9M/Q Results. November 3, 2016

Transcription

1 9M/Q Results November 3, 2016

2 Highlights 9M 2016 Financial highlights ( m) 9M M Variation Adjusted revenue % Adjusted EBITA % Margin (%) 40.5% 39.9% Adjusted net income 77.7 Adjusted Net Income Per Share 4 ( ) 0.88 Elian acquisition closed on September 23, Integration is on-track with rebranding expected before the end of the year Sound performance in Guernsey and the Netherlands Highlights Cayman underperforming; Luxembourg still below targeted growth levels due to FTEs being below budget Interim dividend of 0.24 per share was announced, payable on November 30 Repurchase of shares to accommodate vesting of ESOP grant (175,000 shares) Notes 1. Adjusted before specific items and one-off revenues/expenses 4. Adjusted Net Income per share calculated using weighted average number of shares outstanding as per 2. 9M 2015 includes CorpNordic as of July 2015 September 30 (87,917,883), including issuance of shares for the acquisition of Elian M 2016 includes Elian as of September 23,

3 Elian acquisition update Transaction closed 23 September; integration is on-track Intertrust acquired Elian, a regional Jersey-based T&CS 1 provider, for 435m in Q Transaction closed on September 23, 2016 Colocation of offices: - All offices except London will be colocated by year-end; London will be last office to colocate, expected in January 2017 New, post-merger management structure: - Announced and implemented - Two Elian senior management members joined ExCo of combined company Target Operating Model to be finalised by end of November Integration update Rebranding of Elian to Intertrust will be completed by year-end Cross-selling opportunities between the companies are already being realised, which will have a positive impact on inflow particularly in Jersey, Netherlands, Luxembourg and Germany Per the period September 23 September 30, 2016, Elian contributed 1.6 million in Adjusted Revenue and 0.6 million in Adjusted EBITA Notes 1. Trust & Corporate Services 2 2

4 ( m) Intertrust trading update 9M M 2016 EBITA margin is in line with proforma 9M 2015 EBITA margin Note: Intertrust stand-alone figures Revenue and Adjusted EBITA (Actual growth) Key performance indicators Proforma & in CC % % 39.9% 40.0% proforma & in CC +2.1% Margin % 9M M 2016 Revenue Growth (CC & PF) 1,4 2.6% Revenue Growth (CC) 1 5.1% Revenue Growth 2 3.9% Adjusted EBITA Growth (CC & PF) 1,4 2.1% Adjusted EBITA Growth (CC) 1 3.4% Adjusted EBITA Growth 2 2.5% # of entities (k) M M M M 2016 Revenue Adj. EBITA ARPE ( k) ARPE Growth 13.8% FTE 1,713 1,746 Revenue / FTE ( k) EBITA / FTE ( k) Notes 1. CC refers to constant currency 2. Including FX 3. Annualised numbers 4. CorpNordic is included in 2015 figures 3 3

5 Cayman Impact Adjusted revenue ( m) ARPE 3 ( k) Total growth 2.6% 5.3% 12.3% 6.8% PF CC PF CC M M M M 2016 Intertrust stand-alone Intertrust excl. Cayman 9M M M M 2016 Intertrust stand-alone Intertrust excl. Cayman Revenue growth was negatively impacted by the loss in Cayman of certain low ARPE registered office business due to the re-entry of a competitor into the market Excluding the performance of Cayman, Adjusted Revenue on a constant currency and proforma basis, grew by a solid 5.3% over the 9M period Notes 1. PF refers to proforma including CorpNordic in 2015 figures 2. CC refers to constant currency 3. Annualised numbers 4 4

6 ( m) Intertrust trading update Q Note: Intertrust stand-alone figures Q EBITA margin 39.2%, versus 39.8% in Q driven mostly by increased IT and Group costs, including LTIP costs Revenue and Adjusted EBITA (Actual growth) Key performance indicators Proforma & in CC +1.0% 39.8% 39.2% Margin % Q Q % Revenue Growth (CC & PF) 1,4 1.0% Revenue Growth (CC) 1 1.0% Revenue Growth 2-0.7% Adjusted EBITA Growth (CC & PF) 1,4-0.7% Adjusted EBITA Growth (CC) 1-0.7% Adjusted EBITA Growth 2-2.2% # of entities (k) Q Q Q Q Revenue Adj. EBITA ARPE ( k) ARPE Growth 8.7% FTE 1,713 1,746 Revenue / FTE ( k) EBITA / FTE ( k) Notes 1. CC refers to constant currency 2. Including FX 3. Annualised numbers based on quarterly figures (Q3) 4. CorpNordic is included in 2015 figures 5 5

7 Note: Intertrust stand-alone figures ARPE growth driven by focus on higher value added entities and outflow of lower ARPE entities Total growth Entities (000) -8.6% Total growth ARPE 1,2 ( k) 13.8% Proforma growth % M M M M 2016 At the end of September 2016, Intertrust had 38,493 entities A net outflow of 3,635 entities over the last twelve months mainly due to the re-entry of a competitor in Cayman (2,898 entities lost of which 1,554 in 2016) Notes: 1. Average revenue per entity ("ARPE") 2. Annualised numbers based on adjusted revenue before specific items and one-off revenue/expenses 3. CorpNordic is included in 2015 figures 6 6

8 FTE growth to support new business Note: Intertrust stand-alone figures FTEs Revenue per FTE 1 ( k) Total growth 1.9% Total 2.0% growth 2 1,713 1,746 Proforma growth 3-0.4% M M M M 2016 A net increase of 33 FTEs over the last twelve month period ended in September 2016 Mainly due to the increase in billable FTEs (29 FTEs), mostly in the Netherlands (+33) partially compensated by Hong Kong, Luxembourg and Cayman. Luxemburg increased it s billable FTEs by 5 versus Q2 Non Billable FTEs have increased by 4 mainly due to IT and HQ FTEs Intertrust maintained a billable versus total FTE ratio of 75% Notes: 1. Annualised numbers based on adjusted revenue before specific items and one-off revenue/expenses 2. Including CorpNordic 7 7

9 Cash conversion remains strong Cash conversion¹ Capex ( m) OpFCF² ( m) % 94.0% 97.7% 95.8% Maintenance Capex ( m) Strategic Capex ( m) M 2016 cash conversion ratio, excluding strategic capital expenditures, remains strong at 95.8% Total capital expenditure for 9M 2016 was 6.5 million The implementation of the Business Application Roadmap was completed. Additional capital expenditure will be done for enhancements Increase in maintenance capex in 9M 2016 versus 9M 2015 was driven by timing of hardware replacement, the implementation of the outsourcing of datacentres of Intertrust and leasehold improvements Notes: 1. Cash conversion = OpFCF / Adj. EBITDA 2. OpFCF = Adj. EBITDA Maintenance Capex 8 8

10 Focus on the Netherlands Adjusted revenue ( m) Total growth 4.5% 5.5% Adjusted revenue ( m) Number of entities 4,491 4,321 ARPE ( k) Adjusted revenue growth of 5.5% was driven by continuing international investments and increased billable work force Inflow of new entities YTD 2016 in line with inflow of same period Inflow in Q higher than in Q and at same level as Q Significant part of YTD outflow (~170 entities) related to a onetime administrative correction of a group of capital markets entities terminated before 2016 (correction had no revenue impact) Outflow in Q3 was in line with Q2 2016, predominantly reflecting end of life of client structures ARPE growth continues as a result of transaction complexity and regulatory requirements demanding value-added services 9

11 Focus on Luxembourg Adjusted revenue ( m) Total growth 2.2% 3.7% Adjusted revenue ( m) Number of entities 2,668 2,595 ARPE ( k) Adjusted revenue growth of 3.7%, driven by increased billable workforce and renegotiation of fixed fee agreements to align fees with the current services provided Growth lower than expected due to unavailable hours and fewer billable hours due to fewer FTEs than budgeted because of a tight recruitment market New business from existing clients showed strong growth, specifically PE/VC activity Number of entities decreased by 2.7% compared to September 2015 due to less incorporations in the market, mainly driven by deal flow in the PE and real estate markets Outflows due to end of life and insourcing were balanced by inflows with similar revenue ARPE growth of 6.6% reflects continuous increase in substance requirements and more complex structures leading to higher fees 10 10

12 Focus on Cayman Islands Total growth -17.1% -11.0% Organic growth at constant currency Adjusted revenue ( m) Adjusted revenue ( m) -16.7% % Number of entities 18,984 15,680 ARPE ( k) On a constant currency basis, Adjusted revenue decreased in 9M 2016 by 10.8% driven by a decline in the number of registered office entities as well as the sale of its banking activities in Cayman to Cainvest at the end of 2015, partially offset by higher registered office transfer out fees The re-entry of a competitor into the Cayman Islands led to a reduced inflow and an outflow of 1,554 entities in 9M 2016 (2,898 entities since re-entering the market mid 2015) Remaining outflows in Cayman of 406 entities were driven mainly by end of life and bad debtors Outflow of Cayman entities in Q3 almost half of outflow in Q2 Growth in fiduciary services, fund administration and corporate secretarial services was also less than anticipated Cayman has a new MD as of September 23rd, with the former head of Elian leading the combined teams ARPE in constant currency grew by 8% due to outflow of lower ARPE entities, which improves the mix of business 11 11

13 Focus on Guernsey Adjusted revenue ( m) Total growth -7.2% -1.0% Organic growth at constant currency 11.1% % On a constant currency basis, Adjusted revenue growth of 9.3% in 9M 2016, driven by additional revenue on FATCA filings and compliance remediation work YTD ARPE increased by 21.7% in GBP (10.2% in EUR), driven by the exit of lower margin private client entities from Guernsey and Cayman as well as taking on more complex structures over the last year that generated higher revenues Adjusted revenue ( m) The decrease in the number of entities was due to an administrative clean-up of 276 entities Number of entities 3,335 2,995 ARPE ( k)

14 Focus on Rest of the World Total growth Proforma growth at constant currency Adjusted revenue ( m) Adjusted revenue ( m) 4.0% 16.1% 4.7% % Number of entities 12,650 12,902 ARPE ( k) On a proforma 1 and constant currency basis, Adjusted revenue grew by 5.0% year on year, driven by strong performance of Spain, Ireland and Singapore, but partially offset by Hong Kong and Switzerland On a proforma basis, the number of entities remained stable, mainly driven by net inflows flows in Spain, Ireland, UK, Dubai, all Nordics and Delaware, offset by net outflows in Hong Kong, Curacao and Switzerland ARPE improved further from 5.4 k in Q to 6.1 k in Q3 2016, driven by more complex services resulting in a highervalue service offering to new client entities Increased Asian M&A activity led to an increased outbound deal flow from all Asian offices to the network of Intertrust Stronger growth in ROW countries by client wins away from competitors, as a result of a flight to quality We also see stronger growth in ROW countries by client wins away from competitors, as a result of a flight to quality Notes: 1. 9M 2016 figures include CorpNordic, acquired in June

15 Intertrust is committed to medium term objectives and capital structure Outlook and medium term objectives Full Year 2016 adjusted net income per share including Elian on a proforma basis of approximately 1.42 expected (based on the actual number of shares at the end of Q3 2016) Cayman is expected to continue to be negatively impacted by the re-entry of a competitor into the market for the rest of 2016 and modestly throughout 2017, after which we expect the business to stabilise For the medium term, we reiterate our objective of organic revenue growth slightly above market growth of 5% (estimated market CAGR for CY E) Adjusted EBITA margin improvement objective including Elian is reiterated at bps by CY 2018E over the Intertrust stand-alone CY 2015 proforma Adjusted EBITA margin of 40.4% Interest costs for the combined company for the full year 2016, including new debt for the Elian acquisition, are expected to be approximately 21 million of which 4.0 million is related to amortisation of financing fees (non-cash) Cash conversion to continue to be in line with historical rates Maintenance / normalised capex will be 2-2.5% of revenues for the combined company Effective tax rates based on adjusted net income before tax will be approximately 16% after completion of the Elian acquisition (18% on a stand-alone basis). For 2016, we expect an effective tax rate slightly below 16%. Dividend policy Dividend policy is a target dividend of 40-50% of Adjusted net income. The first interim dividend of 0.24 will be paid on November 30, 2016 over the year ending December 31, 2016 Capital structure Unchanged target steady-state net debt to EBITDA ratios are at times, with a temporary increase in the event of an acquisition 14

16 Appendix 1 Income statement and adjustments 15

17 Income statement and adjustments 1 Including Elian acquisition since September 23, 2016 Income statement ( m) Adjustments ( m) 9M M 2016 Revenue Staff expenses (109.7) (118.7) thereof equity share-based payments upon IPO - (3.7) Rental expenses (12.7) (13.7) Other operating expenses (28.3) (30.9) thereof transaction & monitoring costs (3.2) (4.7) thereof integration costs (1.0) (1.0) Other operating income Earnings before interest, taxes, depreciation and amortisation (EBITDA) Depreciation and amortisation (27.5) (28.7) (Profit/(loss) from operating activities Net finance costs (56.1) (23.1) (Profit/(loss) before income tax Income tax (6.8) (13.9) Profit/(loss) from continuing operations M M 2016 Earnings before interest, taxes, depreciation and amortisation (EBITDA) Transaction & Monitoring costs Integration costs Other operating (income)/expense Equity share based payments upon IPO One-off revenue One-off expenses Adjusted EBITDA Depreciation and software amortisation (5.3) (6.1) Adjusted EBITA Adjusted Revenue Notes: 1. Includes unaudited financial information 16 16

18 9M 2016 Reported and Adjusted Net Income 1 Including Elian acquisition since September 23, 2016 Reported Net Income ( m) 9M 2016 Reported EBITDA Depreciation and software amortisation (6,1) Amortisation of (PPA related) intangibles (22.6) Net finance costs (23.1) Profit before tax 50.0 Income tax (13.9) 9M 2016 Reported Net Income 36.1 Adjusted Net Income ( m) Adjustments HY 2016 Adjusted EBITDA Excluding specific items and equity share based payments upon IPO Depreciation (6.1) Adjusted EBITA Amortisation of (PPA related) intangibles 0 Net Interest costs (14.0) Acquisition related amortisation excluded from Adjusted Net Income definition Net finance Costs excluding Forex gains and losses of 9.1 m Adjusted Profit before tax 91.7 Income tax (13.9) Reported Income tax HY 2016 Adjusted Net Income 77.7 Notes: 1. Includes unaudited financial information 17 17

19 Questions? 2015 Intertrust Group B.V. This document is provided by Intertrust for information purposes only and does not constitute an offer, invitation or inducement to contract. The information herein does not constitute legal, tax, regulatory, accounting or other professional advice and therefore one should seek appropriate professional advice before considering a transaction as described in this document. No liability is accepted whatsoever for any direct or consequential loss arising from the use of this document. The text of this disclaimer is not exhaustive, further details can be found at: