Intertrust N.V. Q1 2017 results

Amsterdam – 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.

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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

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

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.
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