18ANNUAL REPORT 2018 Equiniti is a leading global provider of technology and solutions for complex and regulated data and payments, serving blue-chip enterprises and public sector organisations

Our mission is to combine our technology and specialists to help businesses prosper

We are a Superbrand!

2 Equiniti Group plc Annual Report 2018 333 56 58 60 66 72 80 86 92 118 ADDITIONAL INFORMATION SHAREHOLDER 200 INFORMATION GOVERNANCE GOVERNANCE REPORT BOARD OF DIRECTORS EXECUTIVE COMMITTEE BOARD AND EXECUTIVE COMMITTEE STRUCTURE AUDIT COMMITTEE REPORT RISK COMMITTEE REPORT COMMITTEE NOMINATION REPORT DIRECTORS' REMUNERATION REPORT DIRECTORS' REPORT 04 02 6 8 12 14 16 18 20 22 30 38 52 124 132 139 190 192 03 STRATEGIC REPORT STRATEGIC HIGHLIGHTS OUR BUSINESS MODEL OUR MARKETS STRATEGY KEY PERFORMANCE INDICATORS CHAIRMAN’S STATEMENT CHIEF EXECUTIVE’S STATEMENT REVIEW OPERATIONAL FINANCIAL REVIEW SUSTAINABILITY RISKS AND PRINCIPAL 48 UNCERTAINTIES VIABILITY STATEMENT FINANCIAL STATEMENTS INDEPENDENT AUDITORS' REPORT CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL COMPANY STATEMENTS NOTES TO THE FINANCIAL COMPANY STATEMENTS Inside this year's this year's Inside Annual Report 01 Best Investor Education Voted for by investors and shareholders

4 SECTION 01 STRATEGIC REPORT

01 Strategic Report

HIGHLIGHTS 6 OUR BUSINESS MODEL 8 OUR MARKETS 12 STRATEGY 14 KEY PERFORMANCE INDICATORS 16 GroupEquiniti plc Annual Report 2018 CHAIRMAN’S STATEMENT 18 CHIEF EXECUTIVE’S STATEMENT 20 OPERATIONAL REVIEW 22 FINANCIAL REVIEW 30 SUSTAINABILITY 38 PRINCIPAL RISKS AND UNCERTAINTIES 48 VIABILITY STATEMENT 52

5 Highlights Underlying earnings before interest Revenue Underlying EBITDA* Underlying EBITDA margin* and tax (EBIT)* £530.9m £122.3m 23.0% £39.9m

2017 CHANGE 2017 CHANGE 2017 CHANGE 2017 CHANGE £406.3m 30.7% £98.2m 24.5% 24.2% (1.2pts) £37.0m 7.8%

Profit after tax Diluted earnings per share (EPS) Underlying EPS* Full year dividend per share £20.7m 4.7p 17.9p 5.32p

2017 CHANGE 2017 CHANGE 2017 CHANGE 2017 CHANGE £15.3m 35.3% 3.5p 34.3% 16.8p 6.5% 4.37p 21.7%

Operating cash flow conversion* Net debt Leverage 102% £309.5m 2.5x

2017 CHANGE 2017 CHANGE 2017 CHANGE 93% 9pts £242.9m 27.4% 2.5x –

FINANCIAL HIGHLIGHTS OPERATIONAL HIGHLIGHTS • Revenue growth of 30.7% reflecting acquisition of EQ US and • 100% retention of FTSE clients including relationships with strong organic growth of 7.3% BAE Systems, Carnival, EasyJet, GSK, IHG and QinetiQ • Underlying EBITDA growth of 24.5% reflecting strong organic • Major renewals in the US including 3M, CVS, Honeywell growth and contribution from EQ US; Underlying EBITDA and JP Morgan growth of 10.6% excluding the contribution of EQ US • New client wins across all divisions Margin decline of 1.2pts to 23.0%, driven by a change in • • New share registration clients including Bodycote, Hiscox, business mix due to an increase in lower margin remediation Wm Morrisons and National Grid projects • New company listings including Aston Martin, Avast and • Operating cash flow conversion of 102%, including a reduction Funding Circle in the receivables financing facility to £10.3m from £19.9m • Other new client wins including Combined Nuclear Pension at 31 December 2017, and driven by strong working capital Plan, Mastercard, National Bank Holdings and Ofcom management • New capabilities and strategic disciplines established, • Underlying EBIT growth of 7.8% after the impact of £20.8m including: of non-operating charges arising from the acquisition of EQ US, with profit after tax growth of 35.3%, benefitting from a • Wells Fargo Shareowner Services (EQ US) acquisition reduced tax charge successfully completed on 1 February 2018, with multiple growth opportunities in North America • Recommended final dividend of 3.49 pence per share, giving a total dividend for the year of 5.32 pence per share, • Integration on track with full separation from Wells Fargo representing growth of 21.7%, in line with progressive progressing well dividend policy • The division returned to growth in the second half with new client wins including AbbVie, Beyond Meat and • Net debt of £309.5m, resulting in leverage of 2.5x, reflecting Mastercard the acquisition of the EQ US business and associated costs • New products now launched in the US for private company 2017 numbers are restated for changes in accounting standards (IFRS 9 and M&A, Riskfactor and proxy solicitation services IFRS 15) – see note 2.1 for details. • Integration of Boudicca Proxy delivered and successfully *The Group uses alternative performance measures to provide additional cross-sold to 21 registration clients information on the underlying performance of the business. Key points for ease of reference are provided below. Further explanation is provided in the APM section • Acquisition of Aquila completed on 31 October, enhancing of the Strategic Report. our technology and services for insurance and the life sector Operating cash flow conversion is calculated as underlying EBITDA plus the change in working capital as a % of underlying EBITDA. • Extension of the MyCSP contract for the Civil Service 2017 EPS and dividend have been restated to reflect the bonus element of the Pension Scheme until December 2021, and the purchase of rights issue associated with the EQ US acquisition. the Cabinet Office's 24% shareholding, increasing our stake Net debt at 31 December 2017 excludes the net proceeds of £114.2m from the from 51% to 75% and demonstrating our commitment to this rights issue on 17 October 2017, which was used to fund the acquisition of EQ US. joint venture Operating cash flow conversion, underlying net debt and underlying leverage are calculated after allowing for use of a receivables financing facility the Group has in place, of which £10.3m (2017: £19.9m) was utilised at the end of the period, details of which can be found on page 33. 6 SECTION 01 STRATEGIC REPORT HIGHLIGHTS/ABOUT EQUINITI Equiniti Group plc Annual Report 2018 7

EQ US 16% 31% OF 2018 REVENUES OF 2018 REVENUES INTELLIGENT SOLUTIONS solutions for creative EQ US provides management. The division shareholder a range of transfer agent services offers that enable our clients to manage share communicate with shareowners registers, and undertake significant corporate actions – simply and effectively. or complex Intelligent Solutions targets activities to help organisations regulated manage their interactions with customers, citizens The division and employees. workflow for case and enterprise offers services, complaints management, credit for new clients, specialist on-boarding and remediation for rectification resource and data analytics services.

2%

OF 2018 REVENUES INTEREST INCOME About Equiniti About 24% 27% public sector organisations. public sector income as a fee In addition to our four divisions, we earn interest for the administration of certain client and customer balances. OF 2018 REVENUES OF 2018 REVENUES PENSION SOLUTIONS INVESTMENT SOLUTIONS data solutions, well as pension software, and life and pensions administration. The of pension division is a scale provider have served continuously since 1836. payment services to pension schemes, as technology and operates some of the than 2.6 million members, which has more which we Veterans, and the Armed Forces administration and Pension Solutions offers pension schemes in the UK. These largest include the National Health Service scheme, half the FTSE 100, and the for around range a broad Investment Solutions offers registration of services, including share schemes and administration of SAYE incentive plans for 1.2 million share employees. The division also provides dealing, wealth and management share international to corporate payments customers. to retail directly clients and their employees, as well as technology platformspositions and scale in our chosen markets: of payments, serving blue-chip enterprises and serving blue-chip payments, four divisions, by proprietary each underpinned deliver through our services We and solutions for complex and regulated data and regulated for complex and and solutions Equiniti is a leading global provider of technology technology of provider global is a leading Equiniti

Our business model The inputs to our business model We rely on the following assets to create value for our stakeholders:

PROPRIETARY SPECIALIST RELATIONSHIPS KNOWLEDGE FINANCIAL TECHNOLOGY PEOPLE RESOURCES

We have well-invested We employ people We build excellent We have many years’ We carefully manage and scalable proprietary who are experts in long-term and mutually experience of providing our balance sheet and technology platforms, their fields. At the year beneficial relationships complex services in cash flows, giving us which give us a end, we had over 5,100 with our clients, which regulated markets. We the financial resources competitive advantage employees, including include c70 of the FTSE also have a strong track we need to invest and form a barrier c900 at our offshore 100 and c120 of the record of identifying and in our technology to entry, given the facilities in Chennai. FTSE 250. Our average acquiring new platforms platforms and to substantial experience, relationship with FTSE and capabilities continue our growth. time and money 100 share registration to cross-sell to the required to build them. clients is c29 years. existing client base.

OUR VALUE CREATION MODEL

The outputs from our business model

FOR OUR FOR OUR FOR OUR FOR OUR FOR CLIENTS SHAREHOLDERS PEOPLE SUPPLIERS SOCIETY

Our clients receive Our shareholders gain Our people benefit Our suppliers are able The majority of our high-quality services from rising profits from interesting work to grow their businesses activities have a direct and technology that free and cash flows, which in a growing business, alongside ours, as we social benefit, whether them to focus on what support a progressive where they can develop work in partnership that is ensuring people matters most to them. dividend policy. their careers and fulfil with them. receive their pensions their potential. on time or helping clients to grow and create jobs through our data analytics. We also work in an ethical and sustainable way, and seek to create sustainable value for the long-term.

8 SECTION 01 STRATEGIC REPORT OUR BUSINESS MODEL Equiniti Group plc Annual Report 2018 9 income and interest c10% transactional income, from but is not contracted, such which happens every month the exchange from as foreign payment of overseas pensions DELIVERING RETURNS with our High-quality delivery supports long-term relationships clients’ makers. Our strategic account directors senior decision we can deliver where then work with them to identify other areas typically our key accounts take value and innovation. As a result, than 20. take more us and some than ten services from more Our and up-selling drives our top line growth. This cross-selling market leadership positions also make us a natural choice for new clients. In addition, we look to turn major clients into true supplier and and customer each other’s we are partners, where jointly deliver new opportunities, making these relationships even stronger. ways. The in different services generate revenues Different generated by multi-year contracts and predictable proportion combined with our long-term trading and activity, project For the revenues. gives us high visibility of future relationships, we typically have a whole, at the as start of each year, Group for that for the year and c80% visibility of c90% of revenue following year. vital. Their expertise enables us to provide Our people are from protected services that are sophisticated, high-margin paths career their develop skills and offer commoditisation. We work. and interesting platforms core undertaken for long- tasks and change work standing clients on our c30% to income, which relates dependable project from OUR REVENUE VISIBILITY COMES FROM THE FOLLOWING SOURCES: long-term from contracted income c50% and infrastructure software technology, the own core We continually in our invest to run our operations. We required platforms to add functionality and keep pace with changing innovative new board also bring on We laws and regulations. acquisitions along with new capabilities that platforms through existing to our clients. relevant are SUSTAINING OUR ADVANTAGE SUSTAINING technology with experienced and combine proprietary We efficient accurate, flexible and specialist people, to provide but business‑critical often non-core services. These services are to our clients. of operating Our experience in regulated helps our clients to meet their regulatory environments their interests. stakeholders’ obligations and protect client base means we can make Our scale and broad thatinvestments in technology and people our clients would not economically to make themselves. choose This allows us than clientscould in-house, efficiently services more to provide and giving them the flexibility to delivering cost efficiencies the year. deployed throughout adjust the resources significant operational Our technology platforms provide To grows. as our revenue profits leverage, which increases we continue to expand our technology optimise our efficiency, development, testing and support capability in the UK and India. funds to invest in operating cash flow conversion provides Strong our debt. and to further reduce growth Our value creation model creation Our value WE ADD THE VALUE Our technology platforms

We deliver our services and solutions through a suite of proprietary platforms, which provide cutting edge technology and functionality to our clients and give us a significant competitive advantage.

Our technology underpins our strategy of expanding our service offering, while adapting to changing client and regulatory requirements. Because they are proprietary, we can use them to provide white label services to clients. Our infrastructure is onshore and configured to be secure and resilient. The platforms’ scalability supports our business growth, with significant capacity to process increasingly large volumes of data and transactions, making payments of £93bn in 2018. We also have a track record of making targeted acquisitions of companies with exciting technology, which open new growth areas for us.

Charter is our case and complaints management platform. Compendia is our award-winning pension administration and It supports Intelligent Solutions’ offering, processing more payroll platform. It is used to manage records and payments for than 4.5 million complaints on behalf of clients. It is a highly around 9 million UK pension scheme members. As well as using customisable solution, which supports automated FCA reporting, Compendia in our own business, we provide the platform as a root cause analysis and secure data management. It gives our software solution to in-house pension teams, either on-premise clients a wide variety of business-critical data in a single view, or as a managed service solution. enabling swift and efficient processes. Compendia offers self-service functionality to scheme members, through our mobile app and responsive web design. This improves members’ experience, helps them to plan their retirements, increases their engagement with the scheme and improves efficiency for the schemes themselves.

Sirius is our core share register management platform, Xanite is our custody and settlement wealth management supporting our registration, dividend payment and share plan platform. Through its interface with SWIFT and CREST, it administration services. It can handle vast processing volumes, supports share dealing for both retail investors and corporate managing over 70 million data records on behalf of 19 million clients, as well as our outsourcing services for wealth managers. shareholders and making payments of £44bn in 2018. Sirius The platform also enables us to provide asset custody services receives approximately one million internal website hits each day and supports our growing D2C business, which we deliver and delivers an average response time of less than one second. through our Selftrade web and mobile offering.

10 SECTION 01 STRATEGIC REPORT OUR TECHNOLOGY PLATFORMS Equiniti Group plc Annual Report 2018 11 e proprietary technology platform operated for loan e proprietary administration services Our client on-boarding and anti-money-laundering platform Our client on-boarding Our fraud detection platform Our executive share plans platform Our executive share Th OUR FOUR PRIMARY PLATFORMS ARE CHARTER, ARE CHARTER, PLATFORMS OUR FOUR PRIMARY COMPENDIA, SIRIUS AND XANITE. OUR OTHER INCLUDE: PLATFORMS IMPORTANT

regulatory requirements” regulatory our service offering, while our service offering, our strategy of expanding Our technology underpins adapting to changing client and adapting to changing Our markets

Equiniti has large addressable markets INCREASING REGULATION CONTINUING DIGITISATION in the UK and US. In the short term, There is ongoing pressure to protect Consumers expect to receive high-quality activity in our markets is driven by consumers’ interests through greater services and to be able to manage their macro-economic conditions, including regulation, particularly in the pensions, affairs online. Shorter product lifecycles confidence levels among businesses banking and financial services, and are also requiring organisations to build and institutional investors, and the level healthcare industries. There is also ever- customer journeys more quickly. These of interest rates. These factors impact increasing focus on issues such as money pressures require organisations to invest demand for investment-linked products laundering, which is a global problem. extensively in websites, portals and and the number of flotations, mergers, mobile apps, which can be difficult to acquisitions, share issues and buybacks. New regulations are therefore a feature of our clients’ markets. In the UK, for do in-house. At the same time, they are We also increase our addressable market example, more than 80 new regulations often struggling with legacy technology, over time, by adding capabilities to the have been introduced in financial services particularly in the banking sector, making Group, expanding our client base via IPO since the 2008 crash. More regulation it more difficult to respond. wins, and cross-selling into that expanded results in both public and private sector The growth of digitisation is also creating client base. This will be particularly organisations facing rising compliance vast quantities of proprietary and third- important in the US, as we transfer costs and the need to upgrade technology party data for our clients. They often capabilities developed in the UK to serve to cope. Many may also be contending need specialist help to analyse this data EQ US’s clients. with past regulatory issues at the same and extract customer insights, so they The longer-term growth of our markets is time. Organisations who fail to meet can improve their customer offer. This is the result of powerful structural trends: their regulatory obligations face more particularly critical for clients with large investigations, increasing demand for customer bases. • increasing regulation; remediation services. • continued digitisation; and INCREASING COST-CONSCIOUSNESS While Equiniti is also affected by Companies are under real pressure to • increasing cost consciousness. compliance costs this trend is positive cut costs, to enable them to compete for us, creating new opportunities to These challenge our clients, who effectively and to grow profits. Intense serve our clients. face greater complexity and pressure on public finances also forces rising costs, encouraging them governments and their agencies to turn to us for support. to do more with less. This requires companies and the public sector to focus on their core operations and be more efficient. Technology-led solutions help them to transform their operations and deliver efficiencies.

12 SECTION 01 STRATEGIC REPORT OUR MARKETS Equiniti Group plc Annual Report 2018 13

SERVED BY ISSUERS #3 US SERVED #2 BY SHAREHOLDERS we have challenger positions, are we In markets where data and payments ability to process our proven by differentiated risk averse and Many clients are and accurately. securely operational of the services we supply, given the critical nature their business. excellence is critical for winning and retaining services market, we rank second by the In the US shareholder By served, with c22% market share. number of shareholders with share. 10% market number of issuers served we rank third, OUR STRATEGIC RESPONSE OUR STRATEGIC and up-selling, so they sales to existing clients by cross-selling grow We number of our solutions over time. take a greater services such as share core win new B2B clients requiring We sales. such as software new routes and through services registration stay ahead by understanding our clients’ evolving needs and either We new capabilitiesdeveloping or acquiring to meet them. find other opportunities presence, offshore our continue grow to We fromoperational the leverage of our and benefit efficiency, to increase platforms. the use attractive cash flow characteristics of our business to We invest in our technology platforms, while continuing strengthen to our balance sheet. #4 credit. EXECUTION-ONLY EXECUTION-ONLY RETAIL SHARE DEALING RETAIL

consumer and UK analytics #2 ADMINISTRATION data THIRD-PARTY PENSION THIRD-PARTY

assessment, risk

SHARE PENSION SERVICES

EMPLOYEE #1 SHARE PLANS REMEDIATION REMEDIATION REGISTRATION REGISTRATION PUBLIC SECTOR ADMINISTRATION IMPLICATIONS FOR EQUINITI FOR IMPLICATIONS The changing environment means existing clients need more of our existing means clients need more The changing environment services, so they can manage change effectively. of needs, opening up range clients have an ever-increasing Prospective new ways of winning their business. complex, bothnew and existing clients As theworld becomes more new capabilities. us to offer require on our so we must focus rigorously costs, Complexity tends to increase own efficiency. need to our clients.Our technology is a key enabler of change for We in class. best it remains ensure see pages 14 to 15. information on our strategy, For more both have market-leading and challenger positions across We fragmented our portfolio of services. Most of our UK markets are competitors in each. and we typicallydifferent face In Investment Solutions, we have number one positions in share The division plans. also has and employee share registration challenger positions in custody nominee and flexible benefits services. Pension Solutions one in public is number sector administration administration, serving and number two in third-party seven million pension scheme members. approximately In Intelligent Solutions, we have a number one position positions in regulatory services and strong in remediation (KYC) customer know-your-customer services, loan technology, on‑boarding, OUR COMPETITIVE ENVIRONMENT to these dynamics. outlined implications on page 12 have several to respond Our strategy is designed for us. The trends THE IMPLICATIONS FOR EQUINITI THE IMPLICATIONS Strategy

Equiniti has a five-part strategy, designed to drive organic growth by leveraging our technology platforms. The key components of our strategy are set out below.

GROW SALES WIN NEW DEVELOP AND TO EXISTING B2B CLIENTS ACQUIRE NEW CLIENTS CAPABILITIES

The majority of our organic growth To win new B2B clients, we need to: As our environment changes and opens comes from cross-selling and up-selling up new opportunities for us, we need to • Target clients requiring core services, to existing clients. To achieve this, we in particular share registration. keep ahead by broadening our offering. need to: This means: Attract clients through new routes, Employ great people and develop • Ensuring we understand our clients’ • such as software sales. • them, so they deliver consistently needs, so they can lead our product excellent service, helping to ensure • Maintain our reputation for development. we retain our existing client base. service excellence. • Developing new capabilities • Invest time to understand clients’ that meet those needs, through needs and continue to develop our organic investment. key accounts management. • Making carefully targeted acquisitions that give us new technology to meet those needs.

PROGRESS IN 2018

LONG-TERM CLIENT RELATIONSHIPS KEY NEW ACCOUNT WINS IN THE WE CONTINUED TO BROADEN OUR ARE THE FOUNDATION OF OUR YEAR INCLUDED: CAPABILITIES DURING THE YEAR. IN BUSINESS. WE CONTINUED TO RETAIN • Share registration mandates for PARTICULAR: 100% OF OUR UK LISTED SHARE Bodycote, Deltex, Hiscox, Wm • US transfer agency capability in place REGISTRATION CLIENTS. Morrisons and National Grid. following 1 February 2018 completion Notable examples of cross-selling and of the EQ US acquisition. Share plan mandates including Astra up-selling this year included: • Zeneca, Dunelm, Wm Morrisons, • Boudicca Proxy Services acquired in • Credit services to Vodafone and National Grid and Santander. April 2018 and since cross-sold to 21 MotoNovo Finance. registration clients. • 21 UK main market listings, including • Large scale remediation and fulfilment Aston Martin, Avast and Funding Circle. • Aquila Group Holdings acquired projects with major UK banks. in October 2018, enhancing our Technology sales including Admiral, • technology and services for insurance • Successfully introducing our UK credit Neilson and Ulster Bank. services capability to the US, with and the life sector. Wins in the US including AbbVie, Riskfactor being launched and now being • Estate management and bereavement Beyond Meat, Honeywell, • used by 11 organisations in the US. services model growing, including Mastercard, National Bank Holdings, "tell-us-once" pilot for six major Our key accounts now take an average Inmarsat and Perspecta. of more than ten products from us. UK banks.

14 SECTION 01 STRATEGIC REPORT STRATEGY Equiniti Group plc Annual Report 2018 15 Operating cash flow conversion Revenue growth 7.3% WE DELIVERED 102% 24.5% 30.7% growth revenue Organic Underlying* EBITDA growth acquisitions *Includes contributions from

CASH FLOWS REINVEST STRONG cash flow attributable to free Delivered equity holders of £38.6m. See page 33 for calculation. £39.8m in capital expenditure Invested platforms and to develop our core and on integration products, FinTech of our US business. the year end, we had net debt of At £309.5m and net debt to underlying EBITDA of 2.5 times. business has attractive cash flow Equiniti’s characteristics. us to continue This enables investing platforms, in our technology best‑in‑class, while ensuring they remain leverage. reducing IN 2018 WE: • • •

LEVERAGE OPERATING the scale of our operation Increase in Chennai. for other opportunities to Look including our efficiency, improve consolidation and premises supplier rationalisation. expanded our offshore Further in Chennai, which now has centre and c900 IT and operations staff, began mobilising a new 400 seat in Bangalore. technology centre an additional operations Developed site in Milwaukee as part of our North American infrastructure. advantage of multiple automation Took and digitisation opportunities arising MiFID II. from Our scalable platforms give us operational In addition, we leverage as we grow. continue to: • • DURING THE YEAR WE: • • • Key Performance Indicators

We use the following key performance indicators (KPIs) to track our strategic progress. Each KPI links to one or more elements of our strategy, as described on pages 14 to 15. We have also set medium-term targets for our key financial metrics, which are described below:

KPI RELEVANCE TO STRATEGY PERFORMANCE TREND

REVENUE GROWTH1 Delivering organic revenue growth is at the heart of our strategy. TARGET: ORGANIC REVENUE GROWTH SUPPLEMENTED We supplement this with growth from acquisitions. The value of services and software provided to clients BY GROWTH FROM ACQUISITIONS in the year, plus interest income. Links to the following strategy elements: 1 2 3 Total revenue grew by 30.7% in 2018, with organic growth of 7.3%.

UNDERLYING EBITDA1 MARGIN Underlying EBITDA margin is a key measure of our profitability and TARGET: GRADUAL MARGIN IMPROVEMENT demonstrates our ability to improve our efficiency, as well as the quality Earnings before interest, tax, depreciation, Our underlying EBITDA margin was 23.0%, a decline of of work we win. amortisation and non-operating charges2, as a 1.2 pts, reflecting an increased level of lower margin Links to the following strategy element: percentage of revenue 4 remediation services.

OPERATING CASH FLOW CONVERSION Our strategy requires us to generate cash to fund investment. TARGET: OPERATING CASH FLOW CONVERSION Underlying EBITDA plus the change in working Links to the following strategy element: OF MORE THAN C95% 5 capital, as a percentage of underlying EBITDA In 2018, we delivered another strong cash flow performance, with cash conversion of 102%.

LEVERAGE A strong balance sheet gives us the capacity to invest organically TARGET: LEVERAGE OF 2.0 – 2.5X IN THE MEDIUM TERM and in acquisitions. The ratio of net debt to underlying EBITDA. Net debt was £309.5m at 31 December 2018, resulting in Links to the following strategy element: leverage of 2.5x. 5

CLIENT SATISFACTION Client satisfaction shows how well we are meeting our clients’ needs, which TARGETS: NPS OF 40 IN THE MEDIUM TERM, is essential for retaining our existing business and our ability to grow, both We use the following industry recognised measures CES OF 95%, CCCS OF 97% through selling more to existing clients and through attracting new clients. to monitor client satisfaction: In 2018, we further improved customer satisfaction. Links to the following strategy elements: 1. Net Promoter Score (NPS), measured half yearly 1 2 Our NPS was 39, up from 33 in 2017. via online and paper surveys. The CES was maintained at 96% against an industry benchmark 2. Customer Effort Score (CES), measured via online, of 70%. paper and interactive voice response surveys. The CCCS was maintained at 97%, against an industry benchmark 3. Contact centre customer satisfaction score (CCCS). of 77%.

EMPLOYEE TURNOVER Employee turnover is an indicator of our ability to retain the talented TARGET: 16% EMPLOYEE TURNOVER IN THE UK people who are crucial to our success. The number of employees who voluntarily leave Employee turnover in the UK was 15.1%. Links to the following strategy elements: Equiniti during the year, as a percentage of 1 2 3 employees at the start of the year.

1 Revenue and underlying EBITDA were adjusted 2 Non-operating charges are defined as expense 3 Underlying, excluding the benefit of the for 2014 to reflect the impact of fundamental items, which if included, would otherwise obscure 114.2m of net proceeds from the rights issue changes to the business, as outlined in the the understanding of the underlying performance on 17 October 2017. Group’s prospectus issued in October 2015. of the Group.

16 SECTION 01 STRATEGIC REPORT KEY PERFORMANCE INDICATORS Equiniti Group plc Annual Report 2018 17 39 97 97 96 96 94 24.2% 93 24.2% 113% 18.5 90 23.4% 89 23.1% 23.0% 35 17.8 6.5x 104% 33 £530.9m 102% 100% 31 15.6 93% 15.1 £406.3m £382.6m £369.0m 3 £291.4m 3.0x 2.7x 2.5x 2.5x 2018 2017 2016 2015 2018 2017 2016 2015 2014 2018 2017 2016 2015 2014 2018 2017 2016 2015 2018 2017 2016 2015 2018 2017 2016 2015 2018 2017 2016 2015 2014 2018 2017 2016 2015 2014 TREND NPS CEC CCCS

2.5X IN THE MEDIUM TERM – TARGET: 16% EMPLOYEE TURNOVER IN THE UK TARGET: Employee turnover in the UK was 15.1%. TARGETS: NPS OF 40 IN THE MEDIUM TERM, TARGETS: OF MORE THAN C95% cash flow performance, another strong In 2018, we delivered with of 102%. cash conversion CES OF 95%, CCCS OF 97% customer satisfaction. In 2018, we further improved 33 in 2017. Our NPS was 39, up from The CES was maintained at 96% against an industry benchmark of 70%. The CCCS was maintained at 97%, against an industry benchmark of 77%. TARGET: LEVERAGE OF 2.0 TARGET: TARGET: OPERATING CASH FLOW CONVERSION OPERATING TARGET: BY GROWTH FROM ACQUISITIONS BY GROWTH FROM of 7.3%. growth 2018, with by 30.7% in organic grew revenue Total GRADUAL MARGIN IMPROVEMENT TARGET: was 23.0%, a decline of Our underlying EBITDA margin level of lower margin an increased 1.2 pts, reflecting services. remediation in 2018, resulting Net debt was £309.5m at 31 December leverage of 2.5x. PERFORMANCE REVENUE GROWTH SUPPLEMENTED ORGANIC TARGET: the talented Employee turnover is an indicator of our ability to retain crucial to our success. people who are Links to the following strategy elements: meeting our clients’ needs, which Client satisfaction shows how well we are both our existing ability business and our to grow, is essential for retaining attracting new clients. to existing clients and through selling more through Links to the following strategy elements: RELEVANCE TO STRATEGY RELEVANCE is at the heart of our strategy. growth revenue Delivering organic acquisitions. from supplement this with growth We Links to the following strategy elements: us to generate cash to fund investment. Our strategy requires Links to the following strategy element: balance sheet gives us the capacity to invest organically A strong and in acquisitions. Links to the following strategy element: and of our profitability is a key measure Underlying EBITDA margin as well as the quality our efficiency, demonstrates our ability to improve of work we win. Links to the following strategy element: , as a 2 MARGIN 1 1 via online and paper surveys. surveys. paper and interactive voice response measures use the following industry recognised We to monitor client satisfaction: half yearly measured (NPS), Score Promoter 1. Net via online, (CES), measured Score Effort 2. Customer (CCCS). customer satisfaction score 3. Contact centre EMPLOYEE TURNOVER The number of employees who voluntarily leave of as a percentage Equiniti during the year, employees at the start of the year. KPI REVENUE GROWTH to clients provided and software The value of services income. plus interest in the year, EBITDA UNDERLYING tax, depreciation, interest, Earnings before amortisation and non-operating charges CASH FLOW CONVERSION OPERATING Underlying EBITDA plus the change in working of underlying EBITDA capital, as a percentage LEVERAGE The ratio to underlying EBITDA. of net debt CLIENT SATISFACTION of revenue percentage Chairman's statement Philip Yea

This was another year of progress for Equiniti, with the Group delivering a strong financial performance reflecting the continued successful execution of our strategy.

Revenue increased by 30.7%, driven by the business to prioritise the deployment Group’s financial performance clearly strong organic growth and the acquisition of new customer facing features and to and appropriately. The Board looks to of Wells Fargo Shareowner Services (EQ transition clients to the Group’s Sirius continually enhance the presentation of US), which completed on 1 February 2018. platform over a longer period than its financial results, listening carefully to Combined with our ongoing operational originally envisaged. Overall, we are both specific and generic market and improvements, this led to underlying confident that EQ US will deliver in line regulatory feedback. More information EBITDA rising by 24.5% and underlying with our expectations. can be found in the Audit Committee earnings per share increasing by 6.5%. report on pages 72 to 79. The margin decline of 1.2pts to 23.0% DIVIDENDS reflects an increase in lower margin We have a progressive dividend policy, BOARD AND GOVERNANCE remediation work. Profit after tax was up which sees us pay out around 30% of There were several changes to the Board by 35.3%, and includes the non-operating the underlying profit attributable to in 2018. As I noted in my statement last charges arising from the US acquisition. shareholders each year. The Board is year, Vicky Jarman stood down as a non- Operating cash flow conversion was proposing a final dividend of 3.49 pence executive Director at the AGM on 3 May 102%, demonstrating again the Group’s per share, to give a total dividend for the 2018, with Darren Pope succeeding her as cash–generative characteristics. year of 5.32 pence, up 18.7% on the 4.48 our Senior Independent Director. I again pence paid in respect of 2017. Subject thank Vicky for her contribution during her The acquisition of EQ US was the to shareholder approval at the Annual four years on the Board. most significant development in 2018 General Meeting (AGM) on 2 May 2019, the and we are pleased with its progress. Alison Burns joined the Board as a final dividend will be paid on 16 May 2019, The separation from Wells Fargo and non-executive Director on 1 April 2018. to shareholders on the register at close of integration into Equiniti is progressing well She brings extensive experience of the business on 12 April 2019. We continue and the business is winning important new financial services industry, including to offer a dividend reinvestment plan and clients. The US is the world’s largest capital executive and non-executive roles at any shareholders wishing to participate market and we see real opportunities to numerous blue-chip organisations. Her should submit their election to do so by benefit our clients there by applying the understanding of our financial services 24 April 2019. technology we have developed in the customers is proving a valuable voice at UK, which will significantly expand the COMMUNICATING WITH the Board. market we can address. We have already SHAREHOLDERS Mark Brooker and Cheryl Millington were introduced our Riskfactor product to the The Board prioritises open appointed as non-executive Directors from US, with encouraging results. As reported communication with shareholders and, 1 November 2018. Mark brings strong in more detail in the operating review, as part of this, we look to present the management and operations experience we have revised our detailed plans for from technology-centric businesses and

18 SECTION 01 STRATEGIC REPORT CHAIRMAN'S STATEMENT Equiniti Group plc Annual Report 2018 1919 LOOKING FORWARD of regulation The convergence combined with the need and technology, powerful long-term cost, are to reduce our markets. across drivers of growth leadership team with a a strong have We clear strategy for making the most of the opportunitiesNotwithstanding ahead. the uncertain operating environment, Brexit, including the possibility of a hard continues to look to the future the Board with confidence. Philip Yea Chairman 2019 12 March

MANAGEMENT AND PEOPLE has continued to build its The Group senior leadership capabilities below Board level, with changes to roles a number of among the senior and responsibilities also appointed a Chief People team. We who will be key Officer, & Transformation on our workstreams to driving forward and people development. For the culture is part of the Executive first time, this role Committee. I want to thank the executive team and all of our people for their dedication and their contribution to the success this year. Group’s is fundamental to Having the right culture achieving sustainable success. The Board is fully engaged with this important topic has launched a culture and the Group set of and a refreshed change programme values, as described on page 39. Chairman of our Dr Tim Miller, Remuneration Committee and a former HR leader with global experience, has to become our nominated kindly agreed that the Board to ensure director views has access to our employee’s management and independently from well advanced in settling on the we are that will allow and processes structures in most cases him to do this effectively, access to existing colleague through engagement forums. a refreshed set ofa refreshed values” fundamental to achieving fundamental to achieving Having the right culture is the right culture Having culture change programme and and programme change culture sustainable success. The Board is The Board success. sustainable fully engaged this important with opportunities ahead” topic and the Group has launched a has launched topic and the Group team with a clear strategy for making the most offor the We have a strong leadership a strong have We his time banking is highly in investment to our marketplace. Cheryl relevant has deep technology and leadership a diverse range of experience from sectors. Their appointments add relevant further significant digital and systems supporting our expertise to the Board, agenda. ambitious growth In anticipation of these appointments, the we took the to review opportunity committees. composition of the Board’s Details of the new committee memberships can be found in the Corporate Governance Report. Chief Executive's statement Guy Wakeley

A CONSISTENT VALUE-CREATING STRATEGY Since our IPO in 2015, we have followed a consistent strategy which continues to deliver results. Organic growth is the starting point of that strategy and 2018 was the strongest period of organic growth we have reported as a listed company.

The majority of the services we provide While our registration and share plan services in the US and plan to launch asset are non-discretionary and we continue business is a key source of new clients remediation services and employee share to increase the range of issues we can for us, we were successful in gaining plans in 2019, to build on the momentum address for our clients. Combined with names across all divisions. Intelligent we have seen in H2 2018. very high service quality, this enables us Solutions had a particularly strong year, The separation of the business from Wells to build long-term and mutually beneficial with new wins including customer on- Fargo and its integration into Equiniti is relationships with our clients’ senior boarding services to Ulster Bank and data proceeding well. We have now established decision makers, encouraging them to analytics to Neilson. Pension Solutions our data centres and deployed our take more of our services over time. contracted during the year, in line with our applications within those data centres, We retained all of our UK registration expectations, as a result of a competitive inaugurated our second site in Milwaukee clients this year, with key renewals market, but gained new clients including and introduced new finance, HR and including BAE Systems, GSK, IHG, Just the Combined Nuclear Pension Plan, billing systems. The final phase of our Eat and QinetiQ. Our average relationship Sussex Police and the UK Atomic Energy work is the business acceptance testing with FTSE 100 registration clients is now Authority. of core transactional systems which is well 29 years and our key accounts typically ADDING TO OUR CAPABILITIES underway, and we are now progressing take more than ten services from us, with an extended period of parallel running, Our launch into the US is proving some taking more than 20. The result in anticipated to conclude by June 2019. successful, with the EQ US acquisition 2018 was our best ever organic revenue This additional period of prudent dual giving us a capability in the world’s largest growth of 7.3%. running requires an additional investment market for our services. While revenue in transitional resource, increasing our declined in the first half as a result of some FURTHER GROWTH IN OUR estimated total cost to complete to attrition in the client base and slower CLIENT BASE no more than £45.0m. The synergies corporate action activity, the business Another key feature of the year was committed in the acquisition case of $10m returned to growth in the second half the continued strengthening of our UK in the second year of ownership (2020) are and achieved a substantial increase in its franchise, showing both its resilience on track and will deliver in their entirety. and its capacity for further growth. We profitability. EQ US continues to deliver In the UK, we acquired Boudicca Proxy have approximately 50% of the UK FTSE excellent service, helping it to win new Limited in April 2018. Boudicca is the 100 share registration market and have clients in the year, including National Bank fastest-growing proxy solicitation company won 21 UK main-market IPO mandates, Holdings, Mastercard and Inmarsat. We in the market and has increased our range including the largest new issues such see real opportunity in the US market, as of boardroom services. We have already as Aston Martin and Avast. We also we gain market share and introduce new cross-sold its capabilities to 21 of our won additional registration mandates services. Intelligent Solutions’ rich set of clients. We also added to our technology from our competitors, including for regulatory technologies will be important and services offering for insurance Bodycote, Deltex, Hiscox, Wm Morrisons to our growth in the US, as we expand EQ companies and the broader financial and National Grid, and new share plan US’s relatively narrow current product set. services market, through the acquisition of mandates such as Astra Zeneca and We have launched Riskfactor, private share Aquila Group Holdings in October 2018. Santander. registration work and proxy solicitation

20 SECTION 01 STRATEGIC REPORT CHIEF EXECUTIVE'S STATEMENT Equiniti Group plc Annual Report 2018 2121

2.5x.

–

Boudicca exceptional client base” exceptional We expect further organic further organic expect We 7% per annum supplemented by acquired BoudiccaWe on our relationships with an on our relationships – growth in the UK, as we build build in the UK, as we growth Proxy Limited in April 2018 solicitation company in the is the fastest-growing proxy market and has increased our range boardroom of services. Our medium remains term guidance unchanged and excludes the impact of IRFS 16 to be consistent with current of c25 bps per improvement margin growth revenue organic results: reported capability-enhancing acquisitions, gradual dividend policy annum, a progressive with distribution based on a 30% payout attributable to ratio of underlying profit of 3 of cash tax rate shareholders, ordinary c13% for 2019 and c17% for 2020 onwards, post of 6 – 7% of revenue expenditure integration of the US business and a net debt/underlying EBITDA ratio of 2.0 Guy Wakeley Chief Executive 2019 12 March average cash conversion of c95%, capital 70% won aroundand have approximately have We 50% the of UK FTSE 100 share registration market as Aston Martin and Avast. the largest new issues such mandates, IPO of including OUTLOOK Whilst we expect the uncertainty in the to continue, the operating environment We strong. outlook for Equiniti remains in the UK, growth expect further organic with our as we build on our relationships a exceptional client base. The US offers based platform for accelerated growth the on the potential market opportunity, and the potential to take market share digitised services opportunity to cross-sell into our blue-chip client base. Where we will supplement our appropriate, with capability-enhancing growth organic acquisitions. Our business model gives us excellent Combined with visibility of our revenues. of our the highly scalable platform nature deleveraging and operations, progressive this will further operational improvements, underlying allow us to continue to grow and earnings ahead of revenue. profits INVESTING FOR GROWTH The quality is reflected of our earnings in our ability to turn them into cash. continue to generate high levels of We operating conversion, which cash flow stood at 102% for the against our year strong c95%, and reflects of target working capital management. This allows us to fund our ongoing investment in both in development capital expenditure, operating platforms and in new our core financial technology products. our services. EQ US largest market for acquisition giving us a capability in the world’s Our launch the is into US successful,proving with the Equiniti aims to deliver high-quality, year after sustainable earnings growth, no non-operating were There year. in 2018, with the exception of charges integration and transaction costs of the 21 US business. opportunities ongoing to are There selling both through enhance our margins, which is inherently technology, more leveraging and through profitable, more capabilities in India. We our offshore in now have c900 IT and operations staff opened Chennai and we have recently with in Bangalore a technology centre is a long capacity for up to 400. There process way to go with the offshoring our and our intention is to keep growing while keeping our UK headcount, offshore headcount steady. ENHANCING THE QUALITY OF OUR EARNINGS continue to develop our new We as our estate such capabilities internally, services management and bereavement model. This is gaining traction, with an ongoing pilot with major UK banks. six include blockchain Other notable projects solicitation, which and proxy registration in test. now are Share registration had a strong year. It retained all of its clients in the year, with notable renewals including BAE Systems, Carnival, GSK, IHG, Just Eat, EasyJet and QinetiQ”

Operational review Investment Solutions

MARKET PERFORMANCE The number of companies joining or leaving the stock Investment Solutions had a good year, with revenue market are important drivers of net market growth for increasing by 7.7% to £142.5m (2017: £132.3m). Organic registration and share plan services. The IPO market growth was 6.9%, primarily driven by a rise in corporate was strong for much of the year, with a wide range of action revenue to £18.8m (2017: £9.4m), along with companies joining the main market. The level of takeover outstanding client retention and increased market share. activity was also strong during the year, particularly among Underlying EBITDA increased by 8.7% to £47.3m (2017: FTSE 250 companies, and contributed to substantial £43.5m), representing a margin of 33.2% (2017: 32.9%). corporate action activity. Organic revenue growth, an increase in higher margin Companies served by competitors continued to look for project work and strong growth in employee share plans new registration and share plan providers during 2018, were the main factors of this performance. creating a number of opportunities for Equiniti. The desire Share registration had a strong year. It retained all of to move to a single supplier for these services was often its clients in the year, with notable renewals including a factor, with companies also looking for technology-led BAE Systems, Carnival, EasyJet, GSK, IHG, Just Eat solutions. Consolidation was a feature of the share plan and QinetiQ. The division made excellent progress market in 2018, which may have contributed to the number with competitor wins and was appointed as registrar of companies looking to switch. to clients including Bodycote, Countryside, Deltex, Employee share ownership is increasingly on the political Hiscox, Wm Morrisons and National Grid. It was agenda, as a way of increasing employee engagement and also highly successful at winning IPO mandates, to enhancing productivity. Companies are also recognising securing 21 of those coming to market including the potential benefits of employees having a greater stake Aston Martin, Avast and Funding Circle, as well as a in the business, encouraging them to look at giving them range of smaller issuers. Significant corporate actions free shares, particularly on IPO. in the year included Old Mutual’s spin off of Quilter, Retail share dealing volumes were modest during 2018, Melrose's acquisition of GKN, Tesco's acquisition while dealing activity in the share plan market was steady. of Booker and Shire's acquisition of Takeda. The UK base rate influences the margins we earn on funds In April 2018, Equiniti completed the acquisition of we hold on clients’ behalf. The Bank of England raised Boudicca Proxy Limited. Boudicca helps Equiniti’s clients interest rates in August 2018 from 0.5% to 0.75%. to maximise their shareholder relationships, gain unique insight into their shareholder base and secure support at key events and in unforeseen situations. The acquisition has been fully integrated and cross-sold into the Group’s registration client base.

22 SECTION 01 STRATEGIC REPORT OPERATIONAL REVIEW | INVESTMENT SOLUTIONS Equiniti Group plc Annual Report 2018 23 Daniel White above (left to right): Gemma McCluskey, Pictured had service execution-only brokerage Selftrade, the division’s in trading volumes as a result despite a reduction a good year has been a trend of the There UK equity market. uncertain into self-invested pension plans to save more for customers in further growth (SIPPs). Selftrade is well to benefit from placed than SIPP providers access to more platformSIPPs, as its offers many competitors. educational The business has an ongoing which will continue into these products, around programme a sizeable new marketplace for the2019. This opens up business. during 2018, to its pricing structure Selftrade also reviewed Other customer loyalty. and reward enhance transparency included enhancing its capabilityimportant developments for certificated trading. business can now trade any certificated The not just those for which Equiniti is the registrar. shares, with The international a good year, payments business had the has come from demand In particular, growth. steady organic companies do not corporate markets, where SME and mid-sized functions. continued The business has to have in-house treasury licence offering a software range, creating develop its product for companies who want to carry out their own global payment and investing in virtual bank accounts and e-wallet processing, its partnerships with financial services. It also strengthened to add to institutions, signing a new partnership with Barclays This both increases the existing arrangement with Citigroup. the flows through and allows the to route business resilience bank. most appropriate good traction was with the estate management and There with the “tell-us- during the year, services offering bereavement once” pilot with UK banks going live. six major The division also work with Lloyds from estate processing extended its outsourced customers, which will wealth customers to its retail the bank’s in volumes. in a significant increase result (2017: £132.3m) by increasing with revenue Investment Solutionshad a good year, E I SARES AARS SARES AARS 7.7% to £142.5m WINNER for benefits environmental and cost savings achieve To the division service for their shareholders, clients improve and statements to a new digitaldeveloped solution for providing to MiFID was in response vehicles. This in nominee shareholders to be sent statements such shareholders requires II, which now give investors The statements quarterly rather than annually. of trade activity during the quarter, online access to a breakdown and outstanding payments. as well as the assets, shares value of can Equiniti will continue to add to the services shareholders costs for clients. thefurther portal, to reduce access through the year for wins in share Investment Solutions had a strong plans market with key wins including AstraZeneca, Cobham, Countryside, Deltex, and National Hiscox, Wm Morrisons Grid. competitors, with IPOs The majority of these wins came from plans will be These new share also an important contributor. over the years, as coming to revenue important contributors the up. Many of the balances invested by employees build new sizeable employers, with Wm Morrisons, for example, clients are 105,000 people. employing around plans business has worked closely with EQ US The share to develop a new service for UK-listed during the year, plan for companies that allows them to emulate a UK share in discussions already US employees. A number of clients are more Other UK clients who want to offer about this product. also benefiting plans are traditional US employee stock purchase Another important capabilities in this area. US’s EQ from development in the was the year launch of a new executive shareholder retail module, based on the plan Group’s share all functionality across users more web portal. This offers out during 2019. devices and will be rolled Intelligent Solutions had an excellent year, with a 33.4% increase in revenue to £165.9m (2017: £124.4m), underpinned by exceptional organic growth of 30.2%”

Operational review Intelligent Solutions

MARKET There are strong underlying trends driving growth across The KYC market is driven by regulation, which requires Intelligent Solutions’ four areas of operation – regulatory numerous organisations, from banks and financial services remediation, credit services, know your customer (KYC) and to solicitors and accounting firms, to understand who they data analytics. are doing business with and prevent money laundering. In the regulatory remediation market, growth is being Globally, money laundering is estimated to be between 2% driven by two main factors. First, clients need to reduce and 5% of GDP and less than 1% of money laundering is costs by automating their processes, with Equiniti being currently caught. Regulators have responded with a wave a leading provider in this area. Second, there is an ever- of new rules, which are becoming ever more stringent. This growing range of issues requiring remediation. Some of is pushing organisations to adopt technology solutions to these are specific to individual firms, while others apply help them manage KYC issues effectively and efficiently. across the industry. Examples include pensions mis-selling, To grow their top line, companies increasingly need interest-only mortgages and consumer lending affordability specialist support to extract insights on existing and checks, which could all drive significant volumes of potential customers from vast quantities of their own remediation work. This means that while payment and third-party data. Other important drivers of the protection insurance (PPI) claims will come to an end in data analytics market include cyber security and asset August 2019, as a result of the Financial Conduct Authority’s reunification, through which individuals are reconnected deadline, we expect continued growth in this area of our with lost assets such as pensions or savings accounts. business. The UK data analytics market is expected to more The credit services market is driven by the ongoing than double in size between 2018 and 2023 (source: expansion of consumer debt, which is rising at around ResearchandMarkets). 8.5% per annum, according to the Bank of England. A key opportunity here is for Equiniti to provide technology to PERFORMANCE new firms offering different forms of lending, such as peer Intelligent Solutions had an excellent year, with a to peer and guarantor loans. Lenders of all types also need 33.4% increase in revenue to £165.9m (2017: £124.4m), to increase automation and efficiency, to maintain their underpinned by exceptional organic growth of 30.2%. profitability in the face of an ongoing squeeze on their net Underlying EBITDA rose by 21.7% to £39.8m (2017: £32.7m) interest margins. as a result of strong organic growth with the contraction in

24 SECTION 01 STRATEGIC REPORT OPERATIONAL REVIEW | INTELLIGENT SOLUTIONS Equiniti Group plc Annual Report 2018 25

Lending Awards Equiniti Credit Services wins Services Equiniti Credit management/payments at the Best Technology Partner – Loan Best Technology

Business Awards 2018 Business Awards Yorkshire Post Excellence Post in Yorkshire Equiniti Credit Services wins Services Equiniti Credit the Technology Award at the Award the Technology and a head of a strategy director recruiting during the year, sales. individual product scalable data analytics with human data security experts, to digital risks. from organisations protect new ways and The division continues to focus on efficiencies of working with people in Chennai supporting our Intelligent capacity with further scope to increase Solutions’ technology, The division is also starting to work with clients to offer offshore. and artificialintelligence capabilities, which can them robotics times. in processing generate substantial reductions its senior team Intelligent Solutions further strengthened sales. Both these appointments will support the proposition clients complete solutions, rather than ability to offer division’s EQ FirstSight is relationships. and develop mutually rewarding and which combines comprehensive a cyber security product, the in business change 26.3%), reflecting to 24.0% (2017: margin understand their so they customers, can better serve their needs projects. remediation in lower margin by an increase mix driven with performance, remediation a strong The division produced deal to to Royal Mail. A global Amplify data analytics product management system. Intelligent Solutions launched two new data analytics products EQ Amplify better is designed to help businesses in the year. as Intelligent growth, particularservices a revenue driver of fulfilment and remediation Solutionswon multiple large-scale with a smaller UK Banks. PPI is becoming major projects to clients in the form of people and resource providing from This allows the division to approach. adopts a managed service the cost to the client, while driving use technology to reduce margin. Equiniti’s that increase efficiencies The 2017 acquisitions and Nostrum of Gateway2Finance services, with new wins in credit growth supported strong and MotoNovo Finance. including contracts with Vodafone Other major wins during the year included cross-selling services to Ulster Bank, its case its customer on-boarding management platform to Hiscox and Lloyds Bank, and its EQ complaints management platform for HSBC out Equiniti’s roll into the US. ability to cross-sell demonstrated the division’s data analytics Intelligent Solutions also won contracts to provide Office, to Neilson, IT solutions to the Information Commissioner’s with with Lloyds Bank and a project project an asset reunification to run their claims communications regulator, Ofcom, the UK’s as evidenced by the business of the remediation proportion as it moves away model in remediation is evolving its business Intelligent in 2018 being non-PPI. Solutions projects two largest Pamela Beasley Pictured: 2018 - TOP 25 S s n CH o i

t a c i l

App NTE Amplify I CIO

SOLUTION PROVIDEr COMPANIE PROVIDEr SOLUTION F Equiniti KYC Solutions was named amongst by 25 Fintech solution providers Top Europe’s The acquisition of Aquila enhances our technology and services offering for insurance and the life sector”

Operational review Pension Solutions

MARKET Pension Solutions continued to face a challenging Technological solutions have an important role in delivering marketplace in 2018. In the first half of the year, improved outcomes for scheme members, for example by relatively few clients sought to procure either pensions introducing self-service functionality. While companies have administration or software provision. While more historically been heavily focused on the cost of introducing administration opportunities arose in the second half, improvements, Equiniti’s market research has identified many of those procurement processes were still ongoing that there is increasing willingness to invest to drive better at the year end. There is also continuing consolidation outcomes. in the marketplace, which is part of a long-term trend of Innovation in the retirement products market is another increasing concentration. ongoing trend. Life insurance companies and other fund Despite these short-term challenges, the longer-term providers aim to attract savers with new products, creating drivers of market growth remain in place. The shift to full opportunities for service providers to administer their older, outsourcing of pension fund administration continues, legacy products. as companies and pension fund trustees look to cope A theme underlying many of the drivers of the pensions with the burdens of regulation, cost and the effective market is the need for reliable data. For example, companies management of scheme liabilities. need high-quality data before they can complete a buy-in or There is a growing volume of buy-in and buy-out buy-out transaction, or they will face a risk premium from the transactions in the bulk-purchase annuity market, as insurer which will typically far outweigh the cost of enhancing companies look to de-risk their pension fund liabilities. their data quality. This creates demand for services such The opportunity for Equiniti is to support the insurance as bulk analytics, bulk rectification, remediation and data companies who initiate those transactions, both during cleansing. the transfer and with ongoing administration.

26 SECTION 01 STRATEGIC REPORT OPERATIONAL REVIEW | PENSION SOLUTIONS Equiniti Group plc Annual Report 2018 27 work Pension Solutions continued to pick up ongoing project with existing clients and signed new clients, including Highland the UK NHS Trust, Council Pension Fund, South Warwickshire Authority and a ten-year contract to administer Atomic Energy the Pension Plan. Combined Nuclear MyCSP continueddeliver to in line with expectations during announced that the contract the Group In September, the year. pension administration and to provide with the Cabinet Office services had been extended until the end of 2021. At the related 24% stake the Cabinet Office’s purchased same time, the Group 51% to ownership from Equiniti’s in MyCSP for £8m, increasing 25% of MyCSP continues to be owned by 75%. The remaining which is an employee benefit trust. Company, MyCSP Trustee MyCSP has made a significant investment in technology and services for public sector pensions' administration, and has the and most complex experience and scale to operate the largest of schemes. With committed to this extension, we are contract further investment in the the services and enhancing employer and member experience. Aquila, a UK-based life and acquired In October 2018, the Group for pension schemes and large pensions' technology provider Administrator platform insurance companies. Its proprietary in workplace savings, bulk-purchase supports propositions annuities and heritage transformation. acquisition The enhances technology and services for insurance and the life Equiniti’s The acquisition with brings it a number of key clients sector. the BBC, British Fidelity Airways, including Aon Hewitt, Aviva, and Irish Life. ownership from Equiniti’s 24% stake in MyCSP for £8m, increasing the Cabinet Office’s purchased The Group 51% to 75% decline by 7.5% to As expected, Pension Solutions saw revenue in underlying EBITDA £129.0m (2017: £139.5m), with a decrease of a margin of 19.9% to £19.7m (2017: £24.6m), representing of the ongoing 15.3% (2017: 17.6%). The decline was the result competitive market together with loss and change in a contract scope of the at the NHS contract end of 2017. The previously and transformation costs in announced £2.0m of restructuring in underlying EBITDA. We the of division is reflected respect continue to actively manage the cost base with initiatives in place the course of 2018 and into 2019 to stabilise trading. throughout Initiatives to manage the cost base include driving closer working utilising further with Pension Solutions and MyCSP, relationships work and rationalising the property automation and offshoring footprint. underlying EBITDA in 2018 included £2.0m The division’s and transformation costs. This programme of restructuring Pension Solutions’ operations in a is designed to improve These include enhancing the quality of its bid number of areas. submissions, client engagement and management information, The its operating processes. and simplifying and standardising ability to win new work and intention is to support the division’s as possible. In addition to this to deliver that work as effectively the division is exploring opportunities to integrate programme, digital capabilities into the solutions it provides some of Equiniti’s to clients. the division Despite the challenging market environment, Significant in the year. all of its relationships successfully retained and contract extensions included Abbey Life, GSK, renewals Police. Metal Box and Metropolitan Lloyds Banking Group, PERFORMANCE above: Rachel Roberts Pictured The division also retained all of its major clients, reflecting its strong relationships. This included signing a five-year extension with General Electric and renewing its foundation contract with MDU, a client since 1929”

Operational review EQ US

MARKET The US shareholder services industry is mature and highly In addition, at the time of acquisition, EQ US had a concentrated. The top three players have around 90% of narrow product set, providing transfer agent services the market between them, based on both the number of and corporate actions to its client base. This creates a shareholders and the number of issuers served. Clients significant opportunity to open up new areas of the market are focused on achieving value, which means they look to EQ US, by cross-selling the Group’s existing capabilities to control their costs while ensuring they receive a good developed in the UK and by developing new capabilities quality of service. They are also looking for their service in the US. providers to solve more of their issues, by offering an The US IPO market was relatively slow in the first half of expanded range of products and capabilities. However, the year, with greater activity in the second half. The level the industry has underinvested in both technology and of corporate actions in the US market was also stronger in service in recent years, creating opportunities for EQ US the second half. to take market share. The market EQ US can address is also increasing. The separation from Wells Fargo means EQ US can now compete for banking and financial services clients, which Underlying EBITDA increased by were closed to it when it was owned by a bank. The business had also historically focused on clients with the largest shareholder bases and now has the opportunity 15.0% to £19.2m to work for clients of all sizes.

28 SECTION 01 STRATEGIC REPORT OPERATIONAL REVIEW | EQ US Equiniti Group plc Annual Report 2018 29 its and Fargo Wells The separation the of from business have now well. We integration Equiniti into is proceeding our applications and deployed established our data centres our second site in inaugurated within those data centres, HR and billing new finance, systems. and introduced Milwaukee the of our work is The final phase testing business acceptance and we transactional systems which is well underway, of core of parallel an extended period running, now progressing are anticipatedThis additional to conclude by June 2019. period an additional investment in requires of prudent dual running our estimated cost to total increasing transitional resource, committed in than £45.0m. The synergies complete to no more the acquisition $10m in the case of year of ownership second on track and will deliver in their entirety. (2020) are delivering our annual is being made towards Good progress from of $10m with cost savings being delivered target synergy 2019, As we go through services. office insurance, IT and back a number of procurement expected from further savings are IT licences, digitisation of services and widening our exercises, offshore service delivery capabilities to start and use the Group’s capability. clients, EQ US has prioritised the Following feedback from service of web-based capabilities which will improve introduction facilitate this, EQ US To for both clients and their shareholders. FIS, with its existing system provider, its relationship has renewed platform Sirius over a and will transition clients to the Group’s longer period than originally envisaged. US EQ of Riskfactor, In addition to the successful introduction developed and launched a capability to administer private M&A the end of 2018. This will support new and transactions towards gaining traction with six clients existing clients and is already for introducing in 2018. The division also has a roadmap secured further capabilities in 2019, including data analytics, proxy solicitation has solicitation services and employee plans. Proxy generating commitments now been launched and is already growth, scope for faster revenue for 2019. As well as presenting of new capabilities will deepen EQ US client the introduction Key US clients and further enhance retention. relationships than ten with more take two services, compared currently services for key clients in the UK. new talent potential, EQ US has recruited achieve its growth To and a range of finance in sales, marketing, human resources, the other functions. This will enable the division to both capture and deliver the quality service clients of opportunities presented a Chief Customer Officer expect. The division has also created EQ US stays which is unique in the market and will ensure role, close to its clients to best meet their EQ US has also needs. team, ensuring continuity for clients. its core successfully retained Andy Edler and Amy Madden Pictured: PERFORMANCE The acquisition 2018 on 1 February EQ US completed of this date. from consolidated into the Group were and its results below is for the performance shown Prior period from period to demonstrate and is provided to 31 December 2017 1 February performance. underlying the division’s to £81.4m (2017: by 2.0% theRevenue in period decreased corporate actions of £12.3m from £83.1m) with revenue declinedthe by 6.3% in first half, revenue (2017: £11.3m). Whilst of 1.5% in the second half and growth the business delivered Revenue from in its profitability. achieved a substantial increase £4.7m) as the to £9.0m (2017: division income increased interest rate environment. the rising interest benefitted from by 15.0% to £19.2m (2017: £16.7m), increased Underlying EBITDA the rising (2017: 20.0%), reflecting of 23.6% a margin representing actions, in corporate growth reflecting rate environment, interest by stability of the client discipline base and good cost offset growth. future investment to drive Following the announcement of the acquisition, EQ US experienced some attrition among smaller clients following theof the announcement acquisition. This has now stabilised the with the division winning additional new clients through allits major of The division also retained second half of the year. signing This included relationships. its strong clients, reflecting its a five-year extension with General Electric and renewing foundation with contract MDU, a client since 1929. Other major Motion, Honeywell, CVS and JP included 3M, Garret renewals also encouraging New client wins in the period were Morgan. National Bank and included AbbVie, Inmarsat, Mastercard, Holdings, and Residio. Perspecta EQ US serves as transfer agent now has business. JP Morgan depository receipts to JP Morgan’s UK clients and during the year we to Equiniti’s access greater client. together Dutch Shell won Royal as a depository receipt client, with registration first share Royal Dutch Shell is Equiniti’s 60 years of continuous service, and this cooperation for London service of our listings demonstrates the strength and New York model. Significant corporate actions in the year included being Brands, Inc. for its appointed as exchange agent by Conagra $69bn $11bn acquisition Foods Inc and CVS Health’s of Pinnacle acquisition of Aetna. UK credit early success with was selling the Group’s There to of Riskfactor services into the USA, following the introduction is significant potential for this product the US in July 2018. There market among asset-intensive lenders in the US, with the target financial institutions. smaller companies to large ranging from In total, EQ US added 11 clients for this including service, wins Finance, Capital Business Credit with Advanced Partners, Baron and HSBC. Financial review

JOHN STIER CHIEF FINANCIAL OFFICER

OVERVIEW Revenue grew by 30.7% to £530.9m (2017: £406.3m) during the underlying net debt to underlying EBITDA of 2.5 times excluding year, with organic revenue growth of 7.3%. Underlying EBITDA the proceeds relating to the EQ US acquisition). increased by 24.5% to £122.3m (2017: £98.2m). Profit after tax increased to £20.7m (2017: £15.3m) after non-operating charges RESULTS ANALYSIS AND USE OF ALTERNATIVE of £20.8m. The acquisition of our EQ US business completed on PERFORMANCE MEASURES 1 February 2018 and had a positive impact on earnings. Key items reported in the income statement such as revenue and profit before tax are shown in the analysis of results below. The Group generated a free cash flow attributable to equity In addition to this, alternative performance measures such as holders of £38.6m, and a strong operating cash flow conversion underlying EBITDA (which excludes non-operating charges) are of 102%, with total cash generated from operations of £91.7m. also presented to allow a better understanding of the results for Net debt was £309.5m at 31 December 2018, representing a ratio the year. These measures are described further on pages of 2.5 times net debt to underlying EBITDA (31 December 2017: 36 to 37.

£m 2018 2017

Revenue 530.9 406.3

Underlying EBITDA 122.3 98.2 Depreciation (6.0) (5.7)

Amortisation – software (23.9) (18.3)

Amortisation – acquired intangibles (31.7) (26.7)

EBIT 60.7 47.5 Non-operating charges (20.8) (10.5)

Underlying EBIT 39.9 37.0 Net finance costs (15.3) (11.7)

Profit before income tax 24.6 25.3 Taxation (3.9) (10.0)

Profit after tax 20.7 15.3 Non-controlling interests (3.2) (3.7)

Profit attributable to ordinary shareholders 17.5 11.6

30 SECTION 01 STRATEGIC REPORT FINANCIAL REVIEW Equiniti Group plc Annual Report 2018 31

– % 8.7 7.2 10.1 83.1 24.4 21.7 19.8 24.5 24.5 2017 133.3 127.4 140.7 (19.9) 494.6 411.5 Change Proforma 1 2 3 4 – – 5.2 1.0 3.0 1.2 88.3 2017 83.1 98.2 24.6 10.1 32.7 43.5 2017 (12.7) 110.9 110.9 Adjustment – 19.7 12.1 19.2 39.8 47.3 2018 10.1 (15.8) 2017 122.3 118.9 138.1 132.3 124.4 139.5 406.3 406.3 Reported Group Underlying EBITDA Group Central Costs Pension Solutions Income Interest & Europe UK Total EQ US Divisional Total Intelligent Solutions Investment Solutions EQ US Equiniti Group Investment Solutions Underlying EBITDA (£m) Revenue (£m) Intelligent Solutions Pension Solutions Income Interest & Europe UK Total Acquisition of Boudicca Proxy Ltd Acquisition of Nostrum Group Acquisition of Aquila Acquisition of EQ US 1 2 3 4 ORGANIC REVENUE GROWTH ORGANIC adjusted growth revenue is reported growth revenue Organic 2017 for we restate basis. Here for acquisitions on a like-for-like the prior period acquisitions had they owned in 2017 to been is This progress. year-on-year comparison of a like-for-like create calculated as follows: % 7.3 9.2 6.9 (2.0) 19.8 (8.3) 30.2 Change Organic

– % 7.7 30.7 10.6 19.8 (7.5) 33.4 Change – 10.1 2017 139.5 124.4 132.3 406.3 406.3 81.4 12.1 2018 129.0 165.9 142.5 530.9 449.5 Equiniti Group EQ US Total UK & Europe UK Total Income Interest Pension Solutions Intelligent Solutions Revenue (£m) Investment Solutions Reportable segments The USD is converted into GBP using the average daily rate, 1.3304 USD to GBP 1 February 2018 to 31 December 2018 – for 2018 (average is based on period from period of US business ownership). REPORTABLE SEGMENTS REPORTABLE in five segments: Investment its results reports The Group Solutions, Intelligent Solutions, Pension Solutions, EQ US and supported by central functions. Income, The Board Interest revenue monitors the of the performance five segments through as of these were segments and underlying EBITDA. The results follows: UNDERLYING EBITDA UNDERLYING performance. of the Group’s is a key measure Underlying EBITDA and finance costs, taxation, depreciation before profit It reflects EBITDA Underlying amortisation, and non-operating charges. the (2017: £98.2m) reflecting by 24.5% to £122.3m increased Solutions performance in Investment and Intelligent strong the acquisitionof EQ US. Solutions and the contribution from (2017: £406.3m) during by 30.7% to £530.9m Revenue increased Acquisitions was 7.3%. growth revenue the year whilst organic well, contributing to growth. made in the period have progressed REVENUE Investment Solutions EARNINGS BEFORE INTEREST AND TAX (EBIT) Revenue increased by 7.7% to £142.5m, with 6.9% organic growth supported by corporate action activity of £18.8m (2017: £9.4m), £m 2018 2017 along with outstanding client retention and increased market share. Underlying EBITDA 122.3 98.2

Underlying EBITDA grew by 8.7%, driven by organic revenue Depreciation (6.0) (5.7) growth, an increase in higher margin project work and strong growth in employee share plans. Amortisation – software (23.9) (18.3) Intelligent Solutions Amortisation – acquired intangibles (31.7) (26.7) Revenue increased by 33.4% to £165.9m, driven by exceptional organic growth of 30.2%, reflecting strong demand in EBIT 60.7 47.5 remediation services. Non-operating charges (20.8) (10.5) Underlying EBITDA increased by 21.7% reflecting strong organic growth. Underlying EBIT 39.9 37.0 Pension Solutions Revenue decreased by 7.5% to £129.0m with a decrease in EBIT remains an important measure of the Group’s performance, Underlying EBITDA of 19.9% to £19.7m as a result of the ongoing reflecting profit before finance costs and taxation. In 2018, competitive market, a contract loss and change in scope of the underlying EBIT was £39.9m, an increase of £2.9m (7.8%) NHS contract at the end of 2017. The previously announced compared with the prior year of £37.0m. £2.0m of restructuring and transformation costs in respect of the AMORTISATION OF SOFTWARE AND ACQUIRED INTANGIBLES division is reflected in underlying EBITDA. Amortisation of software in the period increased to £23.9m Interest Income (2017: £18.3m) due to the completion of the development of a Interest income was 19.8% higher than the prior year, with number of significant projects, such as MiFID II, where the work average UK cash balances 4.1% higher at £1,744m (2017: completed in early 2018 and the assets became available to use £1,675m), and income benefitting from a 25bps rise in UK rates with amortisation of the assets commencing. in August 2017. The interest receivable is partially fixed with Amortisation of acquired intangibles in the period increased to instruments secured to July 2020 (£380m), September 2021 £31.7m (2017: £26.7m) and is mainly related to the amortisation (£215m), September 2022 (£215m) and September 2023 (£215m). of customer related intangible assets that were recognised on EQ US the purchase of EQ US in February 2018. Revenue decreased by 2.0% to £81.4m. Whilst revenue declined NON-OPERATING CHARGES by 6.3% in the first half, the business delivered 1.5% organic Non-operating charges are defined as expense items, which if growth in the second half of the year. The attrition of clients we included, would otherwise obscure the understanding of the saw in the first half stabilised and the division won a number of underlying performance of the Group. new clients in the second half of the year. Non-operating charges of £20.8m (2017: £10.5m) relate to the Underlying EBITDA increased by 15.0%, reflecting growth in transaction and integration costs associated with the acquisition corporate actions, stability of the client base, the rising interest of the US business. rate environment and good cost discipline. NET FINANCE COSTS Central Costs Net finance costs increased by £3.6m to £15.3m (2017: £11.7m) as Central costs in the period increased to £15.8m (2017: £12.7m) the level of debt increased in the business due to the acquisition and were driven by an increased share-based payments charge. of the EQ US business. TAXATION Profit before income tax of £24.6m at the UK corporation tax rate of 19% gives an expected total tax charge of £4.7m. The actual tax charge was £3.9m and the difference is largely explained due to two material factors including; (i) non-deductible transaction costs (tax effect £1.1m) and (ii) a tax-deductible amount relating to the loss on the forward exchange contract taken out to hedge the acquisition of EQ US (tax effect (£1.9m)), and which was allocated to the cost of the acquisition. Of the total tax charge of £3.9m, approximately £2.8m relates to the UK and £1.1m relates to the Group’s overseas operations. Taxes paid in the period of £4.5m were primarily due to payments on account for the wider Equiniti UK Group companies. During the year, amounts totalling £2.0m were received relating to repayments of overpaid 2016 taxes and payable R&D expenditure credits. The remainder of the taxes paid were overseas taxes relating to the Group’s operations in India, US and the Netherlands.

32 SECTION 01 STRATEGIC REPORT FINANCIAL REVIEW Equiniti Group plc Annual Report 2018 33 – 3.5 (6.5) (8.3) (9.0) (3.7) (1.9) 98.2 11.6 93% 91.7 39.7 58.5 2017 2017 (31.0) (56.7) 114.2 (19.1) 333.1 (17.7) 2.4 4.7 (4.5) (0.8) (4.0) 17.5 38.6 2018 2018 139.3 (17.6) (39.8) (10.3) (13.9) (20.2) 122.3 102% 371.8 124.7 (24.7) (177.6) (£m) shareholders ordinary to attributable (m) average shares Weighted (pence) Diluted earnings per share Operating cash flow conversion in borrowings Net increase/(reduction) Operating cash flow prior to non-operating charges Cash outflow on non-operating charges Capital expenditure Net finance costs paid Taxes purchase Employee benefit trust (EBT) – share cash flow attributable to equity holders Free Rights Issue arising from Net proceeds/(costs) and prior year Investment in current acquisitions consideration Payment of deferred Dividends paid Net cash movement £m capital movement Working Diluted earnings per share Diluted earnings Underlying EBITDA Profit cash flow attributable to equity generated a free The Group an operating holders of £38.6m (2017: £39.7m) and delivered The main movements cash flow conversion of 102% (2017: 93%). summarised below: in cash flow are PROFIT ATTRIBUTABLE TO ORDINARY SHAREHOLDERS ORDINARY TO ATTRIBUTABLE PROFIT of shareholders attributable to ordinary a profit made The Group £11.6m). £17.5m (2017: PER SHARE DILUTED EARNINGS pence (2017: 3.5 pence) of 4.7 share Diluted earnings per in issue is based on the of shares weighted average number options totalling 371.8m of share plus the dilutive effect (2017: 333.1m). DIVIDEND of the final dividend payable in respect The recommended giving a per share, year ended 31 December 2018 is 3.49 pence representing total dividend for the year of 5.32 pence per share in line of 21.7%, with our progressive full year dividend growth dividend policy. CASH FLOW

US.

EQ of growth, forecast and integration, the of completion of £210.7m tax deductions on tax losses carried forward Future tax deductions on intangible assets of £509.9m Future plant and equipment of tax deductions on property, Future £23.8m tax deduction on employee benefits and other timing Future of £51.4m differences a detailed calculation of The cash tax rate is determined through against our expected cash tax liabilities of the Group the future adjusting for known variables such as changes forecasts, profit rules) and in tax rates, changes in tax legislation (loss restriction transfer pricing policy. implementation of the Group's measure, the consider cash tax rate to be an appropriate We the anticipated from economic outflows as it best reflects the into account our assessment of how our business, taking our cash tax tax attributes will unwind and reduce deferred liabilities over time. tax of gross on £795.8m tax deferred recognised has The Group tax deductions will which reduce future attributes representing to the underlying effective tax rate as compared the cash effective to be expected deductions are time.tax rate over Net future tax asset of deferred on which a net of £136.0m, in the region statutory rate. local at the relevant been recognised £23.6m has by: represented tax attributes totalling are £795.8m The gross • • • • tax as deferred The tax impact of these attributes is recognised on the balance sheet. Included within theintangible assets tax and goodwill intangibles the customer relationship attribute are to the acquisition of the the trade and assets of EQ US related 2018. 1 February from A cash tax rate of 12% applies for 2018 and is estimated to be in reflecting of c13% for 2019 rising to c17% thereafter, the region the The Group has access to a £20.0m receivables financing facility BANK BORROWING AND FINANCIAL COVENANTS of which £10.3m (2017: £19.9m) was utilised at the end of the year At the end of December 2018, net debt was higher at £309.5m and included within cash balances. This is used to match receipts (2017: £136.5m), reflecting the acquisition and integration of our against costs, especially where clients require extended payment US business. terms and is driven by project flow in Intelligent Solutions. The facility is with Lloyds Banking Group at a rate of 1.75% over LIBOR. The facility draw down has reduced by half since 31 Net debt Reported Underlying* Reported December 2017 and is forecast to reduce further subject to 2018 2017 2017 £m commercial requirements. Excluding charges related to the £m £m EQ US integration and the EBT share purchase, the Group delivered free cash flow attributable to equity holders of £80.9m Cash and cash equivalents (90.9) (78.8) (115.2) (2017: £48.0m). Term loan 322.6 250.0 250.0 Operating cash flow conversion Revolving credit facility (76.7) 70.0 – Operating cash flow is underlying EBITDA plus the change in working capital, both prior to non-operating charges, as a Other 1.1 1.7 1.7 percentage of underlying EBITDA, and is a key performance indicator. Net debt 309.5 242.9 136.5 Capital expenditure Net debt/EBITDA prior 2.5 2.5 1.4 Net expenditure on tangible and intangible assets was £39.8m to non-operating charges (2017: £31.0m). This represents 7.5% of revenue (2017: 7.6%). (times) Included within capital expenditure is £10.7m associated with the *Underlying net debt at 31 December 2017 excludes the net proceeds of £114.2m from the rights establishment and integration of EQ US relating to IT servers and issue on 17 October 2017, which was used to fund the acquisition of EQ US software development to enable the business to operate on a The term debt facility does not require scheduled debt standalone basis. repayments and together with the revolving credit facility is Employee benefit trust share purchase available for a five-year term to October 2020. We expect to The trustees of the Equiniti Group Employee Benefit Trust refinance the term loan and revolving credit facility well in advance purchased 6.0m ordinary shares (£13.9m) to satisfy share of the maturity date. The Group has substantial liquidity to entitlements and awards under the Group's share scheme support its growth ambitions and ongoing working capital needs. arrangements. ACQUISITIONS Net finance costs During the year the Group completed three acquisitions. Net finance costs increased by £3.6m to £15.3m (2017: £11.7m). On 1 February 2018, the Group completed on the acquisition Total interest bearing loans increased from £250.0m to £322.6m. of the trade and assets of the Wells Fargo Shareowner Services Investment in current and prior year acquisitions business (EQ US) for a total cash consideration of $227.0m (£159.6m), deferred consideration settled in June of $0.1m Net cash outflow on current and prior year acquisitions was (£0.1m), plus £9.8m in settlement of a deal contingent forward £177.6m (2017: £19.1m) and mainly relates to the acquisition of used to hedge the position. EQ US is a share registration EQ US and the additional investment in MyCSP Limited. A further business based in the United States. £4.0m (2017: £1.9m) was spent on deferred consideration for prior year acquisitions. Details of acquisitions are given in On 26 April 2018, the Group purchased the entire issued share note 4.1 on pages 152 to 153. capital of Boudicca Proxy Limited (Boudicca) for £1.1m plus contingent consideration of up to £0.8m payable in 2019 and £1.5m payable in 2021. Boudicca is a specialist shareholder engagement company providing expertise in the areas of progressive proxy solicitation, shareholder communications, corporate governance advisory, share ownership analysis and global equity intelligence. On 31 October 2018, the Group purchased the entire issued share capital of Aquila Group Holdings Limited and its subsidiaries (Aquila) from AquilaHeywood Limited for a total cash consideration of £5.5m. Aquila is a UK-based life and pensions technology provider for pension schemes and large insurance companies. The Aquila proprietary platform ‘Administrator’, supports propositions in workplace savings, bulk purchase annuities and heritage transformation.

34 SECTION 01 STRATEGIC REPORT FINANCIAL REVIEW Equiniti Group plc Annual Report 2018 35

was immaterial, theIFRS 15 on of The impact results 2017 of £0.2m revenue in restated to an increase and amounted and increased £406.3m restated) to £406.1m reported (from to reported £318.1m administrative (from costs of £0.5m £318.6m restated). in also made to theamounts recognised Adjustments were the statement of financial position at the date of adoption, to fulfilment assets and to contract the reclassifications reflect changes were contract fulfilment liabilities. Re-measurement of recognition assets through made to contract fulfilment additional income and contract delivery accrued costs, and to of additional recognition contract fulfilment liabilities through income. deferred in provided are Full details of the on the impact 2017 results note 2.1 to the financial statements. IFRS 16 for annual is effective IFRS 16 was issued in January 2016 and periods beginning on or after 1 January 2019. The reporting will apply IFRS 16 on 1 January 2019 and it is expected to Group have a material impact on the financial statements for the year in note 2.3 to provided ended 31 December 2019. Full details are the financial statements. John Stier Chief Financial Officer 2019 12 March

deliver. to else nothing is there when term licence the over some multi-period pensions administration contracts, there In in incurred significant costs are is a transition phase where supplier to Equiniti. a previous transitioning customers from would be recognised accounting, revenue Under previous these transitional to provide in line with the effort cost and not a separate services. Under IFRS 15, transition activities are these costs and performance obligation, and therefore over the life of the contract. spread are associated revenue sales of fixed term rights to use from recognised Revenue at a point in time, rather licences will be recognised software than • • and cost IFRS 15 gives rise to changes in the timing of revenue and but will not impact upon the lifetime revenue recognition of contracts, the cash flows of contracts and does profitability The streams. revenue the majority of the Group’s not affect on its fixed the adoption of IFRS 15 are main changes from contracts and transition periods of multi-period period software contracts, in particular: 1 January periods commencing from IFRS 15 became effective basis. 2018 and we have adopted it on a fully retrospective IFRS 15 classification and the recognition, IFRS 9 addresses of financial assets and financial liabilities and was measurement has assessed theadopted on 1 January 2018. Management new no changes to were classifications assets and there for financial as held at amortised assets classified cost under IAS the Group’s designated as cash flow derivatives which are 39. The Group’s other at fair value through hedges continue recognised to be in provided income under IFRS 9. Full details are comprehensive note 2.1 to the statements. financial IFRS 9 CHANGES IN ACCOUNTING STANDARDS the Paymaster all are new members. These closed to which are thePension Scheme, Equiniti and the Limited Pension Scheme ICS Prudential Platinum Scheme. MyCSP Limited Pension Pension – is £22.9m (2017: schemes all three across deficit The aggregate £22.7m) with a fundingplace to clear these plan in over deficits has closed all schemes to future the next nine years. The Group accrual, as well as consolidating contribution its defined pension plans into a single provider. to the contributed £1.2m 2018. schemes during The Group During 2019 the contributions to the and ICS schemes Paymaster following the conclusion of the triennial likely to increase are not expected to be valuations of both Changes are schemes. These contributions represent however. material to the Group out by the payments as laid Schedule of schemes’ deficit repair service costs is to future exposure Contributions. The Group's closed since the to be significant are schemes not considered schemes for the service cost three accrual. The current to future to guaranteed relating was £0.1m in 2018. The past service cost, minimum pensions equalisation, was an additional £0.4m and in full. was recognised RETIREMENT BENEFITS RETIREMENT pension schemes, benefit defined three operates The Group ALTERNATIVE PERFORMANCE MEASURES are £4.7m of costs in relation to permanent project staff, which on completion of the integration project will be absorbed into The Group uses alternative performance measures (APMs) to vacant positions, replace contractors in the business or otherwise provide additional information on the underlying performance leave the Group. Post completion of the US integration of the business. Management use these measures to monitor programme, there will be no further non-operating charges performance on a monthly basis and the adjusted performance absent any transformational transactions. enables better comparability between reporting periods. The APMs used to manage the Group are as follows. UNDERLYING EBITDA MARGIN ORGANIC REVENUE GROWTH Underlying EBITDA margin is earnings before interest, tax, depreciation, amortisation and non-operating charges as Organic revenue growth is reported revenue growth adjusted a percentage of revenue. This is a key measure of Group for acquisitions on a like-for-like basis. Part of the Group's profitability and demonstrates ability to improve efficiency, as strategy is to deliver growth and develop and acquire new well as the quality of work won. capabilities. As such, a measure of like-for-like growth is a key performance indicator. See page 31 for calculation. OPERATING CASH FLOW CONVERSION EBITDA AND UNDERLYING EBITDA Operating cash flow conversion represents underlying EBITDA is considered to be the most suitable indicator to EBITDA plus change in working capital as a percentage of explain the operating performance of the Group. The definition underlying EBITDA. This measures the Group's cash-generative of EBITDA is earnings before net financing interest costs, income characteristics from its underlying operation and is used to tax, depreciation of property, plant and equipment, amortisation evaluate the Group's management of working capital. of software and amortisation of acquired intangible assets. FREE CASH FLOW ATTRIBUTABLE TO EQUITY HOLDERS Underlying EBITDA is used to explain the sustainable operating performance of the Group and its respective divisions, where Free cash flow attributable to equity holders represents our cash EBITDA is adjusted for non-operating charges which are defined flow prior to any acquisition, refinancing or share capital cash as expense items, which if included, would otherwise obscure flows. It is a key measure of cash earned for the shareholders of the understanding of the underlying performance of the Group. the Group. See page 33 for calculation. These items represent material restructuring, integration and EARNINGS BEFORE INTEREST AND TAX (EBIT) costs that are transformational in nature. EBIT is used to measure financial performance of the Group RECONCILIATION OF PROFIT AFTER TAX TO UNDERLYING EBITDA excluding expenses that are determined by capital structure and tax regulations, instead of the underlying trading. In 2018 2017 addition to this, net interest costs are impacted by fair £m £m valuation re-measurements of certain financial liabilities that are dependent on external market factors rather than the Profit before tax 24.6 25.3 Group's core operations. See page 32 for calculation. Plus: Depreciation of property, plant and 6.0 5.7 equipment CASH TAX RATE Plus: Amortisation of software 23.9 18.3 The cash tax rate is determined through a calculation of the future expected cash tax liabilities of the Group against our Plus: Amortisation of acquisition-related 31.7 26.7 profit forecasts, adjusting for known variables such as changes intangible assets in tax rates, changes in tax legislation (loss restriction rules) and Less: Finance income (0.2) (0.8) implementation of the Group transfer pricing policy.

Plus: Finance costs 15.5 12.5 We consider the cash tax rate to be an appropriate measure, EBITDA 101.5 87.7 as it best reflects the anticipated economic outflows from the business, taking into account our assessment of how our deferred tax attributes will unwind and reduce our cash tax Adjustments for non-operating charges liabilities over time.

Plus: Transaction costs 6.1 6.3 LEVERAGE AND NET DEBT Plus: Integration costs 14.7 3.6 Leverage represents the ratio of net debt to underlying EBITDA. This is a key measure that evaluates the Group's capital structure Plus: Restructuring and transformation costs – 0.6 and its ability to meet financial covenants. See page 34 for Underlying EBITDA 122.3 98.2 calculation of net debt.

Transaction costs of £6.1m relate to deal advisory and legal fees UNDERLYING PROFIT ATTRIBUTABLE TO ORDINARY SHAREHOLDERS which were contingent on successful completion of EQ US which The Group has a progressive dividend policy which will see completed in February 2018. Integration costs of £14.7m relate it distribute around 30% of underlying profit attributable to entirely to the US business and represent programme delivery, ordinary shareholders each year. See page 37 for calculation. the development of standalone functions and delivery of systems and processes to run the business. Included within this

36 SECTION 01 STRATEGIC REPORT FINANCIAL REVIEW Equiniti Group plc Annual Report 2018 37 0.8 £m (8.1) (3.7) (5.7) 50.7 16.8 98.2 2017 301.6 (18.3) (12.5) – £m (3.2) (9.2) (6.0) 17.9 64.7 2018 360.8 (15.3) (23.9) 122.3 Underlying earnings per share (pence) Underlying earnings per share Minority interest attributable to ordinary Underlying profit shareholders Diluted weighted average number of shares in issue, adjusted for the timing of the rights issue (m) Plus: Finance income Less: Finance costs Cash tax at 12% / 13% Underlying EBITDA plant and of property, Less: Depreciation equipment Less: Amortisation of software UNDERLYING EARNINGS PER SHARE EARNINGS UNDERLYING EBITDA, underlying represents share per earnings Underlying and equipment, amortisation plant property, of less depreciation net intangibles, amortisation of acquisitions related of software, the Given timing of tax and minority interests. costs, cash interest the number offering, rights the acquisition EQ US and the related in the used 2017 calculation excluded both the of issued shares the rights issue. issuance from share and new bonus shares Sustainability

Equiniti is committed to being a responsible business. Our behaviour is aligned with the expectations of our people, clients, investors, communities and society as a whole.

Sustainability issues are fundamental to our continuity and this IMPROVEMENTS DURING THE YEAR INCLUDE: section includes a key overview of our people, our values, our key An updated Environmental Policy Statement stakeholders; how we undertake our corporate responsibility and • activities to safeguard the environment. The Board takes overall • Reduced carbon emissions per unit of turnover responsibility for these fundamental areas. • A switch to a green energy provider

REBECCA GRATTAN CHIEF PEOPLE AND TRANSFORMATION OFFICER Transforming our people (HR) function In the same way that Equiniti strives for excellence in client service and operations, we want to achieve excellence in our people management.

During 2018, we began to transform our worldwide communities of practice in support this, we carried out a significant People (HR) function, so it can better these areas, so we can share the best succession planning exercise for our support our people goals. One significant ways of working. The third function is the leaders this year, so we know how to fill change is our move from a country People Operations team, which combines any gaps that might arise. For the first model to a global operating model for the transactional services provided in time in 2018, we have implemented a HR. This improves efficiency, by avoiding Chennai and our geographically based global approach to leadership and have duplication at a country level, and ensures People Experience Managers, who help rolled out a Leadership and Management consistency in our processes around the to enhance our employees’ experience of Programme initially in the UK and the US, world, helping to make Equiniti a truly working at Equiniti so we retain our talent. with India to follow in 2019. global group. It also assists with moving Another important initiative is our culture people between countries, so we can IMPLEMENTING OUR PEOPLE STRATEGY programme, which we launched towards transfer our capabilities worldwide. The the end of the year. The programme will In 2018, we developed and began to programme will complete in the first half run during 2019, with a series of initiatives implement an updated people strategy. of 2019. to engender common customer-focused This covers five key topics: culture and Another major change is our decision behaviours across Equiniti. We launched leadership; engagement and experience; to split the People Team into three the programme in conjunction with a learning and talent; diversity and inclusion; functions, to improve the way we refreshed set of values. We developed and performance and reward. deliver. We now have people directors these by running focus groups in the UK, in our divisions, who work closely with CULTURE AND LEADERSHIP US and India, then used our Colleague the divisional leadership to help them Briefings to test the draft values with Strength and depth of leadership is crucial meet their people needs. We have also our people. The values therefore for any business to succeed. The Group created a centre of excellence covering genuinely reflect the business as our uses the Gallup leadership model, which key areas such as reward, learning and people experience it, with each value is based on leaders understanding their resourcing. The global operating model underpinned by a set of behaviours we own strengths and the complementary supports this, by enabling us to create expect to see. strengths they need in their team. To 38 SECTION 01 STRATEGIC REPORT SUSTAINABILITY Equiniti Group plc Annual Report 2018 393939

together contribute it is listened to COLLEAGUES We're together We're empowered and stronger and stronger empowered Think as one global team, ways for everyone to grow Lead by example and create Lead by example and create Know your role and how you Know your role We all have a unique voice and We

real – show pride CUSTOMERS We keep things keep We What you do matters behave with integrity and promote simplicity and promote communities around us communities around Communicate openly and Support and connect with Challenge the complicated

Our values change GROWTH We're inventive We're move quicker together to do things and embrace Always explore fresh ways fresh Always explore Protect time to be creative Protect Test and develop new ideas Test Put common purpose first; we

PERFORMANCE We're meticulous We're Be accountable, make solutions for customers Listen, take time and really Listen, take time and really to create great service and service great to create amends, learn and move on Deliver; on time, every time Use your sharp eye for detail care about getting things right care left to right: Nathan Long and Thomas Kent Pictured ENGAGEMENT AND EXPERIENCE We have also begun to review our performance management process. The intention is to simplify and digitise performance The Group runs an annual employee engagement survey, which management, allowing our people to get faster and more regular has helped us to understand where we are doing well and what feedback. This will be implemented through the utilisation of we need to improve to enhance our employees’ experience. For WorkDay as our new HR data system in 2019. 2019, we will be moving to a much more targeted engagement model provided by Gallup, which complements our leadership DIVERSITY AND INCLUSION model. This is a strategic shift in the way we survey our people, Equiniti has a number of diversity networks, which are aligned with an approach that aligns much more clearly to the Group’s to particular interest areas, such as gender, diversity and culture. This will run alongside our new approach to People inclusion and our LGBTQ network. We have devolved budgets Operations where we will have People Experience managers to those networks so they can create locally relevant initiatives, monitoring and enhancing the employee experience on the resulting in a range of events across Equiniti during the year. ground locally. For example, the gender network organised numerous activities We have engagement champions in every location, who around International Women’s Day and Equiniti has partnered ensure that our communications reach all our people. The with Stonewall, Europe’s largest LGBT charity, including joining Chief Executive’s Colleague Briefings are also an important its Diversity Champions Programme. We are sponsors of both communication tool, with Guy Wakeley visiting every Equiniti the 30% club (focused on increasing female representation at location around the world after the release of the half year executive and Board level) and the Everywoman Campaign. results. This allows our people to talk to him directly about our strategy and progress. In addition, this year we have refined our employee forum to assist in us delivering upon our responsibilities for employee voice. This has involved us in extending the UK forum to a global forum and involving the Board-appointed non-executive Director for Employee Voice in those sessions. LEARNING AND TALENT We have invested significantly in learning this year. Leadership development was a key area of focus, to ensure we are ready to capitalise on the growth opportunities we see. We have also enhanced our sales capabilities, particularly in the US and in Intelligent Solutions, so these teams are better able to sell new concepts to customers. This will be increasingly important as we develop new capabilities and as we introduce more of our UK capabilities into the US market. Our Rising Stars programme accelerates the progress of talented employees, through development, mentoring and stretch projects. We made the programme more practically relevant this year, by linking it to work-based projects rather than the previous workshop approach. The Group has a successful apprenticeship programme. In 2018, we broadened the number of business areas taking apprentices and now have around 30 people in the programme. We also continued to run Movement to Work with the Prince’s Trust, which helps unemployed young people into work through training, development and work experience. A new initiative this year was our introduction of a Leadership Supper Club. This is an informal networking event, with a speaker running a masterclass on topics relevant to our strategy. The Group has continued to be successful at filling vacancies internally rather than through external recruitment. For the first time this year, this has included moving talent internationally. In total, we filled 43% of vacancies internally during 2018. PERFORMANCE AND REWARD During 2018, we began to review two key areas of performance and reward. We need to make sure our reward packages are both attractive in the market and consistent across the business, so we are carrying out an external benchmarking exercise. This was completed for the HR function in 2018 and will carry on in other areas of the Group during 2019. We anticipate a fully-refreshed reward strategy to be implemented by the end of H1 2019.

Pictured top to bottom: Syra Khan and Chris Ticehurst 40 SECTION 01 STRATEGIC REPORT SUSTAINABILITY Equiniti Group plc Annual Report 2018 41 our identify believe not we did we where 2018, changes During people. our recommending first aiders” among proactively for cohort of health mental We have trained our first have We any material non-compliance issues with our people policies. OUR PEOPLE POLICIES PEOPLE OUR Equinitipolicies, people range of has a wide every covering theaspect of employee lifecycle. a In 2018 we undertook of these policies, bothensure to review comprehensive purpose for a fit for they are continued compliance and to ensure global business. how candidates and recruiting, Our policies include resourcing and induction. A number of to on-boarding vetted, through are policies cover issues such as holiday entitlement, sickness and arrangements, while a series of othermaternity and paternity to the facilities people make use of at work, our polices relate have policies we and systems. Finally, such as data, equipment complaints, grievances, to informal outlining our approach whistleblowing and disciplinary matters, as well as redundancy and termination. governance, in 2018 we people we have strong ensure To the They are established the Compliance People Team. legally compliant they are of our policies, sure making guardians an attractive employer. best practice, so we remain and reflect for working through Our People Policy is responsible Manager due to new regulations, for example policy changes required, and policies need to advance. All access to the of our people have full range of policies through also run training and update sessions for key our intranet. We widely understood and upheld. they are policies, to ensure ensuring our policies for are responsible Our lineare managers Services team supported by our People complied with. They are and by our Employee Relations in Chennai, who advise on policy, and This team is part of the People Compliance Team Team. detailed advice or coaching is required. helps when more logged and the All contacts with the People Services team are uses a case management system Employee Relations Team issues. This enables us to identify issues in a to track reported in particular enquiries, which particular location or to spot trends may indicate that we need to update policies to match changing expectations

7 9 85 115 4,419 5,055 4,511 5,179 TOTAL TOTAL TOTAL OTHER OTHER BOARD BOARD SENIOR GROUP SENIOR EMPLOYEES EMPLOYEES MANAGEMENT MANAGEMENT 3 2 44 24 2,442 2,067 2,489 2,093 TOTAL TOTAL OTHER OTHER BOARD BOARD SENIOR SENIOR EMPLOYEES EMPLOYEES MANAGEMENT MANAGEMENT 5 6 61 71 2,352 2,613 2,418 2,690 TOTAL TOTAL OTHER OTHER BOARD SENIOR BOARD SENIOR EMPLOYEES EMPLOYEES MANAGEMENT MANAGEMENT

shortlists balanced to provide for vacancies, requiring includes have also adjusted opportunities for female candidates. We more incentives for mothers and mentoring back coming and providing https://equiniti.com/uk/about-us/ on our website at can be found corporate-responsibility/policies/equiniti-gender-pay-report/. has in place a Disability & Mental HealthTaskforce. The Group Initiatives this year included signing the Time to Change Mental Health Day, coincide withEmployer Pledge, to World demonstrating how we think our commitment to changing also have healthand act about mental in the We workplace. intend to of mental healthtrained our first cohort first aiders. We to support increased and provide our policies in this area review managers. our gender diversityThe table below shows at the year end. Equiniti has a good gender balance overall, with a broadly a has been equal split between men and women. There senior management and in the level of Board notable increase and 28% to 38% of 28% to 33% for the Board, representation we we recognise of the team. However, senior management the of women in our number to do to increase have more on a number of hard senior management and we have worked the the of women moving through number initiatives to address maternity benefits, sponsored These include increased hierarchy. at STEM (science, female networking and development aimed engineering and mathematics) development female technology, and initiated a middle manager female talent programme. Gap. This Pay our Gender to address changes have made We friendlyour family policies, including benefit enhanced maternity information Gap our Gender Pay about to the More workplace.

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CLIENTS Our strategy prioritises organic growth, driven by cross-selling clients to win new business. We also have a bid support team, and up-selling services to existing clients and bringing new which helps us to prepare tenders and to price our contracts. clients into the Group. To do this, we need to develop and Ultimately, our clients stay with us because we have maintain strong client relationships. We continue to benefit from outstanding technology and deliver excellent service. The strong key account coverage, which grows revenue from our top average length of our UK share registration relationships is clients by identifying opportunities to up-sell and cross-sell other around 29 years but we also have a good balance of longer solutions. relationships and clients who are newer to the Group. We Beyond our key accounts programme, each of our divisions have enjoy a similar quality of client relationships in the US. specialist sales teams who work with our clients and potential

Financial Healthcare Aerospace & Defence Publishing Travel & Leisure Pharmaceuticals

Telecomms Energy Postal Retail Oil & Gas Equiniti clients 1 year or less 42 SECTION 01 STRATEGIC REPORT SUSTAINABILITY Equiniti Group plc Annual Report 2018 43

SHAREHOLDERS is committed to openly engaging with our The Board the of effective importance as we recognise shareholders, dialogue, whether with major institutional investors, private or It is important to us that shareholders employee shareholders. objectives and performance, so we look understand our strategy, consider listen to feedback and properly to explain them clearly, any issues or questions raised. with programme, investor relations have a comprehensive We meeting investors and analysts regularly, the executive Directors by the Chairman and the Senior appropriate supported where supports the aims of The programme Independent Director. the UK Corporate Governance Code and the UK Stewardship engagement and interaction between listed Code to promote Withcompanies and their major shareholders. this in mind, we to welcome any opportunities for investors and shareholders with the Chairman and Senior Independent engage directly in addition to the Chief Executive and CFO. Director, Capital Markets Day in September 2018 was a key The Group’s a series of Through calendar. event in the investor relations and question and answer sessions, it explained the presentations detailed insight into and provided strategy and progress Group’s the Intelligent Solutions and EQ US businesses. (ICO) is the UK’s Office The Information Commissioner’s are rights that body for ensuring independent data protection information requests. of information and environmental freedom entities for ensuring UK comply withthe law responsible The ICO is action against any breaches. via data audits and takes enforcement The Securities (SEC) is the and Exchange Commission Federal safety Its focus is on for the US transfer agent industry. regulator and secure. protected thatand soundness, ensuring assets are by transfer agents and certain reporting The SEC requires entities. carries The SEC performs examinations of regulated a on and examines registrants allout a risk analysis of registrants thatschedule based on risk assessment. of Financial Services (DFS) State Department The New York Company. oversees the trust company activities of Equiniti Trust with the DFS as a Company is registered Although Equiniti Trust limited to fiduciary activities. operations are banking-type entity, entities and performs by regulated reporting The DFS requires annual examinationsof them, focusing on information security, over the safeguarding money laundering, sanctions and controls of assets. The DFS uses the work done by the regulated internal audit function focus its examinations. to business’s interaction with both the to SEC and DFS, in regular engage We to them and to us, to obtain guidance of interest discuss areas them with our thoughts and and assistance, and to provide doing and looking at. on what they are recommendations As a trust company with operations in Minnesota and Wisconsin, (out-of- as a foreign Company is also registered Equiniti Trust state) trust company with those states. The states of Minnesota and Wisconsin to trust companies defer the oversight of foreign the home state of those entities, our case is New York. which in codes of practice guidance for all and data provides upheld. It communications, as well as and electronic privacy protection,

suppliers: strategy we may develop a joint business Strategic development, innovation and product share with the supplier, lifecycle jointly optimisesupply chain costs and reduce total costs. and mitigate risk, optimise suppliers: to reduce we look Critical specification may develop the and supply chain costs, and a strategic one. towards relationship suppliers: consolidate we reduce spend, Operational transactions and consumption, and aim to have competing suppliers efficiency. to maximise REGULATORS markets and looks to maintain operates in regulated The Group regulators. with the relevant positive and open relationships theUK The Financial Conduct Authority (FCA) regulates entities It authorises several Group financial services industry. and oversees their and prudential conduct management, dealing, safe financial services such as share when providing information and credit custody of investment assets, consumer money and payment services administration, and electronic FCA supervises and exchange. The currency linked to foreign periodic and ad-hoc firms through engages with these Group thematic industry on conduct and financial resilience, reporting to specific events, topics, responses ‘hot’ on regulatory reviews and desk-based and on-site reviews. The Prudential Regulation Authority (PRA) supervises ‘high impact’ firms in the UK, such as banks, building societies and any regulate While the directly PRA does not insurers. large many of our corporate banking and insurance entity, Group contractually bound by and we are PRA regulated clients are by PRA required them to meet certain governance standards activities. regulated firms, when outsourcing regulated Revenue and Customs (HMRC) is one of 28 Her Majesty’s by the Money supervisors for people and businesses covered registered entities are Laundering Regulations. Several Group with HMRC, including our international payments and company ad-hoc updates to HMRC, which provide We service providers. may also carry out desk-top reviews. The Pensions Regulator (TPR) has a number of statutory how UK workplace pensions and improve objectives to protect by working with employers, trustees, administered, they are administrators such as pension specialists and third-party guidance and publishes codes of practice Equiniti. TPR provides for the industry. and have multi-year contracts with key our all of our relationships suppliers. we use the manage our suppliers we effectively, ensure To following approach: • • • such all expect of our suppliers to comply with our standards, We modern slavery, responsibility, to environmental as those relating human rights and ethics. data protection, value success. We to our business fundamental Our suppliers are SUPPLIERS Corporate Social Responsibility (CSR)

Equiniti’s most significant impact on The policy also outlines our commitments We are increasingly looking to work with society is through the day-to-day services in a range of CSR-related areas, such as charities aligned to our business. For we provide. The large majority of our volunteering, charitable giving, charity example, we have worked with mental activities have a direct social benefit, partnerships and supporting young people. health charity Mind, which is directly whether that is ensuring people receive At Equiniti we believe in the link between relevant to the mental health network their pensions on time or helping clients giving and employee engagement. In we have introduced, as described on to grow and create jobs through our enabling colleagues to give back to page 41. We are also exploring ways data analytics. Our intention over the charities and the causes that really matter of working with organisations who coming years is to investigate ways we can to them, we believe we are creating a support vulnerable customers. We have measure and report on the social impact better place to work. When employees are developed a vulnerable customer policy of our work. free to choose the causes they support, and have introduced training and are We also want to ensure that we approach they are much more likely to participate exploring other ways of helping vulnerable our activities in an ethical and responsible than when the Company restricts customers in the coming year. way. As the first step on this journey, donations to one or a small number of HUMAN RIGHTS towards the end of 2018 the Board charities, which is why at Equiniti we do Protecting human rights is important to approved our CSR Policy Statement. not have a specified corporate charity. We our business. We ensure we protect the This sets out what a socially responsible have an active employer JustGiving page, rights of our people, including those organisation looks like, following the partner annually with the charity ShareGift, with disabilities, by adopting suitable definition in ISO26000. The policy and all employees are able to enrol employment practices and we also aim to statement commits us to: annually in a My Giving scheme, to make act ethically in all our business dealings. tax efficient donations to charity. During 2018, we developed and approved All Equiniti colleagues may use two days • Behave ethically and responsibly our first formal human rights policy per year out of the office, in addition to at all times. statement. This policy statement is their annual leave entitlement, to support guided by the international human rights • Be accountable for our impact on a charity or community project of their principles encompassed by the Universal society, the economy and choice. In 2018, colleagues have used their Declaration of Human Rights, including the environment. Volunteer Days to get involved in a wide those contained within the International variety of activities, helping out at charity • Be transparent in our decisions and Bill of Rights and the International Labour shops, creating Christmas grottos, beach activities which impact on society and Organisation’s 1998 Declaration on cleaning, gardening for local hospices the environment. Fundamental Principles and Rights at and day centres, and running a Christmas Work. We will record and report internally • Respect, consider and respond to the market stall for Brain Tumour Research. all legitimate adverse human rights interests of our stakeholders. A huge effort saw colleagues preparing impacts, in line with this policy statement. • Make a positive impact on colleagues, and distributing 1,065 Christmas food and the community and the environment. toy packages to disadvantaged families nominated by social support centres for the Salvation Army.

44 SECTION 01 STRATEGIC REPORT SUSTAINABILITY Equiniti Group plc Annual Report 2018 45 JUSTGIVING RAISED SO FAR TOTAL c.£109k SOME OF THE CHARITIES OUR EMPLOYEES SUPPORT EMPLOYEES OUR CHARITIES OF THE SOME ETHICAL BUSINESS Equiniti has formal anti-bribery and corruption policies, necessary, and, where supported by a whistleblowing process and independent investigation and follow up of proportionate Full details of our policy can be found on any matters reported. www.equiniti.com. The Audit Committee, in conjunction with the Risk Committee, for our systems and controls for approving is responsible any reports bribery and corruption, and for receiving preventing on non-compliance. During 2018, no material instances of non- reported. compliance were to modern slavery approach Equiniti operates a zero-tolerance and is committed to acting ethically and with integrity in all its Equiniticommitted is also business activities and relationships. to systems and controls effective to implementing and enforcing in our own modern slavery is not taking place anywhere ensure due diligence of all its partner robust business and exercising and suppliers. Full details of our policy can be organisations . found on www.equiniti.com MODERN SLAVERY ENVIRONMENT Policy We take our environmental responsibilities seriously and positively manage our energy consumption. During 2018, we developed and approved our first formal environmental policy statement. We recognise our responsibility for the environment and will ensure compliance with all relevant current and future legislation. We are committed to minimising the environmental impact of our operations. We believe that having responsibility for the environment is an integral part of doing business in the right way. We intend to develop processes and controls to ensure that the policy statement is complied with in full. Performance While revenue in the year increased by 31% and number of

employees increased by 15%, the tonnes of CO2 per £m revenue

reduced by 16% and the tonnes of CO2 per employee reduced by 4%. Transport Vehicle business travel is based on the use of a medium sized car of average value, from the financial records each year ending 31 December. As we expanded the Group with our acquisition of EQ US overall business travel by car has increased by 3% in 2018. Air travel is based on data from financial records each year ending 31 December. Air travel doubled in 2018 from 2017 and miles travelled were up by 66% to 5,707k miles. reflecting the increased number of flights in connection with the integration of our US business. Facilities Buildings emissions are based on data for the years ended 31 March 2017/18. Overall the emissions from our building usage have shown a 4% reduction year on year. Electricity emissions are down by 17% from 4,408 tonnes in 2017 to 3,665 tonnes in 2018. Gas emissions have decreased by 19%, from 603 tonnes in 2017 to 487 tonnes in 2018. The table below shows our greenhouse gas emissions. We continue to look for ways to enhance our environmental performance. For example, we switched to a green energy supplier in the UK in October 2018. This means that, wherever GHG EMISSION (TONNES OF CO2) contractually possible, we are purchasing electricity generated VEHICLES from fully renewable sources such as wind power and solar. It also (BUSINESS AIR RAIL TRAVEL) TRAVEL TRAVEL BUILDINGS TOTAL means that our gas comes from green biomethane. We also look for opportunities to reduce energy consumption 2018 372 1,478 158 4,813 6,821 across the estate whilst providing colleagues with the equivalent or better service level. Recent changes include modification to 2017 362 683 143 5,011 6,199 air handling systems and transitioning to LED lighting to reduce

CHANGE % 3 116 10 (4) 10 energy consumption.

FTSE4GOOD CARBON INTENSITY Equiniti is a member of the FTSE4Good Index Series, which measures the performance of companies demonstrating strong TONNES TONNES OF CO environmental, social and governance practices. The indices 2 REVENUE £M OF CO PER EMPLOYEES PER £M REVENUE 2 EMPLOYEE are used by many market participants to create and assess responsible investment funds. 2018 12.8 531 1.31 5,179

2017 15.3 406 1.37 4,511

CHANGE % (16) 31 (4) 15

We use a number of third party suppliers to supply and validate the data.

46 SECTION 01 STRATEGIC REPORT

Every permanent Equiniti employee based in the UK is entitled to take two volunteer days out of the office each year, to support their chosen charity or community project” SUSTAINABILITY

NON-FINANCIAL REPORTING INFORMATION STATEMENT The Companies Act 2006 requires the Company to disclose certain non- financial reporting information within the Annual Report and Accounts. Accordingly, the disclosures required in the Company’s non-financial information statement can be found on the following pages in the strategic report (or are incorporated into the strategic report by reference for these purposes from the pages noted): • Information on our Anti-bribery and Corruption Policy (page 45) • Information on diversity (page 40) • Information on our employees (page 38) • Information on environmental matters (page 46) • Information on our approach to human rights (page 44)

• Information on social matters (page 44) GroupEquiniti plc Annual Report 2018 • Information on our Whistleblowing Policy (page 45) • Information on business model (page 8) • Information on principal risks (page 48) • Information on Key Performance Indicators (page 16)

47 Principal risks and uncertainties

We provide business-critical services to our clients, often in highly regulated and complex environments. As we grow, our business and our risk environment also become more complex.

It is therefore vital that we effectively identify, evaluate, manage framework, and where applicable are captured within the Group’s and mitigate the risks we face, and that we continue to evolve principal risks (for example, the resilience of our IT infrastructure). our approach to risk management. We recognise that a number Integration of the US business is progressing well and is tracked of our principal risks, such as increasing and changing regulation, closely by a dedicated Executive Steering Committee. Our client also create opportunities for us, as we can develop products and retention remains strong, we are developing and delivering services that help our clients to manage their own regulatory new products and services to our US clients and launching new burdens. Information about our risk management framework, supporting technology which will enable us to move away from including that for our regulated entities, can be found in the Risk the existing Transition Services Agreement in place with Wells Committee Report on pages 80 to 85. Fargo during 2019. OUR RISK PROFILE Information and cyber security remains a key inherent risk with the Group’s business model. As such, we continue to dedicate Managing risk effectively is fundamental to delivering our material resource to review an analysis of information security risk strategy and to us operating successfully. We believe that a and mitigation, with ongoing investment in people, technology robust risk management culture is vital for sustainable growth and processes. Whilst there have been changes in the inherent and must be at the centre of everything we do. Our approach to risk driven by increases in environmental risk, the overall residual risk is supported by an effective policy and control framework, risk has remained stable as a result of our ongoing focus. which guides and informs our colleagues’ work behaviours and the decisions they make. Our prudent risk culture and risk In 2018, we have also seen increasing demands from our markets appetites support effective decision making and enables us to and customers to more proactively demonstrate how we conduct deliver against our strategic priorities. our business appropriately and ethically. We are well placed to manage this through setting an effective conduct culture backed Although we have diversified geographically with the acquisition up with conduct training of our staff and supporting policies and of our US business, we remain predominantly a lower-risk, controls. UK‑focussed business. Despite the continuing uncertain economic and regulatory environment, particularly as a result of The risk to the Group of lower revenues from its cash balances as Brexit, our overall risk profile has remained stable during 2018. a result of falling interest rates, as reported in 2017, has reduced further and is no longer considered a principal risk as the outlook Whilst we do not consider that Brexit has a material direct is for interest rates to remain stable or increase during 2019. operational impact on our business, the influence that it will potentially have on the UK economy and particularly on the core OUR RISK APPETITE markets through which the Group transacts for customers in 2019 The Board has defined risk appetite statements for the main risks will require close monitoring. During 2018 we have undertaken that we face during the normal course of business. By assessing detailed assessments of the potential Brexit scenarios and their the level of each risk against our appetite for it, we ensure impact on the Group, and have developed operational plans to that we focus appropriately on the risks that need additional mitigate areas of potential disruption. The ability of the Group attention. Risks that are within our appetite require no further to manage a range of Brexit market stresses has been reviewed mitigating actions. during the year, and as part of the 2018 viability statement on pages 52 to 53. Given the nature of our services and the regulatory environment we operate in, we have a low appetite for many of the risks we Opportunity and risk emanating from the US business is now face and no appetite for breaches of policy or control in certain assessed and reported as part of our integrated Group reporting. critical areas, such as regulatory reporting or breaches of our The US business has assessed risks at a local level and these anti-money-laundering. have been reviewed through the Groups risk management

GROUP RISK CATEGORY IMPACT MITIGATION TREND* CHANGE & DEVELOPMENT A continuing level of change • The Group Board and Executive An ongoing level of Risk of disruptive change leading and development may lead Committee ensures that all key change is expected to lower business agility, lower to material management and change projects are effectively during 2019, driven by productivity, regulatory sanction, resource stretch which in turn prioritised and resourced, including the external environment, poor customer relationships, could impact the Group’s ring-fencing essential resources. new client engagements, increased costs and lower revenues. ability to achieve its key • All key change projects and initiatives and internal business objectives. are supported by robust programme improvement projects. management and management 1 2 3 4 5 reporting. • We invest in our staff to ensure they have the necessary resource and expertise to deliver change programmes effectively. *Trend indicates perception of how risk has moved year-on-year. 48 SECTION 01 STRATEGIC REPORT PRINCIPAL RISKS AND UNCERTAINTIES Equiniti Group plc Annual Report 2018 49 Market demand for cost- outsourcing effective stable. However, remains risk has inherent as political and increased economic factors may have an adverse impact on this in the short to medium-term. TREND* continue to invest We and in our technology to support processes, high- our clients, ensure quality and to services products develop new and propositions. With the advent of the General Data Protection Regulation (GDPR), which standardised introduced laws data protection all EU member across countries, and the importance of increasing data and cyber security, has the risk environment However we increased. continue to invest in this and our residual key area stable. risk remains

data.

products

our

new encryption protect

to develop to backup, data continue and services. in corporate monitor trends We actions and other market activity. plan also ensures IT architecture Our that that key systems need to work enables together effectively, do so changes to systems and rapid more business process supports effective re-engineering. continually internal monitor our We to and external IT environment, is operating it effectively ensure and to identify opportunities for enhancement. has an operational Group The plan, including prioritisation IT of we invest development, ensuring in our systems on a appropriately timely basis. client ongoing relationship Our management helps us to monitor in demand. trends to monitor industry trends, We identify changes in demand, our and competitive environment technologies. emerging pipeline of have a strong We opportunities actively which we manage. We that progressed is being programme 2019. key systems in across have a well-diversified client base We and portfolio of services, which helps the loss of from to insulate the Group any one client in demand or change for individual services. an extensive IT transformation have We dedicated have a Data Protection We with experienced compliance Office, training and a staff operate We of data protection Ownership risk in the business has been our maturing risk embedded through management and policy framework. to deploy programme have a We on all key up-to-date security software systems. risk and undertakes regular Group The appropriate employ We and data security evaluations Third-party and help us our data protection assure personnel. so our people programme, awareness understand the criticality of data protection. vulnerability assessments, to review any changes or new risks and address in data protection. further. to improve • MITIGATION • • • • • • • • • • • • • • • • customer poor a to lead The loss, corruption or of personal data compromise could and prospects Equiniti’s strategy depend on us growth key customers and retaining taking opportunities to grow and diversify our business. If effectively we do not respond in our market, we to trends could lose key clients or fail to win new business, which our could significantly affect and profits. revenues of our products The majority enabled are and services technical by a resilient infrastructure. Disruptionthis to systems could lead to infrastructure of client service, a failure which in turn could result to meet our in a failure contractual obligations, cause detriment for our customers, and damage our reputation our increase productivity, costs and lead to financial penalties and potential sanction. regulatory IMPACT experience, customer harm, detriment, reputational legal or financial regulatory, sanction, loss of customers costs. and increased 5 5 5 4 4 4 3 3 3 2 2 2 1 to identify or understand failure a strategic market opportunities; of alternative emergence the competing as markets, such digital transformation; customer outlook, change in a for example because of economic conditions or geo-political issues; inability to identify and analyse an competitors; existing or emerging competitive increased longer-term to a failure due to pressures, deliver technical change or innovation; and to medium-term competitor short tactics, such as pricing. 1 1 DATA PROTECTION DATA Risk of loss, corruption or of personal data (also compromise known as personally identifiable to information) which can relate or any other natural customers, staff person. Links to the following strategy elements: MARKETS & COMPETITION Risk of lower corporate performance stemming from: • • • • • • Links to the following strategy elements: GROUP RISK CATEGORY CATEGORY RISK GROUP TECHNOLOGY INFORMATION infrastructure, Risk of poor-quality tools, as a result or business software or invest in to upgrade of our failure as necessary. our systems Links to the following strategy elements: *Trend indicates perception of how risk has moved year-on-year. indicates perception *Trend GROUP RISK CATEGORY IMPACT MITIGATION TREND* REGULATORY Failure by Equiniti to • We have dedicated second-line risk We continue to invest Risk of regulatory action stemming adhere to any of its legal or and compliance teams who have significantly in our from weaknesses or failure in: regulatory requirements could supported the first line business compliance functions and lead to legal and regulatory in enhancing risk ownership and regulatory infrastructure, • analysis of regulations, laws and sanctions, redress costs, accountability in 2018. to enable us to be codes; reputational risk, contract • Our capital investment programme resilient and identify • development of appropriate breach and, ultimately, loss of ensures we appropriately fund the cost-effective solutions as policies, processes and controls; operating licences or invalid actions we need to take to manage new regulations arise. • training and education of first-line contracts, resulting in reduced regulatory risk. teams; revenues. • We can offset the costs of regulation • capacity to monitor and respond by developing new services and to rate of change; products that help clients manage • effectiveness of first-line their own regulatory burden. surveillance in identifying and We continually monitor for upcoming, preventing breaches; • new, or amendments, to regulation, to • project management and ensure we comply on time. documentation of regulatory We deliver regular training for all issues; • employees working in regulated areas, • Board and senior management so they understand the rules and governance and engagement on requirements they must comply with. regulatory matters; • We operate separate legal entities • regulatory reporting and for regulated activities with their own disclosure. Boards, to ensure rigorous focus on Links to the following strategy regulatory requirements. elements:

1 2 3 4 5

PRODUCT DEVELOPMENT, If Equiniti fails to provide • The Executive team and Board We continue to focus on CHANNEL & PRICING appropriate products, regularly discuss strategy in the enhancing the value of Risk of poor products that fail to propositions and services to context of propositional design and our products and services meet the demands of our clients and the market at suitable prices, service enhancement. to customers and new prospective clients or that do not it could suffer lower revenues • We have dedicated resource towards market opportunities. comply with our regulatory or legal or margins, customer customer proposition and customer obligations. This risk also includes dissatisfaction or regulatory or experience to help us meet our the potential for poor product legal sanction. customers’ expectations and ensure distribution (so clients or potential we also understand their own clients are unable to access our regulatory requirements. products) and inappropriate pricing • We run client testing workshops, strategies. to gain customer input on product development. Links to the following strategy • We have implemented a new product elements: governance policy and associated controls to ensure a consistent 1 2 3 4 5 approach to product management is applied across the Group.

CONDUCT Poor conduct could lead • We continue to develop key conduct There is an increasing Risk of the business being unable to to sub-optimal decision risk measures, to provide a granular expectation from our demonstrate and document good making, customer detriment, view of how our products and services markets and customers corporate, staff or market conduct, poor staff experience, legal are performing for customers. to demonstrate how we for example: or regulatory sanction, • We strive to learn from any mistakes conduct our business increased counterparty through root cause analysis and appropriately and • Board, executive and senior risk-based pricing, reduced clear customer accountabilities for ethically. We are well management leadership of the availability of counter parties colleagues, with rewards driven by placed to manage this corporate culture; and reputational harm to us customer-centric metrics. and during 2019 we will • identifying and managing conflicts and our clients. This in turn We are further enhancing and be rolling out enhanced of interest; • could result in a loss of trust embedding our framework to support conduct training, policies • controlling staff behaviour which and confidence amongst our customers, particularly those in and associated controls could result in potential market stakeholders. vulnerable circumstances. across the Group abuse; or • We proactively review and follow • compliance with legal and changes in governance and regulatory regulatory requirements. requirements. Links to the following strategy • We are preparing for the advent elements: of the FCA’s Senior Managers and Certification Regime which applies 1 2 3 4 5 to the UK regulated entities in the Group. 50 SECTION 01 STRATEGIC REPORT PRINCIPAL RISKS AND UNCERTAINTIES Equiniti Group plc Annual Report 2018 51 believe in the We importance of investing in our people and utilisea variety of to tailored programmes help them enhance their performance, set and achieve objectives and develop their leadership skills. programme Our ongoing in of investment controls improved we maintain ensures our position,in an the where environment remains external threat challenging. an ongoing have We of programme enhancements to contracts, to ensure they all have clear performance indicators linked to delivery of services, with appropriate penalties for failure. and Ongoing review testing of our plans up they remain ensures to date and appropriate. TREND*

gender pay gaps within the Group. has an ISO27001 aligned Group The framework. compliant control our cyber continuously review We security capability and emerging threats. is subjected to IT infrastructure Our penetration tests. regular security deploy extensive We to deny unauthorised measures equipment access to our premises, and to protect and resources damage from personnel and property or harm. run supplier health financial We checks and monitor their financial position on an ongoing basis. supplier review regularly We performance and risk. audit our material suppliers’ We business continuity to ensure plans, appropriate. they are consider potential supplier We as part of our overall business failure planning. continuity and resilience employ dual hosting of critical We servers, telecommunications and their applications, to help ensure availability. has separate business Group The sites continuity or disaster recovery available to it. work closely with highly regulated We services to us clients who outsource their own resilience. to ensure manage our organisational carefully We there to ensure capability and capacity, remuneration use effective We encourage and support a number We of employee engagement forums and for run Diversity and Inclusion groups (see page 40). staff managing any proactively are We of programme an ongoing have We in internal and external investment cyber security. has a dedicated Group The function, with due procurement and diligence policies, standards procedures. have detailed business continuity We we plans, which and disaster recovery test regularly. taking focused action to are We and develop high-calibre attract, retain people. have initiatives to reinforce We behaviours that generate the best outcomes for customers and colleagues. to the right skills and resources are meet our customers’ needs. appropriate arrangements to promote colleague behaviours and meet expectations. regulatory • • • • • • • • • • • • • • • • • • • • MITIGATION subcontractor or Partner, could result supplier failure in Equiniti to being unable meet its customer obligations or perform critical business operations. This could in a reputational result business impact, reduced customer detriment, agility, cost and lower increased revenue. plan to effectively Failure for and manage unplanned events could lead to a poor customer experience, customer detriment, harm, regulatory reputational sanction, loss of customers, reduced lower productivity, costs. and increased revenues to attract or retain Failure the right people would limit ability to deliver its Equiniti’s business plan commitments and continue to grow. An information or physical reduce could security breach the quality services of our in us or result to customers the law or our breaching which in turn could contracts, damage our reputation, our costs and reduce increase our revenues. IMPACT 5 5 5 5 4 4 4 4 3 3 3 3 2 2 2 2 1 1 1 1 PURCHASING, SUPPLY & PURCHASING, SUPPLY OUTSOURCING Risk of a business critical partner, subcontractor or supplier failing to deliver and/or perform to the standards. required Links to the following strategy elements: BUSINESS CONTINUITY & RESILIENCE Risk of slow or flawed recovery following unexpected events, such as loss of a key building or a major IT system failure. Links to the following strategy elements: PEOPLE Risk of low operating efficiency morale poor staff stemming from attrition, and experience, higher staff sickness, higher retention increased costs, and unfilled and recruitment positions. Links to the following strategy elements: GROUP RISK CATEGORY CATEGORY RISK GROUP SECURITY involving theCyber risk, disruption or corruptionof systems and of or loss or leakage connectivity, or malicious accidental data from actions. a also risks arising from are There including physical security breach theft injury, damage, staff property access to premises, or inappropriate systems or information. Links to the following strategy elements: Viability Statement

1. ASSESSMENT OF PROSPECTS 2. THE ASSESSMENT PROCESS AND KEY Equiniti conducts a significant portion of its business through ASSUMPTIONS recurring revenue secured via long-term contracts and has a The Group’s prospects are assessed primarily through its stated modest growth strategy, evidenced both by its past strategic and financial planning process. This includes a detailed performance and resilience and the position it occupies in annual review of the ongoing plan, led by the Group Chief the market. Financial resilience has been strengthened by the Executive and CFO, in conjunction with divisional and functional acquisition of Wells Fargo Shareowner Services in 2018. A period management teams. The Board participates fully in the annual of three years has been chosen to base the Viability Statement process by means of an extended Board meeting. on because, although forecasts are prepared for longer periods, The output of the annual review process is a set of objectives, there is inevitably more uncertainty associated with a longer time detailed financial forecasts and a clear explanation of the key frame and the Directors have a reasonable confidence over this assumptions and risks to be considered when agreeing the plan. time horizon. The viability assessment reflects financial stress The latest updates to the plan were finalised in December 2018. placed on the business arising from the scenarios identified in This considered the Group’s current position and its prospects the Principal Risks and Uncertainties section of the Annual Report over the forthcoming years, and reaffirmed the Group’s stated and Accounts. strategy. The Group’s strategy remains unchanged: Detailed financial forecasts are prepared, with the first year of • Grow sales to existing clients the financial forecast forming the Group’s operating budget and is subject to a rolling forecast process throughout the year. • Win new B2B clients Subsequent years of the forecast are extrapolated from the first • Develop and acquire new capabilities year, based on the overall content of the strategic plan. Progress against financial budgets and key objectives are reviewed in • Operating leverage detail on a monthly basis by both the Group’s executive team • Reinvest strong cash flows and Board. Mitigating actions are taken whether identified through actual trading performance or the rolling forecast The key factors supporting the Group’s prospects are: process. Long-term, loyal, blue-chip clients – We have a large and • The key assumptions within the Group’s financial forecasts diverse client base, including c70 of the FTSE 100 and 120 include: of the FTSE 250. Our average relationship with FTSE 100 share registration clients is more than 20 years and our clients • Low single-digit per annum revenue growth, supported by typically take an average of ten services from us. market trends and increased cross selling into our customer base. • Proprietary technology – Our well-invested and scalable proprietary technology platforms give us a competitive • Modest margin improvement driven by operating leverage, advantage and form a barrier to entry, given the substantial offshoring, automation, property rationalisation and increasing experience, time and money required to build them. We have mix of software licenses. more than 30 platforms, all on UK-based infrastructure. Our • No change in the stated dividend policy. primary platforms are Sirius (share registration, dividend and share plan management); Xanite (custody, investment and • No change in capital structure given the Group has secured wealth management); Compendia (pension administration and term debt and an RCF facility out to October 2020. Preliminary payroll); and Charter (case and complaints management). discussions with funding providers have commenced and Equiniti is confident of extending this agreement in 2019, for a Leadership positions – We are leaders in large and growing • further five years. markets, giving us significant growth opportunities and strong momentum. • The viability statement and projections carried out to support it are made assuming the current business model and balance Scale – The scale of our business means we can successfully • sheet structure remain as is and future finance facilities, that handle the biggest transactions. In 2018, in the UK alone, mature during the three-year period, will be refinanced on we made payments of £93 billion, interacted with c28 million similar terms. shareholders and pensioners, and held c70m shareholder records. • Specialist people – We employ people who are experts in their fields. At the year end, we had over 5,100 employees, including c900 at our offshore facility in Chennai, India. • Strong acquisitions track record – We have a strong track record of acquiring new platforms and capabilities, successfully integrating them into the Group and generating growth from them. Since 2007, we have completed 23 transactions.

52 SECTION 01 STRATEGIC REPORT VIABILITY STATEMENT Equiniti Group plc Annual Report 2018 53

on behalf was approved The strategic report of the Board Guy Wakeley Chief Executive 2019 12 March has positive net assets. The Group year business plan, which demonstrates has a three Group The in theit is able to generate significant cash flows next 12 months liabilities to service its as they fall due and pay down ambitions. and cost reduction debt, based on modest growth total cash of £90.9m had December 2018, the 31 Group At its of £122m under together with available headroom committed bank facilities. Net debt to underlying EBITDA 2.5:1. must be less than it is currently 4.0:1; its Senior re-finance intends to 2019 the Group During ongoing with existing banks, to provide Facilities Agreement October 2020 maturity. committed funding beyond the current testing (including scenarios combining of the stress The results high cash generation that,1-3) demonstrate due to the Group’s to additionaland access Equiniti funds, to would be able as withstand the Mitigants impact in each case. considered programmes, testingefficiency included cost part of thisstress and a purchases cancellation of EBT share dividend reductions, rationalisation of capital expenditure. 4. VIABILITY STATEMENT have a of the analysis, the Directors Based on the results will be able to continue expectation that the Group reasonable in operation and meet its liabilities as theyfall due over the three year period of their assessment. 5. GOING CONCERN the to confirm it has adopted going is also required Group The theunderpins accounts, which preparing concern principle in this down to the has narrowed IFRS 1. The Code requirement accounting of going concern (Code C.1.3). As such, purpose to the going concern to make reference is no requirement there part of the although Annual Report and Accounts, in the front confirming good practice the is taking form of a simple reference the financial to prepare consider it appropriate the Directors statements on the of a going concern, as set out in the basis in the back part of the report. basis of preparation going to asserting Equiniti’s The key points to consider in relation concern status are: • • • • the As such we consider the going concern basis of preparing accounts to be applicable. With the analysis concluding the cash flow and undrawn debt facilities for has sufficient Group years on a number of down-side scenarios, the the next three expectation the business will also have a reasonable Directors continue as a going concern for the months. next 12 BUSINESS SHOCK TO UNSPECIFIED

COST DELIVER DO NOT BENEFITS ANTICIPATED ANTICIPATED PROGRAMMES GROWTH REDUCTION IN REVENUE VIABILITY SCENARIOS ACTION REVENUE CORPORATE CORPORATE REDUCTION IN

PRINCIPAL PRINCIPAL RISKS AND in corporate market activity leading a reduction to Depressed action revenue. of time, period for a prolonged growth in revenue Reduction action. with a lag in cost reduction (offshoring/automation/ change programmes Significant rationalisation) do not deliver anticipatedbenefits. property shock to the unspecified business leading a 40% to An a three in planned underlying EBITDA across reduction year period. UNCERTAINTIES BUSINESS CONTINUITY & RESILIENCE SECURITY PURCHASING, & SUPPLY OUTSOURCING CONDUCT REGULATORY PRODUCT DEVELOPMENT, CHANNEL & PRICING DATA PROTECTION MARKETS & COMPETITION INFORMATION INFORMATION TECHNOLOGY CHANGE & DEVELOPMENT Principal Risks by Equiniti’s Viability scenarios affected 3. ASSESSMENT OF VIABILITY 3. ASSESSMENT strategic and financial Although the output of the Group’s best estimate the of the Directors’ reflects planning process has also assessed of the the business, Group prospects future scenarios yet plausible scenarios. There the impact of severe as a any issues arising reflect to appropriately considered were which include stresses represent These consequence of Brexit. the following potential four scenarios: 1. 2. 3. 4. HIGHLIGHTS 0 CHAIRMAN'S STATEMENTS 0 BUSINESS MODEL 0 OUR MARKETS 00 STRATEGY 00 KEY PERFORMANCE INDICATORS 00 CHIEF EXECUTIVE’S STATEMENT 00 OPERATIONAL REVIEW 00 FINANCIAL REVIEW 00 PRINCIPAL RISKS AND UNCERTAINTIES 00 RESOURCES AND RELATIONSHIPS 00

UK Stock Market Awards 2018 Main Market Company of the Year

54 HIGHLIGHTS 0 CHAIRMAN'S STATEMENTS 0 BUSINESS MODEL 0 OUR MARKETS 00 STRATEGY 00 KEY PERFORMANCE INDICATORS 00 CHIEF EXECUTIVE’S STATEMENT 00 OPERATIONAL REVIEW 00 FINANCIAL REVIEW 00

PRINCIPAL RISKS AND UNCERTAINTIES 00 SECTION 02 RESOURCES AND RELATIONSHIPS 00 GOVERNANCE

02 Governance

GOVERNANCE REPORT 56 BOARD OF DIRECTORS 58 EXECUTIVE COMMITTEE 60

BOARD AND EXECUTIVE COMMITTEE STRUCTURE 66 GroupEquiniti plc Annual Report 2018 AUDIT COMMITTEE REPORT 72 RISK COMMITTEE REPORT 80 NOMINATION COMMITTEE REPORT 86 DIRECTORS’ REMUNERATION REPORT 92 DIRECTORS' REPORT 118

55 Corporate Governance Report

Dear Shareholder

In my letter to you last year, I noted that the Board takes CULTURE corporate governance very seriously and that I was determined Another advantage of spending time in the business is that to ensure that we maintain high standards throughout my time as it gives us a feel for the Group’s culture. The Group’s culture Chairman. combines the entrepreneurial drive needed by a growth I am pleased to report that during the year, the Company orientated company with the client focus and operational rigour continued to comply in full with the 2016 UK Corporate that are essential for first-class delivery of regulated services. The Governance Code (the Code). We believe that compliance with Group’s culture is never set in stone and needs to adapt over the Code should be the minimum standard we aspire to, so time, so it remains aligned to the Group’s purpose and strategy. during the year we continued to enhance the Board and our We also need to ensure that when we acquire businesses that corporate governance framework to ensure that the Group has have thrived as independents, we have a culture that allows them the governance procedures and processes it requires to meet to continue to thrive under our ownership. the needs of its clients, employees, shareholders and other More information on our cultural initiatives and the Group’s stakeholders. Additionally, we look forward to working towards values can be found in the Strategic Report on page 38. full compliance with the new 2018 UK Corporate Governance Code and continuing to further progress our governance DIVERSITY AND INCLUSION standards. To us, diversity and inclusion means understanding, appreciating and valuing the visible and invisible differences in our colleagues, BOARD AND COMMITTEE CHANGES and understanding that these differences enrich our culture and There were a number of changes to the Board this year, with benefit the business. Recognising this diversity and inclusion our Board refreshment seeing Vicky Jarman standing down is an integral part of our cultural agenda and we are keen to and Alison Burns, Mark Brooker and Cheryl Millington all being operationalise our approach, with work already in progress. appointed as independent non-executive Directors. More The Group has a range of initiatives for enhancing diversity and information on them and their appointments can be found in my supporting our people, which are described on page 40. statement in the Strategic Report on page 18. TRAINING AND DEVELOPMENT The appointments have enhanced our Board diversity, with A key part of my role is to ensure that all Directors have access female Directors now making up one third of the Board, in line to ongoing training and development to provide them with with the recommendation of the Hampton-Alexander Review. the relevant skills and expertise for their role on the Board and More importantly, our new non-executive Directors bring its Committees. During the year, training was provided on the additional skills and experience to the Board, which are highly following: relevant to the Group’s strategic direction. • IFRS 15 Revenue Recognition; The increase in Board membership also allowed us to review the composition of the Board Committees, increasing the number of • IFRS 16 Lease Accounting; members of some Committees while streamlining others. These • changes to the UK Corporate Governance Code; changes enhance the operation of the Committees and ensure they continue to provide robust oversight of their respective • the General Data Protection Regulation (GDPR) and how it areas. affected the Group; and • cyber security. BOARD VISITS We believe that to be an effective Board, we must stay abreast We also provided extensive induction programmes for the new of what is happening in the business and its markets. During the non-executive Directors. year, we visited three parts of the organisation: EQ Data located BOARD EVALUATION in Exeter (UK), EQ US located in Minneapolis (US) and EQ Credit During the year, we undertook an externally-facilitated evaluation Services located in Leeds (UK). of the Board and its Committees. Overall, the Board and its Visiting the Group’s operations has a number of benefits for Committees were found to be operating effectively and were the Board. We can talk directly to the senior management well managed. A consistent theme from all of the Committee concerned and see demonstrations of current products and evaluations was that the allocation of more time for each of those in development. This gives us insight into how the business the meetings would further develop the breadth and depth is performing and what our clients need from us, both now and of coverage and enhance the wider corporate governance in the future. This in turn informs our Board discussions about framework. Accordingly, where possible, the Risk Committee strategy and helps us to reach conclusions on the strategic meetings will be held on a separate day from the main Board initiatives we are asked to approve. meeting to ensure sufficient time is provided for all of the meetings. More details about the evaluation can be found on page 69.

56 SECTION 02 GOVERNANCE CORPORATE GOVERNANCE REPORT Equiniti Group plc Annual Report 2018 57 CONCLUSION the further strengthening year, This has been a progressive we will Looking forward structure. corporate governance Group’s governance structure, and effective continue to maintain a strong value and create to help the business to deliver its strategy, long-term interests. our stakeholders’ safeguard Philip Yea Chairman 2019 12 March WORKFORCE ENGAGEMENT/EMPLOYEE VOICE WORKFORCE ENGAGEMENT/EMPLOYEE In 2016, an Employee Forum (the Forum) was established within the UK to enable our UK colleagues to meet and discuss employee concerns with senior management and the executive As part of our work to comply with the 2018 UK new Directors. extending the Forum to Corporate Governance Code, we are India, the US, the Netherlands and from include representatives who chairs our have designated Dr TimSouth Africa. We Miller, with Remuneration Committee, as the non-executive Director for conveying Employee Voice. responsibility in the UK and The Forum will meet quarterly during the year, overseas. For those members unable to attend in person, Dr arrangements will be in place for them to attend remotely. Tim back to the Miller will attend those meetings and report after each meeting. Board held overseas, these meetings will meetings are Board Where be used as an opportunity to meet with colleagues in those locations face to face. In addition to the we also have other Forum, methods of allowing For example, ‘Ask Guy’ is colleagues to contact the Directors. intranet system) which allows an open forum (via the Group’s any question. This method is colleagues to ask Guy Wakeley the Group. used extensively by our colleagues across GOVERNANCE AND RISK GOVERNANCE AND that it is critical recognises the Board In an evolving environment, on identifying, focus managing has a rigorous that the Group the Risk and Audit and mitigating the risks it faces. Through this Committees, we have continued to advance our approach reports. as described in their respective year, this year was the change to theThe most significant Group business, Equiniti Trust acquisition As a regulated of EQ US. of independent to have its own board Company (ETC) is required on this board rely committees. We and its own board directors to carry out a number of governance functions on our behalf in help ETC. To from reports regular receives the US and the Board held and EQ US, the Board alignment between the Group ensure of ETC at which we discussed both a joint session with the board and client the strategy for the US business and our regulatory that committedcommitments. ETC has a competent and board and statutory all of our regulatory is fully discharge equipped to oversight commitments in the States, with United appropriate the Group. from KEY

BOARD COMMITTEES Board of Directors A D N Rm R Audit Disclosure Nomination Remuneration Risk Committee Committee Committee Committee Committee

PHILIP YEA GUY WAKELEY JOHN STIER DARREN POPE ALISON BURNS CHAIRMAN CHIEF EXECUTIVE CHIEF FINANCIAL SENIOR INDEPENDENT INDEPENDENT OFFICER DIRECTOR NON-EXECUTIVE DIRECTOR

Appointed: July 2017 Appointed: January 2014 Appointed: June 2015 Appointed: December 2016 Appointed: April 2018 (Independent upon Prior to joining the A qualified accountant, Darren is a qualified Alison has held executive Appointment) Company, Guy was chief prior to joining the accountant with over 30 and non-executive roles Philip was chief executive executive of Morrison Company John was the years of experience in the within Aviva plc, including of 3i Group plc from plc for five years and Chief Financial Officer of financial services industry, the position of CEO of 2004 to 2009. A qualified before that held divisional Northgate Information the majority of which Aviva Ireland. She has accountant, he is also a leadership positions Solutions Ltd for over ten has been spent in retail extensive financial services former finance director of with Amey, The Berkeley years. Prior to that, he financial services. Most experience, gained in Diageo plc and, as finance Group, General Electric was the Chief Financial recently Darren served senior roles with Santander, director of Guinness PLC, and Rolls-Royce. Guy has Officer of Subterra Ltd, as CFO of TSB Bank plc, Lloyds TSB and AXA UK. was closely involved in the an MA in Engineering a subsidiary of Thames having led the initial stages Skills and Experience creation of Diageo through Science from the University Water Plc, which delivered of its separation from Beneficial to the Company: Guinness's merger with of Cambridge and a PhD engineering services to Lloyds Banking Group. Alison has in-depth GrandMet in 1997. in applications of artificial businesses across Europe. He was a non-executive knowledge of the intelligence to engineering director of Virgin Money Skills and Experience Skills and Experience insurance and financial design. Holdings (UK) plc prior to Beneficial to the Company: Beneficial to the Company: services sectors (two key its merger with CYBG plc. Philip is an experienced Skills and Experience John’s considerable markets for the Group). Chairman with in-depth Beneficial to the Company: finance experience, and Skills and Experience Alison’s experience has knowledge of both the Guy is an experienced his extensive executive Beneficial to the Company: provided her with an quoted and private chief executive, with experience, has been Darren’s considerable insight into the customer’s equity sectors. With his extensive IT experience. invaluable in his role as accounting experience and viewpoint which is a skill considerable executive This has enabled him to Chief Financial Officer, in his in-depth knowledge of required by the Board. experience, he brings forge a strong, focused, managing the Company’s the retail financial services Other Appointments: valuable skills to the management team for the balance sheet and ensuring sector, a key business sector Non-executive Director of Board. His knowledge of Company. This team, led it has the firm financial for the Group, is beneficial Hastings plc the international business by Guy, has enabled the foundation from which it to his role as Chair of the environment will be of Company to grow from a has grown from being a Audit Committee and as a particular importance private equity-run business private-equity run business member of the Board. to the Company as it to a main market, FTSE to a main market, FTSE 250 Other Appointments: continues on the next 250 business, with a clear, business. Non-executive Director of stage of its growth and focused strategy for its Other Appointments: CYBG plc development as an future growth. None international business. Other Appointments: Other Appointments: Non-executive Director of Chairman of Greene King plc HgCapital Trust plc Non-executive Director of Member of the CBI’s Public Aberdeen Standard Asia Services Strategy Board Focus plc Non-executive Director of Marshall of Cambridge (Holdings) Ltd

CHAIR N CHAIR E O Sb CHAIR RC GC CHAIR A

D D RC GC D E O Sb R N A Rm 58 SECTION 02 GOVERNANCE CORPORATE GOVERNANCE REPORT Equiniti Group plc Annual Report 2018 59 D KATHY CONG KATHY SECRETARY COMPANY Appointed: July 2016 Prior to joining the Kathy worked at Company, FTSE 250 specialist banking Investec plc, for group, over 13 years. During her time at Investec, Kathy worked closely with senior management and subsidiary to ensure directors governance appropriate established systems were and maintained, particularly to Directors’ in relation regulatory duties, relevant and related requirements party transactions, including firms. FCA-regulated Kathy is an active industry having held the contributor, of position of the Secretary the Association of Women and Secretaries Chartered the London Money Market Association. Other appointments: of Equiniti Share Director Limited Plan Trustees to the Company Secretary UK subsidiary Equiniti Group companies

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marketplace. our to Other appointments: of Non-executive Director Atom Bank plc technological, business leadership, and customer centric experience gained a variety of sectors, across including financial services which is very and retail, relevant CHERYL MILLINGTON CHERYL INDEPENDENT NON-EXECUTIVE DIRECTOR Appointed: November 2018 experience has Cheryl’s her been gained through senior leadership roles a in technology across variety of sectors, including financial services and retail, as Chief most recently at both Digital Officer Perkins and Waitrose. Travis include Her prior roles CIO at Asda and senior in line management roles at HBOS. Cheryl was retail an independent previously non-executive Director of National Savings and Investments. Skills and Experience Beneficial to the Company: Cheryl brings deep

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GC Group Investment Group and Change Committee the of Page Group, Director services provider, recruitment for nine years. Skills and Experience Beneficial to the Company: extensive executive Tim’s a range experience across especially in human of areas, as Chair of the in his role Remuneration Committee. experience made Tim’s him the ideal choice to be appointed as the Board’s designated non-executive to engage with the Director wider workforce. Group’s Other Appointments: of Non-executive Director Equiniti Financial Services most Limited (the Group’s significant FCA regulated entity in the UK) of Non-executive Director Clarkson plc and chair of its committee remuneration of Non-executive Director Otis Gold Corporation, a Stock Exchange Toronto Chairman of listed company, the Academy of St Martin-in- the-Fields compliance, audit, assurance, was also a non-executive has assisted him resources, Bank, Chartered Standard level positionswith director for areas global responsibility including human resources, financial crime and legal. Tim Appointed: February 2015 During his 14 years at Tim held a number of DR TIM MILLER INDEPENDENT NON-EXECUTIVE DIRECTOR CHAIR O

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A Sb Sales and Bid Committee CHAIR Appointed: August 2016 served Sally-Ann previously as COO of the international division and latterly as Operations and Group of Director Technology Willis and held a Group, number of senior executive at Lloyds TSB. roles Skills and Experience Beneficial to the Company: extensive Sally-Ann’s SALLY-ANN HIBBERD SALLY-ANN INDEPENDENT NON-EXECUTIVE DIRECTOR experience of the financial together services sector, with her experience of two the insurance sector, key business sectors for has been the Group, beneficial when conducting as Chair of the her role Risk Committee and as a member of the Board. Other Appointments: of Non-executive Director Holdings plc IG Group Non-executive Board member of Loughborough University member of Advisory board OEE Consulting

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E Executive Committee EXECUTIVE COMMITTEES EXECUTIVE Appointed: November 2018 executive career Mark’s has involved senior roles in technology-centric businesses, including Betfair MARK BROOKER INDEPENDENT NON-EXECUTIVE DIRECTOR he was COO and where he held where Trainline providing a similar role, management and strong operations experience. He also spent 17 years in investment banking, with Rothschild, NatWest and Markets, Merrill Lynch Stanley. Morgan Skills and Experience Beneficial to the Company: Mark brings strong management and operational experience technology-centric from businesses and his time in investment banking to our is very relevant marketplace. Other Appointments: of Non-executive Director AA plc of Non-executive Director William Hill plc Executive Committee

KEY

EXECUTIVE COMMITTEES

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Executive Executive Risk Sales and Bid Operating Group Investment Committee and Compliance Committee Committee and Change Committee Committee

GUY WAKELEY JOHN STIER CHIEF EXECUTIVE CHIEF FINANCIAL OFFICER

See page 58 for details See page 58 for details

THERA PRINS REBECCA GRATTAN ADAM GREEN CHIEF OPERATING OFFICER AND CHIEF PEOPLE AND CHIEF RISK OFFICER CEO, EQ INVEST (INVESTMENT TRANSFORMATION OFFICER SOLUTIONS DIVISION)

Joined the Group in November 2016 Joined the Group in August 2018 Joined the Group in March 2015 Thera is responsible for ensuring that the Rebecca is responsible for Human Adam is responsible for managing the Group has the resources and functions Resources, Transformation and Change Group’s global risk profile. He has a wide in place to deliver the Board’s strategy. functions globally. She has had a lengthy range of experience in financial services, In addition, she manages the division career in consultancy and has worked risk management, regulation and business that operates the various platforms that with some of the largest financial services change. Adam was previously interim investors can use to access the market and public sector organisations, leading Head of UK Compliance for Bupa and and buy, sell and hold investments in a significant transformation programmes prior to that managed a core transition cost effective way. Prior to joining the and specialising in the operating model workstream at the Financial Services Group, Thera spent 20 years in retail and organisational design. Authority as it established the Financial financial services working for Visa Europe, Conduct Authority and Prudential Barclays and Lloyds Group, where she Regulatory Authority. specialised in customer services, new product development solutions and global expansion initiatives.

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60 SECTION 02 GOVERNANCE CORPORATE GOVERNANCE REPORT Equiniti Group plc Annual Report 2018 61

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TODD MAY CEO, EQ US (INVESTMENT SOLUTIONS DIVISION) in February 2018 Joined the Group for leading the is responsible Todd US transfer agent business. Group's Shareowner Fargo He joined Wells leadership, the business implemented websites in meeting and shareowner product customer needs, and increased Services, now EQ US, in 2007. Under his changes, executed key regulatory significant enhancements to issuer while consistently being known offerings has Todd as a leading service provider. over 25 years’ experience in financial services and corporate development.

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Sb RC E digital and technology agenda. Group’s He has extensive global experience in building and leading teams that deliver and support high performance systems for both the and highly secure B2B and B2C markets, in both highly markets, and unregulated regulated investment banking, gaming and travel. in January 2018 Joined the Group for leading the Kevin is responsible a range of industries including across KEVIN O’CONNOR OFFICER CHIEF INFORMATION successful transactions including IPOs PAUL MATTHEWS PAUL CEO, EQ BOARDROOM (INVESTMENT SOLUTIONS DIVISION) in February 2011 Joined the Group with for working Paul is responsible leading businesses to deliver the UK’s and corporate actions for a client base 30 years of experience, his background and knowledge of the securities industry 50% of the and FTSE 100 covering circa 40% of the FTSE 250. Withcirca over brings an important skill set to the helping shape the senior team, Group’s to listed companies offering Group’s both in the and globally. UK

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Sb 2015 in March Joined the Group for the Duncan is responsible EQ Paymaster business lines and for ensuring that its clients and their members, policyholders and employees of the highest outcomes that are receive quality. Aon from Duncan joined the Group he was UK Chief Operating Hewitt where He is a Pensions Actuary who Officer. has worked in Financial Services for 27 years and has significant experience in both advising clients and the delivery of change and operational excellence. DUNCAN WATSON (PENSIONS CEO, EQ PAYMASTER SOLUTIONS DIVISION) strategic accounts. Mark has over development with NCR Corporation, in August 2017 Joined the Group across for growth Mark is responsible markets, both in the core the Group’s new business UK and overseas, through established origination and from 20 years’ experience in business La Rue and Lucent. De Talaris, MARK CHURLEY CHIEF GROWTH OFFICER BOARD MEMBERSHIP AND ATTENDANCE The Board’s Terms of Reference state that at least half of the The Board comprises a non-executive Chairman, the Chief Board should be made up of non-executive Directors. This Executive, the Chief Financial Officer and six independent non- requirement was complied with throughout the year. The Board executive Directors. The members of the Board who served considers that all of the non-executive Directors are independent during the year and as at the date of this report are shown in and that the Chairman was independent upon appointment. the table below, together with their attendance at the 13 Board The Terms of Reference also state that one of the non-executive meetings held during the year or those held during their tenure: Directors should also be appointed as the Senior Independent Director (SID). This role was undertaken by Vicky Jarman until she Name Attended stood down from the Board in May 2018 and Darren Pope was appointed SID in her place. Philip Yea (Chairman) 13/13 The Terms of Reference also state that the roles of the Chairman Guy Wakeley (Chief Executive) 13/13 and Chief Executive should be exercised independently of each other and that the Chairman should not exercise the role John Stier (Chief Financial Officer) 13/13 of the Chief Executive. The Chairman is responsible for the leadership of the Board and the Chief Executive is responsible 4 Darren Pope (Senior Independent Director) 12/13 for managing and leading the business. These roles were carried out independently of each other throughout the year. Alison Burns1 11/11 Each Director has access to the advice and services of the Mark Brooker2 2/2 Company Secretary and can arrange for independent, professional advice at the Company’s expense where they judge Sally-Ann Hibberd 13/13 it is necessary in order to discharge their responsibilities as Directors. There is an agreed procedure enabling them to do so, Vicky Jarman3,4 3/4 which is managed by the Company Secretary. No such advice Dr Tim Miller5 11/13 was sought during the year.

Cheryl Millington2,4 1/2 ROLE OF THE BOARD The Board is collectively responsible for the long-term success of the business and delegates the day-to-day management to 1 Alison Burns was appointed to the Board effective from 1 April 2018. the executive management team. However, there is a schedule 2 Mark Brooker and Cheryl Millington were appointed to the Board effective of matters reserved for the Board’s decision, together with from 1 November 2018. a delegated authority framework, to ensure that unusual or 3 Vicky Jarman stood down from the Board effective from 3 May 2018. material transactions are brought to the Board for approval. 4 Vicky Jarman and Cheryl Millington were each unable to attend one meeting due to illness. Darren Pope was unable to attend one meeting that was The schedule of matters reserved for the Board includes, additionally scheduled during the year due to a prior commitment. amongst other things: 5 Dr Tim Miller was unable to attend one meeting due to illness and one meeting that was additionally scheduled during the year due to a prior • approval of strategic plans; commitment. • approval of annual budgets; • approval of acquisitions and disposals; Details of the Directors, including the skills and experience they bring to the Board can be found on pages 58 to 59. • overseeing the Group’s operations to ensure competent and prudent management, sound planning and an adequate GOVERNANCE system of internal control; During the year, the Company complied in full with the 2016 • approval of half-year and full-year results announcements; UK Corporate Governance Code (the Code). The Board is aware of the new 2018 UK Corporate Governance Code and • approval of the Company’s Annual Report and Accounts; and the enhanced reporting for s172 of the Companies Act 2006 • the appointment or resignation of directors and the company which came into effect on 1 January 2019. The Company already secretary. complies with the majority of the new Code and is taking actions The delegated authority schedule sets out the financial on other provisions. We have already implemented policies and parameters of authority, covering the delegation of all areas procedures during the year to enhance our engagement with of the Group’s activities below Board level to the executive all stakeholders. We have also developed a Code Compliance Directors, divisional CEOs, or business unit managers. Certain dashboard that tracks the progress of actions already authorities, such as approval of capital expenditure, have undertaken, and those to be undertaken during 2019, to ensure different delegated authority limits depending on whether the full compliance with the new Code. We will report further on our particular expenditure was included in the annual budget or compliance with the new Code in our 2019 Annual Report and is an additional item of expenditure where a higher degree of Accounts. Copies of both Codes can be found on the Financial oversight and approval may be appropriate. Reporting Council’s website at www.frc.org.uk.

62 SECTION 02 GOVERNANCE CORPORATE GOVERNANCE REPORT Equiniti Group plc Annual Report 2018 63 63 connected their who Company, the in CONFLICTS OF INTEREST CONFLICTS has an established for the framework The Board of actual and recording identification, approval of its Directors or potential conflicts of interest All conflicts and subsidiary company Directors. and to the Board declared must be of interest of Directors’ register in Equiniti’s recorded are 2006 (the The Companies Act Act) and interests. Articles of Association contain the Company’s management of for the proper detailed provisions which the in The circumstances conflicts of interest. the ongoing participation by a can approve Board in any discussions or decisions conflicted Director a is or may have the Director where of the Board, clearly defined. conflict, are to above, As part of the framework referred is Director each the end of the year, towards with a copy of the information held about provided conflicts, them – personal information, declared shareholding that they confirm that – requesting persons are still valid and up to date. the details held are that the ensures This annual attestation process of the them details held on and is aware Director correct. that the details are maintains oversight of each Directors’ The Board that they continue to ensure external interests, time to discharge to be able to devote sufficient and effectively their duties and responsibilities external commitments, are there Where efficiently. it is satisfied that these do makes sure the Board on the Company or not have any adverse effect to discharge the ability of any particular Director their duties fully. information about members of the Board More and the Executive Committee is available on pages 58 to 61. BOARD ACTIVITIES DURING 2018 The Board met 13 times during the year and undertook the following activities during those meetings:

• received and discussed business updates from the Chief Executive and Chief Financial Officer; • received a Board presentation on the WFSS acquisition; February • received a Board presentation on the Group’s MiFID II readiness; • reviewed the Compliance & Governance report; and • reviewed the Committee and Subsidiary company update reports.

• received and discussed business updates from the Chief Executive and Chief Financial Officer; • received and discussed the gender pay gap report; March • reviewed and approved the 2017 Annual Report and Accounts and ancillary documents; • reviewed the Compliance & Governance report; • reviewed the Committee and Subsidiary company update reports; • approved the Remuneration Committee Terms of Reference; and • approved the Audit Committee Terms of Reference.

• received and discussed business updates from the Chief Executive and Chief Financial Officer; • reviewed the Compliance & Governance report; and April • reviewed the Committee and Subsidiary company update reports.

• offsite Board meeting to discuss the Group’s strategy.

May

• Board meeting held offsite in Exeter; • received and discussed business updates from the Chief Executive and Chief Financial Officer; June • received a Board presentation on EQ Digital; • reviewed an update on the integration of EQ US; • reviewed the Compliance & Governance report; • reviewed the Committee and Subsidiary company update reports; • received product demonstration and met with EQ Data management and staff; and • discussed the Group’s Culture and Values.

64 SECTION 02 GOVERNANCE CORPORATE GOVERNANCE REPORT Equiniti Group plc Annual Report 2018 65 and

the Chief Executive and Chief Financial Officer; discussed and updates from business received the half-year 2018 results; and approved reviewed an update on the integration of EQ US; recieved the Compliance report; & Governance reviewed the Committee and Subsidiaryreports; company update reviewed and of Reference; the Nomination Committee Terms approved update. Programme and discussed the IT Transformation received the Chief Executive and Chief Financial Officer; and discussed business updates from received in MyCSP; 24% stake the acquisition of the Cabinet Office’s approved an update on the integration of EQ US; received the Compliance & Governance report; reviewed the Committee and Subsidiary company update reports; reviewed Plan. Transformation discussed the Culture in Minneapolis; Company of Equiniti Trust meeting with the board Board offsite joint met with EQ US management and colleagues; and Minneapolis. participated in a tour of the centre, US customer experience in Leeds; meeting held offsite Board the Chief Executive Financial Officer; and Chief and discussed business updates from received on EQ Paymaster; presentation a Board received an update on the integration of EQ US; reviewed the Compliance & Governance report; reviewed the Committee and Subsidiary company update reports; reviewed Services and Data Solutionsand teams; the Credit demonstration from a product received on Regulated BPO. presentation a Board received the Chief Executive and Chief Financial Officer; and discussed business updates from received the 2019 Budget; and approved reviewed on IT transformation and the technology platform roadmap; presentation a Board received on Customer Experience and Permission; presentation a Board received an update on the integration of EQ US; received and the Compliance & Governance report; reviewed the Committee and Subsidiary company update reports. reviewed • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • July October December November September BOARD AND EXECUTIVE COMMITTEE STRUCTURE

BOARD

Audit Risk Remuneration Nomination Committee Committee Committee Committee Reviews the integrity, adequacy Reviews the effectiveness Sets, reviews and recommends Evaluates and makes and effectiveness of Equiniti’s of Equiniti’s risk management Equiniti’s overall remuneration recommendations regarding system of internal control and risk and processes to ensure that key policy and strategy and monitors Board and Committee composition, management and the integrity risks are adequately mitigated. their implementation. succession planning and Directors’ of Equiniti’s financial reporting, potential conflicts of interest. whistleblowing and anti-bribery and corruption obligations.

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Executive Disclosure Committee Committee Conducts a weekly review of Oversees continuing obligations performance, allocates resources in respect of the disclosure and and directs activity to deliver the control of inside information directly business plan. concerning the Company.

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Sales and Bid Group Investment and Executive Risk and Operating Committee Change Committee Compliance Committee Committee Conducts a weekly review of all Conducts a monthly review of all Assures performance of the business Challenges and reviews P&L sales submissions, tenders capital expenditure and acquisitions. in accordance with policies, relevant performance, business planning and renewals. legislation and risk appetite. and resourcing, budgeting, central costs and overhead.

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Audit Disclosure Nomination Remuneration Risk Committee Committee Committee Committee Committee

EXECUTIVE COMMITTEES

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Executive Executive Risk Sales and Bid Operating Group Investment Committee and Compliance Committee Committee and Change Committee Committee

66 SECTION 02 GOVERNANCE CORPORATE GOVERNANCE REPORT Equiniti Group plc Annual Report 2018 67 by the Chief Executive, and Bid Committee, Sales chaired the sales for reviewing responsible meets weekly and is This Committee and contract renewals. submissions, tenders and pricing strategy for the Group, sets the commercial launches; including brand, marketing and new product by the Chief Executive, Operating Committee chaired the performance for reviewing meets monthly and is responsible costs and monitoring central forecasting against P&L budgets, and running the budget process; Committee Investment and Change is chaired Group the It reviews meets monthly. and by the Officer, Chief Financial and projects key priority requests, capital expenditure corporate development activity; and Executive Risk and Compliance Committee is chaired the and meets at least quarterly, by the Officer Chief Financial with performance of the business is in accordance to ensure risk appetite. policies, legislation and agreed The Executive Committee the is senior executive most listed on committee.management are Its members 61. pages 60 to performance The Executive Committee weekly to review meets activity to deliver the and directs and the allocation of resources business plan. The Executive Committee is supported by four management sub-committees: • • • •

monthly

include These duties. their discharge to them help external internal and of the detailed oversight Company’s the audit work; risk identification and of the Company’s oversight management; policy and overseeing the remuneration establishing as a whole, specifically for the implementation for the Group and leadership team; and executive Directors and contingency succession plans appropriate determining and senior managers and undertaking for the Directors as required. for new Directors searches appropriate BOARD COMMITTEES BOARD Committees four main has non- solely comprising The Board Audit; Nomination;Remuneration; and Risk. executive Directors: that followout 72 to 117 set on pages The Committees’ reports and activities. These their attendance, members, responsibilities Committees take the lead with the following: • • • • Committee Disclosure has Committees, the Board In addition to the four main Board Committee to oversee to the Disclosure delegated responsibilities compliance with its obligationslaid down by (as the Company’s Transparency Guidance and the FCA's Listing Rules, Disclosure of the Rules and the Abuse Regulation) Market in respect concerning of inside information directly and control disclosure The Committeewhen it is deemed meets as and the Company. necessary and its members consist of the Chairman, Chief and the Secretary. Company Executive, Officer Chief Financial Executive Committees and by the Board In addition to the oversight provided are the executive Directors Committees noted previously, supported by a number of executive management committees, which with the senior and divisional management teams, reviews such as business performance and development, covering areas HR, IT and operationalfinancial management, risk management, performance. operational management The Chief Executive the leads Group’s and is supported by the executive management team. The executive team gives strategic focus and is management for managing the operational and financial responsible the work of the by coordinating performance of the Group, and effective This enables the efficient specialist business areas. businesses. day-to-day operation of the Group’s is kept up to date with developments in the business, The Board the Chief including the work of the leadership teams, through which are reports, regular Executive and Chief Financial Officer’s meeting. discussed in detail at each Board BOARD SKILLS FINANCE SKILLS It is a core feature of good corporate governance that the Board and its Committees have an appropriate balance of skills Equity markets and experience, independence and knowledge, to enable the effective discharge of their duties and responsibilities, whether Debt financing individually or collectively. Part of the role of the Chairman and Audit the Nomination Committee is to keep the balance of skills 2015 and expertise on the Board and its Committees under review Financial accounting 2014 and make recommendations to the Board where changes are Management appropriate to maintain that balance. accounting As part of the Board evaluation that was undertaken during the year (details of which are provided on page 69), the skills of the Directors, as a whole, were collated to illustrate the Board’s OTHER SKILLS in-depth knowledge and experience of the sectors in which the Organisational Company operates. Development The individual experience and background of each Director is set HR & Reward out in their biographies on pages 58 to 59. The Board considers Restructuring & 2015 that the range of skills, experience and background of each of divestment the Directors is sufficiently relevant and complementary to allow Risk Management 2014 appropriate oversight, challenge and review of the Company’s progress in achieving its corporate goals. M&A The following charts illustrate the broad spectrum and depth of experience that the nine members of the Board have and how, collectively, they cover the sectors and businesses in which the Group operates. KEY

BOARD SKILLS

TECHNICAL SKILLS NOT Not so Somewhat Very Extremely APPLICABLE familiar familiar familiar familiar Online marketing

Cyber security DIVERSITY The Board, supported by the Nomination Committee, values Software development 2015 diversity in its broadest sense and when considering new non- executive Director appointments will, in addition to considering IT Infrastructure 2014 gender, age, disability, ethnicity, geography or experience, look to maintain within the boardroom the appropriate balance of skills, experience, independence and knowledge of the Company and SECTOR EXPERIENCE the industry as a whole. The Board notes the aims of the Hampton-Alexander Review and Life assurance the aspiration to achieve at least 33% representation of women on FTSE 350 boards by 2020. The Board is currently comprised of nine Pensions Directors’, three of whom are women. Accordingly, the Company itself has reached the 33% representation level. The Board Insurance 2015 continues to strengthen the pipeline of senior female executives Retail financial 2014 within the business, and ensure that there are no barriers to women services succeeding at the highest levels within the Group. Further details Commercial banking on the Company’s gender diversity statistics as at 31 December 2018 are set out on page 41 and details of the Group’s diversity and inclusion policy can be found on page 40. SALES SKILLS

Alliances

Joint ventures

Retail 2015

Brand & marketing 2014

Business development

68 SECTION 02 GOVERNANCE CORPORATE GOVERNANCE REPORT Equiniti Group plc Annual Report 2018 69 Action Points Discussion & Report Evaluation certain Committee possible, meetings should be held where meeting to ensure or separate to the Board the day before to all of the meetings; time is provided that sufficient should be paid to managing the integration of the attention and the new composition of the new non-executive Directors Committees; should monitor closely the enhancement of the Board the audit and risk functions for EQ US; to meet steps should be taken to allow the Directors further number of talented employees below the senior with a greater management level; new that the proposed Company should ensure the communicated to, and Remuneration Policy is effectively shareholders; supported by, meetings.to help manage impact of lengthening An adverse the meetings is that on occasion Committee meetings have Board the picked up through item which has been an felt compressed, indicated As and Committee Evaluation process. 2018 Board in the an external Accounts, we used Annual Report and 2017 and Committee Evaluation consultant to lead the 2018 Board which we discuss in the following section. process, Interviews to the Chairman who then The initial analysis was provided to discuss and the Company Secretary met with each Director the analysis and gather further information and feedback. The individual performance. Chairman also discussed each Director’s was undertaken by the Senior review The Chairman’s Independent Director. Evaluation and Report and both the questionnaires from All of the responses, for the Board further analysed and reports interviews, were by Lintstock. produced and each of its four Committees were also mapped and charts produced were The skills of the Board familiarity with them. showing the Board’s Discussion and each of its discussed by the Board were The reports and its Committees were Committees. Overall, the Board well managed. The and were found to be operating effectively and between the between individual Directors’ relationships The overall value of rated highly. management were and Board visit to the US was rated very highly and was a great the Board’s opportunity to interact with US management and visit the US all of the Committee operational consistent theme sites. A from time could be allocated to the evaluations was that more meetings. the 2018 Evaluation: Key Recommendations from • • • • • Interviews Analysis Questions composition; board oversight; stakeholder dynamics; board management of meetings; support; board focus of meetings; meeting in theUS; a case study on the Board’s strategic oversight; risk management and internal control; management; and succession planning and human resource priorities for change. time management and composition; and support; committee processes the work of the Committee; and priorities for change. BOARD AND COMMITTEE EVALUATIONS COMMITTEE AND BOARD them? address did we – how Key Recommendations 2017 in the Accounts, it was Annual Report and 2017 As reported discussion time should be allowed for Board noted that more by extending the average length of meetings and simplifying key informationand summarising packs. This was addressed and the to found to be very helpful have been summaries time considering also been spent on has More the Directors. was agreed topics medium-term future issues and a schedule of Analysis and the Company each Director from received The responses by the analysed team at Lintstock and grouped were Secretary by common themes. Questions a questionnaire evaluation, Lintstock circulated For the Board which listed 33 and the Company Secretary to each Director questions the covering following main topics: • • • • • • • • • • • a smaller For the Committee evaluations, Lintstock circulated of ten questions covering the following main questionnaire topics: • • • • performance, asking: Lintstock also evaluated the Chairman’s with each were relationships how constructive the Chairman’s managed; and how well meetings were member of the Board; handled during how well the inputs of the various members were meetings. its Committees the and A formal evaluation of the Board, was undertaken during 2018. Director performance of each of board provider third-party Lintstock, an independent evaluation was engaged to assist with services, the evaluation and its Committees. undertake Lintstock does not of the Board The evaluation followed the any other the services for Company. above and expanded on below: summarised process 2018 Board and Committee Evaluations and Committee 2018 Board • ensure that the proposed new Remuneration Policy is applied, The Group Chief Audit Executive, Group Internal Audit, matching reward to both performance and behaviour; reports regularly to the Chair of the Audit Committee and attends each Audit Committee meeting to present the internal a strategic view of the risk profile over the next four to five • control findings from the internal audits performed. The Audit years should be developed; Committee reviews and discusses the effectiveness of internal • reviewed changes in corporate governance to ensure that the audits on an annual basis with the Group Chief Audit Executive. Board and its Committees are compliant; and This is done by the review of the internal audit plan of work for the year and monitoring progress against the plan and actions the Board should continue its support and involvement in • identified by internal audit. The Group Chief Audit Executive the programme regarding the culture and behaviours of the meets with the Audit Committee at least twice a year, without Group. executive Directors present, and is a regular attendee at the Risk BUSINESS MANAGEMENT Committee meetings. The Chief Executive is responsible for delivering the Company’s REGULATED ACTIVITIES agreed strategy and, with the Chief Financial Officer, prepares A number of the Group’s businesses include regulated activities, the annual budget, which is subject to formal scrutiny and with several of the Company’s subsidiaries being regulated. Two approval by the Board. Progress in delivering this annual budget of these are major businesses within the Group. is reported on at each Board meeting. The first such business is Equiniti Financial Services Limited Monthly business forecasts are prepared by the operating (EFSL), which has a Board consisting of two independent non- divisions to identify variances against the annual budget at the executive Directors, two non-executive Directors and three earliest opportunity, reflecting changes in expectations and executive Directors. The Board is supportive of the EFSL Board, market conditions. Negative variances to budget are subject to to ensure that appropriate governance is followed in respect rigorous challenge at Operating Committee meetings prior to of all FCA regulated activities. The Board maintains oversight progress updates being reported to the Board. of these regulated activities by receiving regular reports, and There are clear policies outlining delegated authority limits for specifically through the ICAAP process and risk appetite and all types of business transactions and associated authorised framework within EFSL, from the Chief Executive and the Chief signatories. The authority limits and processes are verified by Risk Officer. Copies of the EFSL board and committee minutes reviews undertaken by compliance and Group internal audit. are made available to the Board. Additional detail on the work of the compliance and internal The second such business is Equiniti Trust Company in the US. audit functions is set out on page 77. This is governed by its own independent board. The Board and All employees are required to undergo an objective-based the US board work closely together and held a very successful personal appraisal process, with individual objectives derived joint board meeting during the year. The Board maintains from the corporate strategy and the objectives of their line oversight of the US business by receiving regular reports and managers and set within the context of the Company’s corporate presentations from the Chief Executive and Chief Financial goals and annual budget. Officer, who are non-executive Directors of Equiniti Trust Company, and also directly from the US senior management THE BOARD’S REVIEW OF THE SYSTEM OF INTERNAL team. CONTROL The Board has responsibility for the Company’s overall approach STATEMENT OF DIRECTORS’ RESPONSIBILITIES to risk management and internal controls and considers their The Directors are responsible for preparing the Annual Report effectiveness fundamental to the achievement of the Company’s and the financial statements in accordance with applicable law strategic objectives. During 2018, the Board, through its Audit and regulation. and Risk Committees, built upon its 2017 review of the process Company law requires the Directors to prepare financial for identifying, evaluating and managing the principal risks faced statements for each financial year. Under that law the Directors by the Group. have prepared the Group financial statements in accordance with The Group internal audit function advises the executive International Financial Reporting Standards (IFRSs) as adopted management team on the extent to which systems of internal by the European Union and Company financial statements in control are adequate and effective for managing business risk, accordance with International Financial Reporting Standards safeguarding the Company’s resources, and ensuring compliance (IFRSs) as adopted by the European Union. Under company law with Group policies and legal and regulatory requirements, as the Directors must not approve the financial statements unless well as advising on ways in which areas of risk can be addressed. they are satisfied that they give a true and fair view of the state of It provides objective assurance on risk and controls to senior affairs of the Group and Company and of the profit or loss of the management, the Audit Committee and the Board. The Group Group and Company for that period. In preparing the financial internal audit’s work is focused on the Group’s principal risks. statements, the Directors are required to: The mandate and programme of work of the Group internal • select suitable accounting policies and then apply them audit team is considered and approved by the Audit Committee. consistently; Based on the approved internal audit plan, a number of internal audits took place across the Group’s divisions to facilitate • state whether applicable IFRSs as adopted by the European improvement of the Group’s internal controls. Findings were Union have been followed for the Group financial statements reported to the relevant operational management and the and IFRSs as adopted by the European Union have been Audit Committee. The Group internal audit follows up on the followed for the Company financial statements, subject to any implementation of recommendations and reports on progress to material departures disclosed and explained in the financial senior management and to the Audit Committee. statements;

70 SECTION 02 GOVERNANCE CORPORATE GOVERNANCE REPORT Equiniti Group plc Annual Report 2018 71 sustainable activities are the and Group's Company’s the and that the business is a going future, for the foreseeable concern; and to continue a going concern basis in to adopt is appropriate it of the statements. financial the preparation GOING CONCERN GOING activities, business together with likely factors The Company’s position, performance and development, are its future to affect theset out in financial on pages 20 to 29. The Strategic Report liquidity its cash flows, position and position the of Company, objectives, policies facilities, as well as the Company’s borrowing on pages 30 described managing capital, are for and processes objectives, risk management to 37. Financial financial details of risk to credit activities,instruments and hedging and exposures in notes 5 and 6.10 – 6.13 to the described and liquidity risk are 161 and 169 to 174. Accounts on pages the assessed viability of the the Directors During the year, the period, taking into account Company over a three-year financial position and the principal risks, current Group’s the model and business particularly those that could threaten finance. The its receivable to renew the ability of the Group business activities and consider that the Company’s Directors that it is well manage its placed to ensure financial resources viability statement can be The Group business risks successfully. found on page 52. satisfied that: are The Directors • • Philip Yea Chairman 2019 12 March Company financial statements, which have been prepared the Union, with IFRSs as adopted by the European in accordance give a true and fair view of the assets, liabilities, financial of the Company; position and profit in which have been prepared financial statements, Group the Union, with IFRSs as adopted by the European accordance give a true and fair view of the assets, liabilities, financial and of the Group; position and profit of the development Strategic Report includes a fair review the and performance of the business and the position of the together with a description of the and Company, Group principal risks and uncertainties that it faces. and accounting judgements estimates that are make and prudent; and reasonable the on the financial statements basis going concern prepare and that the Group to presume inappropriate unless it is willCompany continue A copy of the in business. financial is available on Equiniti'sstatements website: http://investors. equiniti.com/investors has by section 418 of the Act, each Director As required and confirmed that, so far as they are this report approved audit information (being information is no relevant there aware, its audit needed by the auditor in connection with preparing They have auditor is unaware. of which the Company’s report) also confirmed that they have taken all the steps they ought to audit of any relevant to make themselves aware as a Director auditor is aware information and to establish that the Company’s of that information. STATEMENT OF DISCLOSURE OF INFORMATION TO OF DISCLOSURE OF INFORMATION STATEMENT AUDITORS Directors' Confirmations Directors' consider that the Accounts, Annual Report and The Directors balanced and understandable and taken as a whole, is fair, to assess the information necessary for shareholders provides position and performance, business and Company’s the Group model and strategy. listed in whose names and functions are Each of the Directors, pages 58 to 59 confirm that, to the best of their knowledge: • • • • • the of assets for safeguarding also responsible are The Directors steps and Company and hence for taking reasonable the Group and detection of fraud and other irregularities. for the prevention accounting for keeping adequate responsible are The Directors and explain the to show and Group sufficient that are records accuracy Company's transactions and disclose with reasonable and Company at any time the position financial of the Group that the and the financial statements and enable them to ensure Remuneration Report comply with the Act Companies Directors’ financial statements, Article 4 of the Group 2006 and, as regards the IAS Regulation. for the maintenance and integrity responsible are The Directors website. Legislation in the United Kingdom of the Company’s and dissemination of financial governing the preparation legislation in other jurisdictions. from statements may differ Audit Committee Report

Dear Shareholder

I am pleased to present the Audit Committee (the Committee) • understanding and preparing for the introduction of IFRS 15 Report for the year ended 31 December 2018. and IFRS 16; During the year, Vicky Jarman stood down from the Committee • reviewing the Group’s accounting policies and public when she retired from the Board in May 2018 and we welcomed announcements with the intention to continuously improve the Alison Burns who was appointed to the Board and became a clarity and depth of disclosure where appropriate; and Committee member in April 2018. Following a review of the composition of all Board Committees in November, this resulted • reducing the number of overdue high-risk audit issues. in Dr Tim Miller standing down from the Committee and Cheryl These are important to the business and good progress has been Millington and Mark Brooker being appointed. I look forward made on them. to working with Alison, Cheryl and Mark and would like to thank Vicky and Tim for their invaluable contributions to the Committee PRIORITIES FOR 2019 over the years. In addition to continuing to focus on the areas stated in the paragraph above, we will focus on the implementation of During the year we also had a change in our PwC audit partner IFRS 16 to ensure that these are implemented smoothly. We with Darren Meek being appointed. The Committee undertook will also focus on ensuring that the Committee complies with its a rigorous selection process and are pleased to have Darren obligations under the new 2018 UK Corporate Governance code. as audit partner. He brings a wealth of experience and we look forward to working with him. I would like to thank my fellow Committee members, the finance and internal audit teams within the Group, and the team at PwC CHANGES IN FINANCIAL REPORTING for their work during the year. Throughout the year there have been some significant changes in financial reporting in respect of the implementation of new International Financial Reporting Standards (IFRS) on Revenue Darren Pope from contracts with customers (IFRS 15) and Financial Instruments Chair of the Audit Committee (IFRS 9). The Committee has reviewed the impact of the new standards on the 2018 financial statements and disclosures. 12 March 2019 In addition, the Committee has received training on key areas of revenue recognition that affect the Group and on the expected COMMITTEE MEMBERSHIP AND ATTENDANCE impact of IFRS 16 Leases which is effective from 1 January 2019. The Committee is made up exclusively of independent non- The Committee has reviewed the findings of the Financial executive Directors. The members of the Committee who served Reporting Council’s thematic review for 2018 which was issued in during the year and as at the date of this report are shown in the November 2018 and focused on disclosures around IFRS 15, IFRS table below, together with their attendance at the six committee 9 and on reporting by smaller listed and AIM quoted companies. meetings held during the year or those held during their tenure: A number of improvements in the Group’s financial reporting disclosures were identified which have been implemented in this Annual Report and Accounts including a reconciliation Name Attended of cash from operations to working capital movements Committee Chair: Darren Pope 6/6 and an explanation of the changes made as a result of the implementation of IFRS 15. Alison Burns1 4/4

EFFECTIVENESS OF THE AUDIT COMMITTEE Mark Brooker2 1/1 An external evaluation of the Committee was undertaken during the year by Lintstock. Details of the evaluation and its results can Sally-Ann Hibberd 6/6 be found on page 69. Vicky Jarman3,4 1/2 PRIORITIES FOR 2018 2,4 In addition to its normal business undertaken throughout the Dr Tim Miller 4/5 year, the Committee spent time focusing on the following Cheryl Millington2 key areas: 1/1 • ensuring that the Group Internal Audit function is fully 1 resourced and has a clear mandate and methodology to Alison Burns was appointed to the Committee effective from 1 April 2018. 2 follow; Mark Brooker and Cheryl Millington were appointed to, and Dr Tim Miller stood down from, the Committee effective from 1 November 2018. • focusing on the integration of EQ US into the work of the 3Vicky Jarman stood down from the Committee effective from 3 May 2018. Committee with a particular focus on the building of a US 4Vicky Jarman and Dr Tim Miller were each unable to attend one meeting internal audit team; due to illness.

72 SECTION 02 GOVERNANCE AUDIT COMMITTEE REPORT Equiniti Group plc Annual Report 2018 73 the of the integrity statements of financial monitoring including the half-year annual and results the Company, to and otherannouncements relating announcements formal positions; performance and its financial the accounting policies principles, and practices reviewing the period; adopted throughout issues and on any significant financial to the Board reporting judgements; with the external the and overseeing relationship monitoring auditor; the external auditor's appointment, recommending by for approval to the Board and removal re-appointment shareholders; that at least every ten years, in compliance with all ensuring legislation, the external audit is put out to tender; relevant the annual audit and half-year review and approving reviewing plans; remuneration; the external auditor’s recommending the non-audit services policy and and approving reviewing fees; and objectivity the of audit the effectiveness reviewing an annual basis, including on the quality control process of and considering the expertise and resources procedures the external auditor; the conjunction with the Committee Risk reviewing in internal financial of the Group’s adequacy and effectiveness and the whistleblowing policy; controls, and the ensure manner in which management reviewing extent and effectiveness monitor the of the adequacy nature, of internal controls; including covers all material controls that the review ensuring financial, operational, and compliance; of the Group’s the effectiveness and reviewing monitoring internal audit (GIA) function; at the internal audit programme approving and reviewing least annually and when significant changes occur; timely to ensure and procedures the GIA reports reviewing implementation by management of audit recommendations; the charter of the GIA function and ensuring approving and access to the function has thenecessary resources information to enable it to fulfil its mandate, and is equipped for internal standards professional to perform to appropriate auditors; and and co-ordination the working relationship, monitoring exchange of information between the and internal external restrictions. no inappropriate are audit teams ensuring there Financial Reporting • • • External Auditor • • • • • • • Internal Control • • • Internal Audit • • • • • operations including corporate aspects of the Company’s key environment; internal control policies and the Group’s principles of, and developments in, financial reporting the and standards including the applicable financial reporting practice; statements of recommended of the figures which may influence the presentation matters in the Annual Report and Accounts; and disclosures of internal and external auditors; and the role business. framework for the Company’s the regulatory ROLE OF THE AUDIT COMMITTEE the Committee of Reference, with its Terms In accordance of an independent overview of the effectiveness provides systems and financial reporting the internal financial control include: Its responsibilities processes. The Committee acts independently and reports of management to the Board. directly recommendations and makes the one inclusion of at least requires The Committee structure experience financial and relevant member with significant, recent accountingand competence in or auditing (or both). The during the year. Committee Chair fulfilled this requirement at least one member also requires The Committee structure Risk of the Committeealso be a member of the to Company’s is the Risk Committee Chair and Committee. Sally-Ann Hibberd members of the also Pope and Cheryl Millington are Darren cross-communication Risk Committee. This facilitates efficient that all audit and between the two committees, which ensures effectively. addressed risk issues are to be financially expected literate All committee are members and to have an understanding of the following areas: • • • • • to the The Committee has competence relevant as a whole sectors in which the operates. Company to the Committee and acts as secretary The Company Secretary attends all meetings. The Committee the invites Chief Financial Chief Audit Executive and the Chief Executive, Group Officer, of the external auditor to attend its senior representatives of any its rights to request meetings in full, although it reserves invited Other are senior managers those individuals to withdraw. for the Committee to required as are such reports to present its duties. discharge access to Company documents The Committee has unrestricted and information, as well of the as to employees Company and the external auditor. the Committee met with the senior During the year, and also with the of the external auditor, representatives Chief Audit Executive, without management and/or any Group being present. executive member of the Board Although2018, the it chose not to do so during Committee advice on any matters may take independent professional can be a copy of which of Reference, by its Terms covered http:// website: found in the investor section of the Company’s investors.equiniti.com/investors/shareholder-services/corporate- governance GOVERNANCE COMMITTEE ACTIVITIES DURING 2018 The Committee met on six occasions during the year. At those meetings, the Committee carried out its remit which primarily included the following:

February March June

• reviewed the GIA quarterly report; • reviewed the GIA assurance • reviewed the GIA quarterly report; report on the internal control approved the internal audit plan approved the annual update to • environment, covering internal • for 2019; the internal audit charter; audit, risk and compliance, and • reviewed and approved the new financial operations; • reviewed arrangements for client GIA methodology and quality disbursement accounts; reviewed and approved the assurance programme; • draft viability and going concern • reviewed the external auditor’s • approved the internal audit statements for inclusion within half-year review plan; and resource plan, including the 2017 Annual Report and reviewed the report on the developing the team; Accounts; • effectiveness of the external • reviewed the whistleblowing • approved the significant auditor. policy and report; judgements statement in the 2017 Annual Report and Accounts; • reviewed the independence and objectivity of the external auditor; • reviewed the external auditor’s report for the 2017 financial year; • approved the exemption of audits for certain subsidiary companies • reviewed the 2017 Annual Report under s479 of the Company Act and Accounts, including the 2006 and UK GAAP FRS101; financial statements, disclosures and notes and recommended reviewed the key judgements • their approval to the Board; and for the 2017 Annual Report and Accounts; • reviewed the Committee’s Terms of Reference. • reviewed the progress made in producing the 2017 Annual Report and Accounts; and • reviewed a initial report from the external auditor on the progress of the 2017 audit.

74 SECTION 02 GOVERNANCE AUDIT COMMITTEE REPORT Equiniti Group plc Annual Report 2018 75 November the GIA quarterly report; reviewed the an update from received GIA and management on the compliance of technology infrastructure; the 2019 internal audit approved plan; an update on the received integration of EQ US; the external auditor’s reviewed audit plan including year-end the acceleration of certain areas completed of work so they were in advance of the sheet balance date; year-end the Company’s reviewed plan; audit readiness an accounting policy received update on non-operating costs and and contract renewal; the Company’s reviewed to IFRS 15 and the approach in place to manage controls compliance with this standard. • • • • • • • • September IFRS 15 Revenue Recognition; IFRS 16 Lease Accounting; and PwC update from technical a on corporate governance, the responsibilities, Committee’s and Audit Committee best practice. the GIA quarterly report; reviewed an update on the received integration and of EQ US; training on: received – – – • • • July an update to the GIA reviewed quarterly report; an update on the GIA reviewed quality assurance programme; of a mid-year review undertook the 2018 internal audit plan; the payment practices approved report; the key management reviewed judgements on the interim financial reporting; accounting the Group’s reviewed for policies and disclosures interim financial report; the external auditor’s reviewed and report; interim review the half-year reviewed announcement and results to the its approval recommended Board. • • • • • • • • SIGNIFICANT JUDGEMENTS AND ESTIMATES RELATING TO THE FINANCIAL STATEMENTS In considering the financial results contained in the 2018 Annual Report and Accounts, the Committee reviewed the significant judgements and estimates made by management to determine those results. These are set out in the following table:

AREA OF FOCUS WHY WAS THIS SIGNIFICANT? HOW DID THE COMMITTEE ADDRESS THIS?

Capitalisation The Group has invested in software development Management presented the accounting of software relating to its acquisition of EQ US. Sirius, the UK judgements relating to the capitalisation of the development in-house software share registration platform, is development costs to the Committee. Evidence costs and related being developed for use in the US. The timeline was provided and discussed to show that the assessment of over which this is being developed has been judgements satisfied criteria under accounting carrying value extended in order to focus on widening the standard IAS 38. Management also considered the product offering to US customers first. Judgement scope of the project to review whether any costs has been applied in assessing whether the costs of capitalised to date require impairment. software development meet the criteria of IAS 38 which allows for costs to be capitalised.

Revenue The Group has entered into a number of software Management presented the accounting recognition on contracts. These arrangements can include judgement relating to material transactions that software contracts multiple performance obligations, including included multiple performance obligations and licence delivery. As a result revenue recognition significant licences to the Committee. Evidence in connection with these contracts can involve a was provided and discussed to support how these significant degree of management judgement transactions aligned to the Group’s accounting around the allocation of revenue to performance policy and IFRS 15. obligations and the timing of the revenue in accordance with IFRS 15 and the Group’s stated accounting policy for such items.

Corporate The Group acts as registrar for clients who can Management presented their judgement to the action revenue be involved in major corporate actions. These Committee on how much time had been spent recognition corporate actions can be complex and cross on a significant project and how much time was accounting year-end dates. Revenue is recognised forecast for the project to complete and were in line with the agreed contractual terms, typically satisfied that revenues were recognised in step on a stage of completion method, by referencing with the costs that were incurred. costs incurred to date against the total anticipated project costs. Management judgement is required in assessing the costs to complete the actions as this impacts the percentage of the contract value that has been recognised as revenue.

Employee benefit Employee benefit expenses, relating to the The Committee discussed, and agreed with, the expenses Group’s LTIPs, required judgement in assessing assumptions used by management in calculating how many options are expected to vest based the expenses figure relating to the LTIP. on the potential satisfaction of performance conditions and attrition of eligible employees.

US Corporate The methods clients use to pay for corporate Management presented their proposal on the Action Income actions in the UK and US are different. In the US, classification of interest earned in the US from contracts are often structured so that the fee for holding clients funds as part of a corporate activity. performing the work is received from interest This was compared to the Group’s treatment of earned on holding the client’s funds. This interest interest received in the UK from activities such as income is specific for performing a task and is administering SAYE schemes. It was agreed that not incidental interest. Therefore such income such income should be recognised as fee income. received from corporate actions is recognised as After due discussion, it was agreed that other fee income. US interest income, which was not received as compensation for services performed, would be treated in the same manner as interest earned in the UK from client money held .

76 SECTION 02 GOVERNANCE AUDIT COMMITTEE REPORT Equiniti Group plc Annual Report 2018 77 year the for plan Audit Internal annual the agrees HOW DID THE COMMITTEE ADDRESS THIS? THE COMMITTEE ADDRESS HOW DID The Committee discussed the assumptions used in calculatingby management the fair value of the in the US. net assets acquired discounted cash Management has produced cash generatingflow models for each and unit this to the of goodwill book value compared and other The Committee net assets. discussed, with, the assumptions used by and agreed the discounted cash management in producing flow model and discussed the sensitivity of the changes in these estimates. to reasonable results Committee available to it to resources that GIA has appropriate and ensures the strengthening complete that plan. The Committee approved adding a Deputy Chief Audit Executive role of the team through In addition, and additional Management Information capability. of Internal Audit and IT Auditor have been added to a Director in the US. cover the business acquired During 2018, the internal audit fieldwork for team completed Key audit plan, in line with the agreed 96% of the approved to high risk actions relating All overdue Performance Indicator. to the Committee. The reported internal audit observations are very focused on timely completion of Committee remains audit findings. management action plans to address agreed the and scope of The Committee the determines nature an (which is derived from annual internal auditprogramme processes, audit universe including financial and commercial governance considerations and key corporate risks) and to changes to business time to time, in response from it revises and risk profiles. circumstances to executive reported The findings of the internal audits are agreed actions are management, and any necessary corrective to, presented are and tracked. Summaries of these reports and discussed with, the Committee on a quarterly basis, along against management action plans as with details of progress appropriate. The to the had to be assigned A fair value net as well as determining the fair assets acquired intangibles such as value of acquisition related fair value of contracts. The customer related using a contracts is determined customer related discounteda number cash flow model which has rates data, growth forecast of assumptions around and discount rates. Goodwill is generated on business combinations the price paid for the exceeds business where the fair value of the assets acquired. net needs Goodwill is not amortised and therefore to be tested for impairment at least annually. The book value of goodwill and other net to each cash generating unit, assets related its value of to the present was compared cash flows to determine expected future is any indication of impairment. whether there estimations of the long-term This requires rates and the suitable discount rate. growth WHY WAS THIS SIGNIFICANT? WHY WAS Accounting for the acquisition of EQ US including the determination of goodwill and other acquisition related intangibles Consideration of the carrying value of goodwill and related impairment assessments AREA OF FOCUS AREA OF INTERNAL AUDIT has a dedicated in-house Internal Audit team (GIA). The Group and formalisedDuring 2018, GIA implemented an enhanced designed to evidence ongoing quality assurance programme compliance with international internal audit professional of continuous improvement. a culture and to promote standards, This included an ongoing internal self-assessment which is to the Committee every six months and showed GIA to reported throughout standards be materially with in conformance relevant evident during the the year as 2018, with improvements matured. programme In addition,the during 2018, GIA leveraged specialist expertise for 11 audits internal audit partner, co-source as of KPMG LLP, 16% of the total number of audits completed. which represented In addition, GIA continued to partner with KPMG on further developing the function as a whole, including through incorporating KPMG's input into initiatives to enhance the and internal audit risk assessment and annual planning approach of training to all members of the GIA. provision through to the directly Chief Audit Executive reports The Group on an administrative Committee Chair and in addition reports basis to the Chief Financial Officer. of the design and effectiveness GIA principally review operating within the governance, risk management and controls schedule of independent business by undertaking an agreed audits each year. RISK MANAGEMENT & INTERNAL CONTROLS Tenure The Audit Committee and the Risk Committee both support the The Committee undertook a full tender of the Company’s Board when considering the nature of the Group’s risks, its risk external audit services in 2016, following which the management framework and its risk appetite. Details of these recommendation to approve the reappointment of PwC as are included within the Risk Committee report which can be external auditor was approved by the Board and subsequently by found on pages 80 to 85. Details of the Group’s principal risks shareholders at the 2017 AGM. The Committee is not looking to and uncertainties can be found in the Strategic Report on pages re-tender the external audit services within the near term and will 48 to 51. be recommending PwC be re-appointed the Company’s external auditor for a further year at the 2019 AGM. The Committee has overall oversight of the Group’s systems of financial controls, including their design, implementation and Non-audit Services Policy and Fees effectiveness and details of these controls can be found on While the insight gained as the Group’s auditor may sometimes page 84. make it logical for PwC to undertake work outside of the Having considered reports from Risk, Finance and GIA, the annual audit, the Committee recognises that engaging PwC to Committee is satisfied that the internal controls over financial provide non-audit services to the Group risks affecting PwC’s reporting and risk management systems were appropriately independence. designed and were operating effectively in all material respects. Accordingly, the Group has established a policy which governs the provision of any non-audit services. The policy specifies WHISTLEBLOWING AND ANTI-BRIBERY services which cannot be carried out by PwC as external The Group is committed to the highest standards of quality, auditor (primarily activities which would involve PwC taking up honesty, openness and accountability. management responsibilities) and sets the framework within Accordingly, the Group has whistleblowing, anti-bribery and which non-audit work may be provided. The policy states that corruption risk policies in place. The Committee reviewed the PwC will only be able to perform non-audit work in limited whistleblowing policy during the year. circumstances and where approved by the Committee. Further details on these policies can be found in the Strategic The Group paid £523,000 (2017:£235,000) in audit and audit Report on page 45. related fees, and £264,000 (2017: £278,000) in non-audit related fees, for the financial year ended 31 December 2018. This work EXTERNAL AUDITOR was primarily services performed in relation to the CASS audit of The Committee is responsible for overseeing the Group’s Equiniti Financial Services Limited (EFSL). relationship with its external auditor, PricewaterhouseCoopers LLP (PwC). During the year, the Committee undertook a rigorous The CASS audit of EFSL is required by the Financial Conduct selection process to appoint a new PwC audit partner which Authority (FCA) to provide it with assurance on client assets. resulted in Darren Meek being appointed. Under the guidance issued by the FCA, the auditor undertaking a CASS audit should obtain an understanding of the firm’s The Committee considers the nature, scope and results of PwC’s business model that is sufficient to enable the CASS auditor to work and reviews, develops and implements the policy on the establish expectations about the existence or otherwise of client supply of any non-audit services that are to be provided by PwC. assets, including: The Committee receives and reviews reports from PwC relating to the Company’s Annual Report and Accounts and the external • the nature of the services it provides to clients; audit process including the auditor’s work at the half-year review. • how it is remunerated for those services and other ancillary services; Effectiveness and Independence During the year, an assessment of the quality and effectiveness • the nature of any transactions which it undertakes with or on of the external audit process was undertaken by GIA. The team behalf of, or facilitates or advises on, for clients and how those sought the views of the divisional finance directors, the Group transactions are executed or settled; finance team, the Chief Financial Officer, the Chair of the Audit • the nature of relationships within a group and with other Committee, and members of the Executive Committee who related parties; had interacted with PwC to assess whether the audit had been conducted in a comprehensive, appropriate and effective manner. • the sources and destinations of cash and other asset inflows and outflows in its own accounts and any accounts it holds or The report was then discussed by the Committee at its meeting controls on behalf of clients and other parties; and in June 2018, with the Committee concluding that the audit had been conducted in a challenging and robust manner and that • the role of sub-custodians and third party administrators. the audit plan agreed by the Committee had been followed. Given that PwC is EFSL’s auditor and had the knowledge The Committee also reviewed PwC’s objectivity and required by the FCA to undertake the CASS audit, it was independence and confirmed that sufficient procedures are in logical for it to undertake this work. The nature of the work is place to safeguard those. independent assurance and therefore wholly consistent with PwC’s role as our auditor. The Group has committed to seeking to the ratio of audit to non-audit fees to 70% of the average statutory audit fee. For further information on how the non-audit fees are broken down, and the ratio of audit to non-audit fees, please see note 7.4 on page 178.

78 SECTION 02 GOVERNANCE AUDIT COMMITTEE REPORT Equiniti Group plc Annual Report 2018 79 and challenge review, to time sufficient with Accounts and and compiling the of preparing how the process explained internal teams the business’s was collaborated across report (Investor Relations, Secretariat) Finance, HR and Company skills to and also involved specialist advisors with the requisite the and Accounts; 2018 Annual Report and review structure how the 2018 Annual Report and Accounts was explained designed to be understandable, with consistent presentation In arriving at its the report. of key messages throughout conclusion the Committee also noted that internal reporting and narrative aligned to the KPIs, key financial measures in the Accounts; 2018 Annual Report and themes as presented and that the Accounts was 2018 Annual Report and demonstrated with the narrative aligning put together manner, in a balanced to the strategy and financial performance. business model, and our business leaders reviewing This was achieved through on the content. signing off feedback. provide The briefing note: • • • When taken with the assessment of the significant judgements on pages 76 to 77, the Committee concluded that the 2018 balanced in a fair, presented Annual Report and Accounts are to assess the allowing shareholders and understandable manner, risk and business as a whole. performance, strategy, Group’s Pope Darren Chair of the Audit Committee 2019 12 March integral part of the briefing note as an a detailed Annual how this which set out process, Accounts sign-off Report and the achieved by thehad been teams who prepared internal briefings and the Committee received Furthermore report. appraising them the of theupdates during course of the year, and spent and business performance, Code requirements time discussing the with Annual Report and Accounts senior management. with a draft of the Annual 2018 The Committee was presented Report Committee The 52. page on found be can statement viability to negotiate the extent permissible in law and regulation, to the statutory audit fee and the scope of the and agree statutory audit; initiate and supervise a competitive tender process; to as to the auditor to the Directors recommendations make to appointment pursuant to a competitive tender process; the influence appointment of the audit engagement to partner; and any non-audit services to authorise an auditor to provide to prior to the commencement of those non-audit the Group, services. assessment conducting work in a robust management’s reviewed the model, of the model, the business that risks could threaten assessment This viability of the Company. and the future time for the period review, a reasonable included assessing for that period, identifying plausible financial forecasts reviewing consistent withdownside scenarios risks, as well our principal involving and scenarios as considering their interdependencies multiple risks. also included considerationThese assessments of potential scenarios and their impact on the Group. Brexit the assessment also support the viability, final conclusion on To took into account the mitigations to the available Company to against these the downside scenarios and also adequacy protect Based on this analysis, the environment. of the internal control that it could approve to the Board Committee recommended and make the viability statement. FAIR, BALANCED AND UNDERSTANDABLE BALANCED FAIR, is committed to ensuring that all external financial The Board balanced and understandable a fair, presents reporting performance, position and prospects. assessment of the Group’s C.3.4 of the Code, the Committee has been In line with provision to consider whether it supports the view by the Board requested Annual Report and Accounts, when taken as that the Company’s that it and, further, balanced and understandable a whole, is fair, with the information necessary to assess shareholders provides position and performance, business model and the Company’s strategy. the processes the Committee has considered In forming its view, the Annual Report and produce, for, undertaken to prepare and Accounts and how consideration was given for each of the the balanced and understandable criteria in compilation fair, of thethemes numbers, of the narrative and presentation support this, the Committee received and highlights. To STATEMENT OF COMPLIANCE STATEMENT the audit in 2016, the Company confirms Having tendered that it has complied with the Statutory Audit terms of The Companies Market Investigation (Mandatory Services for Large and Audit Committee Processes Use of Competitive Tender the year. throughout 2014 (the Order) Responsibilities) Order at least mandatory audit re-tendering In addition to requiring provides theevery ten years for FTSE 350 companies, Order its that only the Audit Committee, acting collectively or through is permitted: and for and on behalf of the Board Chair, • • • • • The VIABILITY STATEMENT VIABILITY Risk Committee Report

Dear Shareholder

I am pleased to present the Risk Committee Report for 2018, its history as part of a major bank. The Board and the Committee which provides an update on the Committee’s work during also spent time during the year reviewing the plan to integrate the year. In our 2017 report, we set out five objectives for the the business and implement our Sirius platform in the US. We Committee in 2018. These were to: are satisfied that the decision to implement Sirius following the separation from Wells Fargo has reduced the risk profile of the • continue to oversee the implementation and embedding of the Enterprise-wide Risk Management Framework within the integration process. Group; In addition to the objectives listed, cyber security was an important focus for the Committee during the year. The risk here review the risk skills and experience within the risk and • is constantly evolving, so the Group must stay ahead of the threat compliance functions and the business divisions; while continuing to bring the businesses it acquires within its • continue to monitor progress with implementing changes cyber security defences. We have confidence in our information brought in by MiFID II, GDPR and the EU Data Protection security team and had several presentations during the year to Regulation, as well as other relevant regulatory and legislative update the Committee on progress in this area. changes; EFFECTIVENESS OF THE RISK COMMITTEE • review the time allocated to Committee meetings, to ensure An external evaluation of the Committee was undertaken during sufficient time to cover all matters under review; and the year by Lintstock by means of a questionnaire. Details of the evaluation and its results can be found on page 69. • review the embedding of the EQ US business into the Group and consider any risks that may arise as a result. 2019 PRIORITIES The Committee met all of its objectives during the year. The For 2019, our areas of focus will be: work to embed the risk management tool within the business has • continuing to embed our Enterprise-wide Risk Management gone well and, having reviewed the risk skills and experience in Framework and risk management tool within the Group; the Group, we have put additional resources into our operations, continuing to enhance the corporate governance processes which provide the first line of our three lines of defence risk • within EQ US; and management model. The success of this work is reflected in our external benchmarking, which shows that Equiniti’s risk • to develop a long-term strategic view of the risk profile for the management maturity has steadily improved during the year. The next four to five years. process of embedding our risk management tool will continue More information on the Committee’s activities and the Group’s in 2019. risk structures are provided in this report and in the Principal The Group successfully met the challenges of MiFID II, GDPR Risks and Uncertainties section on pages 48 to 51. and EUDPR during 2018. The major regulatory and legislative changes ahead of us are now posed by Brexit, which continues to evolve. We have a Brexit planning committee which continually reviews the risks. Whilst we do not consider that Brexit has a Sally-Ann Hibberd material direct operational impact on our business, the influence Chair of the Risk Committee that it will potentially have on the UK economy and particularly on the core markets through which the Group transacts for 12 March 2019 customers in 2019 will require close monitoring. During 2018 we have undertaken detailed assessments of the potential Brexit scenarios and their impact on the Group, and have developed operational plans to mitigate areas of potential disruption. The ability of the Group to manage a range of Brexit market stresses has been reviewed during the year, and as part of the 2018 viability statement on pages 52 to 53. The acquisition of EQ US completed in February 2018. Since then, we have begun to implement our risk management framework in the US, with this programme continuing into 2019. EQ US already had a strong risk management culture, reflecting

80 SECTION 02 GOVERNANCE RISK COMMITTEE REPORT Equiniti Group plc Annual Report 2018 81 Framework; Management Risk Enterprise-Wide the overall of the on development Company’s the Board advising risk appetite, and strategy; tolerance future and current and on the current and advising the Board overseeing risk exposures; emerging conjunction with the Audit Committee, keeping under in that overall risk assessment processes the Company’s review decision making; inform the Board’s the in parameters used approving and reviewing regularly and the methodology adopted; these measures for the accurate and timely of monitoring standards setting and certain risk types of critical importance; exposures large ability to identify and manage new the Company’s reviewing risk types; the conjunction with the Audit Committee, reviewing in internal controls; of the Group’s adequacy and effectiveness overseeing of risk limits and on any material breaches reports reviewing action; the adequacy of proposed and the manner in which management ensures reviewing extent and effectiveness monitors the adequacy of the nature, of internal controls; the adequacy and security of the Company’s reviewing arrangements for its employees and contractors to raise in concerns, in confidence, about possible wrongdoing or other matters; financial reporting for managing material procedures the Company’s reviewing including fraud, bribery and compliance requirements, health safety, and corruption, financial crime, data protection, compliance; and and financial services regulatory of the risk management the remit and approving considering and function and ensuring it has adequate resources access to information to enable it to perform its appropriate function effectively. ROLE OF THE RISK COMMITTEE ROLE OF THE RISK the Committee of Reference, with its Terms In accordance of an independent overview of the effectiveness provides Its systems. the internal operational and financial control include: responsibilities Risk Strategy • • Risk Assessment • • • • Internal Control • • documents access to Company The Committee has unrestricted and information, as well as to employees of the Company. advice on The Committee may take independent professional of which a copy of Reference, by its Terms any matters covered website: can be found in the investor section of the Company’s http://investors.equiniti.com/investors/shareholder-services/ corporate-governance • • • • • any feedback 5/5 2/2 1/2 5/5 1/2 3/5 to Attended able are they meeting, a attend to 3,4 unable 4 2,4 1 Directors’ those Name Committee Chair: Sally-Ann Hibberd Alison Burns Vicky Jarman Tim Miller Cheryl Millington Pope Darren Pope Vicky to attend Jarman was unable one meeting due to illness. Darren was unable to attend one meeting illness due to one meeting and (added during thecommitments. Cheryl Millington year) due to prior was unable to attend her first meeting due to prior commitments. 3 May 2018. from the Committee effective Vicky from Jarman stood down from Cheryl Millington was appointed to the Committee effective 1 November 2018. 1 April and from Alison Burns was appointed to the Committee effective of all then stood down on 1 November 2018 as part of the reorganisation committee memberships. advised of any comments they may have on the to the papers Chair and are decisions taken during the meeting. GOVERNANCE The Committee acts independently and reports of management to the Board. directly and makes recommendations the participation requires of Reference Terms The Committee’s is a Pope by the Chair of the Audit Committee and Darren and Cheryl member of the Committee. Sally-Ann Hibberd also members of the Audit Committee. This Millington are between the two cross-communication facilitates efficient that all audit are and risk issues committees, which ensures effectively. addressed to the Committee and acts as secretary The Company Secretary attends all meetings. The Committee invites the Chairman, Chief and Group Chief Risk Officer Executive, Chief Financial Officer, Chief Audit Executive to attend its meetings in full, although it any of those individuals to withdraw. its rights to request reserves as are such reports invited to present Other senior managers are its duties. for the Committee to discharge required met with the Chief Risk the Committee regularly During the year, without management and/or any executive of member Officer, being present. the Board 4 2 3 1 The Committee independent non- is made up exclusively of The members of the Committee who served executive Directors. shown are during the year and as at the date of this report together with their attendance at the five in the table below, committee meetings held during the or those year held during their tenure: COMMITTEE MEMBERSHIP AND ATTENDANCE COMMITTEE MEMBERSHIP For COMMITTEE ACTIVITIES DURING 2018 The Committee met on five occasions during the year. At those meetings, the Committee carried out its remit which primarily included the following:

February April July

• reviewed the quarterly report on • reviewed and approved proposed • reviewed the Group’s self- risk and compliance; amendments to risk categories; assessment attestation report, noting the use of internal reviewed the risk acceptance reviewed the 2018 risk plan • • measures, and external approval process; update; benchmarking, to measure • reviewed the compliance • reviewed and approved the the Group’s risk maturity and monitoring report; EQ US risk model and the capability; implementation of its risk matrix received training on the General reviewed the developments in the • and structure; • Data Protection Regulation risk management approach; (GDPR) and how it affected the received a progress update on • reviewed and approved updated Group; and the implementation of GDPR; • risk acceptances; reviewed risk committee updates received and discussed an in- • • recommended the approval from the Executive Risk and depth presentation on Group- • of the following policies: Compliance Committee (ERCC) wide IT risk; Whistleblowing, Conflicts of and the EFSL Risk Committee. • reviewed the Committee’s Terms Interests, Business Continuity of Reference; and Management and Vulnerable Customer; • reviewed risk committee updates from the ERCC and the EFSL Risk • received training on cyber Committee. security; • received an update on Group- wide IT risks; and • reviewed risk committee updates from the ERCC and the EFSL Risk Committee.

82 SECTION 02 GOVERNANCE RISK COMMITTEE REPORT Equiniti Group plc Annual Report 2018 83

Late November the Chief Risk Officer's reviewed including the risk and report, schematic; framework control risks; the top ten Group assessed the 2019 and approved reviewed Second Line Assurance plan; the management reviewed summaries and ongoing action points for compliance monitoring and business continuity; and risk committee updates reviewed the ERCC and the EFSL Risk from Committee. • • • • • Corruption, & Early November Anti-Bribery as the Risk Templating reviewed update which is used to assist in the establishment of the inherent risks within the business; an update on GDPR; received of a the approval recommended suite of financial crime policies, such Anti-Money Laundering; the approval recommended of a suite of Data Protection policies, Protection, such as Data Documents & Data Retention, CCTV; of the approval recommended the updated Compliance & Risk Charter; of the approval recommended theCorporate Human Rights, Ethical Social Responsibility, and Business and Environmental Modern Slavery statements; on Equiniti's training received risk identification programme, data leakage and how preventing the business; may affect Brexit the annual Money received Laundering Reporting Officer's and report; committee risk updates reviewed the ERCC and the EFSL Risk from Committee. • • • • • • • • • RISK MANAGEMENT AND INTERNAL CONTROLS Our Approach to Risk Management bonuses of the executive Directors and members of the Executive The Group has a complex risk landscape and to manage this, Committee. the Group has its Enterprise-Wide Risk Management (EWRM) Framework in place. This is a stable platform from which the Governance of UK Regulated Entities and Prudential Group can assess, prioritise and mitigate this risk landscape Capital Risk In the UK we have subsidiary companies which are subject to The EWRM Framework is based on the following model: FCA regulatory capital requirements where they must maintain minimum levels of capital in order to manage their affairs.

The Group’s most significant FCA regulated entity is Equiniti Third Line of Defence – Financial Services Limited (EFSL). EFSL is categorised as a P2 Risk Committee prudentially significant firm, which means that its disorderly A committee report is created providing a status of risk management. failure would have a significant impact on the functioning of the market in which it operates. It must ensure that it can meet its regulatory capital requirements and has sufficient liquidity to meet its liabilities as they fall due, including under potentially

Second Line of Defence - highly‑stressed circumstances. It must also comply with a range of Risk & Compliance Oversight and Challenge other regulatory obligations, such as the FCA’s conduct of business Every quarter, the ERCC reviews and rules and the need for periodic regulatory supervisory visits. challenges the top ten risks for each business. To help it meet these requirements, EFSL has its own governance structure. This includes a Board with an independent chair, who also chairs EFSL’s Audit Committee. One of the Group’s First Line of Defence - independent non-executive Directors, Dr Tim Miller, is also a non- Operational Management executive Director of EFSL and chairs the EFSL Risk Committee. The businesses CEOs (our risk leaders) are EFSL has monthly Board meetings and quarterly Risk and Audit responsible for proactive risk identification and Committee meetings, with its Remuneration and Nomination application of systems and controls in line with policy. Committees meeting biannually. EFSL’s Risk Committee reviews and challenges EFSL's risk assessment and log, which flow 1. Our risk leaders are responsible for proactive risk up from its executive management and risk processes. This is identification and application of systems and controls reviewed by the Chief Risk Officer, to ensure risk management is in line with the EWRM Framework. Using our online risk consolidated across all of Equiniti. management tool, risks are inputted and actions taken to A detailed description of EFSL’s risk management approach, mitigate those risks monitored to ensure they are on track. risk governance and risk appetite can be found in its Capital The risk management tool also enables oversight of those Requirement Directive “Pillar 3 disclosures”, which are available “accepted” risks which are outside the Group’s risk appetite on our website at https://equiniti.com/uk/about-us/statutory-and- but where no mitigation is taking place. regulatory-reports/capital-requirements-directive-2018/ 2. Our risk leaders attend quarterly ERCC meetings chaired The second such subsidiary company is Paymaster (1836) Limited by the Chief Financial Officer and attended by the Chief (Paymaster). Paymaster is categorised as a P3 prudentially non- Executive, the Chief Risk Officer and the Group Chief Audit significant firm, which means that its failure, even if disorderly, Executive. At these meetings, the EWRM Framework is would be unlikely to have a significant impact on the market reviewed to ensure that it remains effective, risks for each in which it operates. As a MiFID exempt firm, Paymaster is not business are raised, discussed, and actions to mitigate bound to comply with the Capital Requirements Directive. these risks approved. Where new risks are identified, these Paymaster does, however, assess its capital requirements and are ranked from low to high in probability and impact so is subject to Equiniti’s EWRM and three lines of defence risk that they can be included within the EWRM Framework for management model. ongoing tracking. In July 2018, the FCA granted Paymaster an e-money licence. The 3. While the Board has ultimate responsibility for the system licence enables the company to provide payment services and of risk management and internal control, it has delegated issue digital cash alternatives, which can then be used to make authority for overseeing and directing the EWRM card, internet or phone payments globally. Post year-end, Equiniti Framework’s development to the Risk Committee. The Chief Global Payments Limited also obtained an e-money licence. Risk Officer oversees the risk management system as a whole and, together with the Group Chief Audit Executive, ensures Governance of US Regulated Entities that all parts of the business, with regards to compliance In the US we have a subsidiary company, Equiniti Trust Company monitoring and internal audit reviews, are covered and (ETC), that is regulated by the New York State Department of regularly reviewed. Members of the ERCC attend the Risk Financial Services (DFS). ETC is approved by the DFS as a fully- Committee meetings and the Chief Risk Officer presents his licenced limited purpose trust company bank under the New York report to the Risk Committee for its review. State Banking Laws and has its capital requirements set by the DFS. To help meet its regulatory requirements, ETC has its own Principal Risks and Uncertainties governance structure which include a Board with independent For details of our principal risks and uncertainties, please see non-executive Directors; an Examination Committee; an Audit pages 48 to 51. These principal risks and uncertainties are linked Committee; and a Remuneration and Nominations Committee. to KPIs and the Remuneration Committee reviews those KPIs with ETC has monthly Board and quarterly Examination Committee the Chief Risk Officer when considering the remuneration and meetings which review risk, compliance and audit matters.

84 SECTION 02 GOVERNANCE RISK COMMITTEE REPORT Equiniti Group plc Annual Report 2018 85 Price Risk Price as interest such market prices in changes from risk results Price dealing rates and equity exchange prices, which rates, foreign income or theinfluence our of our financial instruments. value to client as well monies in relation earns income The Group to exposed therefore are deposits. We on its own as interest rate in both intermediary our fee in themovements interest is costs. Intermediary and net finance fee revenue revenue primarily linked to the base rate, while both bank our term and linked to LIBOR. facilities are credit revolving used to manage rate swaps are interest As noted previously, rates. to movements in interest medium-term exposure rate swaps for into interest In 2017 and 2018 Equiniti entered fixed rate to receive £1,025m, agreeing a total of $700m and for variable rates for a range of maturitiesincome in exchange to September 2023. these risks and identify suitable continually review We applicable. instruments where LIQUIDITY RISK AND GOING CONCERN LIQUIDITY RISK AND GOING CONCERN will be unable to meet its Liquidity risk is the risk that the Group to managing financial obligations as they fallapproach due. Our as far as is possible, that we will have liquidity is to ensure, liabilities when liquidity at all times to meet the Group’s sufficient conditions. due, under both and stressed normal cash used our business plan as the have basis for projecting We outcomes on cash availability the resulting flows and measured The years. and bank covenant test points for the next three which gives us a has a very high level of client retention, Group of comfort about the certainty of our revenue. high degree to activities Our principal uncertainties about our income relate as corporate action such to predict, difficult more that are income. These depend on the specific activities of corporate clients, the timing which may be influenced by underlying of market conditions. by the business plan we period covered During the three-year compliant with all covenants. As such, the expect to remain to has adequate resources is satisfied that the Group Board For future. continue in operational existence for the foreseeable the going concern basis has been adopted in the this reason, of these accounts. preparation Sally-Ann Hibberd Chair of the Risk Committee 2019 12 March CAPITAL RISK MANAGEMENT CAPITAL the overall raised to reduce During the funds were IPO in 2015, to level of debt. Our objectives when managing capital are our ability to value while safeguarding maximise shareholder manage continue to proactively continue concern. We as a going share debt repayment, (for example through our capital structure or management of dividend payments), issuance and repurchase while maintaining flexibility to take advantage of opportunities business. One element of our strategy is to our to grow value-enhancing acquisitions. The availability make targeted, of suitable acquisitions, at acceptable prices is, however, unpredictable. committees These ETC of ETC. and the executive Director - generally earned on client and corporate rates are floating rate partially fixed by interest cash balances, which are derivatives with maturities to September 2023; rate swaps, mid-term risk of change in long-term interest the share-plan which income is earned on our SAYE through rate swap by notionalrate interest fixed is protected products, and agreements; loans which incur interest to our bank term relating expenses at a variable rate and includes the £250m and $92m term income earned on unhedged by interest offset facilities are credit does not hedge the revolving cash balances. The Group facility as this is a flexible instrument and the drawn proportion trading by cash we hold for day-to-day of the facility is offset matters. operations risks, to a variety of financial expose it The Group’s in of changes risk, liquidity and the risk effects including credit balances. The EWRM Framework rates on debt and cash interest financial on the Group’s seeks to limit the effects adverse and levels of cash and debt finance performance, by monitoring financial impact. the related financial instruments comprise sterling principal The Group’s and US dollar term loans and a cash and bank deposits, bank swaps, rate and a portfolio of interest facility, credit revolving that arise directly together with and trade creditors trade debtors its operations. from Rate Risk Cash Flow Interest main respects rate risk in three is exposed to interest The Group against this as outlined below: and protected • • • Risk Credit risk is the or risk of financial loss if a customer Credit to meet its contractual counterparty to a financial instrument fails principal financial assets Group’s The obligations to the Group. our deposits, cash and trade debtors. These represent bank are to financial assets. risk in relation to credit maximum exposure the credit monitor, and regularly around, have strict controls We ratings of institutions with which we enter transactions, either risk arises on our own behalf or for clients. Although our credit clients, this risk is not significant from our receivables mainly from and diverse client base and the a large across as it is spread with FTSE 350 companies are majority of our trade receivables does have Trade The Group and public sector organisations. Insurance against some key customers. The amounts Credit in the consolidated statement of financial position presented estimated by net of allowances for doubtful debts, which are are management based on prior experience and an assessment of Losses have only occurred economic environment. the current years and have never been material. in previous infrequently Risk Currency Foreign risk, particularly in currency to foreign is some exposure There operations in the US and India. This risk to the Group’s relation will continue to monitor basis. The Group is hedged on a rolling to, and management of, this risk. both its exposure FINANCIAL RISK MANAGEMENT FINANCIAL independent by a senior The Examination Committee is chaired non operational assessments and risk challenge the company’s Board inform the and escalate and ETC Equiniti across framework consolidated views. Group-level Nomination Committee Report

Dear Shareholder COMMITTEE MEMBERSHIP AND ATTENDANCE The Committee comprises only non-executive Directors and is I am pleased to present the Nomination Committee Report for chaired by the Chairman of the Board, Philip Yea. 2018. In my last report, I set out four main areas of focus for the The members of the Committee who served during the year Committee this year. These were to: and as at the date of this report are shown in the table below, • successfully recruit and induct a new non-executive Director; together with their attendance at the four committee meetings held during the year or those held during their tenure: • grow our talent pool; • continue monitoring and refreshing the succession plans for Name Attended both the Board and senior leadership team; and Committee Chair: Philip Yea 4/4 • monitor progress with implementing the Diversity and Inclusion Policy and the feedback received on this from Alison Burns1 2/2 employees. Sally-Ann Hibberd 4/4 As explained further within this report, we exceeded the first objective by recruiting two new non-executive Directors during Vicky Jarman2 1/2 the year. We also enhanced our talent pool, linking this to our 3 succession planning, and progressed the implementation of our Dr Tim Miller 3/4 Diversity and Inclusion Policy throughout the Group. Darren Pope4 2/4 EFFECTIVENESS OF THE NOMINATION COMMITTEE An external evaluation of the Committee was undertaken during 1Alison Burns was appointed to the Committee effective from 1 April and the year by Lintstock. Details of the evaluation and its results can then stood down on 1 November 2018 as part of the reorganisation of all be found on page 69. committee memberships. 2 For 2019, our focus areas will be: Vicky Jarman stood down from the Committee effective from 3 May 2018. She was unable to attend one meeting due to illness. • to continue developing and growing our talent pool; 3Dr Tim Miller was unable to attend one meeting due to illness. 4 to continue to assess, benchmark and develop our senior Darren Pope was unable to attend two meetings that were additionally • scheduled during the year due to prior commitments. executive team; • to monitor the progress of the Culture Transformation Plan; • to assist management in managing the Gender Pay Gap within the Group; and • to continue to monitor the progress being made in the implementation of the Diversity and Inclusion Policy within the Group. I look forward to reporting on our progress in our next report.

Philip Yea Chair of the Nomination Committee

12 March 2019

86 SECTION 02 GOVERNANCE NOMINATION COMMITTEE REPORT Equiniti Group plc Annual Report 2018 87 the necessary due diligence of interest and conflicts ensuring an appointment is made; before checks have been undertaken that an annual evaluation is undertaken of the ensuring each committee of the Board, of the Board, effectiveness such evaluation be to and the contribution of each Director, years; externally facilitatedat least once every three to established and evolving best practice regard having relevant, including where corporate governance standards, set by voting agencies and voluntary codes; standards for whether satisfactory induction is provided monitoring and Committee to their Board with respect new Directors, responsibilities; is in ongoing training programme an appropriate ensuring place for existing Directors; conjunction with the Remuneration Committee, monitoring in Pay Gap Gender the Group’s withaddressing the progress issues; and conflicts register. of the Group’s an annual review conducting • • Policies and Best Practices Group • • • • • size and composition of the structure, reviewing regularly of skills, balance it has an appropriate to ensure the Board independence, knowledge, experience and diversity; the knowledge, skills and experience of reviewing regularly individual members of the Board; and the considering succession plans for Directors regularly senior executives; of the Board, and nominating for approval identifying and senior executive vacancies, as and candidates to fill Board when they arise; Board and Senior Leadership Team Structure and Composition Structure and Senior Leadership Team Board • • • • ROLE OF THE NOMINATION COMMITTEE ROLE OF THE NOMINATION the Committee of Reference, with its Terms In accordance and transparent develops and maintains a formal, rigorous appointments and reappointments for recommending procedure to the Board. include: Its responsibilities GOVERNANCE The Committee acts independently of management and reports to the Board. directly and makes recommendations state that the Committee Reference of Terms The Committee’s independent non-executive shall be comprised of at least three out the year. and this was complied through Directors to the Committee and Secretary acts as The Company Secretary attends all meetings. The Committee invites the Chief Executive to attend its Officer and the Chief People & Transformation either its rights to request meetings in full, although it reserves the Committee During the year, of those individuals to withdraw. without Officer met with the Chief People & Transformation being management and/or any executive member of the Board present. access to Company documents The Committee has unrestricted It and information, as well as to employees of the Group. from reports can obtain assurances and, when appropriate, of subsidiary which have appointed companies the directors separate nominationcommittees. advice on The Committeetake independent professional may a copy of which of Reference, by its Terms any matters covered website: http:// can be found in the section investor of Equiniti’s investors.equiniti.com/investors/shareholder-services/corporate- governance. COMMITTEE ACTIVITIES DURING 2018 The Committee met four times during the year. At those meetings, the Committee carried out its remit, which primarily included the following:

February April July November

• reviewed the draft • reviewed the leadership • reviewed the ongoing • noted and discussed Nomination Committee team succession and recruitment process for the proposed external report for the 2017 contingency plan within a new non-executive assessment to be Annual Report and the Group; Director; undertaken on the senior Accounts; management team as reviewed the resourcing discussed the shortlist • • part of the talent and considered and requirements for each of candidates (with each • succession planning for recommended the division; Director having met the 2019; appointment of Alison preferred candidates); focused on the US Burns as a new non- • reviewed the results of management structure, gave authority to the • executive Director; • the annual talent and to ensure that it met its Chairman to enter succession planning for noted that Vicky Jarman requirements; into discussions with • 2018 for each ‘enabling would be standing down two proposed final reviewed the senior Function’ and ‘Division’; as a non-executive • candidates; and executives’ performance; Director of the Company; approved the employee subject to satisfactory • reviewed and • screening and security approved the role • results from the due • approved the updated vetting policy, to be specification for a new diligence process, Diversity and Inclusion rolled out Group-wide; non-executive Director; recommended to programme; and the Board their • received updates on reviewed and discussed appointments as non- Diversity and Inclusion; approved the • • the Committee’s executive Directors. appointment of Lygon received an update evaluation report; and • Group (Lygon) as the on the Culture Company’s executive • reviewed the Transformation Plan; search firm, to recruit Committee’s Terms of reviewed the 2018 a new non-executive Reference. • Board and Committee Director. evaluation; and • received an update on Gender Pay Gap.

88 SECTION 02 GOVERNANCE NOMINATION COMMITTEE REPORT Equiniti Group plc Annual Report 2018 89 Directors. Recommendation Due Diligence and Following a satisfactory conclusion to the thorough due diligence and referencing together process, with CRB checks, the Committee the recommended appointment of the candidates preferred for to the Board approval. non-executive as appointed be Interviews Conducted should The Chairman and the Chief Executive conducted interviews with the selected candidates. The candidates preferred then met the of the remainder Board. both that that led to Alison Burns’ appointment, process In the recruitment the Committee was seeking someone who had held an executive business experience and capabilities, related or had role customer to financial services and/or particularly in relation input on strategic, operational focus, and who could provide or customer service matters. Alison Burns was the outstanding her and the Committee recommended candidate in that regard appointment to the Board. that led to the appointment of Mark process In the recruitment and Cheryl Millington, the Committee was seeking Brooker with the IT sector, candidates with knowledge and skills from experience also being financial services and commercial strong while IT background, valuable. Cheryl Millington had a strong and financial services experience commercial Mark Brooker’s to the the Committee recommended also stood out. As a result, Board Shortlist Prepared a provided Lygon long list of candidates to the Chairman for feedback. This was whittled down to a shortlist of candidates to interview. Agreed Specifications The Committee specifications agreed based for the roles, on the criteria for new non-executive Directors. Firm Selected Executive Search the importance a diverse mix of experience, recognising had effectiveness; of diversity in its widest sense in Board and all its make a genuine contribution to the Board could wise counsel and Committees and add value by offering advice, based on their experience and track record; support the Chairman in ensuring that the Board could for and oversight of management direction effective provides and its compliance with its statutory and regulatory and responsibilities; and ensure values and standards help set the Group’s could finance that its obligations its clients, to shareholders, and met. understood and others are regulators providers, The Committee as selected Lygon* the executive search the knows firm. Lygon Company well, having assisted previously with the recruitment Sally- of Philip Yea, and Ann Hibberd Pope. Darren and best practice for the gender diversity on corporate boards to address firms, is a signatory to the voluntary code of conduct for executive search Lygon and Cheryl Alison Burns, Mark Brooker During the year, independent non-executive as Millington joined the Board the and dates of their Details of their backgrounds Directors. Statement on set out in the Chairman’s appointments are page 18. to appoint the new non-executive The Chairman led the process is described in the diagram The appointment process Directors. above. In assessing potential candidates, the Committee looked for people who: • • • • * RECRUITMENT OF NON-EXECUTIVE DIRECTORS OF NON-EXECUTIVE RECRUITMENT Process Appointment but has no other connection with the Company. to the Board in recruitment It has acted for the Company before processes. search related Directors’ Induction and Training Succession Planning The Chairman and Company Secretary designed a tailored One of the Committee’s key roles is to ensure that the Group induction programme for each new Director, prior to their has appropriate plans for progressively refreshing the Board and appointment to the Board. identifying and developing people with the potential to take on Inductions take account of the Director’s existing knowledge of Board and Executive Committee positions in the future. the industry, specific areas of expertise and proposed Committee The Group’s succession plan sets out short- to long-term appointments. The new Director is typically provided with leadership succession and contingency planning, over the information on director duties, the UK Corporate Governance following periods: Code, Board and Committee composition, operational and Short term – emergency cover management structure, key policies and procedures, strategy and financials, matters reserved for the Board, Committee Terms Medium term – within the next 12 months of Reference, forward agendas, previous Board and Committee Long term – within the next two to three years meeting minutes, and the Board and Committee meetings The succession plan is linked to the talent development and schedule. learning programmes described previously. The Committee The induction process also includes detailed briefings with continued to review the succession plan during the year, ensuring the Chairman, Chief Executive, the Company Secretary and that both the Board and the Committee have visibility of a wide Committee Chairs and meetings with the rest of the Board and range of individuals with leadership potential, together with their key individuals from the senior leadership team. This enables new individual development plans. This will remain a focus area for 2019. Directors to fully understand the issues being discussed at Board and Executive Committee levels. Diversity and Inclusion The Board and Committee recognise the benefits that a diverse The process also includes meetings with the Company’s external workforce brings. Specifically, it enables the Group to: auditor, PwC, and one of the Company’s external corporate advisers. This enables new Directors to be given an overview • make objective decisions about how we organise and optimise of current audit affairs, market and sector comparatives and to resources and work, by eliminating structural and cultural be advised of any observations and key challenges facing the barriers and bias, so we can work together effectively; Company. • protect and enhance our reputation by recognising, These meetings take place not only in the Company’s London respecting and harnessing the needs and interests of diverse office, but also at other UK sites such as Lancing and Birmingham. stakeholders; In June and November, the Board held meetings at the Exeter • deliver strong performance and growth by attracting, engaging and Leeds offices to better understand the business operations and retaining diverse talent; within these locations. In October, the Board meeting was held in Minneapolis in the US. • innovate by drawing on the diversity of perspectives, skills, styles and experience of our employees and stakeholders; and Throughout the year, the Chairman discusses training requirements with the Board and the Company Secretary, and • adapt and respond effectively to societal changes. arranges meetings, site visits or information to be provided. As The Group is committed to ensuring that it treats its employees part of their ongoing development, Directors are supplied with fairly and with dignity. This includes being free from any direct appropriate information in a suitable format. All Directors have or indirect discrimination, harassment, bullying or other form of access to the advice and services of the Company Secretary and victimisation. The Whistleblowing Policy and associated policies independent professional advice. encourage employees to speak up about any inappropriate practices or behaviour, including through an independent Talent Management The Committee recognises that the people strategy is whistleblowing contact facility. fundamental to achieving the Group’s strategic goals. The new The Board approved a Diversity and Inclusion (D&I) policy in Chief People & Transformation Officer, who is leading our people February 2017. During 2018, the Group continued to implement agenda, has refreshed the Group’s people strategy, including the the policy, with a range of initiatives across the Group. There has approach to managing learning and talent. been good engagement and awareness of the policy throughout New talent is brought into the Group at apprentice level, as the Group and there has been a number of positive outcomes well as through the recruitment of experienced people. The with the creation of four employee network groups, including a Rising Stars programme is designed to accelerate the progress disability taskforce, by staff who are interested in supporting D&I. of talented employees. This is combined with investment in As D&I becomes more embedded within the Group, it evolves learning, which focused on developing leadership and sales and the business has to adapt. Accordingly, the Committee capabilities in 2018. The Committee is satisfied that the learning approved an updated policy in April 2018. More information can and talent programmes are working well and contributing to the be found in the Strategic Report on page 40. strength and depth of the Group’s talent pool. This will remain an area of focus in 2019. More information on each of these areas can be found on pages 38 to 41 of the Strategic Report.

90 SECTION 02 GOVERNANCE NOMINATION COMMITTEE REPORT Equiniti Group plc Annual Report 2018 91 Our Culture Programme Our Culture launched our culture the Board the end of the year, Towards which will Further be implemented during 2019. programme details on the plan can be found in the Strategic Report on page 38. The Committee will monitor the progress plan's employees. from and the feedback received Board Diversity Board women, are of whom three has nine Directors, The Company meets the therefore The Board 33% of the Board. representing established by the and the Davies Report increased 25% target established of 33% by 2020 by the Hampton-Alexander target Review. ethnicity, disability, age, In addition to considering gender, and experience, thegeography Committee ensure seeks to of skills, balance experience, has an appropriate that the Board knowledge of Equinitiindependence and the and industry as a for the is used team. senior leadership whole. A similar approach Directors’ Remuneration Report

Dear Shareholder

I am pleased to present the Directors’ Remuneration Report for the year ended 31 December 2018 (the Report). The Report includes the following: • this introductory letter; • the proposed new Remuneration Policy that, subject to shareholder approval, will apply to executive and non-executive Directors; • how the Remuneration Policy approved in 2016 was implemented during the year; and • the amounts earned by our executive and non-executive Directors. The proposed new Remuneration Policy, on pages 95 to 103 is subject to a shareholder approval vote at the Annual General Meeting in May 2019. The remainder of the Report is subject to a shareholder advisory vote at the same meeting. It has been a busy year for the Remuneration Committee which has focused on the following key priorities during the year: RENEWAL OF REMUNERATION POLICY (POLICY) In order to prepare for the renewal of our Policy, the Committee undertook a comprehensive review of the approach to remuneration for our executive Directors and senior leadership team. The review included an assessment of our Policy in the context of the Company’s culture and strategic priorities, practice in the UK listed environment, the continued development of external expectations together with the new 2018 UK Corporate Governance Code which is applicable from 1 January 2019 (2018 Code). During the review, the Committee was also mindful of the remuneration policies and practices that will apply to the broader workforce population. The outcome of this review confirmed that our existing remuneration framework continued to be appropriate and aligned with the Company’s culture and strategic priorities, which has supported our performance to date. As a result, we are not proposing to make any substantial changes to the overall opportunity or structure of remuneration, except for some minor amendments to align with best practice developments, including the 2018 Code. The full Policy can be found on pages 95 to 103. In summary, our Policy is aligned with best practice and comprises: • Base salaries, with increases normally aligned with the general increase for the broader workforce population. • Pension, currently set at 15% of salary for executive Directors, which will reduce to 10% of salary for new hires. • Annual bonus of up to 150% of salary based on financial performance as well as individual objectives incorporating risk, customer and strategic measures (including conduct and behaviours). 30% of bonus awards are deferred into shares for three years. • Performance Share Plan (PSP) award (normal award level of 150% of salary). Awards based on a financial measure (currently earnings per share (EPS)) and total shareholder return (TSR), with a holding period of two years following vesting. The approach taken for executive Director pay is cascaded below the Board, as appropriate. This has been an important feature of the Company’s Policy and ensures that the senior leadership team is focused on the delivery of the same objectives and success is shared appropriately. Looking at our wider workforce population, the Committee continues to believe that employee shareholding is central to the Company’s working culture. We are therefore pleased that during the year we have launched a new cycle of our sharesave plan for our UK employees to participate in, and have extended participation to all of our employees based in India, the Netherlands, South Africa and the US. This follows the successful vesting of the previous plan that was introduced in 2015 shortly after the Company’s IPO. In recognition of the provisions of the new 2018 UK Corporate Governance Code and investor sentiment, the Committee is proposing a number of minor amendments to our Policy from 2019, which we believe shareholders will find positive: • Reduction in pension – The level of pension benefits offered to new appointments will be capped at 10% of salary in line with the contribution rates for other employees. This is a reduction from the current pension allowance of 15% of salary.

• Discretion – We have built into our new Policy and our PSP documentation the ability for the Committee to apply discretion to adjust the formulaic outcome for PSP awards but always within plan limits as determined by the approved Policy. This was already part of the annual bonus plan and the Committee has used discretion in previous years to reduce outcomes. Any use of discretion would be clearly explained in the Remuneration Report.

• Post-employment shareholding – We have introduced a post-employment shareholding policy which will apply from 2019 onwards under which executive Directors will normally be required to retain a shareholding in the Company for a period of two years after leaving at the lower of the shareholding requirement in place prior to departure or the actual shareholding on departure. Further details are set out in this report on page 114. The Policy is being proposed for shareholder approval at the AGM to be held on 2 May 2019 and we recommend shareholders to vote in favour of it.

92 SECTION 02 GOVERNANCE DIRECTORS' REMUNERATION REPORT Equiniti Group plc Annual Report 2018 93 2019 12 March Dr Tim Miller Chair of the Remuneration Committee SHAREHOLDER ENGAGEMENT of a high level pleased to receive each year and we were The Committee considers investor feedback and the AGM voting results support for the 2017 Remuneration with Report over 99% of votes cast in favour. soliciting Policy, advisors concerning the proposed and proxy undertook a consultation with our major institutional shareholders We for their helpful input, which plays an important part in I would like to thank those shareholders their feedback on the proposals. pay practices. developing responsible I would like to thank my fellow Committee members, and those who support the Committee, for their commitment and guidance during the year. your continued support at the AGM to be held in May. to receiving I look forward RESPONSE TO 2018 UK CORPORATE GOVERNANCE CODE RESPONSE TO 2018 UK CORPORATE related in implementing the remuneration have made good progress the Committee discussed the 2018 Code. We During the year, of executive Directors, for new hire the provision pension of the 2018 Code, including the changes to our Policy to reduce provisions of a post-employment outcomes and the introduction over remuneration the opportunity for additional discretion to provide exploring ways in which the consistent with the 2018 Code, but we are is already remit The Committee’s requirement. shareholding and will will keep this under review population. We visibility of pay and policies for the wider workforce Committee may have greater fully on this next year. report REMUNERATION FOR 2019 FOR 2019 REMUNERATION to awarded of 2.5% in line with the increase in base salaries for the executive Directors an increase The Committee has approved the Group. employees throughout levels under the for 2019. For the annual bonus or PSP bonus, the weighting of will be no change in the maximum award There set out in the ‘At a Further details are which will apply under the PSP. together with the specific targets has been reviewed, measures Glance’ table on thefollowing page. REMUNERATION FOR 2018 REMUNERATION of 7.3% and a successful growth organic strategic objectives, with record the against Company’s progress 2018 was a year of pleasing its revenues the Company continued to grow entry into the attractive the US market. Despite uncertain operating environment, ahead of expectations. market largest successful, with the EQ US acquisition the giving a capability Company in the world’s The launch into the US is proving set client product narrow relatively EQ US’s as being introduced been gained and new services are has share for our services. Market is being expanded. main-market IPO 70% of UK business and has won around registration its share In the UK, the has continued Company strengthen to its additional The Company has also won mandates from new issues such as Aston Martin and Avast. mandates, including the largest competitors. All divisions clients. have been successful in winning new were years, these targets set for the in 2018. As in previous annual bonus performance against the targets The Committee reviewed at the start of the year. operating and cash flow conversion, together with personal objectives agreed tax, revenue before profit and cash terms, the Chief Executive and Chief Financial profit, performance achieved in revenue, into account the strong Taking for three will be deferred 30% of the award In line with our policy, of their 69% total potential bonus for the year. awarded were Officer years. in the growth average annual 2019, reflecting will vest in March 88.75% of the 2016, award granted in March Of the PSP award to performance relative return the of 10.2% over performance period, together with our total shareholder growth earnings per share the FTSE 250. In line with on IPO of the Company in 2015 vested during the year in October. to Directors granted In addition, the PSP award Based on with the balance shown this year. table last year, was included in the single figure half of this award requirements, reporting vested in full. and TSR performance, this award our earnings per share a further subject to two year holding period. are Both sets of PSP awards evaluationAn external of the Committee during the was undertaken of the by Lintstock. Details year 2018 evaluation and its results improved in the 2017 evaluation, the Committee has benefited from to address 69. As highlightedcan be found on page an area as to the Committee. and in the timing of being delivered Committee papers, both in terms of the quality of the information provided EFFECTIVENESS OF THE REMUNERATION COMMITTEE COMMITTEE REMUNERATION OF THE EFFECTIVENESS CHANGE IN REMUNERATION ADVISER REMUNERATION IN CHANGE in resulted This adviser. the Committeethetender of a also undertook remuneration the Policy, reviewing for of theAs part process I would like to the of Policy. it has assisted in the adviser and review remuneration new Deloittethe appointed as being Company’s can be found years. Further of the details process tender the for its advice to Committeethe over last three thank Bridge Street New on page 105. AT A GLANCE: IMPLEMENTATION OF REMUNERATION POLICY FOR 2019 AND KEY DECISIONS FOR 2018 The table below summarises how key elements of the Remuneration Policy will be implemented in 2019 and key decisions taken by the Committee in relation to base pay and incentives for executive Directors in respect of the year ended 31 December 2018.

Element Chief Executive Chief Financial Officer Guy Wakeley John Stier Base salary from 1 April 2019 £471,500 £328,000

Pension 15% cash in lieu of pension 15% cash in lieu of pension

Annual bonus Maximum: 150% Maximum: 150%

Annual bonus measures • Financial: Reported profit before tax (40%); Total reported revenues (40%); and Operating Cash Flow Conversion (20%). • Non-financial: Performance against the individual non-financial metrics act as a multiplier ranging from 0 to 150%, determined through the Remuneration Committee’s review of performance against personal objectives, with a multiplier of 100% for good performance. • A cap on the overall bonus pool to ensure above target bonus payments do not exceed 40% of incremental profit in excess of budget.

Deferred Annual Bonus Plan 30% of earned bonus is compulsorily deferred into an award over shares, which normally vest after three years.

Performance Share Plan (PSP) Maximum 150% Maximum 150%

PSP measures • Three year vesting period. • EPS (50% of award) – average normalised EPS growth over three financial years. An EPS growth range of 6% to 12% will apply to the 2019 awards. • TSR (50% of award) – relative to the FTSE 250 index (excluding investment trusts). Holding requirement Vested shares from the PSP to be held for two years post vesting (after payment of tax).

Shareholding requirement • 200% of salary within five years of appointment to the Board. • A post-employment shareholding requirement will also apply. Malus and clawback • Recovery and withholding mechanisms apply for a period of three years from the date of payment for the annual bonus. • Recovery and withholding mechanisms apply for a period of at least three years from the date on which an award vests under the PSP. • At the Remuneration Committee’s discretion. Changes for 2019 • Change in bonus weightings, as detailed above. • The threshold EPS target for the 2019 PSP awards will revert to 6% p.a in line with the 2015, 2016 and 2017 awards.

Year-end decisions made:

1 April salary review 2.5% 2.5%

2018 Bonus outcome:

• Value £476,404 £329,494

• % of salary 104% 103%

• % of maximum 69% 69%

Non-executive directors

No change

94 SECTION 02 GOVERNANCE DIRECTORS' REMUNERATION REPORT Equiniti Group plc Annual Report 2018 95 Opportunity no formal is There maximum. However, will normally be increases in line with the general for the broader increase employee population. More may be significant increases time to time, from awarded for example, to recognise, development in an and change role individual’s in position or responsibility. levels are salary Current disclosed in the Annual Report on Remuneration. A car allowance of £15,000 is provided. of The cost of the provision other benefits varies from year to year depending on the cost to Equiniti is no prescribed and there maximum limit. However, the Committee monitors annually the overall cost of the benefits provided, that it remains to ensure appropriate. Operation (including framework used to assess performance) for the role a fair reward Set at a level which provides peers. and which is competitive amongst relevant (but not necessarily increased) Normally reviewed 1 April from annually with any changes taking effect each year. Set taking into consideration individual and Group and accountabilities performance, the responsibilities the experience of each individual,or his of each role, dependencies on key her marketability Equiniti’s and the individual. is also made to salary levels amongst Reference peers and other companies of equivalent relevant size and complexity. The Committee the considers impact of any basic package. on the total remuneration salary increase include a currently The main benefits provided company car allowance, private medical insurance and life assurance. may be subject to minor The benefits provided time to time by the Committee amendment from within this policy. eligible for other are In addition, executive Directors for the wider workforce introduced benefits which are similar terms. Equiniti may also reimburse on broadly expenses (including business related any reasonable if in connection with their role, incurred tax thereon) determined to be taxable benefits. these are Purpose and link to policy a competitive and Provides level of basic appropriate to help attract fixed pay, with Directors and retain the skills and experience to deliver Equiniti’s required strategic goals and business objectives. Reflects an individual’s experience, performance within and responsibilities the Group. a competitive, Provides and cost appropriate benefits package. effective in line withthe level of 15% to 10% of salary, from for newly appointed executive of pension benefits Directors reduction the benefit for the wider workforce; Plan, in line with the Performance Share under the to override formulaic outcomes Company’s of the discretion introduction the Governance Code; 2018 UK Corporate and requirement; shareholding of a post-employment the introduction with market practice and best practice guidance. changes to the drafting of the 2019 Remuneration Policy in accordance minor Element Base Salary Benefits FUTURE POLICY TABLE DIFFERENCES BETWEEN THE 2019 AND 2016 POLICIES DIFFERENCES BETWEEN Annual at the Company’s Remuneration Policy approved the between 2019 Remuneration Policy and the Directors’ The differences General Meeting are: held on 26 April 2016 • • • • DIRECTORS’ REMUNERATION POLICY REMUNERATION DIRECTORS’ asked to now being are 2016. Shareholders on 26 April AGM at our our shareholders by RemunerationOur first Policy was approved a new Remuneration Policy Remuneration (2019 Policy) intended will May 2019 which it is at our AGM on 2 for the apply next approve that the policy continues to be the 2016 Remuneration Policy to ensure During 2018, the financial years. Committee reviewed three aligned with best practice. feedback into and took shareholders’ changes of the proposed in respect shareholders The Committee consulted with largest our overview of the an changes that main below provides The paragraph Remuneration 2019 Policy. finalisingaccount when the revised of theRemuneration 2019 Policy. in respect proposed are 95 to 103. is set out on pages asked to approve are The full 2019 Remuneration Policy that shareholders short and long-term strategic objectives. and how it supports the Company’s The following sets out each element of reward table Operation Element Purpose and link to policy Opportunity (including framework used to assess performance) Pension Provides a competitive, Each executive Director has the right to participate in Pension contributions and/ appropriate and cost one of Equiniti’s defined contribution pension plans or cash allowances in lieu of effective pension package. or elect to be paid some or all of their contributions pension contributions are in cash. capped at 15% of salary for current executive Directors. Pension benefits for new appointments will be capped at 10% of salary in line with the level of benefit for the wider workforce.

Annual Bonus Incentivises the execution of Paid annually, the bonus is subject to achievement The maximum bonus key annual goals, by driving of a combination of stretching corporate financial payable to executive and rewarding performance and personal performance measures. Financial Directors is 150% of base against individual and measures determine the majority of the annual bonus salary. corporate targets. opportunity. The bonus payable at Compulsory deferral of a The Committee has overall discretion to adjust the the minimum level of proportion into Equiniti extent to which bonuses are paid (in line with the performance varies shares provides alignment 2018 UK Corporate Governance Code). from year- to-year and is with shareholders. 30% of bonus earned will be deferred into awards dependent on the degree over shares under the Deferred Annual Bonus Plan of stretch in the targets set. (the DABP), with awards normally vesting after a three-year period. The Committee has the discretion to increase the deferral percentage if required. Awards are subject to malus and clawback provisions as set out in the notes to this table.

Performance Rewards the achievement Annual awards of performance shares which normally The maximum opportunity Share Plan of sustained long-term vest after three years, subject to performance for executive Directors (PSP) financial performance and conditions and continued service. Performance is 150% of base salary. In shareholder returns and is normally tested over a period of at least three exceptional circumstances, is therefore aligned with financial years. Awards are subject to a financial this may be increased to the delivery of value to growth measure and total shareholder return (TSR) 300% of salary. shareholders. Facilitates relative to the constituents of a relevant comparator share ownership to provide index or peer group. further alignment with 25% of the award vests at threshold, with straight- shareholders. line vesting for performance between threshold and Granting of annual awards maximum. aids retention. From 2019 awards onwards, the Committee has the overall discretion to adjust the extent to which awards will vest (in line with the 2018 UK Corporate Governance Code). Following vesting, a further holding period (normally two years) will apply to the awards whereby executive Directors will be restricted from selling the net of tax shares which vest. Awards are subject to malus and clawback provisions, as set out in the notes to this table.

96 SECTION 02 GOVERNANCE DIRECTORS' REMUNERATION REPORT Equiniti Group plc Annual Report 2018 97

made.

being changes Opportunity to subject are The schemes the limits set by HMRC from time to time. Not applicable. significant any to prior How targets are set are How targets the focus each year and varies Committee reviews The the priorities for the to reflect them as appropriate business in the year ahead. range is set for each performance measure A target and challenge to encourage continuous improvement performance and budgeted the delivery of stretch performance against the financial metrics. the choice of performance Committee will review The of the performance and the appropriateness measures prior to each PSP grant. and TSR peer group targets and/or weightings may measures performance Different However, as appropriate. awards be applied for future the Committee will consult in advance with major shareholders

Operation Operation performance) to assess used framework (including time to time operate all-employee Equiniti from may You Save As the plans (such as HMRC approved share Incentive for which Plan) Earn Option Plan and Share eligible to participatethe on are executive Directors as othersame terms employees. must build up and maintain Each executive Director in Equiniti to 200% of base equivalent a shareholding salary within five years of their appointment to the Board. Purpose and link to policy and link Purpose employee share Encourages and therefore ownership alignment with increases shareholders. Encourages executive to build a Directors meaningful shareholding in Equiniti, so as to with further align interests shareholders. metric as these and a cash flow are profitability of revenue, KPIs aligned with Equiniti's strategy. by the agreed performance objectives are Personal Committee at the beginning of the year and will to risk, client and/ relating typically include measures or key strategic goals, as well as individual conduct and behaviours. Performance measures and rationale Performance measures Financial and personal performance measures. key set taking account of Equiniti’s are measures Financial operational objectives but will typically measures include and TSR performance. measure Financial growth Relative TSR has been selected as it reflects index of comparative performance against a broad by received companies. It also aligns the rewards by shareholders. received executives with the returns in normalised EPS has been used as growth Average improvement as it rewards a performance measure underlying financial performance and is a in Equiniti’s overall financial success. of Equiniti’s measure Element Annual bonus Performance Plan Share Element All-employee All-employee plans share Shareholding Shareholding guideline PERFORMANCE MEASURES AND TARGETS PERFORMANCE MEASURES AND set. are The table below sets out the rationale for the performance conditions how the chosen for annual bonus and PSP and targets MALUS AND CLAWBACK misconduct; material misstatement in the case of: gross apply to thebonus and PSP awards annual provisions Malus and clawback the made in assessing satisfaction of any performance conditions applicable to the award; or accounts; an error results of Equiniti’s damage and/ determined by the Committee (which might include fraud, material reputational or other circumstances such adverse years of the date of payment (cash and within three of annual bonus awards apply in respect These provisions or corporate failure). years of vesting. for a period up to three of PSP awards DABP), and in respect USE OF DISCRETION The Committee operates various incentive plans according to their respective rules. To ensure the efficient operation and administration of these plans, the Committee retains discretion in relation to a number of areas. Consistent with market practice, these include (but are not limited to) the following: • selecting the participants; • the timing of grant and/or payment; • the size of grants and/or payments (within the limits set out in the Policy Table); • the form of awards (granting awards as conditional awards, nil-cost options (exercisable up to the tenth anniversary of the grant date), or equivalent instruments); • the extent of vesting based on the assessment of performance and any other factors the Committee considers relevant; • determination of a good leaver and where relevant the extent of vesting in the case of the share-based plans; • treatment in exceptional circumstances such as a change of control, in which the Committee would act in the best interests of Equiniti and its shareholders; • making the appropriate adjustments to awards required in certain circumstances (such as rights issues, corporate restructuring events, variation of capital and special dividends); • cash settling awards in exceptional circumstances where it is not commercially feasible to settle awards in shares; and • the annual review of performance measures, weightings and setting targets for the discretionary incentive plans, from year to year. Any performance conditions may be amended or substituted if one or more events occur which cause the Committee to reasonably consider that the performance conditions would not, without alteration, achieve their original purpose. Any varied performance condition would not be materially less difficult to satisfy in the circumstances. Awards granted under the Company’s share plans may incorporate the right to receive the value of dividends, which would have been paid on the shares that vest in respect of dividend dates occurring during the vesting period and (where awards are subject to a holding period the holding period). This amount will normally be delivered in shares but may be delivered in cash in exceptional circumstances where it is not commercially feasible to deliver in shares. The amount may be calculated assuming the dividends had been reinvested in the Company’s shares.

LEGACY AWARDS The Committee reserves the right to make any remuneration payments and/or payments for loss of office (including exercising any discretions available to it in connection with such payments), notwithstanding that they are not in line with the 2019 Remuneration Policy, where the terms of the payment were agreed: i. before 26 April 2016 (the date on which the Company’s first shareholder-approved Directors’ Remuneration Policy came into effect); ii. before the 2019 Remuneration Policy set out above came into effect, provided that the terms of the payment were consistent with the shareholder-approved Directors’ Remuneration Policy in force at the time they were agreed; or iii. at a time when the relevant individual was not a Director of the Company and, in the opinion of the Committee, the payment was not in consideration for the individual becoming a Director of the Company. For these purposes ‘payments’ includes the Committee satisfying awards of variable remuneration and, in relation to an award over shares, the terms of the payment are ‘agreed’ at the time the award is granted.

REMUNERATION POLICY FOR OTHER EMPLOYEES The policy described in the previous table applies specifically to the executive Directors of Equiniti. In practice, the Committee also has responsibility for setting the policy for, and determining the remuneration of senior management roles at Equiniti, being those roles on the Executive Committee and the Operating Committee, including the Company Secretary. In all cases, the Committee is mindful of the remuneration policy which applies for the broader workforce and seeks to ensure that the underlying principles which form the basis for decisions on executive Director and senior management pay are consistent with those on which pay decisions for the rest of the workforce are taken. For example, the Committee takes into account the general salary increase for the broader employee population when conducting the salary review for the executive Directors. The range of information reviewed by the Committee on broader workforce remuneration and related policies will be extended during 2019 in line with the 2018 UK Corporate Governance Code. The Committee believes that the structure of senior management reward at Equiniti should be linked to Group strategy and performance. A greater proportion of the package for senior leadership roles is therefore based on performance-based pay through the quantum and participation levels in incentive schemes. This ensures the remuneration of the executive Directors and the senior leadership team is aligned with the performance of Equiniti and therefore the interests of shareholders.

98 SECTION 02 GOVERNANCE DIRECTORS' REMUNERATION REPORT Equiniti Group plc Annual Report 2018 99 Difference in remuneration policy for other employees in remuneration Difference as far as possible, are, applied the to executive Directors considerations same principles and that are The applied to all employees. for market-aligned benefits for all employees. Equiniti has provisions defined benefit and defined contribution operates a number of maximum company schemes. The Group The contribution under the defined contribution schemes is 10% of salary. Leadership under The eligible for a bonus award 500 members of the are management team Approximately Incentive Scheme. over into an award of the Executive Committee normally have 30% of their bonus deferred earned Members the on same terms as the executive Directors. shares of the to members Executive Committee and key individuals in the Senior is typically PSP awarded The Management Team. normally granted at a discount to the market value. An all-employee Options plan. are gross each year from up to £1,800 of partnership shares all-employee plan. Employees can typically purchase An matching shares, two free they normally receive participants purchase shares partnership For every three salary. on the first £180 that they invest annually. Element Base salary Benefits Pension Annual bonus Annual Deferred Bonus Plan (DABP) Performance (PSP) Plan Share Sharesave Incentive Share Plan CONSIDERATIONS OF SHAREHOLDER VIEWS CONSIDERATIONS considers investor feedback and the The Committee regularly Equiniti values and is committed to dialogue with its shareholders. As part of the development of the 2019 Remuneration Policy each year. AGM resolutions to relevant in relation received voting results changes and the views of finalising the proposed before shareholders largest the Committee engaged with a number of Equiniti’s informed the final 2019 Remuneration Policy. those shareholders CONSIDERATIONS OF CONDITIONS ELSEWHERE IN THE GROUP OF CONDITIONS CONSIDERATIONS Equiniti, consistency and common practice across framework, which is intended to ensure remuneration broader In line with Equiniti’s to pay and the Committee also pays due regard of the executive Directors, and in determining the overall levels of remuneration in the organisation. conditions elsewhere Following the changes to the on the 2019 Remuneration Policy. workforce with the broader The Committee did not consult directly will be putting to facilitate in place arrangements engagement with the 2019 theUK Corporate Governance Code, during Board on a range of matters including remuneration. workforce broader and shareholders by the Board incentive operated by Equiniti plans for approval the design of all share The Committee reviews will if so, the be made and, overall amount For such plans, the Committee determines each year whether awards appropriate. where to be used. and other senior management, and the performance targets to executive Directors the individual awards of such awards, which vest following the end of the relevant based awards of share for determining the proportion The Committee is responsible of the Equiniti Financial Services Limited Remuneration the recommendations performance period. The Committee also reviews bonus and salary recommendations. certain Code Staff appropriate, where Committee and approves, pay in all levels of including of our geographies a long-term responsible to a commitment we have workforce, For the broader the use of through is encouraged ownership the in UK. All-employee share paying the to commitment Wage Living Real launched with Plan participation to all extended of our key a new cycle of the During 2018, plans. Sharesave all-employee share plans participating these in all-employee share currently are employees 66% of the Group's international locations. Circa to achieve alignment of thebelow explains how The table 2019 Remuneration Policy below executive has been cascaded Directors, the Company. policy across APPROACH TO RECRUITMENT REMUNERATION In the event of hiring a new executive Director, the ongoing remuneration package would be set in accordance with the terms of the approved Directors’ Remuneration Policy at the time of appointment and the maximum limits set out therein. Salaries may be set below market level initially with a view to increasing them to the market rate subject to individual performance and developing into the role by making phased above-inflation increases. Benefits will be provided in line with those offered to other executive Directors, although these may be varied for an overseas appointment taking account of local market practice. Annual bonus payments will not exceed 150% of base salary and PSP payments will not normally exceed 150% of base salary (not including any arrangements to replace forfeited entitlements). In all cases, PSP awards will be within the overall 300% of base salary exceptional limit in the plan. Where necessary, specific annual bonus and PSP targets and different vesting and/or holding periods may be used for an individual for the first year of appointment, if it is appropriate to do so to reflect the individual’s responsibilities and the point in the year in which they joined the Board. A PSP award can be made shortly after an appointment (assuming Equiniti is not in a close period). The Committee retains flexibility to offer additional cash and/or share based awards on appointment, to take account of remuneration or benefit arrangements forfeited by the individual on leaving a previous employer. If shares are used, such awards may be made under the terms of the PSP or as permitted under the Listing Rules. Such payments would take into account the nature of awards forfeited and would reflect (as far as possible) performance conditions, the expected value foregone and the time over which they would have vested or been paid. Awards may be made in cash if Equiniti is in a close period at the time an executive joins. The Committee may agree that Equiniti will meet certain relocation, legal, tax equalisation and any other incidental expenses as appropriate so as to enable the recruitment of the best people including those who need to relocate. Where a new executive Director is an internal promotion, any variable pay element awarded in respect of the prior role may be allowed to pay out according to its terms, and adjusted as relevant to take into account the appointment. In addition, any other ongoing remuneration obligations existing prior to appointment may continue.

Element of Maximum percentage of salary remuneration Maximum variable pay comprising: 300% (450% in exceptional circumstances)

• Annual bonus 150% • Performance Share Plan (PSP) 150% (300% in exceptional circumstances)

Pension 10% pension contributions / cash in lieu of pension

Note: Maximum percentage of salary for annual bonus and PSP excludes compensation for awards forfeited.

SERVICE CONTRACTS AND LOSS OF OFFICE PAYMENTS The policy for service contracts for executive Directors is shown in the table below. Copies of the executive Directors’ service contracts are available for inspection at Equiniti’s registered office during normal business hours and will be available for inspection at the AGM.

Provision Detailed terms

Notice period • 12 months' notice from the Company • 12 months' notice from the Director

100 SECTION 02 GOVERNANCE DIRECTORS' REMUNERATION REPORT Equiniti Group plc Annual Report 2018 101 without and notice without summarily terminated be may contract service Director’s executive Base salary Benefits Pension allowance in lieu by a payment may be terminated employment of notice executive Director’s An comprising: • • • in lieu payment of notice be subject to mitigation in instalments and may be paid should the Any notice period. find alternative employment during any unexpired executive Director An any further payment or compensation, except for sums accrued up to the date of termination, of the or for any other misconduct breach material to be guilty deemed of gross if they are obligations under their employment contract. compensation in other is terminated circumstances, the executive employment of an Director If bonus (subject to the notice period, pro-rata due for any unexpired may include base salary of the financial year of the proportion performance conditions achieved) in respect having been the up to the date of termination any amount assessed by the and Committee as representing during the value of otherwhich would have been received contractual benefits and pension period. some benefits instead of paying a cash sum continue may choose to providing Equiniti their cost. representing claims in connection with a statutory entitlementssums to settle or or compromise Any legal advice and for of the Committee, reimbursement termination (including, at the discretion necessary. of outplacement services) would be paid as provision a departing bonus paid to executive would normally be paid in cash, at the normal payment Any the actual period worked. to reflect pro-rata date, and reduced plans will share Equiniti’s under entitlements to an executive granted Director share-based Any plan rules. with the relevant in accordance be treated or employee lapse when the individual director ceases to be a any outstanding awards Usually, disability, such as death, injury, circumstances, in certain prescribed However, of the Group. with the consent of the Committee, the sale of the entity that employs him or her by retirement of the Committee, ‘good leaver’ status may at the discretion Equiniti or any other circumstances be applied. will normally outstanding unvested awards applies under the PSP, good leaver treatment Where vest at the original vesting date to the extent that the performance condition has been satisfied, the time period of which has basis to reflect a pro-rata on and would normally be reduced elapsed between the date and the grant date on which the participant ceases to be employed of the vesting period. by Equiniti as a proportion on performance accordingly) (and measure to vest awards the discretion Committee retains The cessation and/or to dis-apply time pro-rating. subject to a holding period, the holding leaves holding vested awards an executive Director If unless the Committee to bring decides period will normally continue to these to apply awards, the holding period to a close. will vest at theoriginal vesting date unless the Committee unvested awards the DABP, Under to vest in full on or shortly following the date of and allows the award its discretion exercises cessation. as a ‘good leaver’, the should be treated determining whether a departing executive Director In for their Committee will take into account the performance of the individual and the reasons departure. if the Committee considers it winding up, or, on a takeover, PSP awards Outstanding share the Company’s any other corporate event which will materially affect appropriate, holding period early to the extent that the any relevant from price, will vest and be released satisfied, has been performance condition, as determined by the Committee in its discretion, the period of time which has elapsed basis to reflect on a pro-rata and could be reduced of the corporate event, as a proportion between the grant date and the date of the relevant vesting period. to do if it felt it was appropriate to waive timepro-rating, discretion Committee would retain The so. will vest in full at the time of the corporate event. DABP awards by equivalent new will be replaced awards the event of an internal corporate reorganisation, In should unless the Committee decides that awards in a new holding company, over shares awards vest on a basis which would apply in the case of a takeover. as a ‘good leaver’, the should be treated determining whether a departing executive Director In for their Committee will take into account the performance of the individual and the reasons departure. Detailed terms Detailed • • • • • • • • • • • • • • • • • • • Provision payment Termination Treatment of annual bonus on termination of annual bonus on termination Treatment under plan rules Treatment of unvested share-based of unvested share-based Treatment entitlements Change of control Exercise of discretion Exercise POST-EMPLOYMENT SHARE INTERESTS The Committee has a policy to promote interests in share awards following cessation of employment to enable former executive Directors to remain aligned with the interest of shareholders for an extended period after leaving the Company. Further details of this policy are set out in the Annual Report on Remuneration on page 114.

THE CHAIRMAN AND NON-EXECUTIVE DIRECTORS’ FEES The table below sets out the 2019 Remuneration Policy for the Chairman and non-executive Directors. For a new Chairman or non- executive Director, the fee arrangement would be set in accordance with the approved remuneration policy in force at that time.

Operation Element Purpose and link to policy Opportunity (including framework used to assess performance) Non-executive To attract and retain a The Chairman is paid a single consolidated fee. The fees are subject to Director fees high-calibre Chairman and The non-executive Directors are paid a basic fee with maximum aggregate limits, non-executive Directors by additional fees paid to reflect extra responsibilities as set out in Equiniti’s offering market competitive and/or time commitments, for example the Chairs Articles of Association fee levels. of the main Board committees and the Senior (£2m). Independent Director. The Committee is guided If there is a temporary yet material increase in the by the general increase time commitments for non-executive Directors, the for the broader employee Board may pay extra fees on a pro-rata basis to population, but on recognise the additional workload. occasions may need to recognise, for example, The level of fees is reviewed periodically by the changes in responsibility, Committee and Chief Executive for the Chairman and and/or time commitments. by the Chairman and executive Directors for the non- executive Directors and set taking into consideration Current fee levels are market levels in comparably sized FTSE companies, disclosed in the Annual the time commitment and responsibilities of the role Report on Remuneration. and to reflect the experience and expertise required. The Chairman and the non-executive Directors are not eligible to participate in incentive arrangements or to receive benefits, save that they are entitled to reimbursement of reasonable business expenses and tax thereon. They may also receive limited travel or accommodation related benefits in connection with their role as a Director (including tax thereon if these are determined to be taxable benefits).

CHAIRMAN AND NON-EXECUTIVE DIRECTOR TERMS OF APPOINTMENT The Chairman and non-executive Directors have letters of appointment with Equiniti for an initial period of three years subject to annual re-election at the Company’s AGM. The appointment of each non-executive Director may be terminated at any time with immediate effect if he or she is removed as a Director by resolution at a general meeting or pursuant to the Articles. At other times, three months' notice is required from either party. The non-executive Directors are not entitled to receive any compensation on termination of their appointment. Directors’ letters of appointment are available for inspection at Equiniti’s registered office during normal business hours and will be available for inspection at the AGM.

102 SECTION 02 GOVERNANCE DIRECTORS' REMUNERATION REPORT Equiniti Group plc Annual Report 2018 103 growth 24.3% 30.3% 45.4% Maximum plus price 50% share £1,625,200 35.7% 35.7% 28.7% Maximum plus 50% price growth share 2019 salary Estimated value of ongoing benefits 15% of salary 100% payout of maximum opportunity (150% of base salary) 100% of maximum award (150% of salary) 50% Maximum £1,379,200 51.7% 32.2% 16.1% £764,200 On-target 100% only £395,200 Fixed pay CHIEF FINANCIAL OFFICER 0 Maximum 2019 salary Estimated value of going benefits 15% of salary 100% payout of maximum opportunity (150% of base salary) 100% of maximum award (150% of salary) 0% £500,000 £2,500,000 £2,000,000 £1,000,000 £1,500,000 growth 24.1% 30.4% 45.6% On-target 2019 salary Estimated value of ongoing benefits 15% of salary 75% of salary (budget performance and 100% multiplier) 25% of maximum award (37.5% of salary) 0% Maximum plus price 50% share £2,328,350 28.4% 35.8% 35.8% Maximum £1,974,725

Multi period variable 16.2% 32.4% 51.4% On-target £1,090,663 CHIEF EXECUTIVE 2019 salary Estimated value of ongoing benefits 15% of salary – – – Fixed pay only 100% only Annual variable £560,225 Fixed pay 0 £500,000 only Fixed pay performance On-target performance Maximum price growth withMaximum performance 50% share £2,500,000

£1,000,000 £2,000,000 £1,500,000 Salary Benefits Pension Annual bonus PSP price Share growth applied to PSP award Fixed pay KEY schemes on the same basis as other that employees. The value may be can participate in all-employee share The executive Directors participating in from the value that may be received limits. For simplicity, under these schemes is subject to tax approved received thecharts. below thesebeen excluded from schemes has ILLUSTRATIVE OUTCOMES FOR EXECUTIVE DIRECTORS UNDER THE REMUNERATION POLICY THE REMUNERATION UNDER DIRECTORS EXECUTIVE FOR OUTCOMES ILLUSTRATIVE The performance. is linked to Equiniti’s total remuneration of proportion a significant Remuneration Policy, theUnder Directors’ performance scenarios: four different package varies under total pay followingcharts illustrate how the executive Directors’ 1. 2. 3. 4. all excluded under scenarios. is applied. Dividends are price growth and 3 no share Under scenarios 1, 2 below: noted All assumptions under these made are scenarios ANNUAL REPORT ON REMUNERATION This part of the Directors’ Remuneration Report sets out on pages 104 to 117 a summary of how the 2016 Directors’ Remuneration Policy was implemented during the financial year ended 31 December 2018. This part is subject to an advisory vote at the AGM to be held on 2 May 2019. Details of how we intend to operate our proposed 2019 Remuneration Policy and the remuneration earned by executive and non-executive Directors, the outcome of the incentive schemes, together with the link to the Company’s performance, are provided in this part. Where stated, disclosures regarding the Directors’ remuneration have been audited by the Company’s independent external auditor, PwC.

COMMITTEE MEMBERSHIP AND ATTENDANCE The Committee comprises only independent non-executive Directors and is chaired by Dr Tim Miller. The members of the Committee who served during the year and as at the date of this report are shown in the table below, together with their attendance at the ten committee meetings held during the year or those held during their tenure:

Name Attended Committee Chair: Dr Tim Miller 10/10

Mark Brooker1 2/2

Alison Burns1 8/8

Sally-Ann Hibberd 10/10

Vicky Jarman2 1/3

1Mark Brooker and Alison Burns were appointed to the Committee effective from 1 November and 1 April respectively. 2Vicky Jarman stood down from the Committee effective from 3 May 2018. She was unable to attend one meeting due to illness and another due to a prior commitment.

GOVERNANCE The Committee acts independently of management and reports and makes recommendations directly to the Board. The Committee’s Terms of Reference state that the Committee shall be comprised of at least three independent non-executive Directors, one of whom should be Chairman of the Committee, and this was complied with in full during the year. The Company Secretary, or their nominee, acts as Secretary to the Committee and attends all meetings. The Committee invites the Chief Executive, the Chief People & Transformation Officer and the external remuneration adviser to attend its meetings in full, although it reserves its rights to request any of those individuals to withdraw. During the year, the Committee met with the Chief People & Transformation Officer without management and/or any executive member of the Board being present. The Committee has unrestricted access to Company documents and information, as well as to employees of the Group. It can obtain assurances and, when appropriate, reports from the directors of subsidiary companies which have appointed separate remuneration committees. The Committee may take independent professional advice on any matters covered by its Terms of Reference, a copy of which can be found in the investor section of Equiniti’s website: http://investors.equiniti.com/investors/shareholder-services/corporate-governance.

104 SECTION 02 GOVERNANCE DIRECTORS' REMUNERATION REPORT Equiniti Group plc Annual Report 2018 105 be can Conduct of Code The advice. impartial and objective provide signatories its that requires which Conduct of Code risk and audit) to set, approve and internal teams (including senior management human resources, with the Board, working of the and members Executive senior executives (executive Directors policy for the Group’s and implement a remuneration Committee); workforce; to the broader in respect to remuneration approach ensuring that it adopts a coherent executive chairman and Directors; of the Board determining the terms of service and remuneration contracts of employment, workforce; determining the pensions policy for the broader the schemes operated by Equiniti pay and approving all performance related for, the targets design of, and determining approving schemes; total annual payments made under such For any such plans, the Committee and shareholders. by the Board incentive plans for approval the design of all share reviewing to the individual awards will and, if so, the be made overall amount of such awards, determines each year whether awards be used; to and other and the senior management, performance targets executive Directors applied due account and take and rigorously stretching transparent, are performance objectives for executive Directors ensuring of risk; decisions made by the Remuneration Committee of Equiniti (EFSL); Financial Services Limited and approving reviewing policies for the of all remuneration and effectiveness the years, overall appropriateness at least every three reviewing, periodically Company and its subsidiaries; and to applicable good practices such as the Investment Association and Pensions and Lifetime Savings Association regard having to equal pay and statutory duties in relation guidelines on executive contracts and severance and taking into account the Group’s non-discrimination. new Remuneration Policy; the proposed reviewing annual bonus plan; plan and deferred advising on the performance share the Committee on market practice and and governance issues; informing to general and technical queries. responding Deloitte was appointed following a competitive tender During the year, The Committee to external advice as required. has access signatories to the Remuneration are part of Aon plc. Both Deloitte New Bridge Street and New Bridge Street, replacing process, Consultants’ EXTERNAL REMUNERATION ADVISER EXTERNAL REMUNERATION Remuneration Policy • • • • • • • • Remuneration Policy Monitoring • • ROLE OF THE REMUNERATION COMMITTEE REMUNERATION OF THE ROLE an overall remuneration the to Board recommends and the Committee agrees considers, of Reference, with its Terms In accordance and interests, business strategy long-term that aligned is to the Company’s policy for executive governance framework and Directors business objective and values. and of the Chairman, the Board of the and parameters principles policy the and determines remuneration It sets the over-arching strategy of the as Company the remuneration to the Board senior executives. The Committee recommends also determines and the information pay practices on wider policies and across receives The Committee currently workforce. it applies the to broader understanding in this area. the and deepen Committee’s but work will 2019 to broaden be undertaken during Group, include: Its responsibilities . found at www.remunerationconsultantsgroup.com the following key areas: advice and support around Deloitte has provided • • • • periods of appointment on a time to worked basis. The total fees paid paid during their respective advisers were Both remuneration £91,700. £19,345 and to Deloitte were were New Bridge Street committee of adviser to the remuneration was also the appointed remuneration During its period of appointment, New Bridge Street during their any other services to the Group did not provide New Bridge Street company within the Group. EFSL, an FCA regulated during the year. advice to the Group scheme related other share period of appointment. Deloitte has provided COMMITTEE ACTIVITIES DURING 2018 The Committee met on ten occasions during the year. At those meetings, some of which were telephone meetings, the Committee carried out its remit which primarily included the following:

• reviewed and approved the 2017 performance review report, including feedback from the Chief Risk Officer, Group Chief Audit Executive and Group HR Director; March • reviewed and approved the leadership incentive scheme out-turn; • reviewed and approved the 2018 remuneration recommendations, including objectives; • reviewed and approved the 2018 Performance Share Plan grant; • approved the 2018 Deferred Annual Bonus Plan awards; • reviewed and approved the Directors’ Remuneration report for inclusion within the 2017 Annual Report and Accounts; • reviewed the Remuneration Policy; • reviewed and approved the Committee’s Terms of Reference; and • received an update report from EFSL's remuneration committee.

• reviewed the 2018 leadership incentive scheme structure and weightings; and • reviewed the tender process for the remuneration adviser role.

April

• following the remuneration adviser tender, determined and recommended, to the Board, the appointment of Deloitte as the Committee’s remuneration adviser; and • reviewed the current Remuneration Policy and discussed its renewal. July

• reviewed the proposed Remuneration Policy, taking into account the new 2018 UK Corporate Governance Code and its reporting requirements.

September

• reviewed and approved a grant of options under the Save-As-You-Earn scheme; and • approved the vesting of the 2015 grant of options under the Performance Share Plan.

October

• reviewed and discussed a draft of the proposed 2019 Remuneration Policy; • reviewed and approved amendments to the incentive scheme documents; and November • approved and ratified certain senior executives remuneration.

• reviewed performance updates against objectives for the share plans and leadership incentive schemes during the year;

• reviewed 2019 pay proposals for the workforce and senior leaders; and December • received an update on the 2019 Remuneration Policy consultation.

106 SECTION 02 GOVERNANCE DIRECTORS' REMUNERATION REPORT Equiniti Group plc Annual Report 2018 107

– – – – – 9 9 18 18 41 22 72 65 73 57 56 65 200 100 115 115 159 Total Total 2,379 1,773 3,530 2,679 5 – – – – – – – – – – – – – – – – – – – – 4 1 4 1 1 1 SAYE 4 – – – – – – – – – – – – – – – – – – – PSP 1,660 1,033 2,503 1,557 Life Assurance

3 – – – – – – – – – – – – – – – – – – – – 329 367 476 545 Variable Pay £'000s Variable Bonus Annual 2 2 2 – – – – – – – – – – – – – – – – – – – – 48 46 69 69 Pension Contributions Private Medical Insurance 1 – – – – – – – – – – – – – – – – – – 1 – 18 18 18 47 Benefits 15 15 Fixed Pay £'000s Fixed – – – – – 9 9 41 22 72 65 73 57 56 65 320 308 460 460 100 200 115 115 158 Fees Car Allowance Salary or £’000 2017 2018 2018 2017 2018 2017 2018 2018 2018 2018 2018 2018 2018 2018 2017 2017 2017 2017 2018 2017 2017 2017 2017 2017 6 11 6 8 9 10 7 12 in May 2018 Pope was appointed Auditin November 2017 and Senior Independant Director Chair Darren 29 September 2017. from effective the Board Kevin Beeston stood down from 30 September 2017. from effective the Board John Parker stood down from Mark Brooker Non-executive Directors Philip Yea John Stier Executive Directors Guy Wakeley John Stier Guy Wakeley Guy Wakeley Cheryl Millington Alison Burns Sally-Ann Hibberd Dr Tim Miller Pope Darren Kevin Beeston John Parker Vicky Jarman Vicky entitled below: to taxable benefits as described are Benefits - executive Directors 3 May 2018. from effective the Board Vicky Jarman stood down from of EFSL. The fees for Dr Tim on the for serving board Miller include the £50,000 that he receives savings on 1 January 2019. The value shown is that at the end of the three-year and the Scheme first invitation matured participate in the Sharesave Both executive Directors 1 November 2018. from effective and Cheryl Millington both joined the Board Mark Brooker 1 April 2018. from effective Alison Burns joined the Board member of, an Equiniti pension plan. participates in, or is a deferred in lieu of pension contributions. No executive Director A cash allowance of 15% of base salary is received Further details of the DABP can be found on page 111. into shares. 30% of the bonus shown above will be deferred to 31 December 2017. For details of the performance The performance of this element was measured The PSP value for 2017 includes the EPS element of 2015 PSP awards. at the maturity date. no performance conditions for this Scheme save being an employee of the Group are period. There price on vesting on 27 October 2018 of £2.213. The PSP value for 2018 includes thePSP TSR element of 2015 conditions see page 112.The value shown is based on the share to 27 October 2018. For details of the performance was measured The performance of the TSR element of 2015 PSP awards and the full value of 2016 PSP awards. awards to was measured price on vesting on 27 October 2018 of £2.213. The performance of the 2016 PSP awards conditions see page 112.The value shown is based on the share month average share price of £2.184, the three 31 December 2018. For details of the performance conditions see page 113.The value shown is based on an estimated share and price movements and dividends paid between grant and vesting, £660,994 for Guy Wakeley price to 31 December 2018. The values for 2018 include the impact of share £438,133 for John Stier. 8 9 10 11 12 5 6 7 2 3 4 1 SINGLE TOTAL FIGURE OF REMUNERATION (AUDITED INFORMATION) (AUDITED OF REMUNERATION FIGURE TOTAL SINGLE ANNUAL NON-EXECUTIVE DIRECTOR FEES

Year Ending 31 December 2019 2018 % Change Board Chairman £200,000 £200,000 0 Basic Fee £55,000 £55,000 0 Additional fee for Senior Independent Director £10,000 £10,000 0 Additional fee for Committee Chair £10,000 £10,000 0

VARIABLE PAY OUTCOMES (AUDITED INFORMATION) Annual Bonus For the financial year ended 31 December 2018, annual bonuses for the executive Directors were based on corporate financial and personal objectives. A bonus of up to 150% of salary could be earned. The Committee reviewed the achievements against the targets for the year through the annual performance review process. The tables on pages 109 and 110 show the achievement against the financial and personal performance measures and the resulting bonus payments.

Corporate Financial Objectives The corporate financial metrics were based on profit before tax (50%), revenue (30%) and operating cash flow conversion (20%).

Individual Personal Objectives and Individual Multiplier Performance Rating Maximum multiplier The individual personal objectives were set following consultation between the Committee and each executive Outstanding 150% Director, and are detailed in the table on page 110. The individual multiplier ranges from 0 to 150%, determined High 125% through the Committee's review of performance against Good personal objectives, with a multiplier of 100% for good 100% performance. The performance breakdown and resulting Off track 50% multiplier is shown in the table opposite: Low 0

A cap on the overall bonus pool will apply to ensure that bonus payments which are above target do not exceed 40% of incremental profit in excess of budget.

OUTCOME OF PERFORMANCE AGAINST INDIVIDUAL PERSONAL OBJECTIVES ACTS AS A MULTIPLIER WITH ANNUAL BONUS CALCULATED USING THE FOLLOWING FORMULA:

Corporate Target bonus Individual Annual Salary financial opportunity multiplier bonus outcome

The executive Directors have a target bonus opportunity of 100% of salary. If budget performance is achieved against the corporate financial measures together with an individual multiplier of 100% for good performance, this would result in a bonus of 75% of salary.

108 SECTION 02 GOVERNANCE DIRECTORS' REMUNERATION REPORT Equiniti Group plc Annual Report 2018 109 25.0 84.2 37.5 21.7 122% 103% bonus £98,848 payable £329,494 £230,646 John Stier John Stier % of target % of target 24,643 Actual 123% 104% 101.8% (£000s) 530,920 £476,404 £333,483 £142,921 performance performance Guy Wakeley Guy Wakeley 125% 30,876 100.0% 525,819 Maximum Maximum target (£000s) target 75% 95.0% 25,730 Budget 500,780 target (£000s) target 0% 90.0% 23,157 475,741 Threshold Threshold target (£000s) target 20 30 50 (%) Weighting Weighting Total Operating cash flow conversion Operating cash flow Revenue Profit before tax before Profit Individual multiplier Performance measures Performance Corporate Financial Outcome Financial Corporate Multiplier awarded 2018 Bonus Bonus amount achieved as % of salary Bonus amount achieved Paid in cash (70%) Deferred in shares (30%) in shares Deferred process. the annual performance review was assessed through each of theThe performance of executive Directors for the performance was high personal element Based on their achievements the Committee has determined that each Director’s Further of the details and 122% for John Stier. in multipliers of 123% for Guy Wakeley to their 2018 objectives, resulting relating on page 110. set out in the year are objectives set and progress Individual non-financial objectives Guy Wakeley's objectives focused on: Evidenced by: Delivering a successful entry to the US market through Successful entry into the US market, with no material clients being the transition of the Wells Fargo Shareowner Services lost and new business being won. The transition to Sirius has not yet business (now called EQ US) been achieved, but there has been a flawless delivery of service since day one. Technical separation from Wells Fargo almost completed. US colleagues’ energy and engagement is high. Maintaining sustainable earnings and dividend Sustainable earnings have been increased by single digit growth and progression the dividend has increased by double digits. Increasing sales progression through the cross-sale of Divisional organic growth has increased by over 5%. Good progress products and services has been made with the cross-sale of products. There has been an increase in sales of the Group’s regulation, data and cyber products. Driving the simplification of Group strategy and structure The Group strategy was communicated to investors and analysts in to improve delivery of customer requirements and September 2018. The strategy is well understood within the business shareholder value and amongst the investor base.

Materially improving the delivery of technology and An IT transformation programme has been created and resourced change and has delivered £3m of gross savings in 2018. Full digitisation of our Corporate Shareholder Nominee product has been delivered. A new share plan portal and client portals for the US are now in test. Improving customer satisfaction and advocacy for B2B Corporate satisfaction of 94% and customer satisfaction of 98%. and D2C customers Superbrand status now awarded for ‘Equiniti’ and ‘EQ’. The delivery of the next stages of improvement in Risk, The Group risk framework significantly advanced in 2018, with Audit and Compliance effectiveness divisional risk leaders being appointed and the Xactium risk framework deployed. There is increased ownership and visibility of audit actions. GDPR compliance has been delivered. Demonstrating the ability to connect, inspire and deliver Group leadership training programme launched and delivered for leadership in support of the EQ Leadership model two cohorts. Quarterly leadership evenings are now running and clear objectives have been set for 2019. 43% of vacancies are now filled by internal candidates.

John Stier's objectives focused on: Evidenced by: Concluding the implementation of the HR and finance The Workday finance and HR systems had been rolled out within the systems for Equiniti Trust Company, and building a US according to plan. The new US billing system was on schedule to platform roadmap for the UK go live by the end of the first quarter in 2019. Improving free cash flow yield through improvement Budgeted cash flow was outperformed and cash conversion of 102% in working capital, tax, interest payable and return on was delivered. investment Supporting the negotiation and structuring of further The focus during the year was the integration of EQ US, which was due material combination opportunities to complete by June 2019. Delivering a closing year end net leverage position of less This was out-performed, with very strong cash management. Leverage than 2.6x inclusive of the US transformation costs was 2.5x against the budget of 2.6x. Driving further benefit from Group procurement and Annualised savings of over £5m were delivered. A new property property functions, with particular focus on offshore strategy has been implemented for the business to drive savings. operations and the IT estate Ensuring that compliance and audit items were closed on All items had been closed in a timely manner during the year. a definitive and timely basis Demonstrating the ability to connect, inspire and deliver During the year, a finance conference was launched, together with leadership in support of the EQ Leadership model quarterly web briefings for the finance team. A succession plan has been put in place for the finance team.

110 SECTION 02 GOVERNANCE DIRECTORS' REMUNERATION REPORT Equiniti Group plc Annual Report 2018 111 2 194 194 312.5 312.5 Period End of (pence) 31/12/20 31/12/19 31/12/18 31/12/20 31/12/19 31/12/18 Performance 100% 100% 100% 100% 100% 100% Maximum Shares Vesting Shares Market price at date of grant at date of grant Market price 25% 25% 25% 25% 25% 25% Threshold 2018 34,429 35,220 25,782 52,329 2 194 194 312.5 312.5 31 December 31 December 158.67 158.67 – – – – grant (pence) Market price at Lapsed (number) 1 £737 £737 £489 £489 £690 £464 – – grant £’000 35,220 52,329 Granted Face value at at value Face (number) – – 150 150 150 150 150 150 Maximum Award 34,429 25,782 % of salary 1 1 January 2018 1 January 379,833 464,407 251,845 307,922 220,800 148,608 Number awarded of options date Award and Award Vesting date Vesting 21/03/17 – 21/03/20 24/03/16 – 24/03/19 21/03/17 – 21/03/20 24/03/16 – 24/03/19 21/03/18 – 21/03/21 21/03/18 – 21/03/21 Award and Vesting and Vesting Award 21/03/18 – 21/03/21 21/03/17 – 21/03/20 21/03/17 – 21/03/20 21/03/18 – 21/03/21 Guy Wakeley John Stier John Stier Guy Wakeley ‘nil- the options once they have vested. The options are of options be granted to the to participant and is not the price the participant has to pay to receive the participant will have to pay income tax and them once they have vested. However, is no price to be paid to receive cost’ options which means that there priced at the time of exercise. tax rate on the overall market value of the vested award, national at their insurance respective in line with market practice. adjusted and increased 2017 were in 2016 and Due to therights issue in October 2017, the number of options awarded in this report. provided are details of which vesting, a further two year holding period applies to the PSP awards, Following price. This is used to calculate thenumber closing share granted, the market price at date of grant is calculated using the day’s prior PSP options are When value of the bonus deferred. the is equal to gross awarded At the time the of grant, value of the number of shares closing price of grant was calculated using theThe market price at date prior day’s DEFERRED ANNUAL BONUS PLAN (AUDITED INFORMATION) PLAN (AUDITED BONUS ANNUAL DEFERRED to continued (subject years service for three into shares of the deferred year was financial 2017 in respect the30% of awarded bonus in the table below. awards with is summarised along and clawback) and and malus previous 3 1  2 PERFORMANCE SHARE PLAN (PSP) (AUDITED INFORMATION) PERFORMANCE SHARE PLAN (PSP) unvested the during year together with those which were granted to the executive Directors The table below details the PSP awards in line with the existing Remuneration Policy. made were at 31 December 2018. The awards 1 2 Awards granted under the PSP are nil-cost options and are subject to the following performance measures:

Performance Weighting of Performance Target Measure Measure

EPS growth 50% Average annual growth in the Company’s fully diluted normalised earnings per share (EPS) over three financial years. For 2015, 2016 and 2017 awards, if average growth in EPS over three financial years is 6% or more, 25% of the award will vest. The award will vest in full for average growth of 12%, with payment on a sliding scale in between these points. No award will vest if growth is below 6%. For 2018 awards only, the threshold EPS target over three financial years was increased to 8% to reflect the impact of the WFSS acquisition in the first year of the performance period.

Relative TSR 50% Total shareholder return (TSR) performance over three financial years relative to the constituent companies of the FTSE 250 Index (excluding investment trusts) on date of grant. Vesting of 25% of the award will occur for median ranking and the award will vest in full for upper quartile or above ranking, with straight line vesting in between these points based on ranking. No award will vest if TSR ranks below the median.

Vesting of 2015 PSP Award The first set of PSP awards granted in November 2015 vested in October 2018. The Committee reviewed the performance conditions for the award and determined that 100% of the award vested in total. Performance against both conditions is summarised below. The EPS performance condition was based on the average annual growth in the Company’s fully diluted normalised earnings per share over the 2016 and 2017 financial years, measured from a proforma EPS for the financial year ending 31 December 2015 of 13.5p. The TSR performance condition was measured over three years from November 2015 to October 2018.

Fully diluted % of this normalised EPS Average element of Measure Weighting Vesting scale Base EPS for year ended annual the award 31 December growth vesting 2017

Average annual 50% No vesting if average EPS 13.5p 16.9p 12.03% 100% growth in the growth is below 6%, 25% Company’s vests if average EPS growth fully diluted is equal to 6%, 100% vests if normalised EPS average EPS growth is 12% or more. Straight line pro rata vesting from 25% to 100% for average EPS growth between 6% and 12%

Measure Weighting Vesting scale Performance achieved % of this element of the award vesting

Relative TSR 50% No vesting if TSR ranks below Above upper quartile 100% the median. 25% vests if TSR is median ranking, 100% vests if TSR is upper quartile or above. Straight line pro rata vesting from 25% to 100% for TSR ranking between median and upper quartile

The number of shares that vested in October 2018 for each of the executive Directors as a result of this performance is shown in the

112 SECTION 02 GOVERNANCE DIRECTORS' REMUNERATION REPORT Equiniti Group plc Annual Report 2018 113

% of this element of the award vesting 77.5% % of this element of vesting the award 100% Value of shares at vesting shares of Value Estimated value of shares Estimated value of shares at vesting** £3,114,870 £945,683 £2,065,300 £627,026 Average Average annual growth 10.2% Relative performance achieved Above upper quartile 1,407,537 433,005 933,258 287,100 Number of shares that vested* that shares Number of Number of shares that will vest* Number of shares Fully diluted normalised EPS for year ended 31 December 2018 17.9p Base EPS 13.5p TSR performance 42.5% % that vested based on EPS % that vested and TSR performance 100% % that vested based on EPS and TSR performance 88.75% 100% 88.75% Vesting scale Vesting No vesting if average is below 6%, EPS growth 25% vests if average EPS is equal to 6%, growth 100% vests if average is 12% or EPS growth line Straight pro more. 25% to rata vesting from 100% for average EPS between 6% and growth 12% Vesting scale Vesting No vesting if TSR ranks below the median. 25% vests if TSR is median ranking, 100% vests if TSR is upper quartile or above. Straight line pro 25% rata vesting from to 100% for TSR ranking between median and upper quartile 50% 50% Number of shares shares Number of subject to award 1,339,775 Number of shares Number of shares subject to award 464,407 888,329 307,922 Weighting Weighting Relative TSR Measure Measure Average annual in the growth Company’s fully diluted normalised EPS Measure Guy Wakeley Guy Wakeley Measure Guy Wakeley Guy Wakeley John Stier John Stier 50% of the based on EPS, being above, was included in the values with the Regulations, the portion of the award In accordance table in the 2017 Annual Report. single figure of 2016 PSP Award Vesting the performance conditions for the award 2019. The Committee reviewed 2016 will vest in March granted in March The PSP awards The EPS against both vested in total. Performance conditions is summarised below. and determined that 88.75% of the award fully diluted normalised per share earnings in the Company’s performance condition was based on theaverage annual growth to January 2016 years from over three over theyears. The TSR performance condition 2016, 2017 and 2018 financial measured was December 2018. and 44,929 for John Stier. vesting year as follows: period 67,762 for Guy Wakeley accrued during the three *This number includes dividend equivalent shares below: table and 15,572 for John Stier. year vesting period as follows: 23,486 for Guy Wakeley accrued during the three *This number includes dividend equivalent shares months of 2018. at vesting has been estimated based on the average market value over the last three **The value of the market price of the shares of this performance is shown in the as a result 2019 for each of the executive Directors that will vest in March The number of shares table below: Post-vesting holding period Following vesting, a further two-year holding period will apply to the PSP awards, whereby executive Directors will be restricted from selling their interest in the net of tax shares which vest. These vested shares will be held in an Equiniti investment product for the duration of the holding period.

SAVE-AS-YOU-EARN SCHEME (SHARESAVE) The Company offers a Sharesave scheme to all employees, including executive Directors. Participants can save a sum of money each month for a period of three years. Under the tax-approved limits, the maximum that each participant can save each month is £500, however this can be reduced and capped if the Sharesave is oversubscribed. At the end of the three-year period, the money saved can either be returned to the participant or used to acquire shares in the Company at a price set at a 20% discount to a market price being an amount equal to the average of the daily middle-market quotation of a share over the three dealing days prior to the grant date.

2015 Grant The first grant under the Sharesave was when the Company listed in 2015. The Sharesave was oversubscribed and the monthly limit was capped at £100 per month. The grant price is £1.19 per share. The original price, with the 20% discount was £1.27, however this was reduced to £1.19 following the rights issue on 17 October 2017. The first grant matured on 1 January 2019. Details of the number of shares are included in the Directors’ shareholding table on page 115.

2018 Grant The second grant under the Sharesave was made on 27 September 2018. Again, the Sharesave was oversubscribed and the monthly limit was capped at £100 per month. The grant price is £1.77. The Sharesave will mature in 2021. The 2018 Grant was offered to all of our employees, including those in India, the Netherlands, South Africa and the US. The terms of the Sharesave were the same for all participants, except for those in the US. In the US, the savings period is only for a period of two years. At the end of the two-year savings period, US employees are able to exercise their options, but are restricted from dealing in the shares for a further 12 month period. The discount to the market price is also less for US participants (15%) and therefore the grant price for US participants is £2.23.

SHARE INCENTIVE PLAN Executive Directors may participate in the Company’s Share Incentive plan on the same basis as all other eligible employees. Employees can purchase up to £1,800 of partnership shares each year from gross salary. For every three partnership shares participants purchase, they receive two free matching shares on the first £180 that they invest annually.

DIRECTORS’ SHAREHOLDING REQUIREMENTS AND SHARE INTERESTS (AUDITED INFORMATION) To align the interests of the executive Directors with shareholders, each executive Director must build up and maintain a beneficial shareholding, excluding share options, in the Company equivalent to 200% of base salary. Executive Directors must meet the shareholding guideline within five years of appointment to the Board. From 2019 onwards, executive Directors will normally be required to retain a shareholding in the Company for a period of two years after leaving at the lower of the shareholding requirement in place prior to departure or the actual shareholding on departure. This applies to shares acquired from incentive plans and may include the net value of outstanding DABP awards and PSP awards subject only to a holding period. The Committee will have discretion to operate the policy flexibly and may waive part or all of the requirement where considered appropriate, for example in compassionate circumstances. It is intended that the policy will be supported by the use of nominee accounts. As at 31 December 2018, the Chief Executive beneficially held shares with an equivalent value of 1,213% of his base salary and the Chief Financial Officer beneficially held shares with an equivalent value of 864% of his base salary. Accordingly all executive Directors have met the shareholding requirements.

114 SECTION 02 GOVERNANCE DIRECTORS' REMUNERATION REPORT Equiniti Group plc Annual Report 2018 115 – – – – – 34,175 160,000 150,783 3,734,968 3,734,968 2,041,546 2,041,546 Total Interest Total EQUINITI FTSE 250 Excluding Investment Trusts – – – – – – – – 5,059 5,059 e 2018 conditions SAYE without SAYE – – – – – – – – u 2018 86,758 61,002 conditions DABP with DABP with e 2018 – – – – – – – – Unvested share options share Unvested 708,375 PSP with 1,065,040 conditions ug 2017 – – – – – – – – 933,258 1,407,537 subject to subject to Vested PSP Vested Mr 2017 holding period – – – – – 34,175 160,000 333,852 150,783 1,170,574 ep 2016 Leaving date Beneficial Share Interest Share Beneficial At 31 Dec 18 /At 31 Dec pr 2016 2 1 1 Ot 2015 9% (2%) 97% 86% 75% 64% 53% 42% 31% 20% Guy Wakeley Director John Stier Philip Yea Mark Brooker Alison Burns Sally-Ann Hibberd Jarman Vicky Dr Tim Miller Cheryl Millington Darren Pope Darren for beneficially owned shares in the included figure Incentive Plan are and John Stier hold in the Share that Guy Wakeley shares The Partnership, Matching and Free (13%) (24%) (35%) 119% 108% 3 May 2018. from effective the Board Vickydown from Jarman stood on which matured the 2015 Sharesave each from 3,026 shares and John Stier both exercised On 2 January 2019, Guy Wakeley have been no further changes above. There without conditions figures included in the SAYE are 1 January 2019. These shares between 3 January 2019 and the date of this report. against listing in October 2015 to the end of the 2018 financial year, TSR performance from The following shows the graph Company’s the The FTSE 250 (excluding FTSE 250 index. it comprises companies of a comparable size investment trusts) has been selected as performance. relative a good indication of the Company’s and complexity and provides PERFORMANCE GRAPH AND TABLE 1 2 CHIEF EXECUTIVE’S PAY IN THE LAST FIVE FINANCIAL YEARS The total remuneration of the Chief Executive over the last five years in shown in the table below:

Year Ended 31 December 2018 2017 2016 2015 2014 Total Remuneration (£000) 3,529 3,106 965 2,743 528

Annual Bonus (as % of maximum opportunity) 69% 70% 57% 65% 37%

PSP vesting (as % of maximum opportunity) 95%1 100%2 N/A N/A N/A

1 2018 PSP vesting includes the weighted average of vesting outcomes for the TSR element of the 2015 PSP awards (100% of maximum) and 2016 PSP awards (88.75% of maximum). 2 2017 PSP vesting includes the EPS element of the 2015 PSP awards.

PERCENTAGE CHANGE IN CHIEF EXECUTIVE’S REMUNERATION The table below shows the percentage change in each of the Chief Executive’s salary, taxable benefits and annual bonus earned in 2018 and 2017, compared to that for the average employee of the Group (on a per capita basis):

Guy Wakeley, Chief Executive Average Employee % change % change Salary 0 2.89 Benefits (62) 0 Annual Bonus (12.6) 10.33 The Chief Executive declined a salary increase for 2018, whereas the average increase for employees was 2.89%. The Chief Executive’s benefits level declined 62% due to the repayment by him during 2018 of the loan made by the Company. There were no changes in the level of benefits offered to employees.

RELATIVE IMPORTANCE OF SPEND ON PAY The table below details the percentage change in dividends and overall expenditure on pay compared with the previous financial year:

2018 vs 2017 2018 2017 Total dividend paid +17% 5.32p 4.55p Total employee remuneration +26% £219.8m £174.6m

PAYMENTS FOR LOSS OF OFFICE (AUDITED INFORMATION) There were no payments for loss of office made in 2018.

PAYMENTS TO PAST DIRECTORS (AUDITED INFORMATION) There were no payments made to any past Directors during the year.

EXECUTIVE DIRECTORS SERVING AS NON-EXECUTIVE DIRECTORS Since March 2018, Guy Wakeley has served as a non-executive director of HgCapital Trust plc, for which he received a fee of £29,967 during the 2018 financial year. He retained this fee in full.

OTHER SHAREHOLDING INFORMATION (AUDITED INFORMATION) Share Price The closing share price of the Company’s ordinary shares at 31 December 2018, was 216.5p and the price range for financial year was 196.8p to 326.5p. Shareholder Dilution Awards granted under the Company’s share plans may be satisfied by shares purchased in the market or by the issue of new shares when awards vest. The Board monitors the number of shares issued under the various share plans and the impact on dilution limits. The relevant dilution limits established by the Investment Association in respect of share plans is 10% in any rolling ten-year period and in respect of discretionary share plans is 5% in any ten-year rolling period. Based on the Company’s issued share capital as at 31 December 2018, and assuming that all current awards made under the Company’s share plans as at that date vest in full, the dilution level was 4.59% against all share plans and 2.72% against discretionary schemes. 116 SECTION 02 GOVERNANCE DIRECTORS' REMUNERATION REPORT Equiniti Group plc Annual Report 2018 117

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6 months 9 months 19 months 34 months 27 months 34 months 34 months Rolling contract Rolling contract service contract Unexpired period of Unexpired voted 0.06% of shares voted 0.53% of shares voted 99.47% of shares voted 99.94% of shares in issue 80.64% of shares in issue 75.87% of shares Nil Director 3 months 3 months 3 months 3 months 3 months 3 months 3 months 12 months 12 months Notice from Notice from 127,643 152,141

1,556,725 293,910,020 227,611,057 292,353,295 227,483,414 3 months 3 months 3 months 3 months 3 months 3 months 3 months Company 12 months 12 months Notice from Notice from

23 April 2018 30 June 2017 27 June 2016 6 October 2016 16 October 2018 16 October 2018 22 February 2018 7 September 2015 11 September 2015 letter of appointment Date of current contract/ Date of current 3 July 2017 1 April 2018 27 June 2016 9 October 2015 6 October 2016 27 October 2015 27 October 2015 1 November 2018 1 November 2018 Date of appointment Shares voted Shares Shares voted Shares In Favour In Favour Against Against Withheld Withheld John Stier Non-executive Directors** Philip Yea Mark Brooker Dr Tim Miller Guy Wakeley Executive Directors* Alison Burns Sally-Ann Hibberd Cheryl Millington Darren Pope Darren 2019 12 March AGM held on 26 April 2016 with a very at the Company’s by shareholders Remuneration Policy was approved current The Company’s majority vote in favour. strong Dr Tim Miller Chair of the Remuneration Committee service contracts and their date of appointment to the listed 2015. company was 27 October years. subsequent term of three for a years, renewable appointed for an initial term of three are **Non-executive Directors STATEMENT OF VOTING STATEMENT very strong of the on Remuneration 2017 Annual Report reflected The voting at the outcome 2018 Annual General Meeting in respect support. shareholder into new in June 2015. When the Company listed in October 2015, they entered in January 2014 and John Stier joined the Group joined the Group *Guy Wakeley DIRECTORS’ SERVICE CONTRACTS DIRECTORS’ SERVICE Director Loans Director in recognition IPO in 2015, on of the Group Directors to certain shares transferred Advent Annual Reports, As disclosed previous in arrangements, as disclosed subject to lock up in the were The shares of their contribution of the and management process. IPO all their monies to cover and national income tax liabilities. insurance loans were These the shares who received of those Directors individuals. All benefiting in kind to the as a benefit receiving treated and were the IPO process through approvals relevant subject to no later than 2018. All April with the Company withthese to be repaid loans having into a loan agreement individuals had entered outstanding. by this remains and no amount date repaid loans were taxable at the lent three of grant. The Company point therefore and were vested immediately, As the shares prospectus. price range Directors’ Report

INTRODUCTION DIRECTORS’ RETIREMENT AND REAPPOINTMENT Equiniti Group plc (the Company) is incorporated as a public All of the current Directors will retire and offer themselves for limited company, limited by shares, and is registered in England re-appointment at the 2019 AGM. with the registered number 07090427. The Company is the The Company’s Articles of Association regulate the appointment holding company for the Equiniti Group of companies (the and removal of Directors, as does the Companies Act 2006 and Group). The Company’s registered office is Sutherland House, related legislation. In general, the Directors may fill any casual Russell Way, Crawley, West Sussex, RH10 1UH and its registrar vacancy in the number of Directors, subject to reappointment by is Equiniti Limited which is situated at Aspect House, Spencer shareholders at the next Annual General Meeting. The Articles Road, Lancing, West Sussex, BN99 6DA. of Association also contain authority for shareholders by ordinary The Directors' present their report and audited financial resolution to remove any Director from office regardless of the statements of the Group for the year ended 31 December 2018, terms of their appointment. The Articles of Association may in accordance with section 415 of the Companies Act 2006. The only be amended by special resolution of the shareholders. The FCA’s Disclosure Guidance and Transparency Rules and Listing powers of the Directors are described in the Governance Report Rules also require the Company to make certain disclosures, on pages 62 to 63. some of which have been included in other appropriate sections of the Annual Report and Accounts. DIRECTORS’ DUTIES The Directors of the Company, as those of all UK companies, The Directors’ Report comprises pages 118 to 121, and the must act in accordance with a set of general duties. These duties following cross-referenced material is incorporated into this are detailed in section 172 of the UK Companies Act 2006 which Directors’ Report: is summarised as follows: ‘A director of a company must act in the way they consider, in Future Developments Going Concern good faith, would be most likely to promote the success of the of the Business 21 Statement 71 company for the benefit of its shareholders as a whole and, in Viability Statement 52 Statement of Disclosure doing so have regard (amongst other matters) to: Employees 38 of Information to • the likely consequences of any decisions in the long-term; Auditors 71 Greenhouse Gas • the interests of the company’s employees; Emissions 46 Financial Instruments and Financial Risk • the need to foster the company’s business relationships with Governance Report 56 Management 85 suppliers, customers and others; Statement of Directors' Responsibilities 70 • the impact of the company’s operations on the community and environment;

The 2018 Annual Report and Accounts have been drawn up and • the desirability of the company maintaining a reputation for presented in accordance with UK Company law and the liabilities high standards of business conduct; and of the Directors’ in connection with the report shall be subject to • the need to act fairly as between shareholders of the the limitations and restrictions provided by such law. Company.’ DIRECTORS As part of their induction, a Director is briefed on their duties The Directors’ who have held office during the year ended and they can access professional advice on these, either from 31 December 2018 and to date are as follows: the Company Secretary or, if they judge it necessary, from an independent adviser. It is important to recognise that in a large Philip Yea organisation such as ours, the Directors fulfil their duties partly Guy Wakeley through a governance framework that delegates day-to-day John Stier decision-making to employees of the Company and details of – appointed 1 November 2018 Mark Brooker this can be found in our Governance Report on pages 66 to 67. Alison Burns – appointed 1 April 2018 The following paragraphs summarise how the Directors’ fulfil Vicky Jarman – resigned 3 May 2018 their duties: Sally-Ann Hibberd Dr Tim Miller Risk Management Cheryl Millington – appointed 1 November 2018 We provide business-critical services to our clients, often in Darren Pope highly regulated environments. As we grow, our business and Biographical details of the Directors are set out on pages 58 our risk environment also become more complex. It is therefore to 59. vital that we effectively identify, evaluate, manage and mitigate the risks we face, and that we continue to evolve our approach to risk management.

118 SECTION 02 GOVERNANCE DIRECTORS’ REPORT Equiniti Group plc Annual Report 2018 119 RESEARCH AND DEVELOPMENT to derive new solutions and to enhance our client In order our services and products and customer experiences, improve for the requirements and meet the ever changing regulatory continues to commit resources the Group services we provide, technologies and to the development of new and improved to be capitalised required are capabilities. Expenses incurred economic benefits will be that future when it is probable reliably, attributable to the asset and that costs can be measured and our accounting standards with the relevant in accordance accounting policies. CHARITABLE DONATIONS DONATIONS CHARITABLE corporate committed to being a responsible are We charitable projects, support for appropriate citizen through sponsored no Group are and charities. There organisations carried charitable efforts numerous are charities.there However also located. The Group in which we are out within the regions all of our economic and social wellbeing around aims to promote locations and is active in supporting local community projects and initiatives, including supporting of local schools a number and investing in young talent. POLITICAL DONATIONS did not make any donations to During 2018, the Equiniti Group support certain however it does political parties or organisations, industry-wide bodies and allows time employees to undertake measure, as a precautionary trade union activities. Accordingly authority is to be sought at the to make limited 2019 AGM is a and there political donations incur political or expenditure full explanation in theexplanatory note of Resolution 19 to the 2019 AGM Notice. DIRECTORS’ INSURANCE INSURANCE DIRECTORS’ Liability Insurance policy maintained is and Officers’ A Directors’ has the benefit of a and each Director for all of our Directors by theDeed of Indemnity given Company. INDEMNITY THIRD PARTY indemnity provisions has made qualifying third-party The Group to certain losses and liabilities that in relation for its Directors, of theCompany, may incur in the course of acting as Directors during the year in force its subsidiaries or associates, which were at the date of this report. in force and remain DIVIDEND reflecting dividend policy, has adopted a progressive The Board long-term earnings and cash flow potential. We the Company’s attributable ratio a pay-out of 30% of underlying profit target two-thirds and which is split one-third shareholders to ordinary between interim and final dividends respectively. a final dividend of 3.49 pence is recommending The Board at the 2019 approval which, subject to shareholder per share in a full year dividend of 5.32 pence per share AGM, will result The (including the interim dividend of 1.83 pence per share). on the final dividend will be paid on 16 May 2019 to shareholders members at close of business on 12 April 2019. Any of register Dividend wishing to participate in the Company’s shareholder Reinvestment Plan needs to have submitted their election to do so by 24 April 2019. DIRECTORS' INTERESTS in the Company can be interests share Details of the Directors' found on page 115. Culture and Values and Culture the of having the importance right recognises The Board Our long-term success depends on achieving corporate culture. so we look after the best our strategic goals in the right way, of our clients, people and other stakeholders. Through interests the use of employee and management workshops, we identified values that govern how we act as a business. Details of four core can be found these, plus further culture, details on our corporate on pages 38 to 39. Shareholders is committed to openly engaging with our The Board the importance of a continuing as we recognise shareholders, dialogue, whether with major institutional investors, effective It is important to us that private or employee shareholders. understand our strategy and objectives, so these shareholders and any issues or feedback heard must be explained clearly, considered. questions raised properly For further details on how we engage with our shareholders, please see page 43. Community and Environment to is to use our position of strength approach The Company’s positive change for the people and communities with create want to leverage our expertise and enable which we interact. We us. colleagues the to support communities around For further how with details on interact with communities and the please see pages 44 to 46. environment, Business Relationships driven by cross-selling growth, Our strategy prioritises organic and up-selling services to existing clients bringing new and do this, we need to develop and To clients into the Group. value all our suppliers of We client relationships. maintain strong and have multi-year contracts with our key suppliers. For further how we work with details on our clients and suppliers, please see pages 42 to 43. Our People business. Our The Company is committed to being a responsible behaviour is aligned with the expectations of our people, clients, at the investors, communities People are and society as a whole. heart of our specialist to succeed we services. For our business and performance and develop people’s need to manage our as efficiently talent while ensuring we operate as bring through values that common we share must also ensure possible. We the behaviour so we achieve our goals in inform and guide our right way. For further our people, please see pages 38 to 41. details on and uncertainties, of our principal risks For details how we and our pages 48 to 51 and please see risk environment, manage our on pages 80 to 85. Risk Committee report EMPLOYEES WITH DISABILITIES SHARE CAPITAL STRUCTURE The Company believes that people with health conditions should The Company has one class of share capital: ordinary shares of have full and fair consideration for all vacancies and will interview £0.001 each (shares), which rank equally in all respects. The rights those people with disabilities who fulfil the minimum criteria. For attaching to the shares are set out in the Company’s Articles of those employees in the workforce who become disabled during Association and details of the issued share capital as at employment, the Company will arrange appropriate retraining 31 December 2018 and of the movements during the year are and adjust employees’ environments where possible to allow set out in note 6.2 to the financial statements on page 164. them to maximise their potential and continue to work with the There are no restrictions on the transfer of shares or on the Company. exercise of voting rights, except in circumstances where: The Group has in place a Disability and Mental Health Taskforce, i. the Company has exercised its right to suspend the voting further details of which can be found on page 41. rights or to prohibit the transfer of shares, as a result of the CHANGE OF CONTROL/SIGNIFICANT AGREEMENTS failure by the shareholder to provide us with information In the event of a takeover, a scheme of arrangement (other requested by us in accordance with part 22 of the Companies than a scheme of arrangement for the purposes of creating Act 2006; or a new holding company) or certain other events, unvested ii. the shareholder is prohibited from exercising voting rights by executive Director and employee share awards may in certain the Listing Rules or the City Code on Takeovers and Mergers. circumstances become exercisable. Such circumstances may, but do not necessarily, depend on the achievement of performance The Company operates a share incentive scheme open to all conditions or the discretion of the Remuneration Committee. employees. The Trustees of the Employee Benefit Trust abstain from voting the shares held in the Trust. Except as noted above The Company does not have any agreements with any Director any shares acquired through a share incentive scheme rank or officer that provide for compensation for loss of office or equally with existing shares and have no additional or special employment resulting from a takeover. The Company has facility rights. arrangements with its bank lenders which contain provisions giving those lenders certain rights on a change of control. AMENDMENT TO THE COMPANY’S ARTICLES OF Save as otherwise disclosed above, there are no other significant ASSOCIATION agreements to which the Company is a party that take effect, Any amendments to the Articles of Association may be made in alter or terminate upon a change of control following a takeover accordance with the provisions of the Companies Act 2006 by bid. way of a shareholders’ special resolution. SUBSTANTIAL SHAREHOLDINGS POST BALANCE SHEET EVENTS As at 28 February 2019, the latest practicable date before the There have been no material events between 31 December 2018 publication of this Annual Report and Accounts, the Company and the date of signing this Annual Report and Accounts that was aware that the following shareholders held, or were would require disclosure. beneficially interested in, 3% or more of the Company’s ordinary EXTERNAL AUDITOR shares at that date: Having conducted an effectiveness and independence assessment during the year, as described in the Audit Committee Number of ordinary Report on page 78, the Audit Committee has recommended to Shareholder shares the Board the reappointment of PwC as the Group's external auditor. PwC has indicated its willingness to continue in office. 32,872,362 Mondrian Investment Partners Following the recommendation of the Audit Committee and in accordance with section 489 of the Companies Act 2006, Paradice Investment Management 27,125,630 a resolution to reappoint PwC will be put to shareholders at Invesco 25,696,533 the 2019 AGM. The Audit Committee will be responsible for determining the audit fee on behalf of the Board. GVQ Investment Management 22,352,704

Woodford Investment 18,204,925 Management Rathbone plc 17,128,430

Standard Life Aberdeen 15,443,445

Lazard 15,201,719

Blackrock Inc 13,332,931

BNP Paribas Group 12,368,641

CRUX Asset Management 12,007,114

120 SECTION 02 GOVERNANCE DIRECTORS’ REPORT Equiniti Group plc Annual Report 2018 121 2019 12 March Kathy Cong Company Secretary ANNUAL GENERAL MEETING 2019 Annual General Meeting will (2019 AGM) The Company’s Fetter 110 & Manges LLP, Gotshal of Weil, be held at the offices on 2 May 2019. The at 11.00 a.m. Lane, London, EC4A 1AY Notice of Meeting of the 2019 AGM (2019 AGM Notice) will be available on our website: http://investors.equiniti.com/investors. at to be put to shareholders An explanation of the resolutions in of the Directors the the 2019 AGM, and recommendation to them, is set out in the 2019 AGM Notice. relation on of Directors by the Board Report was approved The Directors' 2019. 12 March of the Board By Order AUTHORITY TO ALLOT AND PURCHASE SHARES SHARES AND PURCHASE TO ALLOT AUTHORITY authoritywas granted The Company General Annual at our 2018 Meeting allot to equity securities of up to a nominal amount allot and equity restrictions, subject to certain £121,489.67, securitieson a non-pre- of £18,223.45 up to a nominal amount During the year emptive restrictions. subject to certain basis, shares of 102,383 ordinary December 2018 a total ended 31 to allotted pence per share, average price of 119 at an were UK under the Equiniti Group options exercised satisfy the share Plan during that period. At the 2018 Annual General Sharesave Meeting, the was also granted authority Company to make shares, of its own ordinary of up to 36,446,900 market purchases as permitted by the Act 2006. Companies to these authorities and permit Directors Resolutions to renew allot equity securities up to a nominal amount of £121,512.22, capital as at 28 share of the Company’s third one representing February 2019 (the latest practicable date), of which £18,226.83, capital as at the issued share of the 5% Company’s representing latest practicable date, could be allotted a non-pre-emptive on and make market purchases basis, subject to certain restrictions, 10% representing shares, of up to 36,453,666 of our own ordinary capital as at the latest practicable issued share of the Company’s at the General 2019 Annual date, will be put to shareholders is set out in the Meeting. A further explanation of the resolutions 2019 Notice General Meeting. of Annual or rights of any agreements not aware are The Directors’ on the transfer of that place restrictions between shareholders of voting rights. exercise or shares Credit Services wins Lending Awards 2018 Best Technology Partner – Loan management / payments

122 SECTION 03 FINANCIAL STATEMENTS Equiniti Group plc Annual Report 2018 123 124 132 139 190 192 INDEPENDENT AUDITORS’ REPORT INDEPENDENT AUDITORS’ REPORT FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS COMPANY FINANCIAL STATEMENTS NOTES TO THE COMPANY Financial Financial Statements 03 Independent auditors’ report to the members of Equiniti Group plc Report on the audit of the financial statements OPINION BASIS FOR OPINION In our opinion, Equiniti Group plc’s Group financial statements We conducted our audit in accordance with International and Company financial statements (the “financial statements”): Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. • give a true and fair view of the state of the Group’s and of the Our responsibilities under ISAs (UK) are further described in the Company’s affairs as at 31 December 2018 and of the Group’s Auditors’ responsibilities for the audit of the financial statements profit and the Group’s cash flows for the year then ended; section of our report. We believe that the audit evidence we • have been properly prepared in accordance with International have obtained is sufficient and appropriate to provide a basis Financial Reporting Standards (IFRSs) as adopted by the for our opinion. European Union and, as regards the Company’s financial statements, as applied in accordance with the provisions INDEPENDENCE of the Companies Act 2006; and We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial • have been prepared in accordance with the requirements of statements in the UK, which includes the FRC’s Ethical Standard, the Companies Act 2006 and, as regards the Group financial as applicable to listed public interest entities, and we have statements, Article 4 of the IAS Regulation. fulfilled our other ethical responsibilities in accordance with We have audited the financial statements, included within the these requirements. Annual Report, which comprise: the consolidated and Company To the best of our knowledge and belief, we declare that non- statements of financial position as at 31 December 2018; the audit services prohibited by the FRC’s Ethical Standard were consolidated income statement and consolidated statement not provided to the Group or the Company. of comprehensive income, the consolidated statement of cash Other than those disclosed in the Audit Committee Report, flows, and the consolidated and Company statements of changes we have provided no non-audit services to the Group or in equity for the year then ended; the accounting policies; and the Company in the period from 1 January 2018 to the notes to the financial statements. 31 December 2018. Our opinion is consistent with our reporting to the Audit Committee.

OUR AUDIT APPROACH Overview

• Overall Group materiality: £2.5 million (2017: £3.1million), based on 2.5% of Earnings Before Interest Tax Depreciation and Amortisation (“EBITDA”). • Overall Company materiality: £1.5 million (2017: £2.0 million), based on 1% of total assets. MATERIALITY

• Full scope audits were performed in respect of five trading entities and also on a further two holding companies. • Additional specific audit procedures were performed on revenue and cash in a AUDIT number of financially insignificant entities to achieve required levels of audit coverage. SCOPE • Overall, these audit procedures provided coverage of 71% of consolidated revenue and 68% of consolidated EBITDA.

• Revenue recognition. KEY AUDIT MATTERS • Determination of goodwill and recognition of acquisition related intangible assets • Consideration of the carrying value of goodwill and related impairment assessments. • Capitalisation of software development costs and related assessments of carrying value.

124 SECTION 03 FINANCIAL STATEMENTS INDEPENDENT AUDITORS’ REPORT Equiniti Group plc Annual Report 2018 125

to the financial in so far as they related internal audit reports assessing thestatements, of whistleblowing impact incidents investigation of such matters, and testing a and management’s limitations in the inherent are There sample of journal entries. above and the described further removed audit procedures the events and is from non-compliance with laws and regulations in the statements, the financial less likely transactions reflected of it. we would become aware to did identify not any key audit matters relating We including in all fraud. As of our audits we also irregularities, the controls, risk of management override of internal addressed was including testing and evaluating journals whether there a risk of that represented theevidence of bias by directors due to fraud. material misstatement KEY AUDIT MATTERS those matters that, in the auditors’ Key audit matters are of most significance in the audit judgement, were professional include the period and of the of the financial statements current misstatement (whethermost significant assessed risks of material or not due to fraud) identified by the auditors, including those on: the overall audit strategy; the effect which had the greatest of the efforts in the audit; and directing allocation of resources the These matters, engagement team. and any comments we addressed were thereon, of our procedures make on the results in the audit context of our of the financial statements as a whole, a and we do not provide and in forming our opinion thereon, separate opinion on these matters. This is not a complete list of all risks identified by our audit. How our audit addressed the key audit matter the How our audit addressed obligations after the year end, as well as the actual outturn. at the year end; each such project and the performance obligations contained therein; by the Group noted. No exceptions were licence sales Contracts with multiple elements including software For a sample of multiple element contracts, we assessed whether the separate performance performed testing over the fair value identified. We obligations had been appropriately or selling prices used in attributed obligation to each performance by comparing the margins calculations to those achieved on similar contracts when sold separately. management’s the signed contracts we assessed whether the customer had an enforceable When reviewing right to payment right to use the licence at the year end and if Equiniti had an enforceable additional evidence of delivery and challenged management to provide necessary, and, where additional we sought and received appropriate deliverable. Where acceptance of the related the customer. from confirmatory evidence directly noted. No exceptions were by the year end to timesheets; and the hours incurred – Agreed performance to complete any remaining of the time required the reasonableness – Considered of completion for calculations of the percentage management’s and reperformed – Obtained on a sample basis, to the by Group, recognised performed substantive tests, validating revenue with and cash payments. customers, underlying evidence, including contracts, correspondence Corporate action revenue to corporate actions that had not completed at the relating selected a sample of revenues We year end and performed the following: receivable the signed contracts with the the customer to understand total revenue – Obtained accounting policy and IFRS 15. We is in line with the Group’s recognised whether the revenue under IFRS 15, and we assessed assessment of the new requirements evaluated management’s We Key audit matter

Revenue recognition Revenue recognition enters into a number of contracts The Group which include multiple elements (for example the sale of licences, hosting and support services), and which can straddle accounting periods. IFRS has adopted IFRS 15 this year. The Group contracts with customers” 15 “Revenue from to determine the specifies a five step approach and recognition amount and timing of revenue amount of revenue that an appropriate requires for each (i.e. therecognised fair value) should be separate performance obligation. recognition Our main focus on revenue to corporate actions that had not fully related completed at the year end and multiple element contracts which involve an element of software sales. These involve management judgement to amount and the timing of revenue relating See note 2.4 to the financial recognition. statements. designing our audit,As part of determined materiality we and assessed the in the risks of material misstatement financial made the directors we looked at where statements. In particular, significant of subjectiverespect judgements, for example in accounting estimates that assumptions involved making and uncertain. inherently events that are considering future gained an understanding of the legal and regulatory We and the in which it industry framework applicable to the Group which the risk of acts by the Group operates, and considered including contrary to applicable laws and regulations, were and significant at Group designed audit procedures fraud. We that the the to risk, recognising respond component level to risk of not detecting due to fraud is a material misstatement error, from higher than the risk of not detecting one resulting for example, as fraud may involve deliberate concealment by, collusion. or through intentional or misrepresentations, forgery that could give rise to a on laws and regulations focused We and Company financial material misstatement in the Group statements, including, but not limited to, the Companies Act 2006, the Listing Rules, pensions legislation, tax legislation, the and the Client Asset Sourcebook Financial Conduct Authority’s relating regulations US Securities Commission’s and Exchange not transfer agents. Our tests included, but were to registered in the with the regulators of correspondence limited to, review business, review regulated of the Group’s UK and US in respect relevant, internal, and where with the Group’s of correspondence of review external legal advisers, enquiries of management, Equiniti Group plc Group Equiniti OF OUR AUDIT THE SCOPE Independent auditors’ report to the members of members to the report auditors’ Independent Independent auditors’ report to the members of Equiniti Group plc

Key audit matter How our audit addressed the key audit matter Determination of goodwill and recognition of In order to assess the appropriateness of the residual goodwill figure determined by acquisition related intangible assets management’s acquisition accounting exercise we performed audit work on the consideration payable, the net assets acquired (excluding acquired intangible assets) and the identification During the year the Group made three and valuation of acquisition related intangible assets. acquisitions, the most significant of which was the purchase of the trade and assets of Wells Consideration and net assets (excluding intangible assets) Fargo Shareholders Services business (“EQ We obtained the acquisition agreements and read them to understand the substance of the US”). EQ US was acquired on 1 February 2018 transactions, including the elements that comprised the total consideration payable and the for a total consideration of £169.5 million. See assets and liabilities acquired. note 4.1 to the financial statements. We agreed the cash element of the consideration to bank statements, and tested other Accounting for the acquisition required a elements, such as hedging transaction costs, to underlying evidence. fair value exercise to assess the assets and We obtained management’s assessment of the fair value of the assets and liabilities and audited liabilities acquired, including valuing any the underlying amounts recorded including adjustments that were made as a result of this separately identifiable intangible assets, and assessment to record assets and liabilities at fair value. the resulting residual goodwill. The most significant intangible asset related to customer No exceptions were noted, and we concluded that appropriate adjustments had been made relationships. The valuation of intangible assets to reflect the acquired assets and liabilities at fair value as required by IFRS 3 “Business involves judgement including management’s combinations”. use of assumptions such as forecast revenues, Recognition and measurement of intangible assets customer attrition rates and the application of an appropriate discount rate. We assessed the completeness of intangible assets identified by management with reference to our own expectations formed from our knowledge and experience of common acquisition Whilst we audited the accounting for the three related intangible assets recorded in business combinations. acquisitions made during the year, we focussed specifically on the EQ US transaction because With the support of our valuation experts, we assessed the fair values attributed to the of its relative significance to the Group and intangibles, performing the following: the quantum of the amounts recorded in the – We evaluated and tested the methodology, underlying assumptions and mechanical financial statements. accuracy of the model used to fair value the customer relationship intangible asset; – In doing so we assessed the appropriateness of the cash flow projections that underpinned the valuation model by validating them to the Prospectus issued in connection with the 2017 rights issue to fund the acquisition (including adjustments to those cash flow projections), budgets and also considered the appropriateness of the growth rates applied in the model; – We assessed other key assumptions used in the model such as the customer attrition and discount rates, including where relevant considering them in light of historic experience and post-acquisition performance. We then considered the amount of residual goodwill in proportion to the total consideration and the fair value of other assets acquired. Based on the audit procedures performed we concluded that the amounts recorded in the financial statements are appropriate. Our work also considered the disclosures made in respect of acquisitions in the financial statements and we concluded that these were compliant with the requirements of IFRS 3.

126 SECTION 03 FINANCIAL STATEMENTS INDEPENDENT AUDITORS’ REPORT Equiniti Group plc Annual Report 2018 127 How our audit addressed the key audit matter the key audit audit addressed How our and other evidence costs capitalised, records in the case of internal staff contractors or, and reviewed employees on development activity, the time spent by relevant corroborating of the capitalisation rates used by management. the reasonableness superseded functionality. to replace incurred by management to prepared forecasts and profitability obtaining and assessing the revenue support the capitalisation of such costs, and evaluating the assumptions therein. made to identify any unusual patterns in the timing of Our work also included analytical procedures to assess whether perform additional we needed to enquiries with amounts capitalised in order management or obtain further audit evidence. assessed the useful economic lives being used to amortise capitalised costs by considering We them to the and compared to suggest these was evidence should be revised, whether there stated accounting policy and our own experience of rates used elsewhere. Group’s of assessment of any indicators of impairment in respect management’s also considered We should have costs to identify whether any material impairment charges capitalised software in the financial statements. been recorded noted. No exceptions were party the amounts capitalised to underlying evidence, such as contracts with third – Tested cash impairment assessment calculations and tested the forecast obtained management’s We the plans for Group. approved to the latest Board flows used therein the evidence and plans and considered evaluated the assumptions in these forecasts We and actual performance during for these, principally on historical trends focussing provided projections revenue the ended 31 December 2018. As part of this year work we considered rates applied, the short and long term growth basis for any significant including any growth cash flows. assumptions, cash outflows for costs, and the discount applied rate to the forecast we also challenged the identification of impairment exercise In considering management’s in appropriate individual cash generating management, and whether units by these were business is run, and based on the evidence provided, to the way in which the Group’s relation of IAS 36. with was consistent the requirements approach concluded that management’s performed we did not identify any material misstatements. Based on the audit procedures IAS 36 and concluded that of the information requirements the disclosure also considered We was compliant with of their annual goodwill impairment review given by management in respect those requirements. functionality or were to new or enhanced software whether such costs related – Considered costs, and the related accounting policy for capitalisation of software evaluated the Group’s We this is applied consistently. implemented by management to help ensure controls development costs capitalised during the year and: selected a sample of software We the evidence to determine whether the criteria had been met. This included IAS 38 – Assessed Key audit matter Key audit

financial statements; and rates and the discount rate cash flows, growth impairment assessment used in management’s models. capitalisation; assessing whether the requisite and criteria set out in IAS 38 “Intangible assets” have been met prior to the commencement of capitalisation. if they capitalised amounts may be impaired superseded by new development activity are change such that, or that circumstances assessment of for example, management’s original business case, or the estimated useful life the which is used to calculate related no longer appropriate. amortisation rates, are Consideration of the carrying value of goodwill Consideration of the carrying impairment assessments and related that assets” requires IAS 36 “Impairment of an annual impairment management perform for indefinite lived intangible assets exercise such as goodwill to determine whether there to thehas been any impairment carrying value. businesses, any purchases When the Group goodwill arising is attributed one of the to operating divisions. This division is then Group’s identified as the cash generating unit for future unless analysis at a more impairment monitoring granular level is appropriate. of annual impairment review Management’s goodwill did not identify the need to impair the in the at financial statements as value recorded 31 December 2018. given: focused on this area We in the quantum of the goodwill recorded – the significance of the assumptions, such as – the further detail Refer to note 4.3 which provides on the £524.1 million goodwill balance as at impairment 31 December 2018 and the related made by management. testing disclosures Capitalisation of software development costs Capitalisation of software assessments of carrying value and related invests significant amounts in The Group that is and developing software purchasing used, or sold or licensed customers, by each to of its operating divisions. See note 4.3 to the financial statements. invested £38.1 million During the year the Group development of which £16.2 million in software to internal development costs. As at 31 related December 2018 the net book value of software development capitalised amounted to £89.1 million. given: focused on this area We of judgement in exercise – management risk that the carrying value of previously – the no key audit matters applicable to the Company to communicate in our report. were determined that there We

Equiniti Group plc Group Equiniti Independent auditors’ report to the members of members to the report auditors’ Independent Independent auditors’ report to the members of Equiniti Group plc

HOW WE TAILORED THE AUDIT SCOPE We tailored the scope of our audit to ensure that we performed sufficient work to be able to give an opinion on the financial statements as a whole, taking into account the geographic and divisional structure of the Group, the accounting processes and controls, and the industry in which the Group operates. The Group is organised into four main operating divisions (Investment Solutions, Intelligent Solutions, Pension Solutions and EQ US) and operates primarily in the UK and US with back office functions performed by a shared service centre in India. It operates through a number of legal entities in these locations. We performed full scope audit procedures on five trading entities (each either a separate reporting unit or a sub-group of reporting units) and a further two holding companies. We then extended our testing in relation to revenue and cash to ensure that we achieved required levels of audit coverage. Overall, these audit procedures provided coverage of 71% of consolidated revenue and 68% of consolidated EBITDA. Of the seven full scope audits, six audits were performed by the Group engagement team based in the UK. For one entity, Equiniti US, a separate PwC component audit team based in the USA performed the audit under instruction from the Group team. The risks and proposed audit response for Equiniti US were agreed with the component team prior to the commencement of that audit. The Group engagement team reviewed the work of the PwC component audit team in the US and attended the clearance meeting to discuss the audit work and findings. As part of the review and supervision of the US component audit team, senior members of the Group team visited the US to evaluate the work performed both before and after the year end date, including reviewing relevant audit working papers. As part of our work we also considered the activities performed by the Group’s dedicated shared service centre in India to understand the finance-related processes that are relevant to the preparation of the financial statements. A sample of transactions processed by the shared service centre were subject to audit procedures performed by the Group engagement team. Additionally, the Group engagement team performed additional audit work over tax balances, share based payments, and business combinations including consideration of management’s goodwill impairment review and the financial reporting consolidation as these items are controlled centrally. MATERIALITY The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole. Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:

Group financial statements Company financial statements Overall materiality £2.5 million (2017: £3.1million). £1.5 million (2017: £2.0 million).

How we determined it 2.5% of Earnings Before Interest Based on 1% of total assets. Tax Depreciation and Amortisation (“EBITDA”).

Rationale for benchmark applied Consolidated EBITDA is an important Total assets is the primary measure measure used by the shareholders to used by shareholders in assessing the assess the performance of the Group and performance of the Company and is a this is considered a generally accepted generally accepted auditing benchmark. auditing benchmark for the calculation of Materiality for the Company was capped materiality. to a level below overall materiality used in the Group financial statements.

128 SECTION 03 FINANCIAL STATEMENTS INDEPENDENT AUDITORS’ REPORT Equiniti Group plc Annual Report 2018 129 have nothing material to add or to We because draw attention to. However, events or conditions can not all future this statement is not be predicted, and a guarantee as to the Group’s ability to continue as a going Company’s concern. For example, the terms on which the may withdraw United Kingdom from Union, which is currently the European 2019, are due to occur on 29 March to evaluate and it is difficult not clear, all of the potential implications on the trade, customers, Company’s and Group suppliers and the wider economy. nothing have to report. We Outcome

if we have anything material to add or draw attention to to report required are We statement in the financial statements about whether the of the directors’ in respect to adopt theof accounting going concern basis it appropriate considered directors identification of any material the financial statements and the directors’ in preparing ability to continue as a going concern and the Company’s uncertainties to the Group’s of the financial the of approval date over a period of at least twelve months from statements. to going concern in statement relating if the directors’ to report required are We with Listing Rule 9.8.6R(3) is materially inconsistent with our knowledge accordance obtained in the audit. Reporting obligation as follows: with ISAs (UK) we report In accordance GOING CONCERN to them misstatements identified during our audit above £125,000 with the Audit Committee that we would report agreed We audit) audit) (2017: £150,000) and £125,000 (Company as well (2017: £150,000) below those as misstatements amounts that, in (Group for qualitative reasons. warranted reporting our view, The materiality. audit, we allocated a materiality that is less than our overall Group in theFor each component of our Group scope £1.0 million was between components £1.5 million. and range of materiality allocated across The other information comprises all of the information in the Annual Report other than the and our auditors’ financial statements for the other information.Our opinion on the financial statements does not cover the responsible are The directors thereon. report except to the extent otherwise explicitly stated in this an audit or, opinion we do not express other information and, accordingly, any form of assurance thereon. report, the other information and, in doing so, consider is to read In connection with our audit of the financial statements, our responsibility whether the other information is materially inconsistent with the in the financial statements or our knowledge obtained audit, or material inconsistency or material misstatement, we are otherwise appears to be materially If we identify misstated. an apparent is a material misstatement of the or a material financial statements to conclude whether there procedures to perform required is a material misstatement misstatement of the other information. If, based on the work we have performed, we conclude that there based on these responsibilities. have nothing to report that fact. We to report required of this other information, we are by the UK required whether the disclosures Report, we also considered With to the Strategic Report and Directors’ respect Companies Act 2006 have been included. in the described above and our work undertaken course of the audit, the Companies Act 2006 (CA06), Based on the responsibilities certain opinions and matters as us also to report ISAs (UK) and the Listing Rules of the Financial Conduct Authority (FCA) require by ISAs (UK) unless otherwise stated). described below (required REPORTING ON OTHER INFORMATION ON OTHER INFORMATION REPORTING

Equiniti Group plc Group Equiniti Independent auditors’ report to the members of members to the report auditors’ Independent Independent auditors’ report to the members of Equiniti Group plc

STRATEGIC REPORT AND DIRECTORS’ REPORT In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report and Directors’ Report for the year ended 31 December 2018 is consistent with the financial statements and has been prepared in accordance with applicable legal requirements. (CA06)

In light of the knowledge and understanding of the Group and Company and their environment obtained in the course of the audit, we did not identify any material misstatements in the Strategic Report and Directors’ Report. (CA06)

THE DIRECTORS’ ASSESSMENT OF THE PROSPECTS OF THE GROUP AND OF THE PRINCIPAL RISKS THAT WOULD THREATEN THE SOLVENCY OR LIQUIDITY OF THE GROUP We have nothing material to add or draw attention to regarding: • The directors’ confirmation on page 71 of the Annual Report that they have carried out a robust assessment of the principal risks facing the Group, including those that would threaten its business model, future performance, solvency or liquidity. • The disclosures in the Annual Report that describe those risks and explain how they are being managed or mitigated. • The directors’ explanation on page 71 of the Annual Report as to how they have assessed the prospects of the Group, over what period they have done so and why they consider that period to be appropriate, and their statement as to whether they have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions. We have nothing to report having performed a review of the directors’ statement that they have carried out a robust assessment of the principal risks facing the Group and the statement in relation to the longer-term viability of the Group. Our review was substantially less in scope than an audit and only consisted of making inquiries and considering the directors’ process supporting their statements; checking that the statements are in alignment with the relevant provisions of the UK Corporate Governance Code (the “Code”); and considering whether the statements are consistent with the knowledge and understanding of the Group and Company and their environment obtained in the course of the audit. (Listing Rules) OTHER CODE PROVISIONS We have nothing to report in respect of our responsibility to report when: • The statement given by the directors, on page 71, that they consider the Annual Report taken as a whole to be fair, balanced and understandable, and provides the information necessary for the members to assess the Group’s and Company’s position and performance, business model and strategy is materially inconsistent with our knowledge of the Group and Company obtained in the course of performing our audit. • The section of the Annual Report on page 72 describing the work of the Audit Committee does not appropriately address matters communicated by us to the Audit Committee. • The directors’ statement relating to the Company’s compliance with the Code does not properly disclose a departure from a relevant provision of the Code specified, under the Listing Rules, for review by the auditors. DIRECTORS’ REMUNERATION In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006. (CA06)

130 SECTION 03 FINANCIAL STATEMENTS INDEPENDENT AUDITORS’ REPORT Equiniti Group plc Annual Report 2018 131 as so. do unless to continue but to accounting of ability alternative basis realistic Company’s concern no the have and going or the Group’s using the operations, and cease assessing to concern for or going to Company responsible the related are or matters Group directors the the applicable, liquidate as to statements, intend disclosing financial either the adequate for our audit have not been or returns have not been kept by the Company, accounting records adequate branches not visited by us; or from received not made; or specified by law are remuneration of directors’ disclosures certain not in Remuneration Report to be audited are Company financial statements and the part of the Directors’ the and returns. with the accounting records agreement our audit; for or all the information and explanations we require not received have we concern,

directors

• • this responsibility. arising from have no exceptions to report We • COMPANIES ACT 2006 EXCEPTION REPORTING COMPANIES to you if, in our opinion: to report required Under the Act 2006 we are Companies • preparing going a Use of this report with members as a body in accordance for and only for the Company’s including the opinions, has been prepared This report, do not, in giving these accept or assume opinions, Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We is shown or into whose hands it may come save for any other purpose or to any other person to whom this report responsibility our prior consent in writing. by agreed expressly where Auditors’ responsibilities for the audit of the financial statements for the Auditors’ responsibilities material from free whether assurance about the are financial statements as a whole to obtain reasonable Our objectives are that Reasonable assurance is a includes our opinion. an auditors’ and to issue report misstatement, whether due to fraud or error, with ISAs (UK) will always detect a material thathigh level of assurance, but is not a guarantee an audit conducted in accordance material if, individually in the or considered and are fraud or error can arise from misstatement when it exists. Misstatements to influence the be expected the economic decisions of users taken on basis of these financial they could reasonably aggregate, statements. website at: for the audit of the financial statements is located on the FRC’s A further description of our responsibilities . This description forms part of our auditors’ report. www.frc.org.uk/auditorsresponsibilities the 12 March 2019 12 March Darren L Meek (Senior Statutory Auditor) Darren for and on behalf of PricewaterhouseCoopers LLP Accountants and Statutory Auditors Chartered Gatwick APPOINTMENT on 11 February 2011 to audit the appointed by the directors of the Audit Committee, we were Following the recommendation financial statements for the subsequent financial periods. The period of total uninterrupted year ended 31 December 2010 and engagement is nine years, covering the 2010 to 31 December 2018. years ended 31 December OTHER REQUIRED REPORTING Responsibilities of the directors for the financial statements for the financial of the directors Responsibilities for the responsible are Responsibilitieson page 70, the set out directors fully in the of Directors’ Statement As explained more withthe applicable satisfied framework and for being that they give a true of the in accordance financial statements preparation as they to enable the determine is necessary preparation for such internal control also responsible are The directors and fair view. material misstatement, whether due to fraud or error. from free thatof financial statements are In Equiniti Group plc Group Equiniti AUDIT AND THE FINANCIAL STATEMENTS FOR THE RESPONSIBILITIES Independent auditors’ report to the members of members to the report auditors’ Independent Consolidated income statement FOR THE YEAR ENDED 31 DECEMBER 2018

2018 2017 (Restated1) Note £m £m Revenue 3.1, 3.3 530.9 406.3 Administrative costs 3.2 (429.4) (318.6) Depreciation of property, plant and equipment 4.2 (6.0) (5.7) Amortisation of software 4.3 (23.9) (18.3) Amortisation of acquisition-related intangible assets 4.3 (31.7) (26.7) Finance income 6.1 0.2 0.8 Finance costs 6.1 (15.5) (12.5) Profit before income tax 24.6 25.3 Income tax charge 8.1 (3.9) (10.0) Profit for the year 20.7 15.3

Profit for the year attributable to: – Owners of the parent 17.5 11.6 – Non-controlling interests 3.2 3.7 Profit for the year 20.7 15.3

Earnings per share attributable to owners of the parent: Basic earnings per share (pence) 6.5 4.8 3.5 Diluted earnings per share (pence) 6.5 4.7 3.5 1Restated for the adoption of IFRS 15 – see note 1 for details

The notes on pages 139 to 189 form part of these financial statements.

132 SECTION 03 FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS Equiniti Group plc Annual Report 2018 133 ) 1 £m 0.8 0.8 0.7 3.8 0.7 4.5 4.5 (0.1) (0.1) 15.3 2017 (12.2) (11.5) (10.8) (Restated – £m 4.4 3.2 (0.9) (0.2) (0.2) 10.9 31.7 20.7 14.4 14.2 34.9 34.9 2018 9.3 Note

Restated for the adoption of IFRS 15 – see note 1 for details Restated for the adoption of IFRS 15 – see note The notes on pages 139 to 189 form part of these statements. financial 1 Profit for year the Profit Other comprehensive income/(expense) Othercomprehensive or loss to profit Items that may be subsequently reclassified hedging reserve Fair value movement through Deferred tax movement in hedging reserve tax movement in hedging Deferred Net exchange gain/(loss) on translation of foreign operations on translationNet exchange gain/(loss) of foreign Items that will not be reclassified to profit or loss to profit Items that will not be reclassified Defined benefit plan actuarial (loss)/gain Deferred tax charge on actuarial (loss)/gain tax charge Deferred Other comprehensive income/(expense) for the income/(expense) year Other comprehensive Total comprehensive income for the year comprehensive Total Total comprehensive income attributable to: comprehensive Total – Owners of the parent – Non-controlling interests – Non-controlling Total comprehensive income for the year comprehensive Total

FOR THE YEAR ENDED 31 DECEMBER 2018 YEAR ENDED 31 FOR THE Consolidated statement of comprehensive income comprehensive of statement Consolidated Consolidated statement of financial position AS AT 31 DECEMBER 2018

2018 2017 1 January 2017 (Restated1) (Restated1) Note £m £m £m Assets Non-current assets Intangible assets 4.3 836.4 667.0 670.1 Property, plant and equipment 4.2 21.9 18.0 17.1 Other financial assets 9.1 0.2 1.9 7.8 Deferred income tax assets 8.2 23.6 26.8 29.1 882.1 713.7 724.1 Current assets Trade and other receivables 5.1 64.1 44.5 44.5 Contract fulfilment assets 5.2 46.2 37.9 33.7 Agency broker receivables 12.4 18.4 15.9 Income tax receivable 8.1 0.7 – – Other financial assets 9.1 0.5 – 0.2 Cash and cash equivalents 6.9 90.9 115.2 56.7 214.8 216.0 151.0

Total assets 1,096.9 929.7 875.1

Liabilities Non-current liabilities External loans and borrowings 6.7 395.2 244.0 301.5 Post-employment benefits 9.3 22.9 22.7 23.9 Provisions 5.5 12.8 18.8 16.2 Other financial liabilities 9.2 4.2 4.5 4.5 435.1 290.0 346.1 Current liabilities Trade and other payables 5.3 112.2 80.8 92.0 Contract fulfilment liabilities 5.4 16.4 16.2 14.8 Agency broker payables 12.4 18.4 15.9 Income tax payable 8.1 – 2.3 2.2 Provisions 5.5 9.1 3.9 – Other financial liabilities 9.2 0.5 6.4 0.5 150.6 128.0 125.4

Total liabilities 585.7 418.0 471.5

Net assets 511.2 511.7 403.6

134 SECTION 03 FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS Equiniti Group plc Annual Report 2018 135 ) 1 – 0.3 £m 18.8 189.5 195.0 384.8 403.6 (Restated 1 January 2017 ) 1 0.4 £m 19.6 2017 115.8 178.0 197.9 492.1 511.7 (Restated 0.4 9.3 £m 2018 115.9 182.4 203.2 501.9 511.2 6.2 6.2 6.3 6.4 Note

Restated for the adoption of IFRS 15 – see note 1 for details Restated for the adoption of IFRS 15 – see note Equity Equity attributable to owners of the parent capital Share John Stier Chief Financial Officer signed on its behalf by: 2019 and were on 12 March of Directors by the Board approved were The financial statements on pages 132 to 189 theseThe notes on pages 139 to 189 form part of financial statements. 1 Share premium Share Other reserves Retained earnings Non-controlling interest Non-controlling Total equity equity Total

AS AT 31 DECEMBER 2018 31 DECEMBER AS AT Consolidated statement of financial position financial of statement Consolidated Consolidated statement of changes in equity FOR THE YEAR ENDED 31 DECEMBER 2018

Non- Share Share Other Retained controlling Total capital premium reserves earnings2 interest equity £m £m £m £m £m £m Balance at 1 January 2017 as originally presented 0.3 – 189.5 193.6 18.8 402.2 Changes in accounting standards – – – 1.4 – 1.4 Restated1 balance at 1 January 2017 0.3 – 189.5 195.0 18.8 403.6

Comprehensive income Profit for the year per the income – – – 11.6 3.7 15.3 statement (restated) Other comprehensive (expense)/income Changes in fair value through – – (12.2) – – (12.2) hedging reserve (note 6.3) Deferred tax on movement through – – 0.8 – – 0.8 hedging reserve (note 8.2) Net exchange loss on translation of – – (0.1) – – (0.1) foreign operations (note 6.3) Actuarial gains on defined benefit pension – – – 0.7 0.1 0.8 plans (note 9.3) Deferred tax on defined benefit pension – _ – (0.1) – (0.1) plans (note 8.2) Total other comprehensive (expense) – _ (11.5) 0.6 0.1 (10.8) /income Total comprehensive (expense)/income – _ (11.5) 12.2 3.8 4.5

Issue of share capital, net of transaction 0.1 115.8 _ _ _ 115.9 costs (note 6.2) Dividends (note 6.6) – – _ (14.6) (1.5) (16.1) Transactions with non-controlling interests – – _ _ (1.5) (1.5) (note 6.4) Share-based payments expense – – _ 3.5 – 3.5 (note 7.2) Deferred tax relating to share option _ _ _ 1.8 _ 1.8 schemes (note 8.2) Transactions with owners recognised 0.1 115.8 – (9.3) (3.0) 103.6 directly in equity Balance at 31 December 2017 0.4 115.8 178.0 197.9 19.6 511.7

136 SECTION 03 FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS Equiniti Group plc Annual Report 2018 137

– 1.1 4.4 0.1 6.4 £m (0.9) (0.2) (1.7) (8.0) 20.7 10.9 14.2 34.9 Total Total (13.9) (18.3) (35.4) 511.7 510.6 511.2 equity – – – – – – – – – – 3.2 £m 3.2 9.3 (1.8) (1.7) 19.6 19.6 (10.0) Non- (13.5) interest controlling 2 – – – – – – 1.1 2.0 6.4 £m (0.2) (0.2) (3.9) 17.5 17.3 (16.5) (12.0) 197.9 196.8 203.2 Retained earnings – – – – – – – – 4.4 3.9 £m (0.9) 10.9 14.4 14.4 (13.9) (10.0) 178.0 178.0 182.4 Other reserves – – – – – – – – – – – – – – 0.1 £m 0.1 Share Share 115.8 115.8 115.9 premium

– – – – – – – – – – – – – – – – 0.4 0.4 £m 0.4 Share Share capital balance at 1 January 2018 balance at 1 January 1

Restated for the adoption of IFRS 15 – see note 1 for details earnings within retained payments reserve to include the share-based Re-presented The notes on pages 139 to 189 form part of these financial statements. 1 2 Balance at 1 January 2018 Balance at 1 January Comprehensive income Comprehensive for year per the the income Profit statement Changes in accounting standards Other comprehensive income/(expense) Othercomprehensive Changes in fair value through (note 6.3) hedging reserve Restated Deferred tax on movement through tax on movement through Deferred (note 8.2) hedging reserve Net exchange gain on translation of operations (note 6.3) foreign Actuarial losses on defined benefit pension plans (note 9.3) Total comprehensive income/ comprehensive Total (expense) Total comprehensive income comprehensive Total Issue of share capital, net of transaction Issue of share costs (note 6.2) Purchase of own shares (note 6.3) of own shares Purchase Own shares awarded to employees awarded Own shares (note 6.3) Dividends (note 6.6) Transactions with non-controlling interests interests with non-controlling Transactions (note 6.4) Further acquisition of non-controlling Further acquisition of non-controlling in MyCSP Ltd (note 6.4) interest Share-based payments expense Share-based (note 7.2) Transactions with owners recognised with owners recognised Transactions in equity directly Balance at 31 December 2018

FOR THE YEAR ENDED 31 DECEMBER 2018 YEAR ENDED 31 FOR THE Consolidated statement of changes in equity changes of statement Consolidated Consolidated statement of cash flows FOR THE YEAR ENDED 31 DECEMBER 2018

2018 2017 (Restated1) Note £m £m Profit before income tax 24.6 25.3

Adjustments for: Depreciation of property, plant and equipment 6.0 5.7 Amortisation of software 23.9 18.3 Amortisation of acquisition-related intangibles 31.7 26.7 Finance income (0.2) (0.8) Finance costs 15.5 12.5 Share-based payments expense 6.4 3.5 Changes in working capital: Net increase in receivables (12.0) (2.0) Net increase in contract assets (3.1) (4.2) Net increase/(decrease) in payables 18.0 (1.7) Net (decrease)/increase in contract liabilities (2.4) 1.4 Net decrease in provisions (1.3) (1.3) Cash flows from operating activities 107.1 83.4 Interest paid (10.5) (9.8) Income tax paid (4.5) (3.7) Net cash inflow from operating activities 92.1 69.9

Cash flows from investing activities Interest received 6.1 0.2 0.8 Business acquisitions net of cash acquired 4.1 (173.6) (3.5) Payments relating to prior year acquisitions (4.0) (17.5) Acquisition of property, plant and equipment (9.5) (6.2) Payments relating to developing and acquiring software (30.3) (24.8) Net cash outflow from investing activities (217.2) (51.2)

Cash flows from financing activities Proceeds from issue of share capital, less transaction costs (0.8) 116.8 Purchase of own shares 6.3 (13.9) – Proceeds from new bank loans 6.7 64.9 – Proceeds/(repayment) of revolving credit facility balance 6.7 76.1 (56.0) Payment of loan set-up fees (0.8) (2.6) Payment of finance lease liabilities (0.9) (0.7) Dividends paid 6.6 (16.5) (14.6) Dividends paid to non-controlling interests (1.8) (1.5) Transactions with non-controlling interests (5.9) (1.6) Net cash inflow from financing activities 100.4 39.8

Net (decrease)/increase in cash and cash equivalents (24.7) 58.5 Foreign exchange gains and losses 0.4 – Cash and cash equivalents at 1 January 115.2 56.7 Cash and cash equivalents at 31 December 90.9 115.2 1Restated for the adoption of IFRS 15 – see note 1 for details The notes on pages 139 to 189 form part of these financial statements.

138 SECTION 03 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Equiniti Group plc Annual Report 2018 139 3 – 5 years. so that it will product it is technicallycomplete the feasible to software be available for use; and use or product management intends to complete the software sell it; product; is an ability to use or sell the software there will generate product it can be demonstrated how the software economic benefits; future probable to complete the adequate technical, financial and other resources available; and are product development and to use or sell the software during its product attributable to the software the expenditure measured. development can be reliably Software Goodwill assets and intangible Goodwill Goodwill arises on the acquisition of subsidiaries and represents the of any non- amount the of the excess consideration transferred, and the acquisition-date fair value in the acquiree interest controlling over the fair value of the in the acquiree equity interest of any previous If the of consideration total transferred, identifiable net assets acquired. held interest and previously recognised interest non-controlling at fair value is less than the value of the fair of the net assets measured is the difference purchase, in the case of a bargain subsidiary acquired, in the statement. income directly recognised in a business For the purpose of impairment testing, goodwill acquired combination is allocatedof the to each cash generating units (CGU) the of combination. Each the synergies that to benefit from is expected the lowest level within unit to which the goodwill is allocated represents for internal management the entity the at which goodwill is monitored purposes. frequently undertaken annually or more are Goodwill impairment reviews indicate a potentialimpairment. if events or changes in circumstances to The carrying value of the containing the CGU goodwill is compared amount, which is the higher of value in use and the fair the recoverable immediately value less costs of disposal. Any impairment is recognised as an expense and is not subsequently reversed. Software programmes Costs associated with computer software maintaining Development costs directly as an expense as incurred. recognised are attributable to the design, development and testing of identifiable and as recognised are by the Group controlled products unique software met: intangible assets when the following criteria are • • • • • • development if it capitalises certain costs as software The Group attributable to software directly can demonstrate that the costs are development. These costs include employee benefit expenses, along overheads, and external portion of relevant with an appropriate not directly costs that are consultancy costs. Other development related as recognised attributable or do not meet the capitalisation criteria are as an recognised Development costs previously an expense as incurred. as an asset in a subsequent period. not recognised expense are licences, when the also includes purchased Capitalised software criteria in IAS 38 Intangible Assets satisfies the recognition expenditure capitalised at cost and amortised on a straight (IAS 38). These items are line basis over their useful economic life or the term of the contract. to the income statement on a straight-line basis Amortisation is charged the date they are from over the estimated useful lives of the software, as follows: available for use. The estimated useful lives are •

current of basis the on and enquiries making after Directors, The

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES SUMMARY BASIS OF PREPARATION GENERAL INFORMATION GENERAL Basis of preparation of the The principal accounting policies applied in the preparation These policies set out below. consolidated financial statements are unless have been consistently applied to all the periods presented, otherwise stated in note 2.2. with in accordance These financial statements have been prepared (IFRS) as adopted by International Financial Reporting Standards Committee (IFRS IC) Union (EU), IFRS Interpretation the European as adopted by the EU and the Companies Act 2006 interpretations under IFRS. The consolidated financial applicable to companies reporting on the concern basis and under going statements have been prepared of financial the historical cost convention, as modified by the revaluation assets and financial liabilities (including derivative instruments) at fair is the currency presentational or loss. The Group’s profit value through British Pound (£). as a payment reserve disclosed a share-based the Group Previously However this been combined has now separate component of equity. earnings. The combination has no impact on with retained distributable reserves. Basis of consolidation entities) over which all entities (including structured Subsidiaries are is an entity when the Group controls The Group has control. the Group with its involvement from exposed to, or has rights to, variable returns its power through those returns the entity has the and ability to affect the date on which fully consolidated from Subsidiaries are over the entity. the deconsolidated from They are to the Group. is transferred control ceases. date that control The acquisition method of accounting is used to account for the The cost of an acquisition is acquisition of subsidiaries by the Group. as the fair value of the issued assets given, equity instruments measured or assumed at the date of exchange. Identifiable and liabilities incurred and liabilities and contingent liabilities assumed in a assets acquired initially at their fair values at the measured business combination are in interest any non-controlling recognises acquisition date. The Group on an acquisition-by-acquisition basis, either at fair value or the acquiree of the recognised share proportionate interest’s at the non-controlling identifiable net assets. amounts of the acquiree’s Going concern meets its day-to-day working capital and financing The Group operations and its bank its cash generated from through requirements facilities. 2.1 in the Kingdom. The Company and its subsidiaries United (collectively, administration complex payment services, and provide the Group) platforms,supported by technology range of organisations. to a wide of the is Sutherland company Russell House, office The registered financial statements RH10 1UH. The Group Sussex, West Crawley, Way, consolidate those of the Company and its subsidiaries. 2 plc (the is a public Company) limited which is company Equiniti Group listed the on and is incorporated and domiciled London Stock Exchange FOR THE YEAR ENDED 31 DECEMBER 2018 YEAR ENDED 31 FOR THE 1 Notes to the consolidated financial statements financial consolidated to the Notes date, and the facilities available at the reporting financial projections to continue has adequate financial resources believe that the Group they continue For this reason, future. in operation for the foreseeable the historical financial to adopt the going concern basis in preparing information. Notes to the consolidated financial statements FOR THE YEAR ENDED 31 DECEMBER 2018

2.1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Financial instruments (CONTINUED) A financial asset or financial liability is only recognised in the statement Other intangible assets of financial position when the Group becomes party to the contractual provisions of the instrument. Other intangible assets consist of intangible assets identified as part of a business combination. They are stated at fair value at the date of Classification and measurement acquisition less subsequent accumulated amortisation and impairment The Group classifies its financial assets in the following measurement losses. categories: Customer relationships are valued based on the net present value of the At fair value through profit or loss excess earnings generated by the revenue streams over their estimated • useful lives. Order books are valued based on expected revenue • At fair value through other comprehensive income generation. Brand valuation is based on net present value of estimated • At amortised cost royalty returns. The classification depends on the business model for managing Amortisation is charged to the statement of comprehensive income on the financial assets and the contractual terms of the cash flows and a straight-line basis over the estimated useful lives of intangible assets. management will determine the classification on initial recognition. Other intangible assets are amortised from the date they are available for At initial recognition, the Group measures a financial asset at its fair value use. The estimated useful lives are as follows: plus, in the case of a financial asset not at fair value through profit or • Other intangible assets 1 – 20 years loss, transactions costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets held at fair value Property, plant and equipment through profit or loss are recognised within the income statement. Property, plant and equipment are stated at cost less accumulated Trade and other receivables (excluding prepayments) and contract depreciation and impairment losses. For items acquired as part of a fulfilment assets that are held for collection of contractual cash flows, business combination, cost comprises the deemed fair value of those where those cash flows represent solely payments of principal and items at the date of acquisition. Depreciation on those items is charged interest, are measured at amortised cost, less provisions for impairment. over their estimated remaining useful lives from that date. Other financial assets includes derivatives which are recognised at fair Leases in which the Group assumes substantially all the risks and rewards value through profit or loss, unless the derivatives qualify for hedge of ownership of the leased asset are classified as finance leases. Where accounting, in which case the recognition of any gain or loss land and buildings are held under leases, the accounting treatment of is recognised in other comprehensive income. the land is considered separately from that of the buildings. Leased The Group classifies its financial liabilities in the following assets acquired by way of finance lease are stated at an amount equal measurement categories: to the lower of their fair value and the present value of the minimum lease payments at inception of the lease, less accumulated depreciation • At fair value through profit or loss and impairment losses. Lease payments are accounted for as described • At amortised cost below. The Group classifies debt and equity instruments as either financial Depreciation is charged to the income statement on a straight-line basis liabilities or as equity, in accordance with the substance of the contractual over the estimated useful lives of each part of an item of property, plant arrangement. An equity instrument is any contract that evidences a and equipment. The estimated useful lives are as follows: residual interest in the assets of the Group, after deducting all of its liabilities. Equity instruments issued by the Group are recognised at • Freehold improvements 50 years the proceeds received, net of direct issue costs. • Leasehold improvements 2 – 50 years Under IAS 32 Financial Instruments: Presentation (IAS 32), financial • Office equipment 2 – 10 years instruments issued by the Group are treated as equity only to the extent • Fixtures and fittings 3 – 20 years that they meet the following two conditions: Impairment of non-financial assets (a) they include no contractual obligations upon the Group to deliver cash or other financial assets or to exchange financial assets or Assets that have an indefinite useful life, for example goodwill or financial liabilities with another party, under conditions that are intangible assets not ready for use, are not subject to amortisation potentially unfavourable to the Group; and and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in (b) where the instrument will or may be settled in the Group’s own circumstances indicate that the carrying amount may not be recoverable. equity instruments, it is either a non-derivative that includes no An impairment loss is recognised for the amount by which the asset’s obligation to deliver a variable number of the Group’s own equity carrying amount exceeds its recoverable amount. The recoverable instruments or is a derivative that will be settled by the Group’s amount is the higher of an asset’s fair value less costs to sell and value exchanging a fixed amount of cash or other financial assets for a in use. For the purposes of assessing impairment, assets are grouped at fixed number of its own equity instruments. the lowest levels for which there are separately identifiable cash flows (CGU). Non-financial assets other than goodwill, that have suffered To the extent that this definition is not met, the proceeds of issue are an impairment are reviewed for possible impairment reversal at each classified as a financial liability. Financial liabilities not classified as reporting date. fair value through profit or loss, such as derivatives, are classified and measured at amortised cost using the effective interest method.

140 SECTION 03 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Equiniti Group plc Annual Report 2018 141 Contract fulfilment assets Contract fulfilment payment is supplied before to a customer are or software When services in the statement of financial asset is recognised due, a contract fulfilment the consideration from the right to receive position, and represents as measured The asset is services delivered. customer for goods or contracts the value of the fair supplied. goods or services The Group’s with determine often include a payment schedule which customers during the settlement raised, and is received, when invoices are contractual term. or fulfilling costs of obtaining a contract with a customer The incremental them. expects to recover as an asset only if the Group recognised are included in the statement of a contract are Costs to obtain or fulfil financial position within fulfilment assets. These assets are contract to administrative costs within the income subsequently charged statement over the contract period using a systematic expected transfers control the pattern in which the Group basis that mirrors or service to the customer. of the products to date and incurred Contract fulfilment assets also include costs through continually monitored anticipated costs to complete and are that contractual costs If it becomes apparent process. a monthly review immediately then therecognised loss is will exceed contract revenue, as an expense in the statement. income balances Agency broker investors, balances for retail acts as an agency broker the Group Where recognised the investor and market maker are owed by or to the retail and other the payables when transaction occurs. within other receivables eliminated. settled, these balances are When the amounts are Cash and cash equivalents and callCash and cash equivalents comprise cash balances deposits. form an integral on demand and repayable that are Bank overdrafts as a component of included cash management are part of the Group’s cash and cash equivalents in the statement of financial position and the right has a legally enforceable the Group statement of cash flows, where is an intention to settle on a net basis. and there to offset External loans and borrowings initially at fair value less recognised are borrowings Interest-bearing interest- attributable transaction costs. Subsequent to initial recognition, stated at amortised cost, with any difference are bearing borrowings in the income value being recognised between cost and redemption interest on an effective statement over the period of the borrowings between the cash paid extinguished, any difference basis. On borrowings in the income statement. and the carrying value is recognised reclassified are equity in accumulated losses or Gains costs.

finance

operation is sold. to the income statement if the foreign receivables Trade stated initiallysubsequently at fair value and are receivables Trade method, less interest at amortised cost using the effective measured recognised for impairment are for impairment. Provisions provisions as set out in IFRS 9 Financial Instruments using the simplified approach at an amount measured (IFRS 9) and consequently loss allowances are loss loss. The expected credit equal to the lifetime expected credit based on an assessment of historical default model applies a percentage, that information, against receivables rates and certain forward-looking is objective evidence there into certain age brackets. Where grouped are to will not be able to collect any amounts due according that the Group is the receivable with the customer, the original terms of the agreement within administrative costs in and the loss is recognised fully impaired the income statement.

FOR THE YEAR ENDED 31 DECEMBER 2018 YEAR ENDED 31 FOR THE ACCOUNTING POLICIES OF SIGNIFICANT 2.1 SUMMARY (CONTINUED) Derecognition cash when the a financial asset rights to receive derecognises The Group and the or have been transferred, the financial asset expire flows from of ownership. substantially all the risks and rewards has transferred Group a financial liability its contractual when derecognises The Group cancelled or expire. discharged, obligations are Derivative activities financial instruments and hedging Derivative financial instruments rate swaps and forward derivatives, which include interest The Group’s being the at fair value, estimated measured contracts, are currency the or pay to terminate instrument would receive amount that the Group the used to fair value party valuations are date. Third at the reporting derivatives. The valuation techniques use inputs such as interest Group’s prices/yields, volatilities of underlying rate yield curves and currency inputs. between instruments and correlations The full fair value of a hedging derivative is classified as a non-current of the maturity hedged item is asset or liability when the remaining asset or liability when the than 12 months, and a current more maturity is less than 12 months. remaining Cash flow hedges portion changes in the of fair value of derivatives that The effective in other designated and qualify flow hedges is recognised as cash are to the ineffective income. The gain or loss relating comprehensive immediately in the statement. income portion is recognised in the or loss to profit reclassified Amounts accumulated in equity are or loss (for example, when profit periods when the item affects hedged transaction thatplace). The gain or loss is hedged takes the forecast rate swaps hedging variable portion of interest to the effective relating in the income statement. When a hedging is recognised rate borrowings or is sold, or when a hedge no longer meets the instrument expires criteria for hedge accounting, any cumulative or loss existing gain in in equity until the hedged item occurs. equity at that time remains Net investment hedges portion to the effective Gains or losses on a hedging instrument relating in other comprehensive recognised operation are of a hedge of a foreign in the income statement portion is recognised income. Any ineffective within Notes to the consolidated financial statements financial consolidated to the Notes Notes to the consolidated financial statements FOR THE YEAR ENDED 31 DECEMBER 2018

2.1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Equity settled share-based payment transactions (CONTINUED) The Group operates a number of equity-settled, share based Trade payables compensation plans, under which the Group receives services from employees in return for equity instruments (options) of the Group. The Trade payables represent liabilities for goods and services received fair value of the employee services received in exchange for the grant of by the Group before the end of the reporting period which have the options is recognised as an expense in the income statement. been invoiced but are unpaid. The amounts within trade payables are The initial amount to be expensed is determined by reference to the unsecured. Trade payables are recognised initially at fair value and fair value of the options granted: subsequently measured at amortised cost using the effective interest method. – including any market performance conditions (for example, total shareholder return); Contract fulfilment liabilities – excluding the impact of any service and non-market performance Contract fulfilment liabilities are recorded when the Group has received vesting conditions (for example, profitability, sales growth targets consideration from customers, but still has an obligation to deliver and remaining an employee over a specified period of time); and services or licences to the customer and meet performance obligations for that consideration. The liability is measured as the fair value of the – including the impact of any non-vesting conditions (for example, the consideration received. requirement for employees to save or hold shares for a specific period of time). Employee benefits At the end of each reporting date, the Group revises its estimate of the Defined contribution plans number of options that are expected to vest, based on the service and A defined contribution plan is a pension plan under which the Group non-market vesting conditions. The impact of revisions to the original pays fixed contributions to a separately administered fund. The Group estimates, if any, are recognised in the income statement with has no further payment obligations once the contributions have been a corresponding adjustment to equity. paid. The contributions are recognised as employee benefit expense in the income statement as incurred. Prepaid contributions are recognised Provisions as an asset, to the extent that a cash refund or reduction in future A provision is recognised in the statement of financial position when the payments is available. 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 Defined benefit plans required to settle the obligation. If the effect is material, provisions are A defined benefit plan is a post-employment benefit plan other than determined by discounting the expected, risk adjusted, future cash flows a defined contribution plan. The Group’s net obligation in respect of at a pre-tax risk-free rate. defined benefit pension plans is calculated by estimating the amount of Dilapidations provisions relate to the estimated cost to revert leased future benefit that employees have earned in return for their service in premises back to a required condition expected under the terms of the the current and prior periods. That benefit is discounted to determine lease. These include provisions for wear and tear, along with provisions its present value, and the fair value of any plan assets (at bid price) are for leasehold improvements made that would require reinstatement back deducted. The liability discount rate is the yield at the statement of to the original status on exit. These are uncertain in timing, as leases may financial position date on AA credit-rated bonds denominated in the be terminated early or extended. To the extent that exits of premises are currency of, and having maturity dates approximating to the terms of the expected within 12 months of the reporting period, the division shown Group’s obligations. The calculation is performed by a qualified actuary as current. using the projected unit credit method. Contingent consideration is provided for on the acquisition of a business, When the calculation results in a benefit to the Group, the recognised where the monetary amount is dependent on the future performance asset is limited to the present value of benefits available in the form of of the acquired business. A provision is initially recognised as the any future refunds from the plan, reductions in future contributions to discounted expected liability and unwound over the period to the legal the plan or on settlement of the plan and takes into account the adverse date of settlement. The liability is reviewed regularly. The subsequent fair effect of any minimum funding requirements. value is determined by reviewing the post-acquisition performance of the Actuarial gains and losses arising from experience adjustments and acquired company, along with available budgets and forecasts, against changes in actuarial assumptions are charged or credited to equity in the earn-out arrangement in the share purchase agreement to determine other comprehensive income, in the period in which they arise. the most likely outcome. Current service costs reflect the increase in the defined benefit obligation Changes to the fair value of the contingent consideration resulting resulting from employee services in the current year, benefit curtailments from additional information obtained post acquisition about facts and and settlements. Payments are recognised as employee benefit expense circumstances that existed at the acquisition date are recognised as an in the income statement. adjustment against goodwill during the first twelve months following the acquisition. Any other changes are recognised in the income statement. Past-service costs, which arise as a result of current changes to plan arrangements affecting the obligation for prior periods, are recognised immediately as an employee benefit expense, within administrative costs, in the income statement. The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of the plan assets. The net cost is included within finance costs in the income statement.

142 SECTION 03 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Equiniti Group plc Annual Report 2018 143 by holding high funds in these seeks to maximise returns Group this possible. However revenue where accounts, interest-bearing activities principal which is why the Group’s from is not generated this is disclosed separately. in recognised to customers are recharged Out-of-pocket expenses the client, net of the related from recoverable when they are revenue expense. Revenue recognition satisfies contractual as, the when, or Group Revenue is recognised goods or services to performance obligations promised by transferring when to be transferred considered services are its customers. Goods and of the or service. good the obtains control customer either at a point in time when the performance Revenue is recognised of obligation in the contract has been performed or over time as control to the customer. the performance obligation is transferred as follows: policies are recognition revenue principal The Group’s services Professional professional of outsourced providers is one of the largest The Group services in the pensions administration, UK, covering pensions payroll, services, employee annuity services, complaints handling, resourcing services. registration plan administration and share share a number of years, fixed-price contracts, which may span Revenue from the rateably over the expected life of the contract, where is recognised criteria. When the over recognition satisfies the over time revenue Group at a point in revenue recognises not satisfied, the Group time criteria are Where delivered. time when the contractual performance obligations are is rates, revenue to customers at hourly or daily staff provides the Group on the basis of time worked. recognised contracts contain multiple deliverables to the Many of the Group’s goods and Management evaluate whether those promised customer. them separate to be accounted for as distinct, which require services are not distinct, performance obligations. If the and services are goods combined with other goods or services until a performance they are obligation can be identified in the contract thatis distinct. If a series of substantially the same and have the same distinct and services are goods the deliverables may be combined pattern of transfer to the customer, and accounted for as a single performance obligation. sales, hosting and support services Software by the Pensions sales, hosting and support services is provided Software such as Solutions and Intelligent Solutions businesses for software and software Compendia, Revenue for hardware Charter and KYC. at a point in time when the goods and licences are licences is recognised in the customer having the right as this results to the customer, delivered in full. to use the licence and the performance obligation is delivered rateably over recognised Revenue for hosting and support services are the term of the agreement. bundled together for the purpose of sale, the are When products net of all applicable discounts, is allocated between associated revenue, fair value basis. The the constituent performance obligations on a relative fair values in these has a systematic basis for allocating relative Group situations, based upon published list prices.

translated at the closing rate on the date of assets and liabilities are the statement of financial position; translated are income and expenses for each income statement at average exchange rates; and in other recognised are exchange differences all resulting within the translation reserve. income and recorded comprehensive

FOR THE YEAR ENDED 31 DECEMBER 2018 YEAR ENDED 31 FOR THE ACCOUNTING POLICIES OF SIGNIFICANT 2.1 SUMMARY (CONTINUED) capital Share costs directly Incremental as equity. classified are shares Ordinary shown in equity or options are attributable to the issue of new shares the proceeds. as a deduction, net of tax, from the consideration shares, own ordinary its acquires the Group Where for own equity within the reserve as a deduction from paid is recorded shares. translation currency Foreign translated into the functional currency transactions are currency Foreign the at dates of the transactions. using the exchange rates prevailing the settlement of from resulting exchange gains and losses Foreign such transactions and the translationof monetary assets and liabilities using exchange rates at the end of the currencies denominated in foreign in the income statement. recognised period are reporting entities having a different and financial position of all Group The results are currency presentational the Group’s from functional currency as follows: currency translated into the presentational • • • Goodwill and fair value adjustments arising on the acquisition of a entity as assets and liabilities of the foreign treated entity are foreign and translated at the exchange rate. Exchange differences closing in other recognised at the closing rate are retranslation arising from income within the translationreserve. comprehensive Revenue the value of services Revenue, which excludes sales taxes, represents and the supplied in the to customers UK, Europe and software provided administration on funds under of received US, and also includes interest the Group. of goods and services represents Revenue classified as rendering as compensation or for services performed amounts due to the Group of under contract. Revenue included within rendering goods delivered the majority of the professional generated from services includes revenue to its customers. It does not include offers services which the Group for example, client funds under generated from, any additional revenue the incidental disclosed separately to reflect administration, which are of this revenue. nature can The arrangements used to pay for goods and services rendered so that any structured clients. Many contracts are vary between different during or after performing invoiced to the client either before, fees are to structured the contractual obligations. However some contracts are processing from income received interest any retain to allow the Group income is funds, instead of an invoiced fee. Such interest the client’s specifically mentioned as the fee for performing contractual tasks and obligations. Given that it is not incidental to the underlying goods is classified as revenue received such revenue and services delivered, of goods and services. the rendering generated from the rendering generated from distinguishes between revenue The Group on received interest representing of goods and services and revenue incidental that are by the Group client monies held and administered to be ancillary to the This income is considered to services delivered. customers. Interest to the Group’s underlying fee paid services delivered and the revenue of the Group’s is an important source income received Notes to the consolidated financial statements financial consolidated to the Notes Notes to the consolidated financial statements FOR THE YEAR ENDED 31 DECEMBER 2018

2.1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Costs to date and costs to complete for each project are continually (CONTINUED) monitored for each project through a monthly review process. If it becomes apparent that contract costs will exceed contract revenue, Transactional revenue then the loss is recognised immediately as an expense in the income Transactional revenue is earned in the Investment Solutions and EQ US statement. businesses representing commission earned on the purchase and sale of The following table illustrates revenue recognition policies predominantly shares and on foreign exchange transactions. used in each reporting segment: Revenue is recognised at a point in time when the performance or Professional Out-of-pocket- Software and Transactional Intermediary processing of the related transactions takes place. Segment services expenses support fees income Further considerations in relation to long-term contracts Investment • • • solutions Where delivery of the services described above spans more than one Intelligent • • accounting period, revenue is either recognised over time or at a point solutions in time. Where the over time criteria in IFRS 15 Revenue from Contracts Pensions • • with Customers (IFRS 15) are satisfied, the Group recognises revenue solutions using the ‘percentage of completion’ method. This generally occurs EQ US • • • • within the Investment Solutions division for the supply of corporate Interest • actions and within the Intelligent Solutions division for software solutions. These services typically take less than one year to perform but, when the Costs arising prior to the Group being awarded a contract, or achieving service falls into two or more accounting periods, there is management preferred bidder status, and mobilisation costs are expensed to the judgement around how much revenue to recognise in each period. income statement as incurred. Where provided for under the terms of the contract, the stage of Once the Group is awarded a contract, the incremental costs of obtaining completion is measured by reference to the contract costs incurred up to or fulfilling the contract are recognised as an asset only if the Group the end of the reporting period, as a percentage of the total estimated expects to recover them. These assets are subsequently charged to the cost for the contract. Total costs incurred under contracts in progress, income statement over the expected contract period using a systematic net of amounts transferred to the income statement, are stated less basis that mirrors the pattern in which the Group recognises the foreseeable losses and payments on account. Where the over time contracted revenue. criteria are not satisfied, and the contract allows, revenue is recognised when the performance obligations are delivered to the customer, which Revenue recognised for goods and services, but not yet billed, is may not be until the end of the contractual period. reflected in the statement of financial position within contract fulfilment assets. There can be a significant period of time between revenue In determining how much revenue to recognise, management is recognition and invoicing where revenue is recognised at a point in required to make an assessment of the expected costs to complete the time but invoices are raised over time. This is evident when we deliver contract. Forecasting contract costs involves judgements around the term licences where the performance obligation is fulfilled on delivery number of hours to complete a task, cost savings to be achieved over of the licence but billing occurs throughout the contract term. Revenue time, anticipated profitability of the contract, as well as contract-specific is only recognised when supported by a written client contract and performance KPIs. Where a contract is anticipated to make a loss, these recoverability is expected in line with the supporting contract. Amounts judgements are also relevant in determining whether or not an onerous billed in advance of work being performed are deferred in the statement contract provision is required and how this is to be measured. of financial position as deferred income. Contract revenue is measured as the fair value of the consideration Operating segments receivable. The fair value of consideration might vary due to variations in Operating segments are reported in a manner consistent with the a contract. A variation is only included revenue when it is probable that internal reporting provided to the chief operating decision maker. the customer will approve the variation and that the amount of revenue The chief operating decision maker, who is responsible for allocating can be reliably measured. An increase in scope of a contract will increase resources and assessing performance of the operating segments, has both the total anticipated revenue and costs to complete the contract. been identified as the Board of Directors.

Government grants Grants that compensate the Group for expenses incurred are recognised in the income statement in the same periods in which the expenses are recognised. Grants relating to operating expenditure are recognised in the income statement as they are earned. Grants relating to intangible assets are netted against the related expenditure, prior to capitalisation, and amortised over the useful life of the asset.

Operating lease payments Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives received are recognised in the income statement as an integral part of the total lease expense.

144 SECTION 03 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Equiniti Group plc Annual Report 2018 145 Not past due – 0.2% Past due 1–30 days – 0.1% 0.1% Past due 31–60 days – 0.6% Past due 61–90 days – Past due 90+ days – 4.7% the fair value of services Contract fulfilment assets – representing but not yet invoiced, and costs capitalised and licences provided obtaining, and fulfilling, the contract from income which deferred Contract fulfilment liabilities – representing recognition. of delayed revenue is higher as a result at a point in time, rather than the over licence term, be recognised to be no further performance obligations required are when there on these of income sales. This leads to earlier recognition delivered. in transitioning incurred significant costs are transition phase where Under previous supplier to the Group. a previous customers from in line with the cost and would be recognised accounting, revenue these transitional services. Under IFRS 15, transition to provide effort any performance obligation, not a separate and therefore activities are over the life of the This contract. recognised are associated revenues for transition work completed. of revenue leads to later recognition a simplified model which permits loss approach credit A new expected fulfilment and contract receivables impairment of trade for the Group’s This model applies 1 January 2018. a credit been appliedassets, has from that risk of default based on historical receivables against risk percentage as balance Using the into certain age brackets. receivables grouped are and level we have assessed theat 31 December 2017, profile payment this date and have in theof bad debts experienced 12 months from as follows: percentages risk established the credit • • • • • similar fulfilment assets share and contract receivables trade The Group’s we have chosen to apply the Therefore risk characteristics by nature. has The Group on all outstanding receivables. same default percentage and contract assets as a high risk on its trade receivables a low credit customers listed on the large is derived from of revenue proportion major international and historical defaults stock exchanges have been the IFRS 9 on the impact of applying and small. As a result, infrequent was not material. 2017 results Impact of adoption 15 – IFRS has 1 January 2018 and the Group from IFRS 15 became effective basis. The year ended on a fully retrospective adopted the standard under IFRS 15 and the 2017 31 December 2018 is the first year reported the changes in the timing of reflect to comparatives have been restated and cost recognition. revenue or the cash profitability IFRS 15 will not impact the lifetime revenues, the majority of the Group’s flows of contracts and does not affect on the adoption of IFRS 15 are The main changes from streams. revenue licences and on the sale of software recognition the timing of revenue transition work on multi-period in particular: contracts, licences will fixed-term right to use software from recognised – Revenue is a some multi-period pension administration contracts, there – In statement of financial position now includes: The Group’s • • to the comparative year ended Details of the restatements set out in note 9.7. The adoption of IFRS 15 31 December 2017 are results. reported did on the not have a material impact Group’s

IFRS 9 Financial Instruments (IFRS 9) Contracts with Customers (IFRS 15) IFRS 15 Revenue from

FOR THE YEAR ENDED 31 DECEMBER 2018 YEAR ENDED 31 FOR THE ACCOUNTING POLICIES OF SIGNIFICANT 2.1 SUMMARY (CONTINUED) Net finance costs on own receivable payable, interest interest Net finance costs comprise of defined cost and losses and the exchange gains interest funds, foreign on plan assets. pension scheme liabilities, net of the return expected in the income is recognised payable income and interest Interest method. interest using thestatement as it accrues, effective Taxation is tax. Tax and deferred for the year comprises current on the profit Tax Notes to the consolidated financial statements financial consolidated to the Notes to in the income statement, except to the extent that it relates recognised in equity. which case it is recognised in in equity, directly items recognised tax is the on the expected tax payable taxable income for the Current or substantively using tax rates enacted at the enacted statement of year, of financial position any adjustment date, and to tax payable in respect years. previous between the carrying on temporary differences tax is provided Deferred purposes and amounts of assets and liabilities reporting for financial the amounts used for taxation purposes. The following temporary of goodwill, the for: the initial recognition not provided are differences neither accounting of assets or liabilities that affect initial recognition other than in a business combination, and differences nor taxable profit to investments in subsidiaries to the extent that they will relating The amount of deferred future. in the foreseeable not reverse probably or is based on the expected manner of realisation tax provided settlementthe of carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the statement of financial position date. AMENDMENTS ADOPTED AND 2.2 NEW STANDARDS for the first timefor has applied the following standards The Group periods commencing 1 January 2018: reporting • • has changed certain accounting policies in adopting of IFRS The Group The adoption of IFRS 15 has required required. were 9; no restatements of prior year changes in accounting policies, as well as restatement and financial position. A number of other amendments adopted results 1 January 2018 did not materially impact the amounts recognised from not expected to significantly affect or prior year and are in the current periods. future Impact of adoption – IFRS 9 of classification measurement and the recognition, IFRS 9 addresses financial assets and financial liabilities and was adopted on 1 January for financial 2018. Management has assessed the new requirements assets previously no changes to the Group’s were assets and there derivatives classified as held at amortised cost under IAS 39. The Group’s at fair value designated as cash flow hedges continue to be recognised income under IFRS 9. other comprehensive through Notes to the consolidated financial statements FOR THE YEAR ENDED 31 DECEMBER 2018

2.3 NEW STANDARDS AND INTERPRETATIONS NOT YET ADOPTED The total cash outflow for lease payments will not change under IFRS 16, but certain lease payments currently treated as cash flows from operating The following new standards is effective for annual periods beginning activities will be presented as cash flows from financing activities. This will after 1 January 2019 and has not yet been adopted by the Group. decrease cash outflows from operating activities and an increase cash IFRS 16 Leases outflows from financing activities. IFRS 16 was issued in January 2016 and is effective for annual reporting The Group also anticipates that certain key performance indicators periods beginning on or after 1 January 2019. The Group will apply IFRS will be impacted, such as underlying EBITDA margin, operating cash 16 on 1 January 2019 and it is expected to have a material impact on the flow conversion and leverage. EBITDA is a key input to each of these financial statements for the year ended 31 December 2019. measures and will increase as a result of IFRS 16, as the Group no longer recognises a rental expense and the depreciation and interest expenses IFRS 16 replaces the current leasing standard, IAS 17 Leases, and details are outside of this measure. the requirements for the classification, measurement and recognition of lease arrangements. IFRS 16 ends the distinction between finance leases There are no other new IFRSs or IFRS IC interpretations not yet adopted and operating leases that was characteristic of IAS 17. Instead, IFRS 16 which would be expected to have a material impact on the financial requires the majority of leases to be recognised on the statement of statements of the Group. financial position. 2.4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS Assets that are deemed to be of low value are outside the scope of IFRS The Group makes estimates and judgements concerning the future, the 16. The Group defines low value assets as items that would have a value results of which may affect the carrying values of assets and liabilities at of £5,000 or less when new. Similarly, leases with a term of 12 months or the year end, as well as the revenue and costs reported for the period. less are also outside the scope of IFRS 16. There will be no changes to Estimates and assumptions are continually evaluated and are based on the Group’s accounting for low value or short term leases. historical experience and other factors, including expectations of future The Group will transition to IFRS 16 using the modified retrospective events that are believed to be reasonable under the circumstances. approach. Under this approach the lease liability will be measured as The accounting estimates that have a significant risk of causing a material the present value of the minimum lease payments that are unpaid on adjustment to the carrying values of assets and liabilities within the next 1 January 2019. However the right of use asset will be measured at financial year are described below. depreciated cost, as though IFRS 16 had been applied from the lease commencement date. Accounting estimates The cumulative effect of adopting IFRS 16 will be recognised as an Pension assumptions adjustment to the opening balance of retained earnings on 1 January The present value of the net defined benefit pension obligation is 2019. The Group is not permitted to restate its comparative financial dependant on a number of factors that are determined on an actuarial statements under the modified retrospective approach. basis, using a number of assumptions. These assumptions, which are set Since IFRS 16 was issued, the Group has been working to identify out in note 9.3, include salary rate increases, interest rates, inflation rates, the leases that will be impacted by the new standard. The Group has discount rates and mortality rates. Any changes in these assumptions identified its leased properties as the main leases that will be impacted. will impact the carrying value of the pension obligation and a sensitivity analysis has been disclosed in note 9.3. The Group also has leases for IT equipment. These leases were designated as finance leases under IAS 17 and, using the practical The discount rate used for calculating the present value of future pension expedient in IFRS 16, the value of the right-of-use asset and lease liability liability cash flows is based on interest rates of high-quality corporate on transition will be equal to the carrying amount of the leased asset and bonds that have terms to maturity approximating to the terms of the lease liability under IAS 17. As at 31 December 2018, the carrying value related pension obligation. of financed leased assets was £1.1m and the carrying value of finance Contingent consideration lease liabilities was £1.1m. When the Group makes an acquisition, consideration for the business On 1 January 2019, the Group will recognise right-of-use assets in can take the form of cash, deferred consideration and contingent property, plant and equipment in the statement of financial position of consideration. The contingent consideration payable is based on post- £36.2m relating to leased properties. Lease liabilities for future lease acquisition targets of the acquired business. Deferred consideration is payments of £42.7m will also be recognised in the statement of financial not based on post-acquisition targets and is generally only dependant position in other financial liabilities. Therefore the Group estimates a on the passage of time before payment is made to the seller. £6.5m reduction in net assets when the new standard is adopted on 1 January 2019. The criteria that must be met in order for a payment of contingent consideration to be made can vary amongst the Group’s acquisitions. The operating lease rental expense for 2018 is £8.7m and has been These can include revenue and EBITDA targets for the acquired business charged to administrative costs in the income statement. However in or of the business unit that the acquired business is joining. Provisions 2019 the majority of these expenses will be replaced by a depreciation for contingent consideration are initially recognised at fair value. These expense of £5.6m, which is recognised separately from administrative estimates are updated at each reporting date by comparing the latest costs in the income statement. There will also be interest charged on performance, budgets and forecasts of the acquired business to the the lease liabilities of £1.3m that is recognised within finance costs. The earn-out arrangement in the share purchase agreement. Group expects that IFRS 16 will have a marginal impact on profit before income tax in 2019.

146 SECTION 03 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Equiniti Group plc Annual Report 2018 147 Group’s the with line in rateably, time, over recognised is

services

Judgements in applying the Group’s accounting policies in applying theJudgements Group’s multipleRevenue on contracts element contracts have multiple such as the components, delivery of Where and implementation undertaken and support services to be software is judgement in determining over the course of the contract, there performance obligations. separable whether the various components are separable, the contractual revenues If the obligations performance are need to be applied to the of the fair value individual components. the delivery of contacts. Revenue from profile This impacts the revenue of a perpetual licence, obligation, as a separate performance is for implementation and revenue at a point in time. Whereas recognised support the term of the agreement. performance throughout development Software costs as an internally generated capitalises certain staff The Group judgement, it can be in management’s intangible asset, where, has the ability to develop the assets and the determined that the Group judgement to is technically also exercises feasible. Management project will and that be completed the asset will determine whether the project economic benefits that outweighs its cost. generate future capitalised £16.2m During the year ended 31 December 2018 the Group judgement, it cannot be costs (2017: £15.5m). If, in management’s of staff criteria will be satisfied, the costs of the determined that the recognition expensed to the income statement. are project

FOR THE YEAR ENDED 31 DECEMBER 2018 YEAR ENDED 31 FOR THE AND JUDGEMENTS ACCOUNTING ESTIMATES 2.4 CRITICAL (CONTINUED) best estimatethe of future management’s require Budgets and forecasts business and on other key inputs, such as performance of the acquired fair value of contingent The consideration profitability. rates and growth for profits was £19.7m (2017: £21.2m). If forecast at 31 December 2018 the business during 10% lower than earn out period was each acquired required. in the provision thiswould lead to a £2.5m reduction forecast during the business earn out period for each acquired profits If forecast in this lead to an immaterial increase would was 10% higher than forecast required. the provision intangible assets of acquired Valuation with IFRS 3, When a business combination occurs, in accordance determine themanagement needs to of net assets acquired. fair value intangibles, that are This includes assets, such as customer-related business. Therefore in the books of the acquired not recognised management needs to calculate the fair value of intangible assets arising on acquisition. on two key assumptions; This is based the discount rate rate. and the long-term growth to the acquisition intangibles related The fair value of customer-related of EQ US was £102.0m. If the discount rate used was one percentage the If discount the value of the asset would be £5.3m lower. point higher, the value of the asset would point lower, rate used was one percentage long- in the forecast point increase A one percentage be £5.8m higher. the value of the by £3.2m and a asset rate would increase term growth the value by £3.0m. would reduce point decrease one percentage Notes to the consolidated financial statements financial consolidated to the Notes Notes to the consolidated financial statements FOR THE YEAR ENDED 31 DECEMBER 2018

3. OPERATING PROFIT

3.1 REVENUE 2018 2017 (Restated1) Revenue from continuing operations: £m £m Rendering of goods and services 509.7 396.2 Interest income 21.2 10.1 Total revenue 530.9 406.3 1Restated for the adoption of IFRS 15 – see note 1 for details

See note 3.3 for further analysis of the Group’s revenue.

3.2 ADMINISTRATIVE COSTS 2018 2017 (Restated1) Expenses by nature: £m £m Employee benefit expense (note 3.4) 219.8 174.6 Employee costs capitalised in respect of software development (16.2) (15.5) Direct costs 101.2 75.8 Bought-in services 38.6 18.1 Premises costs 7.9 7.2 Operating lease costs 8.7 6.6 Government grants for research and development (0.5) (1.6) Other general business costs 69.9 53.4 Total administrative costs 429.4 318.6 1Restated for the adoption of IFRS 15 – see note 1 for details

3.3 OPERATING SEGMENTS

In accordance with IFRS 8 Operating Segments (IFRS 8), 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, EQ US and Interest, in line with how the Group runs and structures its business. Revenue, EBITDA and underlying EBITDA are key measures of the Group’s performance. EBITDA represents earnings before interest, tax, depreciation and amortisation. The EBITDA of each segment is reported after charging relevant corporate costs based on the business segments’ usage of corporate facilities and services. Underlying EBITDA is adjusted for one-off items which obscure the understanding of the underlying performance of the Group and its respective divisions. These items primarily represent material restructuring, integration and transformational acquisition related expenses.

Total Intersegment Reported revenue revenue Year ended 31 December 2018 £m £m £m Investment Solutions 145.0 (2.5) 142.5 Intelligent Solutions 180.8 (14.9) 165.9 Pension Solutions 138.5 (9.5) 129.0 Interest 12.1 – 12.1 UK and Europe 476.4 (26.9) 449.5 EQ US* 81.4 – 81.4 USA 81.4 – 81.4 Total revenue 557.8 (26.9) 530.9 *Included within USA is £9.1m of interest revenue which is reported and managed within the EQ US results. 148 SECTION 03 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Equiniti Group plc Annual Report 2018 149 – £m £m £m £m 72.6 10.1 91.4 29.2 333.7 406.3 2017 2017 Total 406.3 406.3 132.3 124.4 139.5 406.3 208.0 328.6 revenue Reported – £m £m £m – 81.4 (2.8) 4.6 £m 2018 2018 416.7 114.2 449.5 (15.0) (10.5) 14.7 530.9 530.9 (28.3) 19.3 EQ US Intersegment

£m 10.1 Total Total 139.4 150.0 135.1 434.6 £m 27.0 54.3 10.0 91.3 revenue Pension Solutions – £m 12.7 25.2 37.9 Solutions Intelligent £m 37.0 19.2 123.9 180.1 Solutions Investment 1

Restated for the adoption 15 – see note 1 for details of IFRS Less than one year Between one and five years More than five years More Point in time revenue primarily relates to our share and foreign exchange dealing revenue streams where the performance obligation is fulfilled where streams exchange dealing revenue and foreign to our share primarily relates Point in time revenue from these can be dependent on transactions closing. It also includes revenue when the transaction completes, plus corporate action fees where met. client once delivery and acceptance conditions are is recognised revenue right to use licences where has a legal right to revenue the Group businesses, including corporate actions, where registration share to our primarily relates Over time revenue support services. business and software for work performed, our pensions administration remediation business, our customer Unfulfilled performance obligations as at 31 December 2018 allocated the to contractual contracted revenue amount of the Group’s The table below shows the aggregate revenue as, or when, the contractual recognising this anticipates Group unsatisfied or partially satisfied. The performance obligations that are satisfied is as follows: performance obligations are Total revenue Total Over time Total revenue Total recognition Timing of revenue Point in time USA Reported revenue by geographical market Reported revenue UK and Europe 1 Year ended 31 December 2017 – restated ended Year 3.3 OPERATING SEGMENTS (CONTINUED) 3.3 OPERATING Intelligent Solutions Pension Solutions Interest Investment Solutions Total revenue Total The table above represents the contractual consideration which the Group will be entitled to receive from customers. The total revenue that will customers. The total revenue from will be entitled to receive the contractual consideration which the Group The table above represents new wins, scope changes and contract extensions. However these elements have will also include transactional revenue, be earned by the Group revenue will be earned as the work is performed. not contracted and the above as they are the figures been excluded from a At 31 December 2018, these contracts represented automatically until cancelled by the either party. contracts renew Many of the Group’s revenues. However these contracts have not been included in the analysis above as the Group contractual of the Group’s significant proportion for a period of 12 months or less. typically has a contractual right to revenue has taken the practical expedients under IFRS 15 and has excluded the following revenue: In addition, the Group – contracts with a life of less than one year, that as the is earned and invoiced work is performed. – revenue

FOR THE YEAR ENDED 31 DECEMBER 2018 YEAR ENDED 31 FOR THE Notes to the consolidated financial statements financial consolidated to the Notes Notes to the consolidated financial statements FOR THE YEAR ENDED 31 DECEMBER 2018

3.3 OPERATING SEGMENTS (CONTINUED) 2018 2017 (Restated1) Underlying EBITDA £m £m Investment Solutions 47.3 43.5 Intelligent Solutions 39.8 32.7 Pension Solutions 19.7 24.6 Interest 12.1 10.1 UK and Europe 118.9 110.9 EQ US 19.2 – USA 19.2 – Total segments 138.1 110.9 Central costs (15.8) (12.7) Total underlying EBITDA 122.3 98.2 1Restated for the adoption of IFRS 15 - see note 1 for details

Central costs principally include corporate overheads which cannot be allocated to a specific segment or segments.

2018 2017 Depreciation and amortisation £m £m Investment Solutions (23.6) (21.5) Intelligent Solutions (12.0) (10.8) Pension Solutions (9.1) (8.5) EQ US (5.7) – Total segments (50.4) (40.8) Central costs (11.2) (9.9) Total (61.6) (50.7)

2018 2017 (Restated1) Reconciliation of underlying EBITDA to profit before tax £m £m Underlying EBITDA 122.3 98.2 Non-operating charges (20.8) (10.5) Depreciation and amortisation (61.6) (50.7) Net finance costs (15.3) (11.7) Profit before tax 24.6 25.3 1Restated for the adoption of IFRS 15 - see note 1 for details

Assets and liabilities per segment are not items which are reviewed by the Board of Directors and is therefore not disclosed within the segmental reporting. However, capital expenditure is a key measure and is disclosed below. Capital expenditure consists of additions to property, plant, equipment and software.

2018 2017 Capital expenditure £m £m Investment Solutions (6.9) (12.3) Intelligent Solutions (6.4) (6.8) Pension Solutions (4.1) (8.3) EQ US (21.0) – Total segments (38.4) (27.4) Central (7.6) (5.1)

Total (46.0) (32.5) 150 SECTION 03 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Equiniti Group plc Annual Report 2018 151 – – 50 £m 7.6 3.5 429 113 631 774 16.0 2017 2017 2017 2017 4,036 1,150 1,553 1,244 3,754 147.5 4,578 4,578 4,578 174.6 Number Number Number 83 £m 9.0 6.4 567 197 716 416 837 416 17.6 2018 2018 2018 2018 4,371 1,234 1,446 1,323 3,799 186.8 5,135 5,135 5,135 219.8 Number Number Number

Total employees Total and salaries Wages Social security costs Other pension costs payment expense (note 7.2) Share-based employee benefit expense Total The aggregate payroll costs of these persons were as follows: costs of these persons were payroll The aggregate The average monthly number of persons employed by the Group (including Directors) during the year was as follows: (including Directors) The average monthly by the number of persons employed Group Number of employees – by function:Number of employees Operations Support functions Sales and marketing employees Total Number of employees – by operating segment: Investment Solutions Intelligent Solutions Pensions Solutions EQ US Central employees Total Number of employees – by geography: UK Rest of Europe Asia North America 3.4 STAFF NUMBERS AND COSTS NUMBERS 3.4 STAFF

FOR THE YEAR ENDED 31 DECEMBER 2018 YEAR ENDED 31 FOR THE Notes to the consolidated financial statements financial consolidated to the Notes Notes to the consolidated financial statements FOR THE YEAR ENDED 31 DECEMBER 2018

4 INVESTMENTS

4.1 ACQUISITIONS OF BUSINESSES

EQ US On 1 February 2018, the Group completed on the acquisition of the Wells Fargo Shareowner Services (EQ US) business for a total cash consideration of $227.0m (£159.6m), deferred consideration of $0.1m (£0.1m) settled in June, plus £9.8m in settlement of a deal contingent forward used to hedge the transaction consideration. EQ US is a share registration business based in the United States.

The Group took control of the business on 1 February 2018. On this date the business had net assets with a fair value of £111.6m. The results of the business have been consolidated since the date of control and EQ US contributed £81.4m of revenue and £2.1m profit before income tax to the Group’s results in 2018. If the business had been acquired on 1 January 2018 it would have contributed an additional £6.1m of revenue to the Group’s results in 2018. The acquisition-related costs of acquiring and integrating EQ US into the Group amounted to £20.8m in the year and these have been reflected within the income statement. The costs consisted of transaction costs of £6.1m, mainly relating to deal advisory and legal fees, and integration costs of £14.7m relating to programme delivery, the development of standalone functions and delivery of systems and processes to run the business. These have been included in administrative costs in the income statement.

On acquisition, intangible assets relating to customer contracts and related relationships were identified, with a fair value of £102.0m. These are being amortised over 20 years. The value of goodwill reflects amounts in relation to the expected benefit of the ability to generate new streams of revenue and expected synergies of combining the operations of EQ US and the Group. The amounts relating to the intangible assets and goodwill are provisional and subject to further evaluation and adjustment, in accordance with accounting standards.

Fair value of identifiable assets acquired and liabilities assumed £m Intangible assets 102.0 Deferred tax asset 0.2 Property, plant and equipment 1.4 Trade and other receivables 4.8 Contract fulfilment assets 4.6 Trade and other payables (0.5) Contract fulfilment liabilities (0.8) Provisions (0.1) Net identifiable assets and liabilities 111.6 Goodwill on acquisition 57.9 Total consideration and cash outflow in the period 169.5

Boudicca Proxy On 26 April 2018, the Group purchased the entire issued share capital of Boudicca Proxy Ltd (Boudicca Proxy) for £1.1m plus contingent consideration of up to £0.8m payable in 2019 and up to £1.5m payable in 2021. Boudicca Proxy is a specialist shareholder engagement company providing expertise in the areas of progressive proxy solicitation, shareholder communications, corporate governance advisory, share ownership analysis and global equity intelligence.

The Group took control of Boudicca Proxy on 26 April 2018. On this date the business had net assets of £1.1m. The results of the business have been consolidated since the date of control and Boudicca Proxy contributed £1.4m of revenue and £0.2m profit before income tax to the Group’s results in 2018. If the business had been acquired on 1 January 2018 it would have contributed an additional £0.8m of revenue and £0.1m net profit to the Group’s results in 2018. The additional costs to the Group of acquiring Boudicca Proxy in the year, such as legal fees and stamp duty, amounted to £0.1m. These have been included in administrative costs in the income statement.

On acquisition, the fair value of the intangible assets relating to customer contracts and related relationships were re-evaluated, resulting in an upward adjustment of £1.0m to the fair value of the net assets acquired. The value of goodwill reflects amounts in relation to the expected benefit of the ability to generate new streams of revenue and expected synergies of combining the operations of Boudicca Proxy and the Group. The amounts relating to the intangible assets and goodwill are provisional and subject to further evaluation and adjustment, in accordance with accounting standards.

152 SECTION 03 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Equiniti Group plc Annual Report 2018 153 1.0 0.1 0.4 0.2 2.2 1.4 0.1 0.8 2.3 4.2 1.1 1.3 3.3 0.9 5.5 3.2 £m £m (0.4) (0.2) (1.2) (1.7) (0.2) (0.2) (0.2) (2.2) (2.3)

Fair value of identifiable assets acquired and and liabilities assumed Fair value of identifiable assets acquired 4.1 ACQUISITIONS OF BUSINESSES (CONTINUED) OF BUSINESSES 4.1 ACQUISITIONS Intangible assets plant and equipment Property, and other receivables Trade Cash and cash equivalents and other payables Trade Deferred income tax liabilities Deferred Net identifiable assets and liabilities Goodwill on acquisition Contract fulfilment liabilities Provisions income tax liabilities Deferred Net identifiable assets and liabilities Goodwill on acquisition Total consideration Total plant and equipment Property, and other receivables Trade Cash and cash equivalents and other payables Trade consideration Total Fair value of identifiable assets acquired and liabilities assumed Fair value of identifiable assets acquired Aquila Group HoldingsLimited and its subsidiaries (Aquila Group) of Aquila Group capital issued share the entire purchased On 31 October 2018, theGroup solutions for both the life assurance and the pensions markets. software provide for consideration Aquila Group of £5.5m. of the business on 31 October 2018. On this date the business had net assets of £1.3m. The results of Aquila Group took control The Group income tax to the before and £0.1m loss contributed £1.2m of revenue and Aquila Group have been consolidated the since date of control and an additional on 1 January 2018 it would have contributed £5.4m of revenue in 2018. If the acquired business had been results Group’s such as legal fees and in the year, of acquiring Aquila Group additional in 2018. The costs to the Group results £0.7m net loss to the Group’s to £0.3m. These have been included in administrative amounted in the costs income statement. stamp duty, re-evaluated, were and software relationships related to customer contracts and On acquisition, the fair values of intangible assets relating amounts in The value of goodwill reflects adjustment to the of £1.3m fair value of the net assets acquired. upward in a combined resulting of combining the operations of revenue and expected synergies of to the expected benefit of the ability to generate new streams relation and subject to further evaluation and provisional to the assets and goodwill intangible are relating The amounts and the Group. Aquila Group with accounting standards. adjustment, in accordance Cash acquired Contingent consideration (discounted) Net cash outflow in the period As at 31 December 2018, the minimum amount of contingent considerationpayable was £nil and the maximum amount was £2.3m. The final over financial performance the qualifying if period and is only payable the amount to be paid will determined based on the be acquiree’s in line with its business plan. business grows Intangible assets Cash acquired Net cash outflow in the period

FOR THE YEAR ENDED 31 DECEMBER 2018 YEAR ENDED 31 FOR THE Notes to the consolidated financial statements financial consolidated to the Notes Notes to the consolidated financial statements FOR THE YEAR ENDED 31 DECEMBER 2018

4.2 PROPERTY, PLANT AND EQUIPMENT

Leasehold Freehold Office Fixtures & improvements improvements equipment fittings Total £m £m £m £m £m Cost Balance at 1 January 2017 10.8 – 29.4 5.2 45.4 Additions 1.1 – 5.4 0.1 6.6 Disposals (0.8) – (1.0) (0.7) (2.5) Reclassification (0.8) 0.8 – – – Balance at 31 December 2017 10.3 0.8 33.8 4.6 49.5

Balance at 1 January 2018 10.3 0.8 33.8 4.6 49.5 Acquisition of business 1.1 – 0.1 0.4 1.6 Additions 1.9 – 5.8 0.2 7.9 Disposals (0.3) – (1.4) (0.3) (2.0) Translation adjustment 0.2 – 0.2 – 0.4 Balance at 31 December 2018 13.2 0.8 38.5 4.9 57.4

Accumulated depreciation Balance at 1 January 2017 5.5 – 18.9 3.9 28.3 Depreciation charge for the year 1.1 – 4.0 0.6 5.7 Disposals (0.8) – (1.0) (0.7) (2.5) Balance at 31 December 2017 5.8 – 21.9 3.8 31.5

Balance at 1 January 2018 5.8 – 21.9 3.8 31.5 Depreciation charge for the year 1.3 – 4.1 0.6 6.0 Disposals (0.3) – (1.4) (0.3) (2.0) Balance at 31 December 2018 6.8 – 24.6 4.1 35.5

Net book value Balance at 31 December 2017 4.5 0.8 11.9 0.8 18.0

Balance at 31 December 2018 6.4 0.8 13.9 0.8 21.9

Included within office equipment are assets held under finance leases with a cost of £2.8m as of 31 December 2018 (2017: £2.6m). These assets had a net book value as at 31 December 2018 of £1.1m (2017: £1.6m).

154 SECTION 03 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Equiniti Group plc Annual Report 2018 155 0.1 0.1 0.3 £m 16.0 25.9 38.1 18.5 45.0 55.6 Total 986.4 168.7 316.3 361.4 361.4 417.3 667.0 836.4 1,028.4 1,028.4 1,253.7 – – 2.9 0.2 0.1 0.3 £m 12.4 26.7 31.7 323.7 138.8 223.2 326.8 104.0 161.2 188.0 326.8 443.2 188.0 220.0 assets related related intangible Acquisition- – – 2.1 0.2 0.4 0.1 £m 25.9 38.1 18.3 23.9 74.4 89.1 219.6 247.8 155.1 173.4 247.8 286.4 173.4 197.3 Software – – – – – – – – – – 6.0 £m (0.3) 11.0 64.3 443.1 453.8 453.8 524.1 453.8 524.1 Goodwill

4.3 INTANGIBLE ASSETS 4.3 INTANGIBLE Cost Balance at 1 January 2017 Acquisition of business Additions Translation adjustment Translation Balance at 31 December 2017 Balance at 1 January 2018 Acquisition of business Additions Translation adjustment Translation Balance at 31 December 2018 Accumulated amortisation Balance at 1 January 2017 Amortisation for the year Translation adjustment Translation Balance at 31 December 2017 Balance at 1 January 2018 Amortisation for the year Translation adjustment Translation Balance at 31 December 2018 Net book value Balance at 31 December 2017 Balance at 31 December 2018 Software predominately relates to investment in the functionality of the Group’s main operating platforms. Included within additions in the year to investment in the functionality of the Group’s relates predominately Software development. of internal software costs that have been capitalised in respect is £16.2m (2017: £15.5m) of employee staff business combinations. intangible assets consist primarily of customer lists arising from Acquisition-related Goodwill is the only intangible asset with an indefinite life.

FOR THE YEAR ENDED 31 DECEMBER 2018 YEAR ENDED 31 FOR THE Notes to the consolidated financial statements financial consolidated to the Notes Notes to the consolidated financial statements FOR THE YEAR ENDED 31 DECEMBER 2018

4.3 INTANGIBLE ASSETS (CONTINUED)

Goodwill Goodwill arose initially on the acquisition of the Lloyds TSB Registrars business and subsequently through equity and trade and asset acquisitions. For goodwill on current year acquisitions see note 4.1. Goodwill is monitored by management in line with the Group’s operating segments: Investment Solutions, Intelligent Solutions, Pensions Solutions, EQ US and Interest.

Opening Translation Closing balance Acquisitions Disposals adjustment balance Year ended 31 December 2018 £m £m £m £m £m Investment Solutions 289.4 2.2 – – 291.6 Intelligent Solutions 77.2 – – 0.1 77.3 Pensions Solutions 87.2 4.2 – – 91.4 EQ US – 57.9 – 5.9 63.8 Total goodwill 453.8 64.3 – 6.0 524.1

Opening Translation Closing balance Acquisitions Disposals adjustment balance Year ended 31 December 2017 £m £m £m £m £m Investment Solutions 289.4 – – – 289.4 Intelligent Solutions 66.5 11.0 – (0.3) 77.2 Pensions Solutions 87.2 – – – 87.2 EQ US – – – – – Total goodwill 443.1 11.0 – (0.3) 453.8

Impairment testing Goodwill is tested annually for impairment. The recoverable amount of cash-generating units (CGUs) has been determined in accordance with IAS 36 Impairment of Assets. This is determined from value-in-use calculations, being the present value of net cash flows generated by the business over the period for which management expects to benefit from the acquired business. The key assumptions for the value-in-use calculations are those regarding discount rates and revenue growth rates. The CGU 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 to 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 value in use is greater than the carrying value of goodwill. The revenue growth rate applied beyond the approved forecast period is in line with underlying UK and US macro-economic forecasts.

Year ended 31 December 2018 UK & Europe USA Period on which management approved forecasts are based 3 years 3 years Revenue growth rate applied beyond approved forecast period 2.1% 1.8% Discount rate pre-tax 8.1% 9.8%

Year ended 31 December 2017 UK & Europe USA Period on which management approved forecasts are based 3 years – Revenue growth rate applied beyond approved forecast period 2.4% – Discount rate pre-tax 10.2% –

Sensitivity analysis A sensitivity analysis was carried out on the key estimates made within the value-in-use model, applying a 1% increase in the pre-tax discount rate and a 1% reduction in the growth rate. In the opinion of the Directors, there are no reasonably possible changes to these key assumptions which would cause the carrying value of any CGU to exceed its recoverable amount.

156 SECTION 03 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Equiniti Group plc Annual Report 2018 157 50 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 2018 % on 31 December Ownership Principal activities Holding company Dormant Holding company Dormant Non-trading Dormant Proxy solicitation Proxy Dormant Software service provider Software Software service provider Software Dormant Computer software consultancy Computer software Dormant Dormant Dormant Dormant Business process outsourcing Business process Dormant Software service provider Software Company secretarial Software service provider Software Computer software development Computer software Financial services Technology enabled services Technology Elder House, St Georges Business Park, Brooklands Business Park, Brooklands Elder House, St Georges Kingdom KT13 0TS, United Surrey, Road, Weybridge, Sussex, West Crawley, Sutherland House, Russell Way, RH10 1UH, United Kingdom Registered office address office Registered Elder House, St Georges Business Park, Brooklands Business Park, Brooklands Elder House, St Georges Kingdom KT13 0TS, United Surrey, Road, Weybridge, Sussex, West Crawley, Sutherland House, Russell Way, RH10 1UH, United Kingdom Elder House, St Georges Business Park, Brooklands Business Park, Brooklands Elder House, St Georges KT13 0TS, United Kingdom Surrey, Road, Weybridge, Sussex, West Crawley, Sutherland House, Russell Way, RH10 1UH, United Kingdom Elder House, St Georges Business Park, Brooklands Business Park, Brooklands Elder House, St Georges KT13 0TS, United Kingdom Surrey, Road, Weybridge, Elder House, St Georges Business Park, Brooklands Business Park, Brooklands Elder House, St Georges KT13 0TS, United Kingdom Surrey, Road, Weybridge, Elder House, St Georges Business Park, Brooklands Business Park, Brooklands Elder House, St Georges KT13 0TS, United Kingdom Surrey, Road, Weybridge, Elder House, St Georges Business Park, Brooklands Business Park, Brooklands Elder House, St Georges KT13 0TS, United Kingdom Surrey, Road, Weybridge, Elder House, St Georges Business Park, Brooklands Business Park, Brooklands Elder House, St Georges KT13 0TS, United Kingdom Surrey, Road, Weybridge, Sutherland House, Russell Way, Crawley, West Sussex, West Crawley, Sutherland House, Russell Way, RH10 1UH, United Kingdom Elder House, St Georges Business Park, Brooklands Business Park, Brooklands Elder House, St Georges KT13 0TS, United Kingdom Surrey, Road, Weybridge, Aspect House, Spencer Road, Lancing, West Sussex, Aspect House, Spencer Road, Lancing, West BN99 6DA, United Kingdom Elder House, St Georges Business Park, 207 Brooklands Business Park, 207 Brooklands Elder House, St Georges KT13 0TS, United Kingdom Surrey, Road, Weybridge, Elder House, St Georges Business Park, Brooklands Business Park, Brooklands Elder House, St Georges KT13 0TS, United Kingdom Surrey, Road, Weybridge, Aspect House, Spencer Road, Lancing, West Sussex, Aspect House, Spencer Road, Lancing, West BN99 6DA, United Kingdom Elder House, St Georges Business Park, Brooklands Business Park, Brooklands Elder House, St Georges KT13 0TS, United Kingdom Surrey, Road, Weybridge, Elder House, St Georges Business Park, Brooklands Business Park, Brooklands Elder House, St Georges KT13 0TS, United Kingdom Surrey, Road, Weybridge, Elder House, St Georges Business Park, Brooklands Business Park, Brooklands Elder House, St Georges KT13 0TS, United Kingdom Surrey, Road, Weybridge, Elder House, St Georges Business Park, Brooklands Business Park, Brooklands Elder House, St Georges KT13 0TS, United Kingdom Surrey, Road, Weybridge, 102B Newlands Plaza, CNR Lois & Dely, Newlands, Newlands, 102B Newlands Plaza, CNR Lois & Dely, 00181, South Africa Aspect House, Spencer Road, Lancing, West Sussex, Aspect House, Spencer Road, Lancing, West BN99 6DA, United Kingdom Elder House, St Georges Business Park, Brooklands Business Park, Brooklands Elder House, St Georges KT13 0TS, United Kingdom Surrey, Road, Weybridge,

Indirect Investments Indirect Aquila International Limited Equiniti Holdings Limited Name of controlled entity Name of controlled The Directors consider the value of the investments to be supported by their underlying assets. The Group has the following in investments the consider value of the their to be supported by investments The Group underlying assets. The Directors subsidiaries: IN SUBSIDIARIES 4.4 INVESTMENTS Direct Investments Direct Equiniti Finance (Holdings) Ltd Aquila Services UK Limited Equiniti (UK) Finance Ltd Limited Aquila Software Boudicca Proxy Ltd Boudicca Proxy Charter.Net Limited Charter.Net Charter Systems Limited Charter UK Limited Circle of Insight Limited of Circle Claybrook Computing Limited Claybrook Connaught Secretaries Limited Connaught Secretaries Custodian Nominees Limited David Venus & Company LLP David Venus Equiniti Benefactor Limited Equiniti 360 Clinical Limited Equiniti Corporate Nominees Limited Equiniti Data Limited Equiniti David Venus Limited Equiniti David Venus Equiniti Delivery Services Limited Equiniti Employee Services (PTY) Limited Equiniti Financial Services Limited Equiniti Gateway Limited

FOR THE YEAR ENDED 31 DECEMBER 2018 YEAR ENDED 31 FOR THE Notes to the consolidated financial statements financial consolidated to the Notes Notes to the consolidated financial statements FOR THE YEAR ENDED 31 DECEMBER 2018

4.4 INVESTMENTS IN SUBSIDIARIES (CONTINUED) Ownership % on 31 December Name of controlled entity Registered office address Principal activities 2018 Equiniti Global Payments Limited Elder House, St Georges Business Park, Brooklands International payment services 100 Road, Weybridge, Surrey, KT13 0TS, United Kingdom Equiniti HR Solutions Limited Sutherland House, Russell Way, Crawley, West Sussex, Non-trading 100 RH10 1UH, United Kingdom Equiniti India (Private) Limited DLF IT Park, 1/124, Mt Poonamalle High Road, Technology enabled services 100 Ramapuram, Chennai, Tamil Nadu 600 089, India Equiniti ICS Limited 205 Airport Road West, Belfast, BT3 9ED, United Business process outsourcing 100 Kingdom Equiniti (Ireland) Finance Ltd 52–55 Sir John Rogerson’s Quay, Dublin 2, D02 NA07, Non-trading 100 Republic of Ireland Equiniti ISA Nominees Limited Elder House, St Georges Business Park, Brooklands Dormant 100 Road, Weybridge, Surrey, KT13 0TS, United Kingdom Equiniti Jersey Limited 26 New Street, St Helier, JE2 3RA, Jersey Registrars 100

Equiniti KYC Solutions B.V. Donker Curtiusstraat 7, Unit 117-118, 1051 JL Software service provider 100 Amsterdam, The Netherlands Equiniti KYC Systems B.V. Donker Curtiusstraat 7, Unit 117-118, 1051 JL Software service provider 100 Amsterdam, The Netherlands Equiniti Limited Aspect House, Spencer Road, Lancing, West Sussex, Registrars 100 BN99 6DA, United Kingdom Equiniti Nominees Limited Elder House, St Georges Business Park, Brooklands Dormant 100 Road, Weybridge, Surrey, KT13 0TS, United Kingdom Equiniti Pension Trustee Limited Sutherland House, Russell Way, Crawley, West Sussex, Dormant 100 RH10 1UH, United Kingdom Equiniti PMS Limited Sutherland House, Russell Way, Crawley, West Sussex, Software service provider 100 RH10 1UH, United Kingdom Equiniti Registrars Nominees Limited Elder House, St Georges Business Park, Brooklands Dormant 100 Road, Weybridge, Surrey, KT13 0TS, United Kingdom Equiniti Savings Nominees Limited Elder House, St Georges Business Park, Brooklands Dormant 100 Road, Weybridge, Surrey, KT13 0TS, United Kingdom Equiniti Services Limited Elder House, St Georges Business Park, Brooklands Holding company 100 Road, Weybridge, Surrey, KT13 0TS, United Kingdom Equiniti Share Plan Trustees Limited Aspect House, Spencer Road, Lancing, West Sussex, Trustee company 100 BN99 6DA, United Kingdom Equiniti Shareview Limited Elder House, St Georges Business Park, Brooklands Dormant 100 Road, Weybridge, Surrey, KT13 0TS, United Kingdom Equiniti Solutions Limited Elder House, St Georges Business Park, Brooklands Non-trading 100 Road, Weybridge, Surrey, KT13 0TS, United Kingdom Equiniti Trust Company 25th Floor, 90 Park Avenue, New York, NY 10016, United Limited purpose trust company 100 States Equiniti (US) Holdings Limited 1209 Orange Street, Wilmington, Delaware, County of Holding company 100 New Castle 19801, United States Equiniti (US) LLC 1209 Orange Street, Wilmington, Delaware, County of Non-trading 100 New Castle 19801, United States Equiniti (US) Services LLC 1209 Orange Street, Wilmington, Delaware, County of Non-trading 100 New Castle 19801, United States Information Software Solutions Limited Elder House, St Georges Business Park, Brooklands Holding company 100 Road, Weybridge, Surrey, KT13 0TS, United Kingdom icenet Limited Elder House, St Georges Business Park, Brooklands Dormant 100 Road, Weybridge, Surrey, KT13 0TS, United Kingdom

Invigia International Limited Elder House, St Georges Business Park, Brooklands Dormant 100 Road, Weybridge, Surrey, KT13 0TS, United Kingdom

Invigia Limited Elder House, St Georges Business Park, Brooklands Software service 100 Road, Weybridge, Surrey, KT13 0TS, United Kingdom provider 158 SECTION 03 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Equiniti Group plc Annual Report 2018 159 75* 75* 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 2018 % on 31 December Ownership Ownership Holding company Dormant Pensions administration Non-trading Software service provider Software Business process outsourcing Business process Pensions administration Business process outsourcing Business process Company secretarial Dormant Asset recovery Software service provider Software Software service provider Software Software service provider Software Dormant Dormant Software service provider Software Software service provider Software Dormant Holding company Dormant Dormant Dormant Principal activities Registered office address office Registered Donker Curtiusstraat 7, Unit 117–118, 1051 JL The Netherlands Amsterdam, Aspect House, Spencer Road, Lancing, West Sussex, Lancing, West Aspect House, Spencer Road, BN99 6DA, United Kingdom Park Square, Bird Hall Stockport, SK3 0XN, Lane, Bird Park Square, United Kingdom Park Square, Bird Hall Stockport, SK3 0XN, Lane, Bird Park Square, United Kingdom Elder House, St Georges Business Park, Brooklands Business Park, Brooklands Elder House, St Georges KT13 0TS, United Kingdom Surrey, Road, Weybridge, Elder House, St Georges Business Park, Brooklands Business Park, Brooklands Elder House, St Georges KT13 0TS, United Kingdom Surrey, Road, Weybridge, Sutherland House, Russell Way, Crawley, West Sussex, West Crawley, Sutherland House, Russell Way, RH10 1UH, United Kingdom Aspect House, Spencer Road, Lancing, West Sussex, Aspect House, Spencer Road, Lancing, West BN99 6DA, United Kingdom Elder House, St Georges Business Park, 207 Brooklands Business Park, 207 Brooklands Elder House, St Georges KT13 0TS, United Kingdom Surrey, Road, Weybridge, Elder House, St Georges Business Park, 207 Brooklands Business Park, 207 Brooklands Elder House, St Georges KT13 0TS, United Kingdom Surrey, Road, Weybridge, Aspect House, Spencer Road, Lancing, West Sussex, Aspect House, Spencer Road, Lancing, West BN99 6DA, United Kingdom Elder House, St Georges Business Park, Brooklands Business Park, Brooklands Elder House, St Georges KT13 0TS, United Kingdom Surrey, Road, Weybridge, Elder House, St Georges Business Park, Brooklands Business Park, Brooklands Elder House, St Georges KT13 0TS, United Kingdom Surrey, Road, Weybridge, Elder House, St Georges Business Park, Brooklands Business Park, Brooklands Elder House, St Georges KT13 0TS, United Kingdom Surrey, Road, Weybridge, Elder House, St Georges Business Park, Brooklands Business Park, Brooklands Elder House, St Georges KT13 0TS, United Kingdom Surrey, Road, Weybridge, Elder House, St Georges Business Park, Brooklands Business Park, Brooklands Elder House, St Georges KT13 0TS, United Kingdom Surrey, Road, Weybridge, Elder House, St Georges Business Park, Brooklands Business Park, Brooklands Elder House, St Georges KT13 0TS, United Kingdom Surrey, Road, Weybridge, Elder House, St Georges Business Park, Brooklands Business Park, Brooklands Elder House, St Georges KT13 0TS, United Kingdom Surrey, Road, Weybridge, Elder House, St Georges Business Park, Brooklands Business Park, Brooklands Elder House, St Georges KT13 0TS, United Kingdom Surrey, Road, Weybridge, Elder House, St Georges Business Park, Brooklands Business Park, Brooklands Elder House, St Georges KT13 0TS, United Kingdom Surrey, Road, Weybridge, Elder House, St Georges Business Park, Brooklands Business Park, Brooklands Elder House, St Georges KT13 0TS, United Kingdom Surrey, Road, Weybridge, Elder House, St Georges Business Park, Brooklands Business Park, Brooklands Elder House, St Georges KT13 0TS, United Kingdom Surrey, Road, Weybridge, Aspect House, Spencer Road, Lancing, West Sussex, Aspect House, Spencer Road, Lancing, West BN99 6DA, United Kingdom

KYCnet BV L R Nominees Limited MyCSP Limited *The shareholding in MyCSP Limited increased from 51% to 75% in September 2018. from in MyCSP Limited increased *The shareholding capital of the company. share held in the Ordinary All the above investments are MyCSP Trustee Company Limited MyCSP Trustee MyCustomerfeedback.com Limited Pancredit Systems Ltd Pancredit Paymaster (1836) Limited Peter Evans & Associates Limited Prism Communications Limited & Management Prism Cosec Limited Prosearch Asset Solutions Limited Prosearch Refresh Personal Finance Ltd Personal Refresh Riskfactor Solutions Limited Riskfactor Software Limited Riskfactor Software SLC Corporate Services Limited SLC Registrars Limited The Nostrum Group Limited The Nostrum Group Toplevel Computing Limited Toplevel Toplevel Development Limited Toplevel Toplevel Holdings Limited Toplevel Toplevel Software Limited Software Toplevel Trust Research Services Limited Research Trust Wealth Nominees Limited Wealth Name of controlled entity Name of controlled 4.4 INVESTMENTS IN SUBSIDIARIES (CONTINUED) IN SUBSIDIARIES 4.4 INVESTMENTS

FOR THE YEAR ENDED 31 DECEMBER 2018 YEAR ENDED 31 FOR THE Notes to the consolidated financial statements financial consolidated to the Notes Notes to the consolidated financial statements FOR THE YEAR ENDED 31 DECEMBER 2018

4.4 INVESTMENTS IN SUBSIDIARIES (CONTINUED) Audit exemption guarantee The following subsidiaries will take advantage of the exemption from audit of their individual financial statements, under Section 479A of the Companies Act 2006, for the year ended 31 December 2018:

Registration Registration Company name number Company name number Boudicca Proxy Ltd 07847924 Information Software Solutions Limited 03915585 Charter Systems Limited 06147539 Invigia Limited 03318315 Charter UK Limited 02453655 MyCSP Limited 07640786 Claybrook Computing Limited 01287205 Mycustomerfeedback.com Limited 06829521 Equiniti 360 Clinical Limited 04957851 Pancredit Systems Ltd 02215760 Equiniti Data Limited 05350329 Peter Evans & Associates Limited 01870532 Equiniti David Venus Limited 06351754 Prism Communications & Management Limited 04352585 Equiniti Delivery Services Limited 08855189 Prosearch Asset Solutions Limited 02158381 Equiniti Finance (Holdings) Ltd 11092909 Refresh Personal Finance Ltd 07369895 Equiniti ICS Limited NI036763 Riskfactor Software Limited 03923431 Equiniti PMS Limited 03613039 Riskfactor Solutions Limited 02767525 Equiniti Services Limited 00756582 The Nostrum Group Limited 04274181 Equiniti Share Plan Trustees Limited 03925002 Toplevel Computing Limited 02341302 Equiniti Solutions Limited 03335560 Toplevel Holdings Limited 03270082 Equiniti (UK) Finance Ltd 11092548

As a condition of the above exemption, the Group has guaranteed the year end liabilities of the relevant subsidiaries until they are settled in full. The liabilities of the above subsidiaries at the year end date were £116.2m (2017: £128.5m).

160 SECTION 03 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Equiniti Group plc Annual Report 2018 161 – 6.9 8.9 £m 0.2 0.3 £m 5.2 7.5 3.0 1.5 0.4 £m £m (0.1) 28.7 32.7 44.5 16.7 37.9 28.7 2017 2017 2017 2017 7.1 £m 0.4 0.2 0.1 £m 4.6 3.0 1.8 0.2 £m £m (0.5) 46.4 10.6 41.6 64.1 29.0 12.6 46.2 46.4 2018 2018 2018 2018

Trade receivables receivables Trade 5.1 TRADE AND OTHER RECEIVABLES 5.1 TRADE AND OTHER 5 WORKING CAPITAL 5 WORKING Other receivables Prepayments Total trade and other receivables Total Excluding trade receivables, none of these financial assets are either past due or impaired. At the year end, trade receivables are shown net receivables are At trade the year end, either due or impaired. past none of these financial assets are Excluding trade receivables, in the £0.2m (2017: £0.3m). year was of an allowance for doubtful loss recognised of £0.2m (2017: £0.4m). The impairment debts Balance at 1 January Not past due Past due 1–30 days Past due 31–90 days than 90 days Past due more receivables trade Total all existing customers with no defaults in the past. (2017: £16.7m) are not past due of £29.0m receivables Trade of trade has made an impairment allowance of £0.2m (2017: £0.4m) in respect Based on historic performance of these contracts, the Group debt. Movement in the year for the full value of the impaired made, these are impairment allowances are and accrued income. Where receivables is as follows: for impairment of trade receivables provision in the Group’s Credit risk Credit date was: at the reporting The ageing of trade receivables Balances acquired from business acquisitions from Balances acquired New provisions made in year New provisions Balances reversed in year Balances reversed Balance at 31 December 5.2 CONTRACT FULFILMENT ASSETS Trade receivables past due but not impaired of £17.4m (2017: £12.0m) relate to a number of independent customers for whom there is no recent is no recent to a number of independent customers for whom there of £17.4m (2017: £12.0m) relate past due but not impaired receivables Trade history of default or expectation of such going forwards. Accrued income Contract set up costs Contract fulfilment assets As a result of adopting IFRS 15, accrued income and contract set up costs have been reclassified as contract fulfilment assets within as contract the statement of adopting IFRS 15, accrued income and contract set up costs have been reclassified As a result is entitled to and services suppliedthe fair value of goods to customers, for which the Group represents of financial position. Accrued income supported by client contracts. This allows accrued income to be underpinned or paid. All such assets are and is not yet invoiced revenue, recognise with us permanently. occasions that clients cease projects clients even on the rare from and recovered

FOR THE YEAR ENDED 31 DECEMBER 2018 YEAR ENDED 31 FOR THE Notes to the consolidated financial statements financial consolidated to the Notes Notes to the consolidated financial statements FOR THE YEAR ENDED 31 DECEMBER 2018

5.3 TRADE AND OTHER PAYABLES 2018 2017 £m £m Trade payables 26.8 20.2 Accruals 64.8 44.2 Deferred consideration 7.3 5.4 Other payables 13.3 11.0 Total trade and other payables 112.2 80.8

5.4 CONTRACT FULFILMENT LIABILITIES

2018 2017 £m £m Deferred income 16.4 16.2 Contract fulfilment liabilities 16.4 16.2

As a result of adopting IFRS 15, deferred income has been reclassified as contract fulfilment liabilities within the statement of financial position. This was previously classified within trade and other payables. Deferred income represents amounts invoiced in advance of the related services or goods being provided to the customer.

Revenue recognised in relation to contract fulfilment liabilities

2018 2017 £m £m Revenue recognised that was included in the contract liability balance as at 1 January 14.9 13.8 14.9 13.8

5.5 PROVISIONS Contingent Property Total consideration provisions provisions £m £m £m Balance at 1 January 2018 21.2 1.5 22.7 Balances acquired from business acquisitions 2.2 0.3 2.5 Additional provisions made during the year – 0.5 0.5 Amounts utilised during the year (2.1) (0.1) (2.2) Amounts released during the year (2.4) – (2.4) Unwinding of discounted amount 0.8 – 0.8 Balance at 31 December 2018 19.7 2.2 21.9

Non-current 10.6 2.2 12.8 Current 9.1 – 9.1 Total provisions 19.7 2.2 21.9

Contingent consideration A provision for contingent consideration as at 31 December 2018 of £19.7m (2017: £21.2m) relates to various requirements to be met following the Group’s acquisitions. This is recognised at fair value through profit or loss and is derived from management’s best estimate of the amounts likely to be paid. The minimum value of these provisions could be £nil up to a maximum of £28.9m. These were discounted at an appropriate post-tax discount rate at the time of the acquisitions and are provided within provisions due to their uncertainty. Management regularly reconsiders the appropriateness of the discount rate used and updates when appropriate. The remaining balance is expected to be utilised over periods between 2019 and 2021.

162 SECTION 03 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Equiniti Group plc Annual Report 2018 163 2.8 5.5 4.2 0.1 0.2 0.8 8.3 0.8 £m (3.2) (0.4) (4.0) (0.9) (0.5) (0.2) (0.2) (3.0) 19.6 (31.3) Movement £m 37.9 44.5 (22.7) (22.7) (16.2) (80.8) (60.0) 2017 £m 46.2 64.1 (22.9) (21.9) (16.4) (63.0) 2018 (112.1)

Property provisions Property The balance will be utilised properties. of leasehold estimate best of dilapidations in respect to management’s relate provisions Property on vacation of premises. 5.5 PROVISIONS (CONTINUED) 5.5 PROVISIONS Working capital acquired in business combinations in business capital acquired Working accrual Movement in interest accrual Movement in capital expenditure interests to non-controlling Movement in accruals relating set-up fees to loan Movement in accruals relating exchange movement on translation of overseas subsidiaries Foreign Movement in tax accrual year acquisitions to prior Movement in accruals relating issue costs to share Movement in accruals relating Defined benefit plan actuarial loss Changes in working capital per the consolidated statement of cash flows Net working capital per the consolidated statement of financial position Post-employment benefits Provisions for other liabilities and charges Provisions Contract fulfilment liabilities Trade and other payables Trade Contract fulfilment assets Trade and other receivables Trade 5.6 CASH FLOWS FROM MOVEMENTS IN WORKING CAPITAL 5.6 CASH FLOWS FROM

FOR THE YEAR ENDED 31 DECEMBER 2018 YEAR ENDED 31 FOR THE Notes to the consolidated financial statements financial consolidated to the Notes Notes to the consolidated financial statements FOR THE YEAR ENDED 31 DECEMBER 2018

6 CAPITAL STRUCTURE

6.1 FINANCE INCOME AND COSTS 2018 2017 Finance income £m £m Interest income 0.2 0.4 Net foreign exchange gains from forward contracts – 0.4 Total finance income 0.2 0.8

2018 2017 Finance costs £m £m Interest cost on senior secured borrowings 8.1 5.8 Interest cost on revolving credit facility 2.4 1.7 Amortisation of finance arrangement fees 2.2 1.6 Net finance cost relating to pension schemes 0.6 0.6 Unwinding of discounted amount in provisions 0.8 0.7 Cost of interest rate swap against financial liabilities 1.2 1.8 Foreign exchange loss – 0.1 Other fees and interest 0.2 0.2 Total finance costs 15.5 12.5

6.2 SHARE CAPITAL AND SHARE PREMIUM Share capital Share premium 2018 2017 2018 2017 Allotted, called up and fully paid £m £m £m £m Balance at 1 January 0.4 0.3 115.8 – Employee share options exercised – – 0.1 0.1 Rights issue – 0.1 – 115.7 Balance at 31 December 0.4 0.4 115.9 115.8

2018 2017 Ordinary shares of £0.001 each Number Number Balance at 1 January 364,434,283 300,012,911 Employee share options exercised 102,383 112,138 Rights issue – 64,309,234 Balance at 31 December 364,536,666 364,434,283

The Group issued 102,383 ordinary shares on exercise of employee share options during the year (2017: 112,138). The shares were issued at a weighted average exercise price of £1.19 per share. Proceeds of £0.1m were received.

164 SECTION 03 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Equiniti Group plc Annual Report 2018 165 0.8 3.9 4.4 £m (0.1) (0.9) 10.9 (12.2) (13.9) 189.5 178.0 178.0 182.4 reserves Total other Total

– – – – – – 3.1 3.0 3.0 £m (0.1) 10.9 13.9 reserve Translation Translation – – – – 4.9 0.8 4.4 £m (6.5) (0.9) (6.5) (3.0) (12.2) reserve Hedging – – – – – – – – – 3.9 £m (13.9) (10.0) own shares Reserve for – – – – – – – – £m 181.5 181.5 181.5 181.5 Capital reserve contribution

Balance at 1 January 2017 Changes in fair value through hedging reserve Changes in fair value through Deferred tax on movement through hedging reserve tax on movement through Deferred operations translationNet exchange loss on of foreign 2017 Balance at 31 December Balance at 1 January 2018 6.3 OTHER RESERVES 6.3 OTHER Net exchange gain on translation of foreign operations Net exchange gain on translation of foreign to employees awarded Own shares Balance at 31 December 2018 Changes in fair value through hedging reserve hedging Changes in fair value through of own shares Purchase Capital contribution reserve settle issued equity instruments to non-current in 2015, when the Group on the Initial Public Offering arose The capital contribution reserve financial liabilities with shareholders. Reserve for own shares held in an are for consideration of £13.9m. The shares shares nil) of its own ordinary 6,000,000 (2017: purchased the Group During the year, option plans. share under the Group’s and will be used to satisfy the vesting of awards by the Group, employee benefit trust, which is controlled equity and deducted from held by the trust are Shares used to satisfy the vesting of awards. were During the year 1,697,093 (2017: nil) shares dividends. the trust has waived its right to receive Hedging reserve where exchange contracts foreign portionof changes in the fair value of cash flow swaps and forward comprises the effective The hedging reserve the hedged transactions have not yet occurred. reserve Translation to the currencies the translation of financial statements in foreign exchange movements arising from the foreign represents The translation reserve of the Group. currency presentational Deferred tax on movement through hedging reserve hedging tax on movement through Deferred

FOR THE YEAR ENDED 31 DECEMBER 2018 YEAR ENDED 31 FOR THE Notes to the consolidated financial statements financial consolidated to the Notes Notes to the consolidated financial statements FOR THE YEAR ENDED 31 DECEMBER 2018

6.4 NON-CONTROLLING INTEREST

The Group controls one non-wholly owned trading subsidiary, MyCSP Limited. In September 2018, the Group purchased an additional 24% of the issued share capital of MyCSP Limited increasing its shareholding from 51% to 75%, for consideration of £8.0m, including £4.0m payable immediately and £4.0m deferred until October 2020. Prior to the additional purchase, the carrying value of the existing 49% non-controlling interest was £20.3m. The Group recognised a decrease in non-controlling interests of £10.0m and an increase in equity attributable to owners of the parent of £2.0m. £m Carrying amount of non-controlling interest acquired 10.0 Consideration paid to non-controlling interests (4.0) Deferred consideration (4.0) Excess of consideration paid recognised in equity attributable to owners of the parent 2.0

The summarised financial information for MyCSP Limited, set out below, is prior to intercompany eliminations.

2018 2017 Summarised statement of financial position £m £m Non-current assets 1.3 1.4 Current assets 33.6 33.9 Non-current liabilities (1.3) (1.4) Current liabilities (11.4) (12.1) Net assets 22.2 21.8

2018 2017 Summarised statement of comprehensive income £m £m Revenue 40.1 40.6 Profit for the year 5.9 6.0 Other comprehensive income 0.1 0.2 Total comprehensive income 6.0 6.2

Transactions with non-controlling interests 25% of MyCSP Limited is owned by employees of MyCSP via an employee benefit trust and shares rank pari passu with the remaining share capital, including receiving annual dividends when declared. In the current and prior year, dividends have been waived by the trust in lieu of a bonus payment through payroll. This is reflected within transactions with non-controlling interests in the statement of changes in equity.

166 SECTION 03 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Equiniti Group plc Annual Report 2018 167 ) – – – 1 – 1.5 5.3 9.3 £m £m 3.5 3.5 £m (6.0) 11.6 14.6 2017 2017 331.6 333.1 2017 250.0 244.0 (Restated – – 7.1 1.7 6.6 9.9 £m £m 4.8 4.7 £m (4.1) 17.5 16.5 76.7 2018 2018 363.0 371.8 2018 322.6 395.2

Restated for the adoption of IFRS 15 - see note 1 for details Profit from continuing operations attributable of to owners the parent from Profit in issue (millions) shares Basic weighted average number of ordinary plan options (millions) Dilutive performance share options (millions) Dilutive employee SAYE in issue (millions) shares Diluted weighted average number of ordinary (pence) Basic earnings per share (pence) Diluted earnings per share Term loan Term facility Revolving credit Final dividend 31 December 2016 (2.91p per share) for year ended liabilities Non-current Unamortised cost of raising finance external loans and borrowings Total 6.7 EXTERNAL LOANS AND BORROWINGS The Board recommends a final dividend payable in respect of the year ended 31 December 2018 of £12.7m (2017: £9.9m) or 3.49p per share respect of £9.9m) or 3.49p per share the year ended 31 December 2018 of £12.7m (2017: a final dividend payable in recommends The Board at the Annual General Meeting on 2 May 2019, no liability has been included in approval As this is subject to shareholder (2017: 2.73p per share). register at close of business on 12 April 2019. on the theseThe final financial statements. dividend will be paid on 16 May 2019, to shareholders held. receive dividends on shares Trust has waived its right to Employee Benefit The Equiniti Group Interim dividend 31 December 2018 (1.83p per share) for year ended Final dividend for year ended 31 December 2017 (2.73p per share) Interim dividend 31 December 2017 (1.64p per share) for year ended 6.6 DIVIDENDS Amounts recognised as distributions to equity holders of the parent in the year as distributions of the to equity holders parent Amounts recognised 1 Basic and diluted earnings per share or loss attributableof to equity holders the Company by the weighted average number by dividing is calculated the profit Basic earnings per share in issue during the year. of shares excluded are These shares equity. and deducted from shares as treasury treated Trust are Employee Benefit held by the Equiniti Group Shares to the option holder. transferred are in issue until the shares shares the average number of ordinary weighted from the impact of these where options outstanding and other potential shares calculation includes vested share The diluted earnings per share is dilutive. 6.5 EARNINGS PER SHARE 6.5 EARNINGS

FOR THE YEAR ENDED 31 DECEMBER 2018 YEAR ENDED 31 FOR THE Notes to the consolidated financial statements financial consolidated to the Notes Notes to the consolidated financial statements FOR THE YEAR ENDED 31 DECEMBER 2018

6.7 EXTERNAL LOANS AND BORROWINGS (CONTINUED) Year of Terms and debt repayment schedule Currency Closing interest rate maturity Term loan Sterling GBP Libor + 1.75% 2020 Term loan US dollar USD Libor + 1.75% 2020 Revolving credit facility Sterling GBP Libor + 1.75% 2020 Revolving credit facility US dollar USD Libor + 1.75% 2020

The Group’s debt facilities, which mature in full in 2020, contain one financial covenant only, namely a maximum ratio of Net Debt to EBITDA (as defined in the loan agreement) which is tested half yearly and at the year end. Net Debt to EBITDA must be no more than 4.50:1 for the years to 31 December 2017 and 4.00:1 thereafter. The Group was in compliance with this covenant at the year end. The margin payable on both the term loan and revolving credit facility (RCF) is determined based on the ratio of Net Debt to EBITDA, where the margin payable ranges from a maximum of 2.25% to a minimum of 1.25%. No debt is repayable before the end of our current funding agreement in 2020. In 2017, the Group entered into an agreement with existing and new banks to increase existing loan facilities, comprising of a $92.0m term loan and £49.0m of revolving credit facilities, increasing total facilities to a term loan of £250.0m and $92.0m and £199.0m of revolving credit facilities. The increased facilities became effective on the completion of the Wells Fargo Shareowner Services acquisition in February 2018 and have the same maturity as the existing facilities, October 2020.

6.8 FINANCIAL LIABILITIES ARISING FROM FINANCING ACTIVITIES

The movements during the year in financial liabilities relating to financing activities and a reconciliation to net debt are as follows:

2018 2017 £m £m Term loan 322.6 250.0 Revolving credit facility 76.7 – Finance lease liabilities 1.1 1.7 Cash and cash equivalents (90.9) (115.2) Net debt 309.5 136.5

Liabilities from financing activities Other assets Revolving Finance lease Cash and cash Term loan credit facility liabilities equivalents Total £m £m £m £m £m Net debt at 1 January 2017 250.0 56.0 1.9 (56.7) 251.2 New finance leases acquired – – 0.4 – 0.4 Interest on finance lease liabilities – – 0.1 – 0.1 Cash flows – (56.0) (0.7) (58.5) (115.2) Net debt at 31 December 2017 250.0 – 1.7 (115.2) 136.5

Net debt at 1 January 2018 250.0 – 1.7 (115.2) 136.5 Cash flows 64.9 76.1 (0.9) 24.7 164.8 New finance leases acquired – – 0.2 – 0.2 Interest on finance lease liabilities – – 0.1 – 0.1 Foreign exchange movements 7.7 0.6 – (0.4) 7.9 Net debt at 31 December 2018 322.6 76.7 1.1 (90.9) 309.5

168 SECTION 03 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Equiniti Group plc Annual Report 2018 169 £m 115.2 115.2 2017 £m 90.9 90.9 2018

– credit risk – credit – liquidity risk – market risk Cash and cash equivalents per statement of financial positionCash and cash equivalents The Group has exposure to the following risks from its use of financial instruments: to the following risks from has exposure The Group and the Audit Committee oversees how management monitors compliance with these established for the Group Risk management policies are The Audit to the risks faced by the Group. the adequacy of the management framework in relation risk and reviews policies and procedures, and of risk management controls and ad hoc reviews by Internal Audit which undertakes both regular Committee oversight role is assisted in its to the Audit Committee. reported of which are the results procedures, risk Credit a financial instrument fails to meet its to including brokers, a customer or counterparty, if risk is the risk of financial loss to the Group Credit customers. from receivables the Group’s contractual obligations, and arises principally from institutions, including many with large and contract fulfilment assets are of the business, the majority of the trade receivables Due to the nature years and have never been material. in previous infrequently Losses have only occurred FTSE 350 companies and public sector organisations. risk mitigation Credit customers listed large is derived from of revenue and contract assets as a high proportion receivables risk on its trade has a low credit The Group and small. on the major international defaults stock exchanges and historical infrequent have been credit ratings assigned by international For cash, cash equivalents and derivative banks and financial institutions financial instruments, only with with accepted, 100% of cash balances at the year end being held in banks and financial institutions with a short-term are agencies credit-rating rating higher. of A or credit 6.10 FINANCIAL RISK MANAGEMENT Cash and cash equivalents per statement of cash flows Cash and cash equivalents client represent accounts. These balances balances with holds certain cash a number of segregated banks in In addition to the above, the Group consolidated of accounts and balance sheet. The number not included in the Group’s parties, and hence are for third money under management the year. balances held vary significantly throughout basis. These balances are on a non-recourse agreement purchase in a receivables has the ability to sell certain trade receivables The Group of which £10.3m (2017: £19.9m) has access to a £20.0m arrangement under this when sold The Group arrangement. derecognised therefore The insurance. by trade credit all covered was utilised at the end of the within year and included the cash balances above. Invoices sold are received at year end. the net of cash reflected shown in note 5.1 are trade receivables 6.9 CASH AND CASH EQUIVALENTS 6.9 CASH AND

FOR THE YEAR ENDED 31 DECEMBER 2018 YEAR ENDED 31 FOR THE Notes to the consolidated financial statements financial consolidated to the Notes Notes to the consolidated financial statements FOR THE YEAR ENDED 31 DECEMBER 2018

6.10 FINANCIAL RISK MANAGEMENT (CONTINUED)

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. The maximum exposure to liquidity risk at the reporting dates was as follows:

Total Carrying contractual Within 1–2 2–5 Amount cash flows 1 year years years 31 December 2018 Note £m £m £m £m £m Trade and other payables 5.3 112.2 112.2 112.2 – – Term loan 6.7 322.6 342.9 10.0 332.9 – Revolving credit facility 6.7 76.7 76.7 – 76.7 – Other financial liabilities 9.2 1.1 1.3 0.5 0.5 0.3 Derivatives used for hedging 9.2 3.6 4.7 2.5 1.5 0.7 Total 516.2 537.8 125.2 411.6 1.0

Total Carrying contractual Within 1–2 2–5 Amount cash flows 1 year years years 31 December 2017 Note £m £m £m £m £m Trade and other payables 5.3 80.8 80.8 80.8 – – Term loan 6.7 250.0 267.4 5.8 5.8 255.8 Other financial liabilities 9.2 1.7 1.9 0.7 0.5 0.7 Derivatives used for hedging 9.2 9.2 9.3 7.5 1.0 0.8 Total 341.7 359.4 94.8 7.3 257.3

All trade and other payables are expected to be paid in six months or less. Liquidity risk mitigation The Group regularly updates forecasts for cash flow and covenants, to ensure it has sufficient funding available. It maintains significant cash balances to meet future cash funding requirements and had £90.9m of cash at 31 December 2018. The Group also has revolving credit facilities of £199.0m available, of which £122.3m was undrawn at 31 December 2018. 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. a) Interest rate risk The Group is exposed to movements in interest rates on both interest earned on segregated funds administered for third parties and its net finance costs. Net finance costs include interest costs on the term loan and the RCF and interest income on the Group’s own deposits. Interest costs payable are mostly linked to changes in Libor. Interest income receivable is largely driven by changes in the Bank of England base rate and the US Federal Reserve benchmark rate. A movement in interest rates which negatively affects net finance costs would have a positive effect on revenue, and vice versa.

170 SECTION 03 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Equiniti Group plc Annual Report 2018 171

Foreign exchange rate risk Foreign Sensitivity analysis earnings. Over the longer-term, the impact of short-term fluctuations on the Group’s aim to reduce rate risks, the Group In managing interest rates would have an impact on consolidated earnings. in interest permanent changes however, by £1.4m, finance costs for the Group the have increased start of 2018 would from rates effective point in interest of one percentage An increase rate swaps, after tax of £6.8m. This includes the impact of interest in profit by £10.1m, yielding a net increase revenue interest and increased point for rate movements. Had no hedging been in place this example of a one percentage interest resulting from the fluctuations which reduce after tax would be £16.0m. to profit rates, the net increase in interest increase b)  movements. currency by foreign affected exchange rate risk on cash flows in overseas operations which are to foreign has exposure The Group exchange rate movements between sterling and the to foreign the which exposes the EQ US business Group main risk is from The Group's US dollar. to in Chennai and this exposes the Group in operating its service centre incurred costs exchange rate risk arising from also has foreign The Group the risks associated with movements in has implemented a hedging policy to reduce movements between sterling and Indian rupee. The Group contracts Indian Rupee. These forward expected cash flows to purchase contracts based on this exchange rate by entering into a series of forward Recognition designated as hedges under IAS 39 Financial Instruments: and Measurement. are of which on consolidation gives rise to the re-translation Indian and Euro, rupee operations in US dollar, has net investments in foreign The Group as a of term debt and RCF borrowings has designated US$103.0m to the non-Sterling carrying values of assets and liabilities. The group exposure hedge of a net investment in its EQ US business. c) Equity price risk dealing transactions on behalf of its clients. does not hold its own position in trading securities and is involved only in arranging share The Group Interest rate risk mitigation Interest designated as are rate swaps, which rate swaps. Interest the use of interest rate fluctuations is partly managed through to interest Exposure the have the and objective of reducing by the Board agreed are Financial Instruments: Recognitionhedges under IAS 39 and Measurement, Group does not enter into speculative transactions in financial The and cash flow. profit rates on the Group’s impact of variations in interest these consolidated financial statements. included throughout are instruments or derivatives. Further quantitative disclosures totalling rate swaps 2021 (£215.0m), to July 2020 (£380.0m), to September £1,025.0m into sterling denominated interest has entered The Group the 2021, exchanging variable rate rate swaps to March and $700.0m interest and to September 2023 (£215.0m) to September 2022 (£215.0m) funds into fixed rates. segregated income on derived interest variable based rate swap exchanging into an interest entered The Group over Libor. based on a margin accrues interest The £250.0m term loan into a entered has not replaced. The Group in 2018 and has not been expired years. This swap period of for fixed rate for a three charges interest hedge of its outstanding RCF commitments. on financial performance costs to limit any adverse effects leverage ratio and interest monitor the overall level of borrowings, The Directors of the Group. 6.10 FINANCIAL RISK MANAGEMENT (CONTINUED) RISK MANAGEMENT 6.10 FINANCIAL

FOR THE YEAR ENDED 31 DECEMBER 2018 YEAR ENDED 31 FOR THE Notes to the consolidated financial statements financial consolidated to the Notes Notes to the consolidated financial statements FOR THE YEAR ENDED 31 DECEMBER 2018

6.11 CAPITAL RISK MANAGEMENT

The Group is focused on delivering value for its shareholders whilst ensuring it 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. Total capital comprises total equity plus net debt, as shown in the consolidated statement of financial position. Net debt equates to the total of external interest bearing loans plus other finance lease liabilities, less cash and cash equivalents, as shown in the consolidated statement of financial position and note 6.8. The policies for managing capital are to increase shareholder value by maximising profits and cash. The policy is to set budgets and forecasts in the short and medium term that the Group ensures are achievable. The process for managing capital is 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 Group may also consider repayment of debt, issuance of new and repurchase of existing shares and adjusting dividend payments to shareholders, to maintain an optimum capital structure. The Board regularly reviews the Group’s capital structure and no changes have been made to these objectives and processes since the Group listed in October 2015. The Board considers it has sufficient funds to pay dividends in line with the stated policies for the foreseeable future. Under the terms of the current loan agreement signed in October 2015, the Group has one covenant, a maximum ratio of net debt to EBITDA. The Group was in compliance with this covenant at the year end. Regulated entities In the UK, the Group has one significant Financial Conduct Authority (FCA) regulated entity, Equiniti Financial Services Limited (EFSL), which must maintain minimum levels of capital in order to manage its affairs. It must ensure that it can meet its regulatory capital requirements and has sufficient liquidity to meet its liabilities as they fall due, including under potentially highly stressed conditions. EFSL has its own governance structure and holds monthly Board meetings and quarterly Risk and Audit Committee meetings, to ensure its regulatory objectives are met.

In the US, the Group has an entity regulated by the New York State Department of Financial Services (DFS), Equiniti Trust Company (ETC). ETC is approved by the DFS as a limited licensed bank under the New York State Banking Laws and has minimum capital requirements set by the DFS. To help meet its regulatory requirements, ETC has its own governance structure which includes a Board with independent non-executive Directors; an Examination Committee; an Audit Committee; and a Remuneration and Nominations Committee.

2018 2017 Management of capital (Restated1) Note £m £m Equity 511.2 511.7 Term loan 6.7 322.6 250.0 Revolving credit facility 6.7 76.7 – Finance lease liabilities 9.2 1.1 1.7 Cash and cash equivalents 6.9 (90.9) (115.2) Total equity plus net debt 820.7 648.2

1Restated for the adoption of IFRS 15 - see note 1 for details

6.12 FINANCIAL INSTRUMENTS

The carrying amounts of financial assets and liabilities are classified as per IFRS 7 Financial Instruments: Disclosures according to the following categories: 2018 2017 Financial assets Note £m £m At amortised cost Trade and other receivables 5.1 53.5 35.6 Contract fulfilment assets 5.2 46.2 37.9 Cash and cash equivalents 6.9 90.9 115.2 At fair value through profit or loss Derivatives used for hedging 6.13 0.7 1.9 Total financial assets 191.3 190.6

172 SECTION 03 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Equiniti Group plc Annual Report 2018 173 – £m 0.3 0.4 9.2 1.7 0.7 £m £m (3.6) (3.6) 16.2 80.8 Total Total 2017 250.0 357.9 – – – – – £m £m £m 3.6 1.1 76.7 16.4 2018 322.6 112.2 532.6 Level 3 Level 3 £m 0.3 0.4 0.7 £m 6.13 9.2 6.7 6.7 5.4 5.3 (3.6) (3.6) Level 2 Level 2 Note – – – – – £m £m Level 1 Level 1

Valuation techniques used to derive level 2 fair values Valuation exchange contracts. The interest foreign and forward rate swaps, deal contingency forwards Level 2 hedging derivatives comprise interest and forward observable yield curves and the deal contingency forwards rates extracted from interest fair valued using forward rate swaps are generally insignificant of discounting are contracted exchange rates. The effects fair valued using the future exchange contracts are foreign for level 2 derivatives. levels as of the date of the or change in event out of fair value hierarchy transfers into and transfers policy is to recognise The Group’s that caused the transfer. circumstances no changes in valuation techniques during the year. were The valuation is a discounted technique used model. There cash flow valuation processes Group’s reporting for financial required finance department includes a team that monitors financial assets andthe values of liabilities The Group’s reviewed at least once every six Valuations are and the Audit Committee. to the Chief Financial Officer purposes. This team ultimately reports dates. reporting months, in line with the Group’s Fair value of financial assets and liabilities between the carrying value of assets and liabilities and their only financial instruments measured fair value. The no material differences are There the derivatives. at fair value are There were no transfers between levels during the year. were There Derivatives used for hedging: rate swaps Interest liabilities Total Liabilities Derivatives used for hedging: rate swaps Interest exchange contracts foreign Forward assets Total Assets Fair value hierarchy at fair value. measured financial assets and liabilities that are the Group’s The following table presents Total financial financial liabilities Total At fair value through profit or loss profit At fair value through Derivative used for hedging Other financial liabilities Revolving credit facility Revolving credit Secured bank loans Secured Contract fulfilment liabilities At amortised cost other and payables Trade 6.12 FINANCIAL INSTRUMENTS (CONTINUED) INSTRUMENTS 6.12 FINANCIAL Financial liabilities

FOR THE YEAR ENDED 31 DECEMBER 2018 YEAR ENDED 31 FOR THE Notes to the consolidated financial statements financial consolidated to the Notes Notes to the consolidated financial statements FOR THE YEAR ENDED 31 DECEMBER 2018

6.13 DERIVATIVES

In October 2015, the Group entered into an interest rate swap of its £250.0m term loan, exchanging variable based interest charges for fixed rate for a period of three years. This agreement expired in October 2018 and has not been replaced. The Group has entered into sterling denominated interest rate swaps totalling £1,025.0m to August 2020 (£380.0m), to September 2021 (£215.0m), to September 2022 (£215.0m) and to September 2023 (£215.0m) and $700.0m interest rate swaps to March 2021, exchanging the variable rate derived interest rate income to fixed rates. The Group enters into forward foreign exchange contracts to hedge its exposure to adverse variations in the GBP/INR exchange rate. All the above derivatives, which are effective at a Group level, have been designated as cash flow hedges and qualify for hedge accounting. They are measured at fair value, with changes recognised within other comprehensive income. 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: Total Carrying contractual Within 6 6–12 1–2 2–5 amount cash flows months months years years 31 December 2018 £m £m £m £m £m £m Assets Interest rate swaps 0.3 1.3 0.6 0.6 0.1 – Forward foreign exchange contracts 0.4 0.4 0.4 – – – Total 0.7 1.7 1.0 0.6 0.1 – Liabilities Interest rate swaps (3.6) (4.7) (1.1) (1.4) (1.5) (0.7) Total (3.6) (4.7) (1.1) (1.4) (1.5) (0.7)

Total Carrying contractual Within 6 6–12 1–2 2–5 amount cash flows months months years years 31 December 2017 £m £m £m £m £m £m Assets Interest rate swaps 1.9 1.9 1.6 0.3 – – Total 1.9 1.9 1.6 0.3 – – Liabilities Interest rate swaps (3.4) (3.5) (0.8) (0.9) (1.0) (0.8) Deal contingency forward (5.8) (5.8) (5.8) – – – Total (9.2) (9.3) (6.6) (0.9) (1.0) (0.8)

174 SECTION 03 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Equiniti Group plc Annual Report 2018 175 – £ 2.5 1.0 £m 3.5 2017 price 2017 £0.00 £0.00 £0.00 £0.00 £0.00 147,223 389,271 Number 2,167,663 2,123,106 5,646,013 Weighted Weighted 10,473,276 average exercise average exercise – 2017 1.9 2.3 4.2 £m 2018 2018 147,223 389,271 options Number (717,601) 1,658,262 2,144,649 2,108,573 4,231,452 2,954,361 8,236,516 Number of 10,679,430 10,473,276 £ £ price £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 Weighted Weighted Exercise price Exercise average exercise average exercise 2018 Year 2028 2027 2027 2027 2026 2025 (83,920) options 1,987,167 (1,697,093) 10,473,276 Number of 10,679,430 Expiry date

2018 – 2021 2017 – 2020 2017 – 2019 2017 – 2018 2016 – 2019 2015 – 2018 Exercised Outstanding at 31 December date Grant date / Vest Out of the 10,679,430 (2017: 10,473,276) outstanding options at the end of the year, 4,620,723 (2017: none) were exercisable. Share options Share exercisable. 4,620,723 (2017: none) were Out of the 10,473,276) outstanding 10,679,430 (2017: options at the end of the year, prices: outstanding at the end of the year had the following expiry dates and exercise Outstanding at 1 January Granted Forfeited Performance Share Plan (PSP) Performance Share options granted under the price. Share and selected employees with nil exercise granted to Executive Directors options are Share conditional options are granted in 2018 which (except for the share growth conditional on a minimum 6% earnings per share PSP scheme are options can be vesting period. Vested over a three-year return and median total shareholder growth) on a minimum of 8% earnings per share the grant date. over a period of up to ten years from exercised as follows: prices were weighted average exercise options outstanding and their related Movements in the of share number The Group operates several share-based award and option plans, the terms of which are summarised below, along with the in the movements summarised below, and option plans, the of which are terms award operates several share-based The Group options during the year. number of share 7.2 SHARE-BASED PAYMENTS Share-based payment expense Share-based remuneration directors’ Total accruing under money purchase no benefits were benefits and therefore a cash payment in lieu of retirement receive The Executive Directors Remuneration on pages 92-117. Report set out in the Directors’ are remuneration pension schemes at the year end. Full details of the Directors’ Directors’ emoluments Directors’ 7.1 DIRECTORS’ REMUNERATION 7 GOVERNANCE

FOR THE YEAR ENDED 31 DECEMBER 2018 YEAR ENDED 31 FOR THE Notes to the consolidated financial statements financial consolidated to the Notes Notes to the consolidated financial statements FOR THE YEAR ENDED 31 DECEMBER 2018

7.2 SHARE-BASED PAYMENTS (CONTINUED)

The fair value of options granted during the year, which was determined using the Monte Carlo valuation model, was £2.48 per option. The significant inputs into the model were the share price of £3.13 at the grant date, the exercise price shown above, volatility of 32.1% (based on the historical share price volatility of Equiniti Group plc since listing in October 2015), a dividend yield of 1.4%, an expected option life of three years and an annual risk-free interest rate of 1.0%. The total charge for the year relating to this scheme was £5.6m (2017: £3.1m).

Sharesave Plan 2015 Share options are granted to full time Directors and employees who enter into Her Majesty’s Revenue & Customs (HMRC) approved share savings scheme. Participants can save a maximum of £500 per month over three to five years. The number of shares over which an option is granted is such that the total option price payable for those shares corresponds to the proceeds on maturity of the related savings contract. The exercise price is calculated as 80% of the average share price over the three preceding days or, in relation to new issue shares, the nominal value of a share. Granted options vest over the maturity of the savings contract and can be exercised over a period of up to six months after vesting. Movements in the number of share options outstanding and their related weighted average exercise prices were as follows:

2018 2017 Weighted Weighted Number of average exercise Number of average exercise options price options price £ £ Outstanding at 1 January 3,507,110 £1.19 3,912,896 £1.27 Granted – £1.19 227,825 – Forfeited (217,646) £1.19 (521,473) £1.27 Exercised (102,383) £1.19 (112,138) £1.27 Outstanding at 31 December 3,187,081 £1.19 3,507,110 £1.19

Out of the 3,187,081 (2017: 3,507,110) outstanding options at the end of the year, 22,542 (2017: 60,973) were exercisable at a weighted average exercise price of £1.19. Share options outstanding at the end of the year had the following expiry dates and exercise prices:

Expiry date Exercise price 2018 2017 Grant date / Vest date Year £ Number Number 2015 – 2019 2019 £1.19 2,962,854 3,223,970 2015 – 2017 2018 £1.19 – 60,973 2015 – 2018 2019 £1.19 22,542 – 2017 – 2019 2019 £1.19 201,685 222,167 3,187,081 3,507,110

The total charge for the year relating to this scheme was £0.8m (2017: £0.4m).

176 SECTION 03 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Equiniti Group plc Annual Report 2018 177 – – 4.5 0.1 1.7 6.3 £m 2017 2017 2017 (1,194) 143,820 142,626 Number Number 142,626 142,626 – 5.8 0.1 3.5 9.4 £m 2018 2018 2018 142,626 206,591 142,626 206,591 Number Number 349,217 349,217 Year 2028 2027 Expiry date

Deferred Annual Bonus Plan Deferred the the date of years from for three deferred which are in shares is delivered and selected employees 30% of the annual bonus for Directors conditions not subject to any performance but can be forfeited, either in part annual bonus plan are under the deferred awarded Shares award. is awarded or in full, subject to continued the unless deemed a good leaver by employment, Remuneration Committee. The number of shares date. on grant calculated using the market value of shares as follows: outstanding were Movements in the number of shares 7.2 SHARE-BASED PAYMENTS (CONTINUED) PAYMENTS 7.2 SHARE-BASED Forfeited Outstanding at 31 December Outstanding at 1 January Granted Out of the 349,217 (2017: 142,626) shares outstanding at the end of the year, none (2017: none) were exercisable. Shares outstanding at the end Shares exercisable. none (2017: none) were outstanding at the end of theyear, Out of the 349,217 (2017: 142,626) shares of the year had the following expiry dates: date Grant date / Vest 2018 – 2021 2017 – 2020 Key management emoluments pension plans Company contributions to money purchase payment expense Share-based Total or plan the direct to control, and the Executive Committee, who have authority and responsibility of the Group the Directors Key management are major activities within the Group. 7.3 RELATED PARTY TRANSACTIONS PARTY 7.3 RELATED with key management personnel Transactions is as follows: The compensationmanagement personnel (including of key the Directors) The total cash value of the deferred shares awarded during the (2017: £0.3m). year was £0.6m awarded shares The total cash value of the deferred

FOR THE YEAR ENDED 31 DECEMBER 2018 YEAR ENDED 31 FOR THE Notes to the consolidated financial statements financial consolidated to the Notes Notes to the consolidated financial statements FOR THE YEAR ENDED 31 DECEMBER 2018

7.4 AUDITORS’ REMUNERATION 2018 2017 £m £m Fees payable to Group’s external auditors, PricewaterhouseCoopers LLP, and its associates were as follows: – Audit of the parent company and consolidated financial statements 0.3 0.2 – Audit of the Company’s subsidiaries 0.2 0.1 Audit fees 0.5 0.3 Fees payable to Group’s auditors and its associates for non-audit services were as follows: – Other assurance services 0.2 0.2 – Other services 0.1 0.1 Non-audit fees 0.3 0.3 Total 0.8 0.6

Other assurance services includes £0.2m (2017: £0.2m) for services performed in relation to the CASS audit of Equiniti Financial Services Limited. Fees for other services relate to the audit of controls and acquired balances of EQ US. CASS audit fees are excluded from the ratio of audit to non-audit fees, and therefore the ratio for 2018 was 1:0.2 (2017: 1:0.3). The Audit Committee is committed to maintaining this ratio to a maximum of 70% of the average statutory audit fee.

178 SECTION 03 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Equiniti Group plc Annual Report 2018 179 – – 4.9 2.4 0.2 2.1 5.7 0.2 1.0 2.3 0.8 1.0 £m £m 5.9 4.1 (0.6) 15.3 10.0 25.3 10.0 10.0 2017 2017 – – 3.9 4.7 0.9 0.1 0.1 0.2 3.5 0.2 1.6 £m £m 2.1 1.8 3.9 3.9 (1.9) (0.2) (1.4) 20.7 24.6 2018 2018

Profit for the year Profit charge tax Total tax before Profit the using UK corporation tax rate of 19.00% (2017: 19.25%): Tax Non-deductible expenses Recognised loss on derivative contract tax assets unrecognised Previously of tax rate change Effect and development of claims for research Effect scheme deductions Share Reconciliation of effective tax rate: Reconciliation of effective of prior periods Adjustment in respect Current tax: Current period Current of prior periods Adjustment in respect tax current Total tax: Deferred of temporary differences Origination and reversal balances tax Impact of rate changes on opening deferred of prior periods Adjustment in respect tax deferred Total tax charge income Total tax charge income Total to this rate to 17%, substantively 1 April 2017, was on 26 October 2015. A reduction enacted from The UK corporation tax rate of 19%, effective accordingly. tax charge current future the Group’s 1 April 2020, was substantively 2016. This will enacted on 6 September reduce from effective tax assets and liabilities at 31 December 2018 have been calculated based on these rates. The deferred on the acquisition of the of non-deductible expenses incurred the higher due to tax effect Non-deductible expenses in the prior year are used to hedge the by a derivative loss on a deal contingent forward has been reduced year tax charge EQ US business. The current of the change in tax rates applied was also higher due to the tax effect consideration in US dollars for EQ US. The prior year tax charge 18% to 17%. tax from to deferred Recognised in the income statement in the year: 8.1 INCOME TAX CHARGE 8.1 INCOME TAX 8 TAXATION

FOR THE YEAR ENDED 31 DECEMBER 2018 YEAR ENDED 31 FOR THE Notes to the consolidated financial statements financial consolidated to the Notes Notes to the consolidated financial statements FOR THE YEAR ENDED 31 DECEMBER 2018

8.2 DEFERRED INCOME TAX ASSETS AND LIABILITIES

Recognised assets Deferred income tax assets are attributable to the following:

2018 2017 £m £m Property, plant and equipment 1.6 2.8 Employee benefits and other timing differences 9.4 8.2 Tax value of losses carried forward 36.0 38.0 Tax assets 47.0 49.0 Net of tax liabilities (23.4) (22.2) Net tax assets 23.6 26.8

Recognised liabilities Deferred income tax liabilities are attributable to the following:

2018 2017 £m £m Intangible assets 23.4 22.2 Tax liabilities 23.4 22.2 Net of tax assets (23.4) (22.2) Net tax liabilities – –

No deferred tax asset has been recognised in respect of £4.8m (2017: £3.8m) of gross tax losses due to uncertainty in terms of future recoverability. The Group has no other unrecognised deferred tax assets.

Movements in deferred tax during the year:

Opening Recognised Recognised Closing balance Acquisitions in income in equity balance Year ended 31 December 2018 £m £m £m £m £m Property, plant and equipment 2.8 – (1.2) – 1.6 Intangible assets (22.2) (0.2) (1.0) – (23.4) Employee benefits and other timing differences 8.2 – 2.4 (1.2) 9.4 Tax value of losses carried forward 38.0 – (2.0) – 36.0 26.8 (0.2) (1.8) (1.2) 23.6

Opening Recognised Recognised Closing balance Acquisitions in income in equity balance Year ended 31 December 2017 £m £m £m £m £m Property, plant and equipment 3.4 – (0.6) – 2.8 Intangible assets (21.7) (0.7) 0.2 – (22.2) Employee benefits and other timing differences 4.8 – 0.9 2.5 8.2 Tax value of losses carried forward 42.6 – (4.6) – 38.0 29.1 (0.7) (4.1) 2.5 26.8

180 SECTION 03 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Equiniti Group plc Annual Report 2018 181 – – 1.9 3.4 1.1 5.8 0.6 1.1 1.5 1.9 4.5 6.4 £m £m £m 20.1 22.7 2017 2017 2017 – 0.2 0.5 3.6 0.6 0.5 1.0 1.7 0.2 0.5 4.2 0.5 £m £m £m 20.2 22.9 2018 2018 2018

Non-current Non-current 9.1 OTHER FINANCIAL ASSETS 9.1 OTHER FINANCIAL 9 OTHER DISCLOSURES 9 OTHER 9.2 OTHER FINANCIAL LIABILITIES Derivatives used for hedging (note 6.13) Total Current Derivatives used for hedging (note 6.13) Total remaining asset, as the a non-current classified as rate income are Derivatives used for hedging the term loan and variable rate derived interest recognised to variations in exchange rates are than 12 months. Derivatives used for hedging the exposure maturity of the is more hedged item to occur within expected months six of the year end. are currency transactions denominated in a foreign asset, as the forecast as a current Non-current Non-current Defined benefit pension plans provide benefits to are final salary pension plans and funded defined benefit pension plans in the UK. All of the plans operates three The Group members in the form of a guaranteed level of pension, payable for life. The liability under all schemes is based on final salary and length of service of funds. The Trustees assets, in separate trustee-administered held independently of the Group’s The assets of the are schemes to the employer. stakeholders. of the and of all fund relevant by law to act in the interest required the pension funds are schemes is set out below: The net liability of the three 9.3 POST-EMPLOYMENT BENEFITS 9.3 POST-EMPLOYMENT Defined contribution pension plans relating to these plans in was £8.5m (2017: £7.3m). the year operates a number of defined contribution pension plans. The total expense The Group Derivatives used for hedging (note 6.13) Finance lease liabilities Total Current Derivatives used for hedging (note 6.13) Finance lease liabilities Total remaining as the liability, a non-current classified as rate income are Derivatives used for hedging the term loan and variable rate derived interest as recognised to variations in exchange rates are than 12 months. Derivatives used for hedging the exposure maturity of the is more hedged item expected to occur within six months of the year end. are currency transactions in a foreign denominated as the forecast liability, a current Total defined benefit pension plan net liability Total Prudential Platinum Pension – MyCSP Limited ICS Pension Scheme Paymaster Pension Scheme

FOR THE YEAR ENDED 31 DECEMBER 2018 YEAR ENDED 31 FOR THE Notes to the consolidated financial statements financial consolidated to the Notes Notes to the consolidated financial statements FOR THE YEAR ENDED 31 DECEMBER 2018

9.3 POST-EMPLOYMENT BENEFITS (CONTINUED)

Full actuarial valuations are performed every three years which determines the funding required to eliminate the net pension plan liabilities. The latest full valuations took place in 2018 and will conclude in 2019. All pension schemes have been closed to new members for a number of years and all schemes are now closed to future accrual, apart from a small sub-section of the Paymaster Pension Scheme. The present value of the defined benefit obligation consists of approximately £3.4m (2017: £3.7m) relating to active employees, £41.1m (2017: £54.2m) relating to deferred members and £32.5m (2017: £22.8m) relating to members in retirement. The investment strategy of the plans are set taking into account a number of factors including the profile and value of plan liabilities, the strength of the employer covenant and the long-term funding objectives agreed with the employer. The schemes have a broad allocation of investments in return-seeking assets with the remaining allocated to liability matching assets, designed to partially offset the movements in the scheme liabilities caused by movements in interest rates and inflation. The asset split reflects the Trustees’ view of the most appropriate investments balancing risk/ reward characteristics of the funds the Scheme is invested in. Pension plan assets are valued at fair value. Quoted equities and debt instruments on a recognised stock exchange are valued at the closing market price as at the valuation date. Exchange traded and over-the-counter derivative instruments are valued at the settlement price or at the latest valuation for such instruments on the valuation date. Cash and other illiquid assets will be valued at their face value plus accrued interest at the valuation date. The Group is exposed to a number of risks through its defined benefit pension plans, the most significant of which are described below: • Investment risk – Scheme growth assets are invested in a diversified portfolio of debt securities, equities and other return-seeking assets such as pooled private markets fund. If the assets underperform the discount rate used to calculate the defined benefit obligation, it will increase the net pension plan liabilities. • Interest rate risk – A decrease in corporate bond yields will increase plan liabilities, although this is likely to be partially offset by an increase in the value of the plans’ bond/liability driven investment holdings. • Inflation risk – The majority of the liabilities are linked to inflation, although in most cases, caps on the level of inflation increases are in place to protect the scheme against extreme inflation. An increase in inflation rates will lead to higher liabilities, although this is likely to be partially offset by an increase in the value of some of the plans’ liability-driven investments. • Longevity risk – The pension plans’ provide benefits for the life of the members, therefore increases in life expectancy will result in an increase in the plans’ liabilities. The Group and Trustees are aware of these risks and manage them through appropriate investment and funding strategies. The Trustees manage governance and operational risks through a number of internal control policies, including a risk register.

Defined benefit plan - ICS Pension Scheme A full actuarial valuation was carried out at 5 April 2015 and has since been updated each year end to 31 December 2018 by a qualified independent actuary.

2018 2017 £m £m Present value of obligations (12.3) (13.1) Fair value of plan assets 10.6 11.6 Recognised liability for defined benefit obligations (1.7) (1.5)

182 SECTION 03 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Equiniti Group plc Annual Report 2018 183 – – – – – – 0.3 0.6 0.1 0.3 0.7 0.1 0.3 3.3 1.0 2.2 2.9 2.2 £m £m £m £m £m (0.5) (0.5) (0.3) (3.4) (3.4) 12.6 11.0 13.1 11.6 11.6 2017 2017 2017 2017 2017 – 0.3 0.2 0.1 0.3 0.3 0.2 1.0 2.9 2.4 1.9 2.4 0.2 £m £m £m £m £m (0.2) (0.1) (0.1) (0.9) (0.5) (0.9) (0.3) (3.4) (0.1) (3.5) 13.1 11.6 12.3 10.6 10.6 2018 2018 2018 2018 2018

9.3 POST-EMPLOYMENT BENEFITS (CONTINUED) BENEFITS 9.3 POST-EMPLOYMENT Movement in present value of defined benefit obligation value Movement in present Defined benefit obligation at 31 December Interest cost Interest – changes in financial assumptionsActuarial (gains)/losses – changes in demographic assumptionsActuarial (gains)/losses Actuarial gains – other experience items Benefits paid Defined benefit obligation January at 1 Past service cost Movement in fair value of plan assets Fair value of plan assets at 31 December (Loss)/return on plan assets (Loss)/return Employer contributions Benefits paid Fair value of plan assets at 1 January income Interest Expense recognised in the income statement Expense recognised Total expense Total Interest cost Interest income Interest Past service cost Actuarial gains and losses recognised in other comprehensive income in other comprehensive Actuarial gains and losses recognised Cumulative loss at 31 December Cumulative loss at 1 January income in other comprehensive Actuarial losses recognised Plan assets are comprised of the following: Plan assets are Corporate bonds funds Diversified growth Liability-driven investment funds Illiquid assets Cash Fair value of plan assets at 31 December Equities

FOR THE YEAR ENDED 31 DECEMBER 2018 YEAR ENDED 31 FOR THE Notes to the consolidated financial statements financial consolidated to the Notes Notes to the consolidated financial statements FOR THE YEAR ENDED 31 DECEMBER 2018

9.3 POST-EMPLOYMENT BENEFITS (CONTINUED)

Weighted average assumptions used to determine benefit obligations: 2018 2017 Discount rate 2.75% 2.62% Rate of increase for pensions in payment: – CPI subject to a max of 3.0% pa. 1.93% 1.89% – RPI subject to a max of 5.0% pa. 3.07% 3.02% – RPI subject to a max of 2.5% pa. 2.17% 2.15% Rate of increase for pensions in deferment 2.15% 2.09% Inflation assumption 3.15% 3.09%

Weighted average life expectancy for mortality tables (100% SAPS S2PMA, 100% SAPS S2FA, 100% SAPS S2PA CMI 2017, 1% long-term trend) used to determine benefit obligations at 31 December 2018: Male Female Member age 65 (current life expectancy) 86.8 88.7 Member age 45 (life expectancy at 65) 87.9 89.9

Contributions Equiniti ICS Limited expects to contribute £0.2m to its pension plan in 2019.

Defined benefit plan – Paymaster Pension Scheme A full actuarial valuation was carried out at 5 April 2015 and has since been updated each year end to 31 December 2018 by a qualified independent actuary.

2018 2017 £m £m Present value of obligations (57.5) (59.6) Fair value of plan assets 37.3 39.5 Recognised liability for defined benefit obligations (20.2) (20.1)

2018 2017 Movement in present value of defined benefit obligation £m £m Defined benefit obligation at 1 January 59.6 57.9 Current service cost 0.1 0.2 Past service cost 0.2 – Interest cost 1.6 1.6 Actuarial (gains)/losses – change in financial assumptions (3.8) 0.8 Actuarial losses – other experience items 1.6 0.7 Benefits paid (1.8) (1.6) Defined benefit obligation at 31 December 57.5 59.6

184 SECTION 03 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Equiniti Group plc Annual Report 2018 185 – £m £m £m £m 1.0 2.1 1.0 0.2 1.6 0.6 9.6 8.2 0.7 0.8 (1.6) (1.0) 37.0 21.0 39.5 39.5 2017 2017 2017 2017 (22.0) (21.4) £m £m £m £m 1.0 1.0 0.1 0.2 1.6 8.8 7.2 9.3 0.9 (2.4) (1.8) (1.0) (0.2) 39.5 12.0 37.3 37.3 2018 2018 2018 2018 (21.4) (21.6)

9.3 POST-EMPLOYMENT BENEFITS (CONTINUED) BENEFITS 9.3 POST-EMPLOYMENT Movement in fair value of plan assets Movement in fair value Fair value of plan assets at 31 December Fair value of plan assets (Loss)/return on plan assets (Loss)/return Employer contributions Benefits paid Interest income Interest Fair value of plan assets at 1 January Fair value of plan assets Expense recognised in the income statement Expense recognised Total expense Total Current service cost Current Past service cost cost Interest income Interest Actuarial gains and losses recognised in other comprehensive income in other comprehensive Actuarial gains and losses recognised Cumulative loss at 1 January income in other comprehensive Actuarial (losses)/gains recognised Cumulative loss at 31 December Plan assets are comprised of the following: Plan assets are Private equity and diversified growth funds Private equity and diversified growth Illiquid assets Cash and other Fair value of plan assets at 31 December Liability-driven investment funds

FOR THE YEAR ENDED 31 DECEMBER 2018 YEAR ENDED 31 FOR THE Notes to the consolidated financial statements financial consolidated to the Notes Notes to the consolidated financial statements FOR THE YEAR ENDED 31 DECEMBER 2018

9.3 POST-EMPLOYMENT BENEFITS (CONTINUED)

Weighted average assumptions used to determine benefit obligations: 2018 2017 Discount rate 3.00% 2.66% Rate of compensation increase 1.50% 1.50% Rate of increase for pensions in payment 3.10% 3.08% Rate of increase for pensions in deferment (Pre 6 April 2009 service): – Pre 6 April 2009 3.10% 3.08% – Post 6 April 2009 2.10% 2.08% Rate of increase for pensions in deferment (Post 6 April 2009 service) 2.50% 2.50% Inflation assumption 3.10% 3.08%

Weighted average life expectancy for mortality tables (96% SAPS S2PMA, 84% SAPS S2PFA CMI 2017, 1% long-term trend) used to determine benefit obligations at 31 December 2018

Male Female Member age 65 (current life expectancy) 86.7 89.8 Member age 45 (life expectancy at 65) 87.9 91.1

Contributions Paymaster (1836) Limited expects to contribute £0.9m to its pension plan in 2019.

Defined benefit plan – Prudential Platinum Pension – MyCSP Limited The latest full actuarial valuation was carried out at 31 December 2015 and has since been updated to 31 December 2018 by a qualified independent actuary.

2018 2017 £m £m Present value of obligations (7.2) (8.0) Fair value of plan assets 6.2 6.9 Recognised liability for defined benefit obligations (1.0) (1.1)

2018 2017 Movement in present value of defined benefit obligation £m £m Defined benefit obligation at 1 January 8.0 13.8 Interest cost 0.2 0.3 Actuarial (gains)/losses – changes in financial assumptions (0.8) 0.1 Actuarial gains – changes in demographic assumptions – (0.1) Liabilities extinguished on settlements – (5.9) Benefits paid (0.2) (0.2) Defined benefit obligation at 31 December 7.2 8.0

2018 2017 Movement in fair value of plan assets £m £m Fair value of plan assets at 1 January 6.9 12.4 Interest income 0.2 0.3 (Loss)/return on plan assets (0.7) 0.2 Employer contributions 0.1 0.1 Assets distributed on settlements – (5.8) Benefits paid (0.2) (0.2) Administration expenses (0.1) (0.1)

186 Fair value of plan assets at 31 December 6.2 6.9 SECTION 03 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Equiniti Group plc Annual Report 2018 187 – 0.1 0.3 0.2 0.6 4.0 2.3 £m £m £m 0.1 6.9 (0.3) (1.6) (1.4) 88.7 89.9 2017 2017 2017 2017 2.68% 2.06% 2.06% 3.06% Female 0.1 0.2 0.1 1.5 2.8 1.8 0.1 £m £m £m 0.1 6.2 (0.2) (1.4) (1.3) 86.8 87.9 Male 2018 2018 2018 2018 2.07% 2.07% 3.07% 3.10%

9.3 POST-EMPLOYMENT BENEFITS (CONTINUED) BENEFITS 9.3 POST-EMPLOYMENT Expense recognised in the income statement Expense recognised Administration expenses cost Interest income Interest Total expense Total Actuarial gains and losses recognised in other comprehensive income in other comprehensive recognised Actuarial gains and losses Cumulative loss at 1 January Cumulative loss at 31 December Actuarial gain recognised in other comprehensive income in other comprehensive Actuarial gain recognised Plan assets are comprised of the following: Plan assets are Sensitivity analysis on the employee used in calculating the pension obligation. The total effect Estimates of the discount rate, inflation rate and life expectancy are of £2.6m (2017: £2.9m), in life expectancy by one year would be an increase benefit liability on all schemes as at 31 December 2018 of an increase in the inflation assumption would (2017: £8.6m), and a 0.5% increase of £6.0m in the discount rate used would be an increase a 0.5% decrease based on a change in one assumption whilst holding all other of £6.0m (2017: £7.6m). These individual sensitivity analyses are be an increase assumptions constant. Member age 65 (current life expectancy) Member age 65 (current Member age 45 (life expectancy at 65) Contributions MyCSP Limited does not expect to make contributions to the scheme in 2019 except to cover the administration expenses of maintaining the scheme. Overseas equities Corporate bonds fund Diversified growth Cash Fair value of plan assets at 31 December average assumptions used to determineWeighted obligations: benefit Rate of increase for pensions in payment Rate of increase for pensions in deferment Rate of increase Inflation assumption trend) 100% SAPS S2PxA CMI 2017, 1% long-term average life expectancy for mortality SAPS S2PMA, 100% SAPS S2PFA, tables (100% Weighted used to determine benefit obligations 2018: at 31 December Discount rate

FOR THE YEAR ENDED 31 DECEMBER 2018 YEAR ENDED 31 FOR THE Notes to the consolidated financial statements financial consolidated to the Notes Notes to the consolidated financial statements FOR THE YEAR ENDED 31 DECEMBER 2018

9.4 OPERATING LEASES

Future aggregate minimum lease payments, relating primarily to the Group’s premises, are payable as follows:

2018 2017 £m £m Less than one year 7.0 5.8 Between one and five years 26.1 17.6 More than five years 21.3 21.1 Total 54.4 44.5

9.5 CONTINGENT LIABILITIES

The Company, along with other companies in the Group, has provided a guarantee in relation to a Senior Facilities Agreement comprising a term loan and revolving credit facility made available to Equiniti Holdings Limited. The facilities comprise term loan facilities of £250.0m and US$92.0m, and a multicurrency revolving credit facility of £199.0m, of which the drawn balance was £76.7m at 31 December 2018 (2017: £nil). Both facilities are repayable in 2020.

9.6 EVENTS AFTER THE REPORTING DATE

There have been no material events between 31 December 2018 and the date of authorisation of the consolidated financial statements that would require adjustments of the consolidated financial statements or disclosure.

188 SECTION 03 FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Equiniti Group plc Annual Report 2018 189 £m £m £m (5.7) 0.8 3.7 3.5 3.5 (1.2) 2.6 (18.3) (26.7) (12.5) (10.0) 11.6 44.5 37.9 80.8 16.2 25.3 15.3 15.3 2017 value (318.6) 193.6 406.3 195.0 Restated As at 1 January IFRS 15 carrying – – – – – – – – – £m £m £m (0.5) (0.3) (0.1) (0.1) 2.1 (1.0) 2.1 1.0 0.2 (0.3) (0.3) (0.3) 2018 196.8 ments ments 197.9 Re-measure- Re-measure- As at 1 January £m £m (5.7) 0.8 3.7 3.6 3.6 11.9 (26.7) (18.3) (12.5) (10.0) (35.8) 35.8 (15.2) 15.2 25.6 15.6 15.6 406.1 (318.1) fications Reclassi- As reported

– – £m 80.3 96.0 value IAS 18 carrying

The impact from adopting IFRS 15 on the Group’s income statement was as follows: income statement adopting IFRS 15 on the Group’s The impact from 9.7 RESTATEMENT OF FINANCIAL STATEMENTS UNDER IFRS 15 UNDER FINANCIAL STATEMENTS OF 9.7 RESTATEMENT Year ended 31 December 2017 ended Year Revenue Administrative costs Depreciation of property, plant and equipment property, of Depreciation intangible assets Amortisation of acquisition-related Finance income income tax before Profit for the year Profit interests – Non-controlling Amortisation of software Finance costs Income tax charge for the year attributable to: Profit – Owners of the parent for the year Profit attributableEarnings to owners of the parent: per share (pence) Basic earnings per share (pence) Diluted earnings per share reflect in the statement of financial position at adoptionthe date of (1 January 2018), to made to the amounts recognised Adjustments were were made to contract fulfilment changes fulfilment to contract fulfilment assets and contract liabilities. Re-measurement the reclassifications recognition of of additional accrued income and contract delivery costs, and to contract fulfilment liabilities through recognition assets through comparatives for the 2017 financial has restated of IFRS 15, the Group with the transition provisions income. In accordance additional deferred year and below is a summary of the changes: Balance sheet extract as at 31 December 2017 Trade and other receivables Trade Contract fulfilment assets Trade and other payables Trade Contract fulfilment liabilities Retained earnings – as reported recognition Change in timing of revenue Recognition of asset for costs to fulfil a contract earnings – IFRS 15 Opening retained The impact on the Group’s retained earnings as at 1 January 2018 and 1 January 2017 was as follows: earnings as at 1 January 2018 retained The impact on the Group’s

FOR THE YEAR ENDED 31 DECEMBER 2018 YEAR ENDED 31 FOR THE Notes to the consolidated financial statements financial consolidated to the Notes Company statement of financial position AS AT 31 DECEMBER 2018

2018 2017 Note £m £m Assets Non-current assets Investments in subsidiaries 9 276.9 174.6 276.9 174.6 Current assets Amounts due from Group undertakings 10 520.8 585.8 520.8 585.8

Total assets 797.7 760.4

Liabilities Current liabilities Amounts due to Group undertakings 11 64.0 2.6 64.0 2.6

Total liabilities 64.0 2.6

Net assets 733.7 757.8

Equity Equity attributable to owners of the parent Share capital 12 0.4 0.4 Share premium 12 115.9 115.8 Capital redemption reserve 0.2 0.2 Reserve for own shares 13 (10.0) – Retained earnings 627.2 641.4 Total equity 733.7 757.8

The Company’s loss for the financial year was £96,000 (2017: profit of £48,000). The notes on pages 192 to 197 form part of these financial statements.

The financial statements of Equiniti Group plc (registered number: 07090427) on pages 190 to 197 were approved by the Board of Directors on 12 March 2019 and were signed on its behalf by:

John Stier Chief Financial Officer

190 SECTION 03 FINANCIAL STATEMENTS COMPANY FINANCIAL STATEMENTS Equiniti Group plc Annual Report 2018 191

– – – 3.5 0.1 6.3 £m (0.1) (0.1) (14.6) (13.9) (16.5) Total Total (24.0) 115.9 733.7 653.0 104.8 757.8 757.8 equity 1 – – – – – 3.5 6.3 £m (3.9) (0.1) (0.1) (14.6) (16.5) (11.1) (14.1) 627.2 652.5 641.4 641.4 Retained earnings – – – – – – – – – – – – – – 3.9 £m (13.9) (10.0) (10.0) own shares Reserve for Reserve for – – – – – – – – – – – – – – 0.2 0.2 0.2 0.2 £m Capital reserve redemption redemption – – – – – – – – – – – 0.1 0.1 £m 115.8 Share Share 115.9 115.8 115.8 115.8 premium – – – – – – – – – – – – 0.1 0.4 0.3 0.1 0.4 0.4 £m Share capital Share

Re-presented to include the share-based payments reserve within retained earnings within retained payments reserve to include the share-based Re-presented The notes on pages 192-197 form part of these financial statements. Balance at 31 December 2018 Balance at 1 January 2017 Balance at 1 January income Comprehensive Resultfor the year of share-based Capital contribution in respect compensation 14) plans (note directly with owners recognised Transactions in equity Balance at 31 December 2017 Balance at 1 January 2018 expense Comprehensive Loss for the year (note 13) of own shares Purchase to employees (note 13) awarded Own shares of share-based Capital contribution in respect compensation plans (note 14) directly with owners recognised Transactions in equity Total comprehensive income comprehensive Total capital, net of transaction costs Issue of share (note 12) Dividends (note 17) expense comprehensive Total capital, net of transaction costs Issue of share (note 12) Dividends (note 17) 1

FOR THE YEAR ENDED 31 DECEMBER 2018 YEAR ENDED 31 FOR THE Company statement of changes in equity changes of statement Company Notes to the Company financial statements FOR THE YEAR ENDED 31 DECEMBER 2018

1 GENERAL INFORMATION – including any market performance conditions (for example, total shareholder return); Equiniti Group plc (the Company) is a public limited company which is listed on the London Stock Exchange, incorporated and domiciled in – excluding the impact of any service and non-market performance the United Kingdom. The principal activity of the Company is that of vesting conditions (for example, profitability, sales growth targets and a holding company. The registered office is Sutherland House, remaining an employee over a specified period of time); and Russell Way, Crawley, West Sussex, RH10 1UH. – including the impact of any non-vesting conditions (for example, the requirement for employees to save or hold shares for a specific period 2 BASIS OF PREPARATION of time). 2.1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES At the end of each reporting period, the Company revises its estimates of the number of awards that are expected to vest based on the non- Statement of compliance market vesting conditions and service conditions. It recognises the impact of the revisions to original estimates, if any, reflecting employee These financial statements have been prepared in accordance with services provided to the Group, in the cost of subsidiary investments, International Financial Reporting Standards (IFRS) as adopted by with a corresponding adjustment to equity. the European Union (EU), IFRS Interpretation Committee (IFRS IC) interpretations as adopted by the EU and the Companies Act 2006 Taxation applicable to companies reporting under IFRS. Tax on the profit for the year comprises current and deferred tax. Tax is Basis of preparation recognised in the statement of comprehensive income, except to the extent that it relates to items recognised directly in equity, in which The principal accounting policies applied in the preparation of the case it is recognised in equity. Company financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise Current tax is the expected tax payable on the taxable income for the stated. These financial statements have been prepared on the going year, using tax rates enacted or substantively enacted at the statement concern basis and under the historical cost convention. The Company’s of financial position date, and any adjustment to tax payable in respect functional and presentational currency is the British Pound (£). of previous years. The Company has taken advantage of the exemption provided under Deferred tax is provided on temporary differences between the carrying section 408 of the Companies Act 2006 not to publish its individual amounts of assets and liabilities for financial reporting purposes and statement of comprehensive income and related notes. The loss for the amounts used for taxation purposes. The following temporary the year was £96,000 (2017: profit of £48,000). differences are not provided for: the initial recognition of goodwill, the initial recognition of assets or liabilities that affect neither accounting A statement of cash flows has not been presented as the Company nor taxable profit other than in a business combination and differences did not have any cash flows during the current or prior period, nor did relating to investments in subsidiaries to the extent that they will it have any cash and cash equivalents at any time during the period. probably not reverse in the foreseeable future. The amount of deferred Therefore the presentation of a statement of cash flows would not tax provided is based on the expected manner of realisation or provide any additional information. Dividends payable by the Company settlement of the carrying amount of assets and liabilities, using tax are paid by another entity within the Group. rates enacted or substantively enacted at the statement of financial position date. Investments in subsidiaries A deferred tax asset is recognised only to the extent that it is probable Investments in subsidiaries are carried at historical cost less any that future taxable profits will be available against which the asset can provisions for impairment. be utilised.

Share capital 2.2 NEW STANDARDS AND INTERPRETATIONS NOT YET ADOPTED Ordinary shares are classified as equity. Incremental costs directly There are no other new IFRSs or IFRS IC interpretations not yet adopted attributable to the issue of new shares or options are shown in which would be expected to have a material impact on the financial equity as a deduction, net of tax, from the proceeds. statements of the Company. Where the Company acquires its own ordinary shares, the consideration paid is recorded as a deduction from equity. 2.3 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

Equity share-based payment transactions There are no accounting policies where the use of judgements and estimates is determined to be significant to the financial statements. The Company operates a number of equity-settled, share-based compensation plans, under which companies within the Group receive services from employees as consideration for equity instruments (options). The fair value of the employee services received in exchange for the grant of the options is recognised as an increase in the cost of subsidiary investments. The total amount recognised is determined by reference to the fair value of the options granted:

192 SECTION 03 FINANCIAL STATEMENTS NOTES TO THE COMPANY FINANCIAL STATEMENTS Equiniti Group plc Annual Report 2018 193 £m 2017 757.8 757.8 £m 2018 733.7 733.7

– credit risk – credit – liquidity risk The Company made a loss in the year of £0.1m (2017: £nil). The expenses borne by the Company in the year were not tax deductible and no tax The Company made a loss in the borne by the year of £0.1m (2017: £nil). The expenses in the Company year were has been incurred. credit to this rate to 17%, substantively 1 April 2017, was on 26 October 2015. A reduction enacted from The UK corporation tax rate of 19%, effective 1 April 2020, was substantively 2016. enacted on 6 September effective 8 INCOME TAX CHARGE 8 INCOME TAX . The costs of the Directors were were Remuneration Report on pages 92-117. The costs of the Directors set out in the Directors’ are remuneration Full details of the Directors’ to the Company. companies, without recharge borne by fellow Group 7 DIRECTORS’ REMUNERATION There were no persons employed directly by the Company, other than the Directors, and therefore no staff costs were incurred. costs were no staff and therefore other than the Directors, by the Company, no persons employed directly were There 6 STAFF NUMBERS AND COSTS 6 STAFF The audit fees for these financial statements of £1,250 (2017: £1,250) were borne by a fellow Group company. borne by a fellow Group The audit fees for these (2017: £1,250) were financial statements of £1,250 5 AUDITORS’ REMUNERATION Total equity Total Equity Management of capital: The Company’s objectives when managing capital are to maximise shareholder value whilst safeguarding the Company’s ability to continue as a the Company’s value whilst safeguarding to maximise shareholder objectives when managing capital are The Company’s equity in the capital is calculated as total sheet. balance going concern. Total 4 CAPITAL RISK MANAGEMENT 4 CAPITAL The Company has exposure to the following risks from its use of financial instruments: to the following risks from The Company has exposure plc. The including Equiniti Group of companies (the Group), plc group established for the Equiniti Group Risk management policies are the adequacy of the risk and reviews Audit Committeemanagement monitors compliance oversees how with these policies and procedures Audit. by Internal Audit The Committee is assisted in its oversight role to the risks faced by the Group. in relation management framework reported of which are the results procedures, and of risk management controls and ad hoc reviews Internal Audit undertakes both regular to the Audit Committee. risks and risk management policies financial of can be found in note 6.10 the consolidated the Group’s Further information regarding financial statements. 3 FINANCIAL RISK MANAGEMENT 3 FINANCIAL

FOR THE YEAR ENDED 31 DECEMBER 2018 YEAR ENDED 31 FOR THE Notes to the Company financial statements financial Company to the Notes Notes to the Company financial statements FOR THE YEAR ENDED 31 DECEMBER 2018

9 INVESTMENTS IN SUBSIDIARIES

The Company has the following investments in subsidiaries: 2018 2017 Cost and net book value £m £m At beginning of the year 174.6 171.1 Additions 96.0 – Investment related to share based award costs 6.3 3.5 Total investment in subsidiaries 276.9 174.6

During the year the Company subscribed to £1 of share capital in newly created entities Equiniti Finance (Holdings) Limited and Equiniti (UK) Finance Limited. It subsequently invested the equivalent of a further $45.0m (£32.0m) in Equiniti Holdings Limited and the equivalent of $90.0m (£64.0m) in Equiniti Finance (Holdings) Limited to provide funding for the acquisition of Wells Fargo Shareowner Services. This transaction was funded by way of intercompany transfer. The Directors consider the value of the investment to be supported by its underlying assets. The Company has the following direct investments in subsidiaries:

Ownership % on 31 Principal December Name of controlled entity Registered office address activities 2018 Equiniti Holdings Limited Elder House, St Georges Business Park, Brooklands Holding company 100 Road, Weybridge, Surrey, KT13 0TS, United Kingdom Equiniti Finance (Holdings) Ltd Elder House, St Georges Business Park, Brooklands Holding company 100 Road, Weybridge, Surrey, KT13 0TS, United Kingdom Equiniti (UK) Finance Ltd Elder House, St Georges Business Park, Brooklands Non trading 100 Road, Weybridge, Surrey, KT13 0TS, United Kingdom

The above investments are held in the Ordinary share capital of the companies. A full list of the Company’s indirect investments is included in note 4.4 to the consolidated financial statements.

10 AMOUNTS DUE FROM GROUP UNDERTAKINGS 2018 2017 Current £m £m Non-interest bearing receivables due from related parties 520.8 585.8 Total amounts due from Group undertakings 520.8 585.8

Balances due from related parties can be called upon on demand.

11 AMOUNTS DUE TO GROUP UNDERTAKINGS 2018 2017 Current £m £m Non-interest bearing payables due to related parties 64.0 2.6 Total amounts due to Group undertakings 64.0 2.6

Balances due to related parties are repayable on demand.

194 SECTION 03 FINANCIAL STATEMENTS NOTES TO THE COMPANY FINANCIAL STATEMENTS Equiniti Group plc Annual Report 2018 195 – 0.1 £m 2017 2017 115.7 115.8 112,138 Number 64,309,234 300,012,911 364,434,283 – – 0.1 £m 2018 2018 115.8 115.9 Share premium Share 102,383 Number 364,434,283 364,536,666 – 0.3 0.1 £m 0.4 2017 – – 0.4 £m 0.4 2018 Share capital Share

12 SHARE CAPITAL 12 SHARE Allotted, called and fully up paid Balance at 1 January Employee share options exercised Employee share Rights issue Balance at 31 December Ordinary shares of £0.001 each of £0.001 shares Ordinary Balance at 1 January Employee share options exercised Employee share Rights issue Balance at 31 December The Group has equity-settled share-based award plans in place, being the conditional allocations of Equiniti Group plc shares. Share-based Share-based plc shares. plans in place, being the conditional allocations of Equiniti Group award has equity-settled share-based The Group within note 7.2 to the consolidated financial statements. presented to the Company are relevant payments disclosures 14 SHARE-BASED PAYMENTS During the year, the Group purchased 6,000,000 of its own ordinary shares for consideration of £13.9m. The shares are held in an employee are for consideration of £13.9m. The shares shares ordinary 6,000,000 of its own purchased the Group During the year, option plans. During the year 1,697,093 (2017: nil) shares share under the Group’s benefit trust and willused to satisfy be the vesting of awards dividends. not receive equity and do deducted from held by the trust are Shares used to satisfy the vesting of awards. were 13 RESERVE FOR OWN SHARES The Company issued 102,383 ordinary shares on exercise of employee share options during the year (2017: 112,138). The shares were issued at a were options during the The shares year (2017: 112,138). of employee share on exercise shares The Company issued 102,383 ordinary Equiniti Holdings Limited, and company, by a fellow Group received of £0.1m were Proceeds price of £1.19 per share. weighted average exercise related parties. receivables due from within the balance is reflected shares for every 14 fully paid ordinary on the basis of 3 shares issue to existing a rights shareholders In October 2017, the offered Company of £122.2m were proceeds Gross at £1.90 per share. shares in the issue of 64,309,234 ordinary held. The issue was fully and resulted subscribed receivables due within Equiniti Holdings Limited, and the balance was reflected company, behalf fellow by a Group on the Company’s received transaction costs of £6.5m. of direct which was net by £115.7m as a result, account increased premium parties. The share related from

FOR THE YEAR ENDED 31 DECEMBER 2018 YEAR ENDED 31 FOR THE Notes to the Company financial statements financial Company to the Notes Notes to the Company financial statements FOR THE YEAR ENDED 31 DECEMBER 2018

15 FINANCIAL INSTRUMENTS

The carrying amounts of financial assets and liabilities are classified as per IFRS 7 Financial Instruments: Disclosures according to the following categories:

2018 2017 Financial assets Note £m £m Amortised cost Loans and receivables due from related parties 10 520.8 585.8 Total financial assets 520.8 585.8

2018 2017 Financial liabilities Note £m £m Amortised cost Loans and receivables due to related parties 11 64.0 2.6 Total financial liabilities 64.0 2.6

The fair values and the carrying values of financial assets and liabilities are not materially different.

16 RELATED PARTY TRANSACTIONS

2018 2017 Receivable at the year end £m £m From fellow Group companies 520.8 585.8 Total 520.8 585.8

2018 2017 Payable at the year end £m £m To fellow Group companies 64.0 2.6 Total 64.0 2.6

196 SECTION 03 FINANCIAL STATEMENTS NOTES TO THE COMPANY FINANCIAL STATEMENTS Equiniti Group plc Annual Report 2018 197 – – 5.3 9.3 £m 14.6 2017 – – 6.6 9.9 £m 16.5 2018

17 DIVIDENDS Amounts recognised as distributions to equity holders in the year Amounts recognised The Company, along with other companies in the Group, has provided a guarantee in relation to a Senior Facilities Agreement comprising a term to a Senior Facilities Agreement a guarantee in relation has provided with along other companies in the Group, The Company, facility made available to Equiniti Holdings The facilities Limited. comprise term loan facilities of £250.0m and US$92.0m, credit loan and revolving facility of £199.0m, of which the balance was £76.7m at 31 December 2018 (2017: £nil). Both drawn facilities credit revolving and a multicurrency in 2020. repayable are 18 CONTINGENT LIABILITIES Interim dividend (1.83p per share) for year ended 31 December 2018 Final dividend per share) for year ended 31 December 2017 (2.73p Interim dividend (1.64p per share) for year ended 31 December 2017 Final dividend per share) for year ended 31 December 2016 (2.91p dividend paid during the year Total respect of of £12.7m (2017: £9.9m) or 3.49p per share the year ended 31 December 2018 a final dividend payable in recommends The Board at the General Meeting Annual May 2019, no liability on 2 has been included in approval As this to shareholder is subject (2017: 2.73p per share). register at close of business on 12 April 2019. on the these financial statements. The final dividend will be paid on 16 May 2019, to shareholders held. receive dividends on shares to Trust has waived its right Employee Benefit The Equiniti Group

FOR THE YEAR ENDED 31 DECEMBER 2018 YEAR ENDED 31 FOR THE Notes to the Company financial statements financial Company to the Notes Superbrand 2018 Chosen by an expert council of B2B marketing experts and 2,500 individual business professionals

198 SECTIONSECTION 04 01 ADDITIONALSTRATEGIC INFORMATIONREPORT PAGE TITLE Equiniti Group plc Annual Report 2018 199 200 SHAREHOLDER INFORMATION 04 Additional information Shareholder information

Registered Office For enquiries regarding Telephone Equiniti Group plc ordinary shares, please contact UK only 0371 384 2335 Sutherland House Equiniti Limited Non UK +44 121 415 7047 Russell Way Aspect House Crawley Spencer Road West Sussex Lancing RH10 1UH West Sussex BN99 6DA Company number 07090427

Shareholders can also access their purchase, is insufficient to buy a single who target UK shareholders offering to holdings online by visiting the website share, no charge is made and the dividend sell what often turn out to be worthless or at www.shareview.co.uk is carried forward. high-risk shares in US or UK investments. They can be very persistent and extremely For corporate governance enquiries, E-communications persuasive. Shareholders are advised to please contact the Company Secretary: Using the Group’s website as the main be very wary of any unsolicited advice, Kathy Cong method of distribution for many statutory offers to buy shares at a discount or offers [email protected] documents is part of our commitment of free company reports. to reducing our environmental impact. For investor relations enquiries, please Shareholders can choose to receive If you receive any unsolicited investment contact the Head of Investor Relations: communications, including the Annual advice: Frances Gibbons Report and Accounts and Notice of • Ensure that you obtain the correct name [email protected] Meetings, in electronic form rather than of the person and organisation; by post. Financial calendar* • Check that they are properly authorised Shareholders can register through the by the FCA before becoming involved. 12 March 2019 Annual results for year online service at www.shareview.co.uk. ended 31 December 2018 You can check at www.fca.org.uk; and 2 May 2019 Annual General Meeting The registration process requires the input of a shareholder reference number • Report the matter to the FCA at 2 August 2019 Interim results for www.fca.org.uk. six months ended (SRN), which can be found on the share 30 June 2019 certificate. To ensure that shareholder communications *The financial calendar may be updated from time to time throughout the year. Please refer to our website are received in electronic form, “email” www.equiniti.com for up-to-date information. should be selected as the mailing preference. Dividend Reinvestment Plan Once registered, shareholders will be Shareholders are able to take their sent an email notifying them each time dividend as cash, or in shares through a shareholder communication has been the DRIP (Dividend Reinvestment Plan). published on the Company website, and Further details are available at providing them with a link to the page on www.shareview.co.uk. the website where it may be found. The DRIP allows shareholders to use their cash dividends to buy more shares Warning to shareholders in the Company. Rather than receiving Equiniti Group plc is legally obliged to a dividend cheque through the post or make its share register available to the having their bank account credited with general public. Consequently some the dividend payment, shareholders can shareholders may receive unsolicited choose to use their cash dividend to buy mail, including correspondence from additional shares. unauthorised investment companies. Whole shares are purchased with any Companies have become increasingly residual money being carried forward and aware that their shareholders have added to the next dividend. However, received unsolicited phone calls if the amount of the dividend, less any concerning their shareholding. These calls dealing costs incurred in completing the are typically from overseas-based brokers

200 SECTION 04 ADDITIONAL INFORMATION SHAREHOLDER INFORMATION Equiniti Group plc Annual Report 2018 201 100 0.85 0.03 6.35 92.77 Register % of Share % of Share 91,412 3,082,268 23,134,381 338,228,605 364,536,666 No. of Shares 100 8.93 45.19 32.80 13.08 % of Holders 90 456 331 132 1,009 No. of Holders Weil, Gotshal & Manges Weil, 110 Fetter Lane London EC4A 1AY Equiniti Limited Aspect House Spencer Road Sussex Lancing, West BN99 6DA Barclays 5 The North Colonnade London E14 4BB Global Markets Ltd Citigroup Centre Citigroup 33 Canada Square London E14 5LB Liberum Ropemaker Place 25 Ropemaker Street London EC2Y 9LY Rothschild New Court Lane St Swithin’s London EC4N 8AL Bar Advisory Limited Temple 60 Cannon Street London EC4N 6NP PricewaterhouseCoopers LLP The Portland Building 25 High Street Sussex West Crawley, RH10 1BG 500,000 50,000 – – 1,000 – REGISTRAR LEGAL ADVISER FINANCIAL PR ADVISER FINANCIAL ADVISER CORPORATE BROKERS CORPORATE AUDITOR ADVISERS Range ANALYSIS OF ORDINARY SHAREHOLDERS AS AT 31 DECEMBER 2018 31 DECEMBER 2018 AT SHAREHOLDERS AS OF ORDINARY ANALYSIS 50,001 1,001 500,001+ Total 1