Equiniti Group PLC (LON:EQN) today confirmed that it is engaged in discussions to divest a key part of Equiniti Financial Services Limited, namely EQi’s direct-to-consumer customer book, predominantly the Selftrade business.
Negotiations are ongoing but subject to commercial, operational and regulatory discussions. Accordingly, there is no certainty as to whether the transaction will take place at this moment in time, or at all, Equiniti stresses.
Let’s recall that Equiniti has recently announced the appointment of Paul Lynam as Chief Executive. The appointment is effective April 1, 2021. Mr Lynam will be succeeding Guy Wakeley who has been in the role since 2014.
Regarding performance, let’s note that the latest trading update EQ has provided is for the period for the period 1 July 2020 to 5 November 2020.
Whilst non-discretionary, long-term contracts accounting for c75% of Group revenue have been sustained throughout the period, the ongoing disruption to capital markets and the wider economy continues to hold back any material recovery in market-paid and discretionary revenues. These revenues arise mainly from interest receivables, commission and fee-based income from capital market activity and discretionary projects in EQ Digital. In aggregate around half of the Group’s discretionary revenues remain impacted.
EQ has cancelled pay reviews for the majority of its colleagues and eliminated hiring. These measures continue to reduce operating costs with an in-year reduction of £16m with a similar saving in financial year 2021.
Back in November 2020, when the latest trading update was provided, EQ said that liquidity and headroom remain good, with more than £175m of stable liquid resources, and covenant headroom of c£60m of net debt. The Board remained focused on the reduction of leverage and the generation of free cash as the Group’s preeminent priority. The Group said then that it was exploring the divestment of a number of non-core assets should market conditions allow.