Intertrust N.V. Q1 2016 results
Amsterdam, April 21, 2016, Intertrust N.V. ("Intertrust" or "Company") [ticker symbol INTER] a leading global provider of high-value trust and corporate services, today announces its operating results for the three months ended March 31, 2016.
Presentation of financial and other information
Financials are presented on adjusted basis before specific items and one-off revenues/expenses. Year-to-date (YTD) financial information represents unaudited financial information for the three months ended March 31, 2016.
Q1 | Q1 |
% Change
(reported) |
% Change
(Proforma and CC 10 ) | |
2016 | 2015 | |||
Adjusted revenue 1 (€m) | 87.9 | 81.6 | 7.7% | 3.8% |
Adjusted EBITA 1 (€m) | 36.0 | 33.7 | 6.8% | 4.5% |
Adjusted EBITA 1 margin | 40.9% | 41.3% | -34.6bps | +24.8bps |
Operating free cash flow 2 (€m) | 36.5 | 34.7 | ||
Cash conversion ratio including strategic capital expenditure (%) 3 | 94.7% | 93.4% | ||
Cash conversion ratio excluding strategic capital expenditure (%) 4 | 96.3% | 98.1% | ||
Adjusted net income | 25.5 | na | ||
Adjusted net income per share (€) 5 | 0.30 | na | ||
Profit (loss) after income tax | 15.9 | 3.0 | ||
No. of entities 6 (000's) | 39.2 | 40.9 | -4.1% | |
Average Adjusted revenue per entity (ARPE) 7 (€k) | 9.0 | 8.0 | ||
No. of full-time equivalents (FTEs) 6 | 1,737.4 | 1,568.5 | 10.8% | |
Adjusted revenue 1 per FTE 6,7 (€k) | 202.3 | 208.1 | ||
Total net debt 8 | 415.3 | na | ||
Net debt leverage ratio 9 | 2.75 | na |
Financial highlights Q1 2016 versus Q1 2015
Adjusted net income and Adjusted net income per share
Operational highlights Q1 2016
Outlook
David de Buck, Chief Executive Officer of Intertrust, commented:
"I am pleased to report a solid performance in Q1 and we are on track to meet our targets for the full year 2016. Recently, there has been a lot of attention to our sector in the media and among politicians. Our selective approach to client acceptance combined with high ethical and compliance standards has shown its value throughout this period, despite the sectoral turbulence in the media. We continue to monitor the environment, and do not see regulatory proposals which would negatively impact our business. We think that recent developments, such as the Panama Papers, confirm our belief that transparency requirements will increase. This will provide us with the opportunity to assist our clients with additional administration and reporting requirements. It may also benefit quality providers like Intertrust."
Performance in key jurisdictions
The Netherlands
Q1
2016 |
Q1
2015 |
% change
(reported) | |
Adjusted revenue 1 (€m) | 28.6 | 27.1 | +5.5% |
Number of entities | 4,396 | 4,406 | -0.2% |
Annualised ARPE | 26.0 | 24.6 | +5.7% |
In the Netherlands, we achieved quarter-on-quarter Adjusted revenue growth of 5.5% The growth was supported by the increase in the number of billable FTEs. Nevertheless, the revenue growth was impacted in Q1 2016 by amongst others training and timing of holidays (e.g. Easter). In Q1 2016, the inflow of entities was strong due to continued sales efforts. The outflow of entities was driven by "end of life" and product rationalization initiatives in order to focus on higher ARPE entities. The ARPE growth of 5.7% was driven by regulatory and transaction complexity, which required more value-added services.
Luxembourg
Q1
2016 |
Q1
2015 |
% change
(reported) | |
Adjusted revenue 1 (€m) | 18.8 | 18.4 | +2.5% |
Number of entities | 2,572 | 2,560 | +0.5% |
Annualised ARPE | 29.3 | 28.7 | +2.0% |
In Luxembourg, we achieved quarter-on-quarter Adjusted revenue growth of 2.5%. Q1 2015 comprised €0.5 million overruns which have been monitored and invoiced more regularly going forward. On a like-for-like basis, Q1 2016 Adjusted revenue grew by 5.3% compared to Q1 2015, driven by increased billable workforce. In addition, the Adjusted revenue growth was impacted by lower amount of available billable hours partially because of training and timing of holidays (e.g. Easter). The number of entities remained stable compared to March 2015, outflows were mainly due to end of life and consolidation at competitors but were balanced by inflows coming mainly from existing customers. The ARPE growth of 2.0% reflects continuous increase in substance requirements and increasing complexity of structures, but was impacted by the lower amount of billable hours which affected overall revenues in Q1 2016.
The Cayman Islands
Q1
2016 |
Q1
2015 |
% change
(reported) |
% change
(CC 1 ) | |
Adjusted revenue 2 (€m) | 13.3 | 13.7 | -2.4% | -4.5% |
Number of entities | 16,485 | 18,874 | -12.7% | |
Annualised ARPE | 3.2 | 2.9 | +11.7% | +9.3% |
In the Cayman Islands, on a constant currency basis, Adjusted revenue decreased by 4.5% for the quarter, driven by the re-entry of a competitor in the market. Although the negative impact was consistent with our expectations, our revenues were impacted by less registered office (RO) fees resulting from transfers out to a competitor (2,370 low ARPE RO entities lost). Therefore, the number of entities was reduced. Our ARPE grew by 9.3% at constant currency, driven by the transfer of lower ARPE entities, upselling corporate support to existing clients, growth in fiduciary services and exit fees in Q1 2016.
Guernsey
Q1
2016 |
Q1
2015 |
% change
(reported) |
% change
(CC 1 ) | |
Adjusted revenue 2 (€m) | 7.2 | 7.3 | -1.4% | +2.2% |
Number of entities | 3,198 | 3,415 | -6.4% | |
Annualised ARPE | 9.1 | 8.6 | +5.3% | +9.1% |
In Guernsey we achieved quarter-on-quarter Adjusted revenue growth of 2.2% in constant currency. This growth was mostly driven by the renegotiation of fees and the deployment of compliance services. The number of entities reduced by 217 structures compared to March 2015, low-value entities being replaced by new more complex structures. Our ARPE increased by 9.1% at constant currency, reflecting the intake of new structures with higher value-added services.
Rest of the World
Q1
2016 |
Q1
2015 |
% change
(reported) |
% change
(Proforma and CC 1 ) | |
Adjusted revenue 2 (€m) | 19.9 | 15.1 | 31.5% | 9.7% |
Number of entities | 12,576 | 11,656 | +7.9% | |
Annualised ARPE | 6.3 | 5.2 | +21.9% | +8.6% |
In the rest of the world (ROW) in Q1, at constant currency, Adjusted revenue grew by 31.4% quarter-on-quarter. Q1 2016 figures include CorpNordic, acquired in June 2015. On a pro forma basis, our adjusted revenue at constant currency grew by 9.7%, driven by strong performance of Singapore, Spain, Ireland and the UK. This growth was driven by increased M&A activity, increased private equity activity and growth in demand from financial institutions. The growth in number of entities reflects the inclusion of CorpNordic (+796 structures) and the development of Rest of World affiliates.
On a pro forma basis, ARPE improved from €5.8 thousand in Q1 2015 to €6.3 thousand in Q1 2016, driven by more complex services resulting in a higher-value service offering to new client entities. Increase in FTEs comprises 72 FTEs from the CorpNordic acquisition, together with additional billable FTEs to support business growth.
We opened a sales office in Chicago early January 2016 to further expand our successful strategy of proximity to our clients in the key US markets and to take advantage of opportunities in these regions.
We clearly benefited from the trend to outsource in the fund management sector. We launched AIFMD Manco Services in Ireland last year, with first revenues reported in Q1 2016. Our global presence and sales offices generated a strong year-on-year growth in Q1 in cross-border referrals for the entire Intertrust network.
Investor call
Intertrust CEO David de Buck and CFO Ernesto Traulsen will hold an investor call today at 10:00 a.m. CET to discuss the Company's Q1 2016 Trading Update. An audiocast of the call will be available on the website. Details can be found at
http://investors.intertrustgroup.com
.
For further information | |
Intertrust N.V. | IR@intertrustgroup.com |
Anne Louise Metz | Tel: +31 20 577 1157 |
Director of Corporate Affairs |
About Intertrust
Intertrust is a leading global provider of high-value trust and corporate services, with a network of 37 offices in 26 jurisdictions across Europe, the Americas, Asia and the Middle-East. The Company focusses on delivering high-quality tailored services to its clients with a view to building long-term relationships. Intertrust's business services offering comprise corporate services, fund services, capital market services, and private client services. Intertrust has leading market positions in selected key geographic markets of its industry, including the Netherlands, Luxembourg, the Cayman Islands and Guernsey.
Intertrust N.V. - Unaudited Consolidated Profit/Loss | |||||
(In € million) | Q1 2016 | Q1 2015 | |||
Revenue | 87.9 | 81.2 | |||
Staff expenses | (38.8) | (35.2) | |||
thereof equity share-based payments upon IPO | (1.0) | - | |||
Rental expenses | (4.5) | (4.0) | |||
Other operating expenses | (8.3) | (8.4) | |||
thereof transaction & monitoring costs | - | (0.4) | |||
thereof integration costs | (0.5) | (0.6) | |||
EBITDA | 36.3 | 33.5 | |||
Depreciation & amortisation | (9.6) | (9.1) | |||
Profit/(loss) from operating activities | 26.8 | 24.5 | |||
Net Finance costs | (5.1) | (19.9) | |||
Profit/(loss) before tax | 21.6 | 4.5 | |||
Income tax | (5.7) | (1.5) | |||
Profit/(loss) from continuing operations | 15.9 | 3.0 | |||
Definitions
Adjusted EBITDA is defined as EBITDA before specific items and before one-off revenue / expenses. 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 our financial performance. Specific items include (i) transaction and monitoring costs; (ii) integration costs; and (iii) income / expenses related to disposal of assets. Specific items are not of an operational nature and do not represent our core operating results. One-off revenue consists mainly of revenues related to the release of one-off provision. 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 Adjusted revenue, and is expressed as a percentage.
Adjusted revenue is defined as revenue adjusted for one-off revenue as defined under Adjusted EBITDA.
Capital expenditure is defined as investments in property, plant, equipment and software not related to acquisitions.
Cash conversion ratio including strategic capital expenditures is defined as Adjusted EBITDA less capital expenditure, including strategic capital expenditures, divided by Adjusted EBITDA and is expressed as a percentage
Cash conversion ratio excluding strategic capital expenditures is defined as operating free cash flow divided by Adjusted EBITDA and is expressed as a percentage.
EBITDA is defined as earnings before interest, taxes, depreciation and amortisation.
Operating free cash flow
is defined as Adjusted EBITDA less capital expenditure, excluding strategic capital expenditures. We define strategic capital expenditures as capital expenditures relating to the Business Application Roadmap, or relating to investments in our IT infrastructure in connection with the Business Application Roadmap.
Forward-looking statements
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.