordinary
Holding company
Ordinary
Registrars
Ordinary
Financial services
Equiniti Jersey Limited
Channel Islands
Ordinary
Registrars
Prosearch Asset Solutions Limited
Equiniti Share Plan Trustees Limited
Equiniti David Venus Limited
Equiniti ICS Limited
UK
UK
UK
UK
Ordinary
Ordinary
Ordinary
Asset recovery
Ordinary
Trustee company
Equiniti ICS India (Private) Limited
India
Ordinary
Equiniti 360 Clinical Limited
CES 2011 Limited
Equiniti Registrars Nominees Limited
Trust Research Services Limited
Equiniti ISA Nominees Limited
Equiniti Nominees Limited
Equiniti Savings Nominees Limited
Equiniti Corporate Nominees Limited
Wealth Nominees Limited
LR Nominees Limited
Equiniti Shareview Limited
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Company
secretarial
Business process
outsourcing
Technology
enabled services
Business process
outsourcing
Non trading
Non trading
Non trading
Non trading
Non trading
Non trading
Non trading
Non trading
Non trading
Non trading
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
101
Making complex things simpleSECTION 03Equiniti Annual Report 2014FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014
16. INVESTMENTS IN SUBSIDIARIES (CONTINUED)
Name of controlled entity
Indirect Investments
SLC Registrars Limited
SLC Corporate Services Limited
Connaught Secretaries Limited
Peter Evans Limited
Peter Evans & Associates Limited
Prism Communications &
Management Limited
Prism Cosec Limited
David Venus (Health & Safety) Limited
Equiniti Services Limited
Paymaster (1836) Limited
Claybrook Computing Limited
Equiniti Software Limited
Equiniti Solutions Limited
Hazell Carr Software Services Limited
InformationLog.com Limited
Equiniti Global Incentive Solutions
Limited
Killik Employee Services (PTY)
Limited
Custodian Nominees Limited
Equiniti NewCo 2 Plc
Pancredit Systems Limited
Invigia Limited
Charter Systems Limited
Charter UK Limited
MyCustomerFeedback.com Limited
MyCSP Limited *
Country of
Incorporation
Class of
shares held
Principal activities Ownership
2014
%
Ownership
2013
%
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
South Africa
UK
UK
UK
UK
UK
UK
UK
UK
Ordinary
Ordinary
Ordinary
Non trading
Non trading
Non trading
Ordinary
Holding company
Ordinary
Ordinary
Ordinary
Ordinary
Business process
outsourcing
Company
secretarial
Non trading
Non trading
Ordinary
Holding company
Ordinary
Pensions
administration
Ordinary Computer software
consultancy
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Dormant
Pensions
administration
Dormant
Dormant
Non trading
Ordinary Computer software
development
Ordinary
Holding company
Ordinary
Holding company
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Business process
outsourcing
Software service
provider
Software service
provider
Software service
provider
Software service
provider
Pensions
administration
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
51
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
0
0
0
0
0
40
* MyCSP Limited was an associate at the end of the prior year.
102
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014
17. OTHER FINANCIAL ASSETS
Non-current
Shares held in Euroclear plc
2014
£m
11.0
11.0
2013
£m
6.1
6.1
The investment in Euroclear plc has been revalued at the year end date. Shares in Euroclear plc are unquoted and therefore the
valuation has been based on the trade price of recent transactions.
Current
Derivatives used for hedging (note 28)
18. OTHER FINANCIAL LIABILITIES
Non-current
Finance lease liabilities
Current
Derivatives used for hedging (note 28)
Finance lease liabilities
2014
£m
0.2
0.2
2014
£m
0.3
0.3
2014
£m
0.4
0.4
0.8
2013
£m
1.6
1.6
2013
£m
0.6
0.6
2013
£m
3.3
0.4
3.7
103
Making complex things simpleSECTION 03Equiniti Annual Report 2014FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014
19. DEFERRED INCOME TAX ASSETS AND LIABILITIES
Recognised liabilities
Deferred income tax liabilities are attributable to the following:
Non-current
Intangible assets
Tax liabilities
Net of tax assets
Net tax liabilities
Recognised assets
Deferred income tax assets are attributable to the following:
Non-current
Property, plant and equipment
Employee benefits
Tax value of loss carry-forwards
Tax assets
Net of tax liabilities
Net tax assets
Liabilities
2014
£m
24.0
24.0
(16.3)
7.7
Assets
2014
£m
2.9
2.9
10.5
16.3
(16.3)
–
Liabilities
2013
£m
21.8
21.8
(18.3)
3.5
Assets
2013
£m
8.1
2.0
8.2
18.3
(18.3)
–
Deferred income tax assets amounting to £21.6m (2013: £18.8m) arising on temporary timing differences of £107.8m (2013:
£93.9m) in respect of unrecognised deferred tax assets have not been recognised as their future economic benefit is uncertain.
31 December 2013
Property, plant and equipment
Intangible assets
Employee benefits
Tax value of loss carry-forwards
1 January
2013
£m
Acquisitions
/ disposals
£m
Recognised
in income
£m
Recognised
in equity
£m
31 December
2013
£m
6.3
(25.8)
1.4
9.5
(8.6)
–
–
–
–
–
1.9
4.0
(0.3)
(1.3)
4.3
–
–
0.8
–
0.8
8.2
(21.8)
1.9
8.2
(3.5)
31 December 2014
Property, plant and equipment
Intangible assets
Employee benefits
Tax value of loss carry-forwards
1 January
2014
£m
Acquisitions
/ disposals
£m
Recognised
in income
£m
Recognised
in equity
£m
31 December
2014
£m
8.2
(21.8)
1.9
8.2
(3.5)
–
(8.1)
–
–
(8.1)
(5.3)
5.9
–
2.3
2.9
–
–
1.0
–
1.0
2.9
(24.0)
2.9
10.5
(7.7)
104
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014
20. TRADE AND OTHER RECEIVABLES
Trade receivables
Other receivables and prepayments
2014
£m
36.1
28.6
64.7
At 31 December 2014 trade receivables are shown net of an allowance for doubtful debts of £0.1m (2013: £0.3m). The
impairment loss recognised in the year was £nil (2013: £0.2m).
21. CASH AND CASH EQUIVALENTS
Cash and cash equivalents per statement of financial position
Cash and cash equivalents per statement of cash flows
2014
£m
30.1
30.1
2013
£m
24.3
32.4
56.7
2013
£m
15.4
15.4
The Group holds certain balances with banks in a number of segregated accounts. These balances are appropriately not included
in the Group’s consolidated balance sheet. The number of accounts and balances held vary significantly throughout the year.
22. DISPOSALS AND DISCONTINUED OPERATIONS
Discontinued operations relates to the disposal of the Xafinity Consulting business in February 2013.
Analysis of the result of discontinued operations, and the result recognised on the re-measurement of assets or disposal group
is as follows:
Revenue
Expenses
Profit before tax of discontinued operations
Tax
Profit after tax of discontinued operations
Profit on disposal of Group companies
Profit for the year from discontinued operations
2014
£m
–
–
–
–
–
–
–
2013
£m
3.2
(2.8)
0.4
–
0.4
3.3
3.7
105
Making complex things simpleSECTION 03Equiniti Annual Report 2014FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014
23. INTEREST-BEARING LOANS AND BORROWINGS
Non-current liabilities
Senior secured notes
Revolving credit facility
Equiniti Enterprises payment in kind (“PIK”) facility
Unamortised cost of raising finance
Shares classified as debt
Non secured loan from related party
Non secured loan
2014
£m
440.0
45.5
151.1
(14.9)
204.0
73.8
2.0
901.5
2013
£m
440.0
–
135.0
(17.8)
188.9
68.3
1.9
816.3
Costs of raising finance are being amortised over a period between 5 and 6 years. In the year £2.9m (2013: £9.7m) has been
recognised in finance expenses – amortised fees.
Terms and debt repayment schedule
Senior Secured Notes
Senior Secured Floating Rate Notes
Revolving credit facility
Equiniti Enterprises payment in kind
(“PIK”) facility
Shares classified as debt
Non secured loan from related party
Non secured loan
Amount
£m
250.0
190.0
45.5
151.1
204.0
73.8
2.0
916.4
Currency
Sterling
Sterling
Sterling
Sterling
Sterling
Sterling
Sterling
Nominal
interest rate
7.125%
Libor + 5.75%
Libor + 3.5%
Libor + 10.4%
8.0%
8.0%
8.0%
24. TRADE AND OTHER PAYABLES
Trade payables
Accruals and deferred income
Other payables
2014
£m
9.1
50.9
8.5
68.5
Year of
maturity
2018
2018
2018
2019
–
2020
2020
2013
£m
2.8
38.1
8.1
49.0
The Group is subject to regulatory supervision by the Financial Conduct Authority, and in the ordinary course of business is
subject to regulatory reviews with its regulator. All matters arising from these discussions are evaluated on a regular basis. At the
date of these accounts the Directors do not believe there are any matters in progress which would have a material impact on the
Group’s financial position or operations.
106
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014
25. EMPLOYEE BENEFITS
Management equity plan
A number of the Group’s senior management team have been granted ‘B’ shares in the Group’s intermediary holding
company, Knight Cayman Limited. On 1 July 2014, 9,500 shares were issued and none have been forfeited by the year end.
These shares are recognised as equity-settled share options under IFRS2. The fair value of the scheme has been
estimated using the Monte Carlo model. The charge relating to the arrangement in the year is not material and as such
no charge has been recognised.
Employee co-investment plan
Prior to October 2007 all employees in Equiniti Enterprises Limited had the opportunity to purchase units under the
co-investment plan. A unit was defined as a notional unit share equal in proportion to the ordinary share and preference
shares held by Advent International Corporation.
The units will only vest on the occurrence of a return of capital to the entire business and the value of each unit will be
determined in relation to the value of the ordinary shares and preference shares at that time. The proportion of ordinary
shares and preference shares is 5% and 95% respectively. Unpaid dividends on preference shares accrue at 8% per annum
and compounded annually.
A unit shall lapse on the earlier of the tenth anniversary of the scheme, an exit, the cessation of a persons employment, a
participants bankruptcy or on notice of a voluntary winding up of the Company. Unless there has been an occurrence of a
return of capital and the value of a unit has been determined to have increased, the repayment will be the grant price.
As at 1 January
As at 31 December
No of units
2014
In millions
0.4
0.4
Carrying
amount
2014
£m
0.4
0.4
Nominal
interest rate
2013
In millions
0.4
0.4
Carrying
amount
2013
£m
0.4
0.4
At the balance sheet date the units have been valued at £1 which, in the opinion of the Directors, is the higher of the subscription amount and
the fair value of the units.
Management share scheme
A number of the Group’s senior management are entitled to subscribe for a combination of B, C, D and E ordinary shares.
Since the inception of the scheme a total of 250,910 B ordinary shares have been issued at a price of £1.43, 15,738 C
ordinary shares at price of £3.33, 144,943 D ordinary shares at a price of £3.33 and £1.00 and 155,005 E ordinary shares at a
price of £3.33. In total at 31 December 2014 566,596 shares had been issued for a consideration of £1,271,000.
The terms of the investment define “Good” and “Bad” leavers. A Bad leaver is an employee leaving the Group by
dismissal. A Good leaver receives the value of the market value or subscription price.
During the year 34,395 E ordinary shares (2013: 45,040), 62,500 D ordinary shares (2013: 22,537), nil C ordinary shares
(2013: 5,348) and 17,500 B ordinary shares (2013: 52,500) were disposed of by leavers at the subscription amount of
£0.2m (2013: £0.3), and acquired by Appleby Trust Jersey Limited. This company holds shares temporarily pending their
purchase by authorised senior management. At 31 December 2014 the Appleby Trust held approximately 70,000 B
ordinary shares, 6,000 C ordinary shares, 129,000 D ordinary shares and 137,000 E Ordinary shares at a consideration
of £0.9m.
During the year no shares were acquired (2013: 12,000) by senior management, for a consideration of £nil (2013: £nil), from
shares held by the Appleby Trust.
The charge relating to the arrangement in the year and the prior year is not material and as such no charge has been
recognised in the period, nor the prior year.
107
Making complex things simpleSECTION 03Equiniti Annual Report 2014FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014
25. EMPLOYEE BENEFITS (CONTINUED)
Defined contribution plans
The Group operates a number of defined contribution pension plans. The total expense relating to these
plans in the year was £4.5m (2013: £4.7m).
Defined benefit plan – Summary of schemes
Equiniti ICS Limited
Paymaster (1836) Limited
MyCSP Limited
Total of defined benefit plans liability as at 31 December
2014
£m
2.0
13.4
0.1
15.5
2013
£m
0.9
9.2
–
10.1
Defined benefit plan – Equiniti ICS Limited
The Group operates a defined benefit pension plan in the UK in its subsidiary Equiniti ICS Limited. A full
actuarial valuation was carried out at 30 November 2012 and updated to 31 December 2014 by a qualified
independent actuary.
Present value of obligations (funded)
Fair value of plan assets
Recognised liability for defined benefit obligations
Plan assets
The weighted average asset allocations at year end were as follows:
Equities
Corporate bonds
Cash
Actual return on plan assets
Movement in present value of defined benefit obligation
Defined benefit obligation at 1 January
Current service cost
Interest expense
Plan participants’ contributions
Actuarial loss
Benefits paid
Defined benefit obligation at 31 December
108
2014
£m
(11.1)
9.1
(2.0)
2014
87%
9%
4%
100%
2014
£m
0.4
2014
£m
9.9
0.1
0.4
–
1.2
(0.5)
11.1
2013
£m
(9.9)
9.0
(0.9)
2013
85%
8%
7%
100%
2013
£m
1.3
2013
£m
8.7
0.1
0.4
0.1
0.8
(0.2)
9.9
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014
25. EMPLOYEE BENEFITS (CONTINUED)
Movement in fair value of plan assets
Fair value of plan assets at 1 January
Interest income
Actuarial gain
Employer contribution
Member contributions
Benefits paid
Fair value of plan assets at 31 December
Expense recognised in statement of comprehensive income
Current service cost
Interest cost
Interest income
2014
£m
9.0
0.4
–
0.2
–
(0.5)
9.1
2014
£m
0.1
0.4
(0.4)
0.1
2013
£m
7.6
0.3
1.0
0.2
0.1
(0.2)
9.0
2013
£m
0.1
0.4
(0.3)
0.2
The current service cost is recognised in administrative expenses in the statement of comprehensive income. Interest costs and
interest income are recognised in other finance charges in the statement of comprehensive income.
Actuarial gains and losses recognised in other comprehensive income
Cumulative loss at beginning of the year
Actuarial gains recognised in other comprehensive income
Cumulative loss at end of the year
Weighted average assumptions used to determine benefit obligations at:
Discount rate
Rate of compensation increase
Rate of increase in payment of currently accruing pensions (Post 6.4.06)
Rate of increase in payment of currently accruing pensions (Pre 6.4.06)
Rate of increase in pensions in deferment
Inflation
Weighted average life expectancy for mortality tables used to determine benefit
obligations at 31 December 2014:
Member age 65 (current life expectancy)
Member age 45 (life expectancy at 65)
Contributions
Equiniti ICS Limited expects to contribute £0.2m to its pension plan in 2015.
2014
£m
(2.3)
(1.2)
(3.5)
2014
3.60%
3.90%
2.10%
2.90%
2.20%
2.90%
Male
87.1
88.3
2013
£m
(2.5)
0.2
(2.3)
2013
4.55%
4.30%
2.20%
3.20%
2.50%
3.30%
Female
89.5
90.8
109
Making complex things simpleSECTION 03Equiniti Annual Report 2014FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014
25. EMPLOYEE BENEFITS (CONTINUED)
Defined benefit plan – Paymaster (1836) Limited
The Group operates a defined benefit pension plan in the UK in its subsidiary Paymaster (1836) Limited.
A full actuarial valuation was carried out at 6 April 2012 and updated to 31 December 2014 by a qualified
independent actuary.
Present value of obligations
Fair value of plan assets
Recognised liability for defined benefit obligations
Plan assets
The weighted average asset allocations at year end were as follows:
Equities
Corporate bonds
Cash
Actual return on plan assets
Movement in present value of defined benefit obligation
Defined benefit obligation at 1 January
Current service cost
Interest expense
Benefits paid
Actuarial loss – experience losses
Actuarial loss – change in financial assumptions
Defined benefit obligation at 31 December
Movement in fair value of plan assets
Fair value of plan assets at 1 January
Interest income
Actuarial gain – return on plan assets
Employer contribution
Benefits paid
Fair value of plan assets at 31 December
110
2014
£m
(47.9)
34.5
(13.4)
2014
67%
21%
12%
100%
2014
£m
2.9
2014
£m
40.6
0.7
1.9
(1.1)
0.2
5.6
47.9
2014
£m
31.4
1.4
1.5
1.3
(1.1)
34.5
2013
£m
(40.6)
31.4
(9.2)
2013
63%
26%
11%
100%
2013
£m
1.5
2013
£m
35.2
0.7
1.6
(1.0)
0.1
4.0
40.6
2013
£m
30.0
1.4
0.1
0.9
(1.0)
31.4
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014
25. EMPLOYEE BENEFITS (CONTINUED)
Expense recognised in statement of comprehensive income
Current service cost
Interest cost
Interest income
2014
£m
0.7
1.9
(1.4)
1.2
2013
£m
0.7
1.6
(1.4)
0.9
The current service cost is recognised within operating costs in the statement of comprehensive income. Interest costs and
interest income are recognised in other finance charges in the statement of comprehensive income.
Actuarial gains and losses recognised in other comprehensive income
Cumulative loss at beginning of the year
Actuarial loss recognised in other comprehensive income
Cumulative loss at end of the year
Weighted average assumptions used to determine benefit obligations at:
Discount rate
Rate of compensation increase
Rate of increase in payment of currently accruing pensions
Rate of increase in pensions in deferment (Pre 6.4.09 service)
Rate of increase in pensions in deferment (Post 6.4.09 service)
Inflation assumption
2014
£m
(10.2)
(4.3)
(14.5)
2014
3.60%
1.75%
3.05%
3.05%
2.50%
3.05%
2013
£m
(6.2)
(4.0)
(10.2)
2013
4.60%
1.75%
3.40%
3.40%
3.40%
3.40%
Weighted average life expectancy for mortality tables (101% SAPS S1PMA, 88% SAPS S1PFA, 1% long term trend) used to
determine benefit obligations at 31 December 2014 and 31 December 2013:
Member age 65 (current life expectancy)
Member age 45 (life expectancy at 65)
Contributions
Paymaster (1836) Limited expects to contribute £1.2m to its pension plan in 2015.
Male
86.5
88.0
Female
90.1
91.7
111
Making complex things simpleSECTION 03Equiniti Annual Report 2014FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014
25. EMPLOYEE BENEFITS (CONTINUED)
Defined benefit plan – MyCSP Limited
The Group operates a defined benefit pension plan in the UK in its subsidiary MyCSP Limited. A full
actuarial valuation was carried out at 31 December 2012 and updated to 31 December 2014 by a qualified
independent actuary.
Present value of obligations
Fair value of plan assets
Recognised liability for defined benefit obligations
Plan assets
The weighted average asset allocations at year end were as follows:
UK Equities
Overseas Equities
Bonds
Diversified Growth Fund
Cash
Actual return on plan assets
Movement in present value of defined benefit obligation
Defined benefit obligation at 1 January
Defined benefit obligation acquired
Current service cost
Interest expense
Actuarial loss – change in financial assumptions
Defined benefit obligation at 31 December
Movement in fair value of plan assets
Fair value of plan assets at 1 January
Assets acquired
Interest income
Actuarial gain – return on plan assets
Employer contribution
Fair value of plan assets at 31 December
112
2014
£m
(8.5)
8.4
(0.1)
2014
17%
17%
40%
24%
2%
100%
2014
£m
0.4
2014
£m
–
7.4
0.4
0.1
0.6
8.5
2014
£m
–
7.6
0.1
0.3
0.4
8.4
2013
£m
–
–
–
2013
–
–
–
–
–
100%
2013
£m
–
2013
£m
–
–
–
–
–
–
2013
£m
–
–
–
–
–
–
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014
25. EMPLOYEE BENEFITS (CONTINUED)
Expense recognised in statement of comprehensive income
Current service cost
Interest cost
Interest income
2014
£m
0.4
0.1
(1.1)
0.4
2013
£m
–
–
–
–
The current service cost is recognised within operating costs in the statement of comprehensive income. Interest costs and
interest income are recognised in other finance charges in the statement of comprehensive income.
Actuarial gains and losses recognised in other comprehensive income
Cumulative loss at beginning of the year
Actuarial loss recognised in other comprehensive income
Cumulative loss at end of the year
Weighted average assumptions used to determine benefit obligations at:
Discount rate
Rate of compensation increase
Rate of increase in payment of currently accruing pensions
Rate of increase in pensions in deferment
Inflation assumption
2014
£m
–
(0.3)
(0.3)
2014
3.60%
3.60%
2.40%
2.40%
2.40%
2013
£m
–
–
–
2013
–
–
–
–
–
Weighted average life expectancy for mortality tables (101% SAPS S1PMA, 88% SAPS S1PFA, 1% long term trend) used to
determine benefit obligations at 31 December 2014:
Member age 65 (current life expectancy)
Member age 45 (life expectancy at 65)
Contributions
MyCSP Limited expects to contribute £1.6m to its pension plan in 2015.
Male
87.3
88.6
Female
89.6
91.1
113
Making complex things simpleSECTION 03Equiniti Annual Report 2014FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014
26. PROVISIONS FOR OTHER LIABILITIES AND CHARGES
Balance at 1 January 2014
Provisions made during the year
Amounts arising from acquisitions
Provisions used during the year
Provisions reversed during the year
Unwinding of discounted amount
Balance at 31 December 2014
Non-current
Current
Contingent
consideration
£m
Property
provisions
£m
Other
provisions
£m
Total
provisions
£m
2.6
2.8
–
(0.7)
–
0.3
5.0
3.1
1.9
5.0
3.0
1.9
0.4
(0.5)
(1.0)
0.1
3.9
2.7
1.2
3.9
5.3
–
–
(1.9)
(3.1)
–
0.3
–
0.3
0.3
10.9
4.7
0.4
(3.1)
(4.1)
0.4
9.2
5.8
3.4
9.2
Contingent consideration of £5.0m (2013: £2.6m) relates to various requirements to be met following the
Group’s acquisitions. The minimum value of these provisions could be £nil up to a maximum of £5.0m. These
were discounted at an appropriate discount rate at the time of the acquisitions, 9%, and are provided within
provisions due to their uncertainty. Management regularly reconsider the appropriateness of the discount
rate used and update when appropriate. These are expected to be utilised over periods up to 2016.
Property provisions includes £2.0m (2013: £3.0m) in respect of dilapidations. £1.0m was reversed during the
year. A provision for onerous leases for unused property space on operating leases of £1.9m was created
during the year. £0.5m of this provision has subsequently been utilised. In addition, an onerous lease
provision of £0.4m was aquired with the acquisition of MyCSP.
Other provisions include:
• A provision of £2.2m brought forward at 1 January 2014 for exceptional irrecoverable costs incurred on a
complex long term contract. £1.9m has been utilised during the period. The remainder is expected to be
utilised during the year.
• A provision related to constructive compliance obligations in existence on the acquisition of the LTSB
registrars business in 2007 for £2.5m was reversed during the year.
• A provision of £0.6m relating to the remaining potential balances payable on an acquisition in 2010 was
reversed during the year.
114
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014
27. SHARE CAPITAL AND SHARE PREMIUM
In millions of shares
On issue at 1 January – fully paid
On issue at 31 December – fully paid
Allotted, called up and fully paid
Shares of £1 each
Ordinary
shares
2014
5.0
5.0
Share
premium
2014
£m
3.5
3.5
Ordinary
shares
2013
5.0
5.0
Total
2014
£m
8.5
8.5
Share
capital
2014
£m
5.0
5.0
Share capital comprises A, B, C, D and E ordinary share of £1 each. The A ordinary shares are primarily held
by the holding company. The B, C, D and E shares are primarily held by senior management.
The B, C, D and E shares are entitled to share in the proceeds of a sale or a listing of the Group.
Each share has equal voting rights.
All shares are entitled to receive dividends from profits available for distribution pro rata to the nominal
value of each share.
115
Making complex things simpleSECTION 03Equiniti Annual Report 2014FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014
28. FINANCIAL INSTRUMENTS
Credit risk
The maximum exposure to credit risk at the reporting date was:
Derivatives used for hedging
Trade and other receivables
Cash and cash equivalents
Credit risk mitigation
Note
17
20
21
2014
£m
0.2
64.7
30.1
95.0
2013
£m
1.6
56.7
15.4
73.7
Trade and other receivables are due from primarily FTSE listed companies, their pension funds and major UK public bodies
both of which historically have few occurrences of defaults in the past.
For cash, cash equivalents and derivative financial instruments, only banks and financial institutions with a minimum rating of A
are accepted.
The ageing of trade receivables at the reporting date was:
Not past due
Past due 0–30 days
Past due 31–90 days
Past due more than 90 days
2014
£m
26.0
7.2
1.9
1.0
36.1
2013
£m
16.5
5.6
1.6
0.6
24.3
Trade receivables not past due of £26.0m (2013: £16.5m) are all existing customers with no defaults in the past.
Based on historic performance of these contracts, the Group has made an impairment allowance of £0.1m (2013: £0.3m) in
respect of trade receivables. Where impairment allowances are made these are for the full value of the impaired debt.
Group impairment losses
Balance at 1 January
New provisions made in year
Release against receivables written off
Balance at 31 December
2014
£m
0.3
0.1
(0.3)
0.1
2013
£m
0.6
0.2
(0.5)
0.3
116
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014
28 FINANCIAL INSTRUMENTS (CONTINUED)
Liquidity risk
The maximum exposure to liquidity risk at the reporting date was:
Trade and other payables
Employee benefits
Other financial liabilities
Derivatives used for hedging
Senior secured notes
Revolving credit facility
Equiniti Enterprises payment in kind (“PIK”) facility
Unamortised cost of raising finance
Shares classified as debt
Non secured loan from related party
Non secured loan
Note
24
25
18
18
23
23
23
23
23
23
23
Carrying Amount
2014
£m
68.5
0.4
0.7
0.4
440.0
45.5
151.1
(14.9)
204.0
73.8
2.0
971.5
2013
£m
49.0
0.4
1.0
3.3
440.0
–
135.0
(17.8)
188.9
68.3
1.9
870.0
All trade and other payables are expected to be paid in 6 months or less.
Employee benefits become repayable when the units lapse, as described in note 25.
The contractual cash flows including interest payments for the interest-bearing loans and borrowings and derivatives are shown in
the table in this note 28, under interest rate risk below.
Liquidity risk mitigation
The Group regularly updates forecasts for cash flow and covenants to ensure it has sufficient funding available. The Group also
has revolving credit facilities of an additional £29.5m available.
Capital risk
The Group’s objectives when managing capital is to maximise shareholder value whilst safeguarding the Group’s ability to
continue as a going concern. Total capital is calculated as total equity as shown in the balance sheet, plus net debt. Net debt is
calculated as the total of interest bearing loans and borrowings as shown in the balance sheet, less cash and cash equivalents.
Management of capital
Equity
Interest-bearing loans and borrowings
Cash and cash equivalents
Interest rate risk
2014
£m
(208.7)
901.5
(30.1)
662.7
2013
£m
(184.0)
816.3
(15.4)
616.9
Interest bearing assets comprise cash and bank deposits, all of which earn interest at a variable rate.
£250m of the senior secured notes were issued at fixed interest rates. £190m are senior secured floating rate notes. Where the
interest rate is variable at a margin over LIBOR, a swap has been taken out to fix this rate until October 2016. For the payment in
kind facilities interest accrues at a variable rate at a margin over Libor and the Group policy is not to fix these as there is no cash
flow in the immediate term.
The Group’s policy is to maintain other borrowings at fixed rates to fix the amount of future interest cash flows.
Interest rate risk is managed across the Group’s companies by monitoring its interest linked revenues.
The directors monitor the overall level of borrowings, leverage ratio and interest costs to limit any adverse effects on financial
performance of the Group.
117
Making complex things simpleSECTION 03Equiniti Annual Report 2014FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014
28. FINANCIAL INSTRUMENTS (CONTINUED)
Effective interest rates and repricing analysis
The following are the contractual maturities of interest bearing financial liabilities including interest
payments;
31 December 2013
Amount in £m’s
Effective interest rate %
Carrying amount
0–1 years
1–2 years
2–5 years
5 years and over
Total contracted cash flows
31 December 2014
Amount in £m’s
Effective interest rate %
Carrying amount
0–1 years
1–2 years
2–5 years
5 years and over*
Total contracted cash flows
Senior
Secured
Notes
Senior
Secured
Floating Rate
Notes
Equiniti
Enterprises
PIK
loan
Shares
classified as
Debt *
7.125%
250.0
(17.0)
(17.8)
(303.5)
–
(338.3)
6.25%
190.0
(11.4)
(11.9)
(225.7)
–
(249.0)
10.9%
135.0
–
–
–
(239.3)
(239.3)
8.0%
188.9
–
–
–
(249.9)
(249.9)
Senior
Secured
Notes
Senior
Secured
Floating Rate
Notes
Equiniti
Enterprises
PIK
loan
Shares
classified as
Debt *
7.125%
250.0
(17.0)
(17.9)
(285.6)
–
(320.5)
6.25%
190.0
(11.4)
(11.9)
(213.8)
–
(237.1)
10.9%
151.1
–
–
(239.3)
–
(239.3)
8.0%
204.0
–
–
–
(249.9)
(249.9)
Total
763.9
(28.4)
(29.7)
(529.2)
(489.2)
(1,076.5)
Total
795.1
(28.4)
(29.8)
(738.7)
(249.9)
(1,046.8)
* The shares classified as debt are redeemable on a change of control of the business but do not confer any rights of
redemption nor any right to vote. They have the right to a fixed dividend of 8%. Unpaid dividends accrue and are
compounded annually.
118
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014
28. FINANCIAL INSTRUMENTS (CONTINUED)
The Equiniti Enterprises PIK loan is repayable in 2019 and has an interest rate of Libor plus 10.4%. Interest
accrues and is compounded annually.
In addition, non current non secured loans with a carrying value of £58.5m (2013: £54.1m) including a loan to
related parties of £56.4m (2013: £52.3m) with an interest rate of 8% are repayable on exit with a contracted
cash flow of £85.9m (2013: £85.9m). Current non secured loans due to related parties of £17.3m (2013:
£16.0m) with an interest rate of 8% are repayable on demand and have a contracted cash flow of £25.5m
(2013: £25.5m).
The following tables indicates the periods in which the cash flows associated with derivatives that are cash
flow hedges are expected to occur and are expected to impact the profit and loss;
31 December 2013
Amount in £m’s
Carrying Amount
Expected cash flows
6 months or less
6–12 months
1–2 years
2–5 years
Total contracted cash flows
31 December 2014
Carrying Amount
Expected cash flows
6 months or less
6–12 months
1–2 years
Total contracted cash flows
Interest rate swaps
Assets
Liabilities
1.6
1.5
(0.4)
(0.2)
0.5
1.6
1.5
(3.3)
(3.4)
0.3
0.2
(1.0)
(2.9)
(3.4)
Interest rate swaps
Assets
Liabilities
0.3
0.2
0.3
0.2
(0.3)
0.2
(0.5)
(0.5)
(0.6)
0.1
–
(0.5)
Total
(1.7)
(1.9)
(0.1)
–
(0.5)
(1.3)
(1.9)
Total
(0.2)
(0.3)
(0.3)
0.3
(0.3)
(0.3)
Interest rate liabilities relate to two separate swaps. The first hedges monthly interest payable on secured
bank loans based on Libor against a fixed rate, the second hedges monthly fee income earned on funds
under the administration of the group on bank base rate against a fixed rate which runs through to
October 2016.
Sensitivity analysis
At the balance sheet date it is estimated that an increase of one percentage point in interest rates would
increase the finance costs for the Group by an estimated £1.7m, of which £1.4m is payable in kind on the PIK
facility per annum and £0.2m is payable on the RCF, and give rise to an estimated increase in revenue across
the Group of £0.8m, yielding a net reduction to equity of £0.7m after tax.
The sensitivity analysis above is calculated after taking account of the effect of the interest rate swaps the
Group holds.
119
Making complex things simpleSECTION 03Equiniti Annual Report 2014FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014
28. FINANCIAL INSTRUMENTS (CONTINUED)
Fair value hierarchy
The following table presents the Group’s financial assets and liabilities that are measured at fair value
at 31 December 2014.
Assets
Derivatives used for hedging
Total assets
Liabilities
Derivatives used for hedging
Total liabilities
Level 1
£m
–
–
Level 2
£m
0.2
0.2
0.4
0.4
Level 3
£m
–
–
–
–
Total
£m
0.2
0.2
0.4
0.4
There were no transfers between Levels during the year.
Valuation techniques used to derive Level 2 fair values
Level 2 hedging derivatives comprise solely interest rate swaps. These interest rate swaps are fair valued
using forward interest rates extracted from observable yield curves. The effects of discounting are generally
insignificant for Level 2 derivatives.
The Group’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as of the
date of the event or change in circumstances that caused the transfer. There were no changes in valuation
techniques during the year.
The valuation technique used is a discounted cash flow model.
Group’s valuation processes
The Group’s finance department includes a team that monitors and obtains the valuations of financial assets
and liabilities required for financial reporting purposes. This team ultimately reports to the Chief Financial
Officer and the Audit Committee. Valuations are reviewed at least once every quarter, in line with the Group’s
quarterly reporting dates.
Fair value of financial assets and liabilities
There are no material differences between the carrying value of assets and liabilities and their fair value.
The only financial instrument measured at fair value is the interest rate swap.
120
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014
29. OPERATING LEASES
Future aggregate minimum lease payments relate primarily to the Group’s premises and are payable
as follows:
Less than one year
Between one and five years
More than five years
2014
£m
4.6
12.2
8.0
24.8
2013
£m
4.7
10.7
6.1
21.5
During the year £5.6m (2013: £5.4m) was recognised as an expense in the statement of comprehensive
income in respect of operating leases.
30. RELATED PARTY TRANSACTIONS
During the year interest of £5.5m (2013: £5.1m) accrued on a loan bearing interest at 8% from Equiniti
(Luxembourg) Sarl, leaving a balance outstanding at the year end of £74.4m (2013: £68.9m).
During the year interest of £0.1m (2013: £0.1m) accrued on a loan bearing interest at 8% from key
management personnel, leaving a balance outstanding at the year end of £1.4m (2013: £1.3m).
Transactions with key management personnel
The compensation of key management personnel (including the
directors) is as follows:
Key management emoluments including social security costs
Company contributions to money purchase pension plans
Compensation for loss of office
2014
£m
2.8
0.1
–
2.9
2013
£m
5.6
0.1
2.0
7.7
Key management are the directors of the Group (includes non-executives), as well as the senior non-statutory
director of each of the major subsidiaries, who have authority and responsibility to control, direct or plan the
major activities within the Group.
As detailed in note 25, key management are entitled to subscribe for a combination of B, C, D and E ordinary
shares. The value of shares held is as follows;
Opening balance
Sales by key management
Closing balance
Advent International plc
2014
£m
0.3
(0.2)
0.1
2013
£m
0.4
(0.1)
0.3
See page 5 for information about the ultimate controlling party, Advent International plc. £0.1m
(2013: £0.1m) has been paid to various companies of the ultimate parent company for services received.
121
Making complex things simpleSECTION 03Equiniti Annual Report 2014FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014
31. ULTIMATE PARENT COMPANY AND CONTROLLING PARTY
The Company is a wholly owned subsidiary of Equiniti (Luxemburg) Sarl, a Company incorporated in
Luxemburg. The ultimate controlling party relationship lies with the funds managed by Advent International
Corporation, a group incorporated in the United States of America.
32. POST BALANCE SHEET EVENTS
On 23 January 2015, the Group purchased the trade and assets of Selftrade for £17.7m in cash. The business
provides an online share dealing platform for over 100,000 customers. The acquisition has been funded by
drawing on the revolving credit facility.
122
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014
33. RECONCILIATION OF (LOSS) / PROFIT TO CASH GENERATED FROM OPERATIONS
Continuing operations
Adjustments for:
Loss before income tax
Depreciation and amortisation
Gain on disposal of associate
Share of profit of associates
Revaluation gain on investment
Finance income
Finance costs
Changes in working capital
Increase in trade and other receivables
Increase in trade and other payables
(Decrease) / increase in provisions
Income tax (paid) / received
Discontinued operations
Adjustments for:
Profit for the year
Profit on disposal of subsidiaries
2014
£m
2013
£m
(38.7)
40.7
(9.8)
(1.7)
(4.9)
(0.6)
72.4
(1.2)
0.4
(2.8)
(2.6)
51.2
2014
£m
–
–
–
51.2
(61.7)
36.5
–
(1.6)
–
(1.0)
79.1
(7.7)
13.9
0.3
1.8
59.6
2013
£m
3.7
(3.7)
–
59.6
123
Making complex things simpleSECTION 03Equiniti Annual Report 2014FINANCIAL STATEMENTS INDEPENDENT AUDITORS’ REPORT TO THE
MEMBERS OF EQUINITI GROUP LIMITED
REPORT ON THE COMPANY FINANCIAL STATEMENTS
Our opinion
In our opinion, Equiniti Group Limited’s Company financial statements (the “financial statements”):
• give a true and fair view of the state of the Company’s affairs as at 31 December 2014 and cash flows for
the year then ended;
• have been properly prepared in accordance with International Financial Reporting Standards (“IFRSs”) as
adopted by the European Union; and
• have been prepared in accordance with the requirements of the Companies Act 2006.
What we have audited
Equiniti Group Limited’s financial statements comprise:
• the Company statement of financial position as at 31 December 2014;
• the Company statement of cashflows for the year then ended;
• the Company statement of changes in equity for the year then ended; and
• the notes to the financial statements, which include a summary of significant accounting policies and other
explanatory information.
The financial reporting framework that has been applied in the preparation of the financial statements
is applicable law and IFRSs as adopted by the European Union, and as applied in accordance with the
provisions of the Companies Act 2006.
In applying the financial reporting framework, the directors have made a number of subjective judgements,
for example in respect of significant accounting estimates. In making such estimates, they have made
assumptions and considered future events.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion, the information given in the Strategic Report and the Directors’ Report for the financial year
for which the financial statements are prepared is consistent with the financial statements.
Other matters on which we are required to report by exception
Adequacy of accounting records and information and explanations received
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not received all the information and explanations we require for our audit; or
• adequate accounting records have not been kept, or returns adequate for our audit have not been
received from branches not visited by us; or
• the financial statements are not in agreement with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Directors’ remuneration
Under the Companies Act 2006 we are required to report to you if, in our opinion, certain disclosures of
directors’ remuneration specified by law are not made. We have no exceptions to report arising from this
responsibility.
124
INDEPENDENT AUDITORS’ REPORT TO THE
MEMBERS OF EQUINITI GROUP LIMITED
Responsibilities for the financial statements and the audit
Our responsibilities and those of the directors
As explained more fully in the directors’ responsibilities set out on page 67, the directors are responsible for
the preparation of the financial statements and for being satisfied that they give a true and fair view.
Our responsibility is to audit and express an opinion on the financial statements in accordance with
applicable law and International Standards on Auditing (UK and Ireland) (“ISAs (UK & Ireland)”). Those
standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.
This report, including the opinions, has been prepared for and only for the company’s members as a body
in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not,
in giving these opinions, accept or assume responsibility for any other purpose or to any other person
to whom this report is shown or into whose hands it may come save where expressly agreed by our prior
consent in writing.
What an audit of financial statements involves
We conducted our audit in accordance with ISAs (UK & Ireland). An audit involves obtaining evidence about
the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the
financial statements are free from material misstatement, whether caused by fraud or error. This includes an
assessment of:
• whether the accounting policies are appropriate to the company’s circumstances and have been
consistently applied and adequately disclosed;
• the reasonableness of significant accounting estimates made by the directors; and
• the overall presentation of the financial statements.
We primarily focus our work in these areas by assessing the directors’ judgements against available
evidence, forming our own judgements, and evaluating the disclosures in the financial statements.
We test and examine information, using sampling and other auditing techniques, to the extent we consider
necessary to provide a reasonable basis for us to draw conclusions. We obtain audit evidence through
testing the effectiveness of controls, substantive procedures or a combination of both.
In addition, we read all the financial and non-financial information in the Annual Report of the directors
and Financial statements to identify material inconsistencies with the audited financial statements and to
identify any information that is apparently materially incorrect based on, or materially inconsistent with,
the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent
material misstatements or inconsistencies we consider the implications for our report.
Other matter
We have reported seperately on the group financial statements of Equiniti Group Limited for the year
ended 31 December 2014
Graham Lambert (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Gatwick
25 March 2015
125
Making complex things simpleSECTION 03Equiniti Annual Report 2014FINANCIAL STATEMENTS
COMPANY STATEMENT OF FINANCIAL
POSITION AS AT 31 DECEMBER 2014
Assets
Non-current assets
Investments in subsidiaries
Investments
Other financial assets
Current assets
Tax receivable
Other financial assets
Trade and other receivables
Cash and cash equivalents
Total assets
Equity and liabilities
Equity
Share capital
Share premium
Retained earnings
Total equity
Liabilities
Non-current liabilities
Other financial liabilities
Current liabilities
Other financial liabilities
Total liabilities
Total equity and liabilities
Note
2014
£m
2013
£m
8
9
10
10
12
13
14
14
11
11
8.5
11.0
2.8
22.3
0.3
–
0.5
2.6
3.4
25.7
5.0
3.5
3.3
11.8
13.7
13.7
0.2
0.2
13.9
25.7
8.5
6.1
1.0
15.6
–
7.8
0.5
3.0
11.3
26.9
5.0
3.5
(0.7)
7.8
19.0
19.0
0.1
0.1
19.1
26.9
The notes on pages 129 to 136 form part of these financial statements.
These financial statements on pages 126 to 136 were approved by the board of directors on and were signed
on its behalf by:
G Wakeley
Chief Executive
126
COMPANY STATEMENT OF CHANGES
IN EQUITY AS AT 31 DECEMBER 2014
Share
capital
£m
Share
premium
£m
Retained
earnings
£m
Balance at 1 January 2013
Loss after tax and total comprehensive income
for the year
Balance at 31 December 2013
Balance at 1 January 2014
Profit after tax and total comprehensive income
for the year
Balance at 31 December 2014
5.0
–
5.0
5.0
–
5.0
3.5
–
3.5
3.5
–
3.5
The notes on pages 129 to 136 form part of these financial statements.
Total
equity
£m
8.5
(0.7)
–
(0.7)
(0.7)
(0.7)
(0.7)
4.0
7.8
4.0
3.3
11.8
127
Making complex things simpleSECTION 03Equiniti Annual Report 2014FINANCIAL STATEMENTS COMPANY STATEMENT OF CASH FLOWS
AS AT 31 DECEMBER 2014
Note
Cash flows from operating activities
Loss before tax
Adjustments for:
Finance income
Financial expense
Increase in trade and other receivables
Increase in other financial assets
Group relief paid
Net cash outflow from operating activities
Cash flows from investing activities
Dividends received
Net cash inflow from investing activities
Cash flows from financing activities
Loans from related parties
Loans to related parties
Net cash outflow from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
13
The notes on pages 129 to 136 form part of these financial statements.
128
2014
£m
4.0
(5.5)
0.9
(0.6)
–
(0.2)
(0.8)
–
(0.8)
0.4
0.4
–
–
–
(0.4)
3.0
2.6
2013
£m
(0.7)
(0.4)
1.1
–
(0.3)
–
(0.3
0.1
(0.2)
–
–
(0.1)
(0.9)
(1.0)
(1.2)
4.2
3.0
NOTES TO THE COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
1 Accounting policies
Equiniti Group Limited (the “Company”) is a limited company incorporated and domiciled in the UK. The
principal activity of the Company is that of a holding company. The registered office is Sutherland House,
Russell Way, Crawley, West Sussex, RH10 1UH.
These financial statements have been prepared in accordance with International Financial Reporting
Standards as adopted by the European Union (IFRSs as adopted by the EU), IFRIC Interpretations and the
Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have been
prepared under the going concern basis.
The preparation of financial statements in conformity with IFRSs requires the use of certain critical
accounting estimates. It also requires management to exercise its judgement in the process of applying the
Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas
where assumptions and estimates are significant to the financial statements, are disclosed in note 19.
The Company has taken advantage of the exemption provided under section 408 of the Companies Act 2006
not to publish its individual statement of comprehensive income and related notes. The profit for the year
was £4.0m (2013: loss of £0.7m).
Measurement convention
The financial statements are prepared on the historical cost basis.
Investments in subsidiaries
Investments in subsidiaries are carried at cost less any provisions for impairment.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable
on demand and form an integral part of the Company’s cash management are included as a component of
cash and cash equivalents for the purpose only of the statement of financial position and the statement of
cash flows.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or
options are shown in equity as a deduction, net of tax, from the proceeds.
Net finance costs
Net finance costs comprise interest payable, interest receivable on own funds, dividend income and foreign
exchange gains and losses that are recognised in the statement of comprehensive income.
Interest income and interest payable is recognised in profit or loss as it accrues, using the effective interest
method. Dividend income is recognised in the statement of comprehensive income on the date the entity’s
right to receive payments is established.
Taxation
Tax on the profit for the year comprises current and deferred tax. Tax is recognised in the statement of
comprehensive income except to the extent that it relates to items recognised directly in equity, in which
case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or
substantively enacted at the statement of financial position date, and any adjustment to tax payable in
respect of previous years.
129
Making complex things simpleSECTION 03Equiniti Annual Report 2014FINANCIAL STATEMENTS NOTES TO THE COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
1 Accounting policies (continued)
Taxation (continued)
Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for taxation purposes. The following temporary
differences are not provided for: the initial recognition of goodwill, the initial recognition of assets or
liabilities that affect neither accounting nor taxable profit other than in a business combination and
differences relating to investments in subsidiaries to the extent that they will probably not reverse in the
foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or
settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted
at the statement of financial position date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be
available against which the asset can be utilised.
New standards and interpretations not yet adopted
a) New and amended standards adopted by the company
There are no IFRSs or IFRIC interpretations that are effective for the first time for the financial year
beginning on or after 1 January 2014 that would be expected to have a material impact on the company.
b) New standards and interpretations not yet adopted
A number of new standards and amendments to standards and interpretations are effective for annual
periods beginning after 1 January 2014, and have not been applied in preparing these financial statements.
None of these is expected to have a significant effect on the financial statements of the company.
There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a
material impact on the company.
2 Financial risk management
The Company has exposure to the following risks from its use of financial instruments:
• credit risk
• liquidity risk
• market risk
Risk management policies are established for the Equiniti Group Limited group of companies (the
“Group”) including Equiniti Group Limited and the Group Audit Committee oversees how management
monitors compliance with these policies and procedures and reviews the adequacy of the risk management
framework in relation to the risks faced by the Company. The Group Audit Committee is assisted in its
oversight role by Internal Audit and Compliance Monitoring. Internal Audit and Compliance Monitoring
undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of
which are reported to the Audit Committee.
Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty, including brokers, to a
financial instrument fails to meet its contractual obligations.
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due.
The Company’s approach to managing liquidity is to ensure, as far as possible, that the Company will have
sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions.
Market risk
Market risk is the risk that changes in market prices such as interest rates, foreign exchange rates and equity
prices will effect the Company’s income or the value of its financial instruments.
The Company does not engage in holding speculative financial instruments or their derivatives. Further
details in relation to financial risk management are contained in note 15 to these financial statements.
130
NOTES TO THE COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
3 Capital risk management
Equiniti Group Limited is focused on delivering value for its shareholders whilst ensuring the Company
is able to continue effectively as a going concern. Value adding opportunities to grow the business are
continually assessed, although strict and careful criteria are applied.
4 Auditors’ remuneration
Auditors’ remuneration of £1,250 (2013: £1,250) was borne by a subsidiary company.
5 Staff numbers and costs
The Company has no employees other than the directors. Services to the Company are provided by staff
employed by other companies within the Group.
6 Directors’ remuneration
The costs of the directors are borne by subsidiaries of the Company. There are no costs to the Company for
their services.
7 Income tax credit
Recognised in the statement of comprehensive income
Current tax credit for the Company
Current year
Total tax in the statement of comprehensive income
Reconciliation of effective tax rate
Profit / (loss) for the year
Total tax credit
Profit / (loss) excluding taxation
Tax using the UK corporation tax rate of 21.5% (2013: 23.25%)
Non-deductible expenses
Total tax credit
2014
£m
(0.3)
(0.3)
2014
£m
4.0
(0.3)
3.7
0.8
(1.1)
(0.3)
2013
£m
–
–
2013
£m
(0.7)
–
–
(0.2)
0.2
–
The standard rate of Corporation tax in the UK changed from 23% to 21% with effect from 1 April 2014.
Accordingly the Company’s profits for this accounting year are taxed at an effective rate of 21.5%.
131
Making complex things simpleSECTION 03Equiniti Annual Report 2014FINANCIAL STATEMENTS NOTES TO THE COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
8 Investments in subsidiaries
The Company has the following investments in subsidiaries:
Cost and net book value
At beginning of year
At end of year
2014
£m
8.5
8.5
2013
£m
8.5
8.5
The directors consider the value of the investments to be supported by their underlying assets.
The Company has the following direct investments in subsidiaries:
Name of controlled entity
Country of
Incorporation
Class shares
held
Equiniti Enterprises Limited
Equiniti X2 Enterprises Limited
UK
UK
Ordinary
Ordinary
Principal
activities
Holding
company
Holding
company
Ownership
2014
%
Ownership
2013
%
100
100
100
100
A more comprehensive listing of indirectly owned subsidiaries is provided in the consolidated financial
statements of Equiniti Group Limited.
9 Investments
The Company has the following investments
Shares held in Euroclear plc
2014
£m
11.0
11.0
2013
£m
6.1
6.1
The shares were revaluaed at the end of 2014 to reflect the price paid by other shareholders of Euroclear
plc in recent transactions.
132
NOTES TO THE COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
10 Other financial assets
Non-current
Intercompany loan due from related parties
Accrued interest on loan due from related parties
2014
£m
2.6
0.2
2.8
Interest on intercompany loans is charged at a rate equivalent to the average rate charged on the
underlying loans in Equiniti NewCo 2 plc. The intercompany interest rate is currently 7.125%
(2013: 7.125%). Amounts owed from group undertakings are unsecured and have no fixed date of
repayment but will not be called upon in the next twelve months.
Current
Receivables due from related parties
11 Other financial liabilities
Non-current
Intercompany loan due from related parties
Accrued interest on loan due from related parties
2014
£m
–
–
2014
£m
12.2
1.5
13.7
2013
£m
1.0
–
1.0
2013
£m
7.8
7.8
2013
£m
18.3
0.7
19.0
Interest on intercompany loans is charged at a rate equivalent to the average rate charged on the
underlying loans in Equiniti NewCo 2 plc. The intercompany interest rate is currently 7.125%
(2013: 7.125%). Amounts owed to group undertakings are unsecured and have no fixed date of repayment
but will not be called upon in the next twelve months.
Current
Amounts classified as other financial liabilities due
to related parties
2014
£m
0.2
0.2
2013
£m
0.1
0.1
133
Making complex things simpleSECTION 03Equiniti Annual Report 2014FINANCIAL STATEMENTS NOTES TO THE COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
12 Trade and other receivables
Other receivables and prepayments
13 Cash and cash equivalents
Cash and cash equivalents per statement of financial position
Cash and cash equivalents per statement of cash flows
14 Share capital and reserves
In millions of shares
On issue at beginning of year
On issue at 31 December – fully paid
Allotted, called up and fully paid
Shares of £1 each
15 Financial instruments
Credit risk
Share
capital
2014
£m
5.0
5.0
Share
premium
2014
£m
3.5
3.5
The maximum exposure to credit risk at the reporting date was:
In millions of shares
Loans and receivables due from related parties
Trade and other receivables
Cash and cash equivalents
Note
10
12
13
134
2014
£m
0.5
0.5
2014
£m
2.6
2.6
2013
£m
0.5
0.5
2013
£m
0.3
0.3
Ordinary
shares
2014
Ordinary
shares
2013
5.0
5.0
Total
2014
£m
8.5
8.5
5.0
5.0
Total
2014
£m
8.5
8.5
Carrying
amount
2014
£m
Carrying
amount
2013
£m
–
0.5
2.6
3.1
7.8
0.5
3.0
11.3
NOTES TO THE COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
Credit risk mitigation
No amounts were past due, the company holds no collateral as security. For cash and cash equivalents, only banks and
financial institutions with a minimum rating of A are accepted.
Liquidity risk
The maximum exposure to liquidity risk at the reporting date was:
In millions of shares
Payables to related parties
Loans from related parties are repayable on demand.
Capital risk
Note
11
Carrying
amount
2014
£m
0.2
0.2
Carrying
amount
2013
£m
0.1
0.1
The Company’s objectives when managing capital is to maximise shareholder value whilst safeguarding the Company’s
ability to continue as a going concern. Total capital is calculated as total equity as shown in the balance sheet.
Management of capital
Equity
16 Related party transactions
Interest receivable from related parties during the year
Company’s subsidiaries
Interest payable to related parties during the year
Company’s subsidiaries
Amounts receivable from related parties at the balance sheet date
Company’s subsidiaries
2014
£m
11.8
11.8
2013
£m
7.8
7.8
2014
£m
2013
£m
0.2
0.9
2.8
0.3
1.1
8.8
Amounts payable to related parties at the balance sheet date
Company’s subsidiaries
13.9
19.1
135
Making complex things simpleSECTION 03Equiniti Annual Report 2014FINANCIAL STATEMENTS NOTES TO THE COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
17 Ultimate parent company and controlling party
The Company is a wholly owned subsidiary of Equiniti (Luxemburg) Sarl, a company incorporated in
Luxemburg. The ultimate controlling party relationship lies with the funds managed by Advent International
Corporation, a group incorporated in the United States of America.
18 Post balance sheet event
There have been no events subsequent to the balance sheet date which require disclosure in, or adjustment
to, the financial statements.
19 Accounting estimates and judgements
There are no accounting policies where the use of assumptions and estimates are determined to be
significant to the financial statements.
136
Making complex
things simple
Equiniti Annual Report 2014Making complex things simple equiniti.com