Intertrust N.V. Q1 2017 results

Amsterdam - 4 May 2017 - Intertrust N.V. ("Intertrust" or the "Company") [ticker symbol INTER], a leading global provider of high-value trust, corporate and fund services, today announces its results for the first quarter of 2017.

Intertrust financial and operating performance for Q1 2017

  • Revenue in Q1 increased by 38.4% year-on-year to EUR 121.6 million. Underlying revenue increased 4.2% driven primarily by strong performance in Luxembourg and increasing ARPE across all jurisdictions.
  • EBITA in Q1 was EUR 44.7 million, increasing by 30.3% year-on-year or 0.9% on an underlying basis.
  • We continue to see solid operating leverage in the business, however due to an increase in Group HQ & IT costs our underlying EBITA margin decreased 125 bps.
  • The Elian integration and associated synergy realisation continue to be on track.
  • Adjusted EPS in Q1 was EUR 0.36, up 19.9% year-on-year.

Intertrust Group Q1 2017 figures

  As reported   Adjusted 3  
  Q1 17 1 Q1 16 % Change   Q1 17 1 Q1 16 % Change % Underlying change 2
         
Revenue (€m)121.687.938.4% 121.687.938.4%4.2%
         
EBITA (€m)44.734.330.3% 46.236.028.4%0.9%
         
EBITA Margin 36.8% 39.1% -230bps   38.0% 40.9% -298bps -125bps
         
Net Income (€m)20.815.930.8% 33.025.529.4% 
         
Earnings per share (€)0.230.1921.2% 0.360.3019.9% 
         
Cash from operating activities (€m)65.954.620.8%     

1 Q1 2017 figures include Elian and Azcona
2 Underlying: Q1 2017 at constant currency and Q1 2016 including proforma Elian and Azcona figures
3 See definitions for further information on Adjusted figures

David de Buck, Chief Executive Officer of Intertrust, commented:

"We are pleased with our first quarter top-line performance, and our revenue base is now well diversified, with 24% of revenue coming from the Netherlands, 20% from Luxembourg, 14% from Cayman, 12% from Jersey and 30% from Rest of the World. Luxembourg had a strong performance on the back of new entity inflows and additional regulatory and compliance work. The Netherlands saw modest growth in Q1, but we expect a pick up in the latter part of the year. Cayman continues to stabilise and strengthen, though 2017 will continue to be impacted by the competitive landscape. Jersey continues to perform in line with our expectations. The Elian integration is on track, and we see our employees truly acting as one team. Our recent transaction with Azcona has made us a leading independent provider of capital markets, funds and corporate services in Spain."

Intertrust Group Q1 2017

  Q1 17 1 Q1 16 % Change % Change (CC) % Underlying change 2
      
Revenue (€m)121.687.938.4%40.8%4.2%
Adjusted 3 EBITA (€m) 46.236.028.4%30.1%0.9%
Average number of FTEs2,3921,72139.0%  
Number of entities (000's, end of period)51.039.230.0%  
ARPE (€k, annualised)9.59.06.5%  
Revenue/FTE (€k, annualised)203.4204.2-0.4%  
Adj. EBITA/FTE (€k, annualised)77.283.6-7.6%  

1 Q1 2017 figures include Elian and Azcona
2 Underlying: Q1 2017 at constant currency and Q1 2016 including proforma Elian and Azcona figures
3 See definitions for further information on Adjusted figures

Financial Highlights Q1 2017

  • Revenue increased 38.4% year-on-year, largely due to the acquisition of Elian. Underlying revenue grew at 4.2% driven by strong growth in Luxembourg and increasing ARPE (+6.5%) due to the introduction of additional reporting requirements in several jurisdictions including the Common Reporting Standard and Country-by-Country reporting.
  • EBITA margins contracted by 230 bps or 125 bps on an underlying basis. The contraction was largely due to increased HQ and IT costs. The total expenses in Q1 2017 include EUR 0.8 million (or 69 bps) of non-recurring items.
  • Gross inflow of entities over Q1 was 1,979 while gross outflow was 2,179. End-of-life continues to account for more than half of all outflow and competitive losses represent less than 10% of gross outflow globally.
  • Cash from operating activities was EUR 65.9 million. The cash conversion ratio was 97.6%. Capex amounted to EUR 1.1 million (0.9% of revenue) versus EUR 2.0 million in Q1 2016.
  • Net debt decreased to EUR 706.3 million at end Q1 2017 (from EUR 758.5 million at end Q4 2016). The leverage ratio decreased from 3.72x (end Q4 2016) to 3.50x (end Q1 2017).

Operational Highlights Q1 2017

  • The Elian operational integration continued according to plan.
  • In Spain, the remaining 25% of SFM Spain shares were purchased from Azcona, a Spanish capital markets service provider. Azcona's clients were also acquired and their employees joined Intertrust, doubling the headcount of the Madrid office.
  • Intertrust announced a share buy-back program on 22 March 2017 in order to meet its deferred obligation towards certain employees including the selling shareholders within the former management team of Elian. The share buy-back comprises up to 1,856,354 shares and may be effectuated until 8 October 2017. As of 1 May 2017, 1,065,398 of the shares had been repurchased in the program.


Guidance

Management reiterates the guidance given at the time of the announcement of the Q4 2016 results, with the exception of capex, for which more precise guidance is given. The guidance below pertains to 2017. Management will update the medium term guidance at the Capital Markets Day on 21 September 2017.

  • Underlying revenue growth for 2017 is expected to be between 4-5%.
  • Underlying EBITA margins in 2017 are expected to expand slightly due to synergies and continued operating leverage, which will compensate for the margin pressure inherent in Elian's lower margin profile. This will result in expected adjusted EBITA margin being roughly stable versus 2016 (39.9%).
  • Dividend policy over 2017 continues to be 40-50% of adjusted net income.
  • Guidance on synergies (GBP 10.4 million by the end of CY 2018E, of which 75% by end CY 2017E), effective tax rate (circa 16%), and cash conversion (in line with historical rates) remain unchanged.
  • Capex (previously 2-2.5% of revenue), now revised to less than 2% of revenue.


Performance in key jurisdictions

Due to integration of Elian, as of Q1 2017 Intertrust no longer breaks out Elian results but will use the following segmentation: the Netherlands, Luxembourg, Cayman Islands, Jersey, and Rest of the World (ROW), whereby Guernsey is included in ROW in both 2016 and 2017 figures.


The Netherlands

  Q1 2017 1 Q1 2016 % Change % Underlying change 2
     
Revenue (€m)29.128.61.8%1.2%
     
Number of entities (000's)4.24.4-5.2% 
     
Annualised ARPE (€k)27.926.07.3% 

1 Q1 2017 figures include Elian
2 Underlying: Q1 2017 at constant currency and Q1 2016 including proforma Elian figures

Intertrust Netherlands' revenue grew by 1.8% year-on-year of which approximately 1.2% was underlying growth. ARPE increased 7.3% on the back of increased transaction complexity and an ongoing trend of enhanced corporate governance. Based on the current pipeline, a pick-up of revenue across the Netherlands business over the latter part of 2017 is expected.

The number of entities managed by Intertrust Netherlands decreased by 5.2%. Inflow of entities in Q1 2017 was comparable to Q1 2016. Outflow was mainly due to end-of-life.


Luxembourg

  Q1 2017 1 Q1 2016 % Change % Underlying change 2
     
Revenue (€m)24.118.827.9%18.4%
     
Number of entities (000's)3.12.619.9% 
     
Annualised ARPE (€k)31.229.36.6% 

1 Q1 2017 figures include Elian
2 Underlying: Q1 2017 at constant currency and Q1 2016 including proforma Elian figures

In Luxembourg, increased transaction complexity and an ongoing trend of enhanced corporate governance contributed to a growth in ARPE of 6.6%. Intertrust Luxembourg's revenue increased 27.9% year-on-year or 18.4% on an underlying basis, mainly driven by existing clients. 

Entity inflow was higher than inflow over the same period last year, largely driven by Private Equity and Real Estate funds.

Cayman Islands

  Q1 2017 1 Q1 2016 % Change % Change (Constant currency) % Underlying change 2
      
Revenue (€m)17.513.331.3%26.9%-2.1%
      
Number of entities (000's)19.716.519.5%  
      
Annualised ARPE (€k)3.63.29.9%6.2% 

1 Q1 2017 figures include Elian
2 Underlying: Q1 2017 at constant currency and Q1 2016 including proforma Elian figures

In Cayman, entity outflow to competitors continued to reduce in Q1. ARPE grew 9.9% (or 6.2% at constant currency) year-on-year, reflecting the growing portion of higher value-added services and increased cross-sell activities.

Revenue increased 31.3%, largely due to the Elian contribution and currency effects. Q1 underlying revenue was down 2.1% year-on-year. Q1 year-on-year comparisons for Cayman are impacted by prior-year entity losses and related one-off transfer revenue in Q1 2016.


Jersey

  Q1 2017 Q1 2016 % Change % Underlying change 1
     
Revenue (€m)14.6n.a.n.a.3.7%
     
Number of entities (000's)4.5n.a.n.a. 
     
Annualised ARPE (€k)12.9n.a.n.a. 

1 Underlying: Q1 2017 at constant currency and Q1 2016 based on proforma Jersey figures
n.a.: no reported results available as Intertrust had no operations in Jersey in Q1 2016

Jersey continued to perform in line with expectations. Underlying revenue growth in Q1 is estimated to be 3.7%, impacted by alignment of Elian revenue allocation policies with Intertrust as well as one-off income in Q1 2016. Accelerated growth in the second half of 2017 is expected to lead to overall high-single digit growth for the full year.

  

Rest of the World (ROW)

  Q1 2017 1 Q1 2016 % Change % Change (Constant currency) % Underlying change 2
      
Revenue (€m)36.327.134.0%37.6%1.8%
      
Number of entities (000's)19.515.823.7%  
      
Annualised ARPE (€k)7.46.98.3%11.2% 

1 Q1 2017 figures include Elian and Azcona
2 Underlying: Q1 2017 at constant currency and Q1 2016 including proforma Elian and Azcona figures

In Rest of the World (ROW) revenue grew by 34.0%, of which underlying growth was 1.8% year-on-year. Underlying revenue growth was driven by the performance of Guernsey, Asia and Spain but impacted by Belgium and Switzerland. Growth continues to be driven by ongoing M&A activity, increased real estate activity and additional reporting requirements. ROW drove the majority of the Group's total cross jurisdictional sales in Q1 2017, with the largest contributions coming from the US, UK and Asia.

Annualised ARPE increased from EUR 6.9 thousand in Q1 2016 to EUR 7.4 thousand in Q1 2017. The addition of the Elian entities and more complex services contributed to the ARPE increase.


Group HQ and IT

  Q1 2017 1 Q1 2016
   
Group HQ and IT costs (€m)-16.1-9.5

1 Q1 2017 figures include Elian and Azcona

Group HQ and IT costs increased by EUR 6.6 million, of which EUR 2.7 million (net of synergies) is related to the inclusion of Elian.

In addition to the former Elian overhead costs, the increased HQ costs (EUR 2.4 million) were mainly driven by higher Long-Term Incentive Plan (LTIP) and bonus related spend (EUR 0.8 million), higher professional fees and other expenses (EUR 0.7 million), and higher staff cost (EUR 0.9 million) related to, amongst others, the strengthening of the business operations and duplication of staff cost due to the shift of Group Finance from Geneva to Amsterdam.

IT costs after inclusion of former Elian costs increased EUR 1.5 million due to higher IT depreciation following the completion of IT investments in the Business Application Roadmap (BAR), and higher operating expenses related to the migration of data centres and increased outsourcing costs. IT spend on the migration of the data centres is front loaded, and related operating expenses costs are expected to decrease over the course of the year. IT capital expenditures are lower due to the migration to Software as a Service and Infrastructure as a Service.

Financial Calendar

Date Event
16 May 2017Intertrust N.V. AGM
18 May 2017Intertrust NV share quotation ex-final dividend 2016
19 May 2017Record date final dividend 2016 entitlement
12 June 2017Payment date final dividend 2016
24 August 2017Q2 & Half Year 2017 results & announcement of interim dividend
21 September 2017Capital Markets Day
9 November 2017Q3 2017 results


Press and analyst calls

Today, Intertrust's CEO David de Buck and CFO Maarten de Vries will hold an:


For further information

Intertrust N.V.                                                              annelouise.metz@intertrustgroup.com
Anne Louise Metz                                                          Tel: +31 20 577 1157
Director of Investor Relations, Marketing & Communications

About Intertrust
Intertrust is a leading global provider of high-value trust, corporate and fund services, with more than 2,500 employees located throughout a network of 41 offices in 30 jurisdictions across Europe, the Americas, Asia and the Middle-East. The Company delivers high-quality, tailored services to its clients with a view to building long-term relationships. Intertrust's business services offering is comprised of corporate services, fund services, capital market services, and private wealth services. Intertrust has leading market positions in selected key geographic markets of its industry, including the Netherlands, Luxembourg, Jersey and the Cayman Islands. Intertrust works with global law firms and accountancy firms, multi-national corporations, financial institutions, fund managers, high net worth individuals and family offices.


Intertrust N.V. - Consolidated Profit/Loss
(unaudited)

(EUR 000) 01.01.17 - 31.03.17 01.01.16 - 31.03.16
      
Revenue  121,624  87,864
    
Staff expenses  (54,450)  (38,796)
Rental expenses  (6,069)  (4,499)
Other operating expenses  (13,685)  (8,265)
Depreciation and amortisation of software  (2,690)  (1,969)
Amortisation of acquisition-related intangible assets  (10,128)  (7,582)
    
Profit/(loss) from operating activities   34,602   26,753
       
Net finance costs  (7,734)  (5,103)
Share of profit of equity-accounted investees (net of tax)  (3)  (9)
    
Profit/(loss) before income tax   26,865   21,641
    
Income tax  (6,069)  (5,741)
    
Profit/(loss) after tax   20,796   15,900
       
Profit/(loss) after tax attributable to:    
Owners of the Company  20,744  15,919
Non-controlling interests   52  (19)
Profit/(loss)   20,796   15,900
       
Earnings per share (EUR)   0.23  0.19


Intertrust N.V. - Balance Sheet
(unaudited)   

(EUR 000) 31.03.2017 31.12.2016
    
Assets   
Property, plant and equipment19,620   20,167
Software  14,021  15,120
Goodwill and acquisition-related intangible assets  1,560,273  1,565,367
Investments in equity-accounted investees   578   707
Other non-current financial assets  3,708  3,820
Deferred tax assets  354  2,480
Non-current assets   1,598,554   1,607,661
     
Trade receivables  94,517  99,160
Other receivables  20,917  15,021
Work in progress  37,105  31,984
Current tax assets   512  945
Other current financial assets  1,344  1,627
Prepayments  10,139  8,167
Cash and cash equivalents   91,143  69,858
Current assets   255,677   226,762
     
Total assets   1,854,231   1,834,423
   
Equity   
Share capital  55,200  55,200
Share premium  630,441  630,441
Reserves  37,385  42,345
Retained earnings  50,801  29,887
Equity attributable to owners of the Company   773,827   757,873
Non-controlling interests   178  1,930
Total equity   774,005   759,803
     
Liabilities   
Loans and borrowings  781,125  781,221
Other non-current financial liabilities  2,980  1,763
Employee benefits liabilities  2,785  3,082
Deferred income   7,577  8,677
Provisions   847  1,147
Deferred tax liabilities  85,320  85,659
Non-current liabilities   880,634   881,549
     
Loans and borrowings   62  18,072
Trade payables  5,629  10,636
Other payables  60,615  66,974
Other current financial liabilities  4,975   -
Deferred income  99,272  71,467
Provisions  1,182  2,219
Current tax liabilities  27,857  23,703
Current liabilities   199,592   193,071
     
Total liabilities   1,080,226   1,074,620
   
Total equity & liabilities 1,854,231   1,834,423

Intertrust N.V. - Condensed Cash flow statement (unaudited)  

(EUR 000) 01.01.17 - 31.03.17 01.01.16 - 31.03.16
     
Cash flows from operating activities   
Profit/(loss)   20,796   15,900
     
Adjustments for:  
Income tax expense  6,069   5,741
Share of loss/(profit) of equity-accounted investees   3   9
Net finance costs  7,734  5,103
Depreciation and amortisation of software  2,690  1,969
Amortisation of acquisition-related  intangible assets  10,128  7,582
(Gain)/loss on sale of non-current assets   10   5
Other non-cash items  1,128  1,145
    48,558  37,455
Changes in:  
(Increase)/decrease in trade working capital (*)  21,200  24,709
(Increase)/decrease in other working capital (**)  (1,639)  (7,210)
Increase/(decrease) in provisions  (1,309)  (89)
Changes in foreign currency   418  388
   67,228  55,253
Income tax paid  (1,332)  (691)
Net cash from/(used in) operating activities   65,896   54,562
   
   
Net cash from/(used in) investing activities   (6,735)   (2,864)
   
   
Net cash from/(used in) financing activities   (25,656)   (3,827)
   
Net increase/(decrease) in cash   33,505   47,871
     
Cash attributable to the Company at the beginning of the period  51,733  66,472
Effect of exchange rate fluctuations on cash attributable to the Company  (554)   (1,770)
Cash attributable to the Company at the end of the period   84,684   112,573
Cash held on behalf of clients at the end of the period  6,459  5,681
Cash and cash equivalents at the end of the period   91,143   118,254
 

(*) Trade working capital is defined by the net (increase)/decrease in trade receivables, work in progress, trade payables and deferred income
(**) Other working capital is defined by the net (increase)/decrease in other receivables, prepayments and other payables (excluding liabilities for cash held on behalf of clients)


Intertrust N.V. - Reconciliation of performance measures to reported results

(EUR 000) 01.01.17 - 31.03.17 01.01.16 - 31.03.16
   
Profit/(loss) from operating activities  34,602  26,753
Amortisation of acquisition-related intangible assets  10,128  7,582
Specific items - Transaction & Monitoring costs  93  -
Specific items - Integration costs  352  529
Specific items - Share-based payment upon IPO  480  1,039
Specific items - Share-based payment upon integration  404  -
Specific items - Other operating (income)/expenses  103  5
One-off expenses  -  55
Adjusted EBITA (*)  46,162  35,963

(*) Adjusted EBITA is defined as EBITA before specific items. Specific items of income or expense are income and expense items that, based on their significance in size or nature, should be separately presented to provide further understanding on financial performance. Specific items are not of an operational nature and do not represent core operating results. The one-off expenses are related to redundancies, legal costs and settlement fees. The Company uses this measure to analyse the operational performance of the company and its reportable segments.

(EUR 000)  01.01.17 - 31.03.17  
   Adjusted Specific items Excluded items Reported
           
EBITA   46,162   (1,432)   -   44,730
Amortisation of acquisition-related intangible assets   -   -   (10,128)  (10,128)
Profit/(loss) from operating activities   46,162   (1,432)   (10,128)   34,602
Net interest  (7,050)  -  -  (7,050)
Foreign exchange losses  -  -  (684)  (684)
Share of profit of equity-accounted investees (net of tax)  (3)  -  -  (3)
Profit/(loss) before income tax   39,109   (1,432)   (10,812)   26,865
Income tax  (6,069)   -   -   (6,069)
Net income (*)   33,040   (1,432)   (10,812)   20,796
      
(EUR 000)   01.01.16 - 31.03.16  
   Adjusted Specific items Excluded items Reported
           
EBITA   35,963   (1,628)   -   34,335
Amortisation of acquisition-related intangible assets  -   -   (7,582)  (7,582)
Profit/(loss) from operating activities   35,963   (1,628)   (7,582)   26,753
Net interest  (4,686)  -  -  (4,686)
Foreign exchange losses  -  -  (417)  (417)
Share of profit of equity-accounted investees (net of tax)  (9)  -  -  (9)
Profit/(loss) before income tax   31,268   (1,628)   (7,999)   21,641
Income tax (5,741)   -   -   (5,741)
Net income (*)   25,527   (1,628)   (7,999)   15,900

(*) Adjusted net income is defined as Adjusted EBITA less net interest and less income tax. The Company uses this measure a.o. in its dividend policy.



Forward-looking statements and presentation of financial and other information

This press release may contain forward looking statements with respect to Intertrust's future financial performance and position. Such statements are based on Intertrust's current expectations, estimates and projections and on information currently available to it. Intertrust cautions investors that such statements contain elements of risk and uncertainties that are difficult to predict and that could cause Intertrust's actual financial performance and position to differ materially from these statements. Intertrust has no obligation to update or revise any statements made in this press release, except as required by law.

Definitions

Adjusted EBITDA is defined as EBITDA before specific items. Specific items of income or expense are income and expense items that, based on their significance in size or nature, should be separately presented to provide further understanding about financial performance. Specific items include (i) transaction and monitoring costs; (ii) integration costs; (iii) income / expenses related to disposal of assets; and (iv) share-based payment upon IPO. Specific items are not of an operational nature and do not represent core operating results. One-off revenue consists mainly of revenue related to the release of one-off provisions. The one-off expenses are related to redundancies, legal costs and settlement fees.

Adjusted EBITA is defined as Adjusted EBITDA after depreciation and software amortisation.

Adjusted EBITA margin is defined as Adjusted EBITA divided by Revenue, and is expressed as a percentage.

Adjusted net income is defined as Adjusted EBITA less net interest and less income tax.

Adjusted net income per share is defined as Adjusted net income divided by the average number of shares outstanding at 31 March 2017.
Average for Q1 2017: 91,990,328 shares. Average for Q1 2016: 85,221,614 shares.

ARPE is Average revenue per entity.

Capital expenditure is defined as investments in property, plant, equipment and software not related to acquisitions.

Cash conversion ratio is defined as operating free cash flow divided by Adjusted EBITDA and is expressed as a percentage.

CC is Constant Currency .

EBITDA is defined as earnings before interest, taxes, depreciation and amortisation.

Leverage ratio is total net debt divided by Adjusted proforma EBITDA. Proforma means adjusted to take into account the full year effect of acquisitions, including projected synergies.

Net interest is defined as Net finance cost excluding Forex gains and losses.

Operating free cash flow is defined as Adjusted EBITDA less capital expenditure.

Total net debt is nominal value of the senior facilities at the prevailing exchange rates less cash excluding cash held on behalf of clients.

Underlying is Q1 2017 at constant currency and Q1 2016 including proforma Elian and Azcona figures.

Intertrust NV Press release - Q1 2017 Results - vFINAL



This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.

The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.

Source: Intertrust Group via GlobeNewswire

HUG#2101610