Investor call
25 August 2016
Q2 2016
Financial results
1
AGENDA
DISCLAIMER
2016 SECOND QUARTER / H1 PERFORMANCE
CAPITAL STRUCTURE
OUTLOOK
APPENDIX
2
DISCLAIMER
Any information in this presentation that is not a historical fact is a “forward-looking statement”. Such
statements may include opinions and expectations regarding TMF Group Holding B.V. ( the ‘Company’) and its
future business, Management’s confidence and strategies as well as details of Management’s expectations of
global economic and regulatory trends.
Such forward-looking statements involve known and unknown risks, uncertainties and other important factors
beyond the Company's and/or its Management control that could cause the actual results, performance or
achievements of the Company to be materially different from future results, performance or achievements
expressed or implied by such forward-looking statements. While the Company believes that its assumptions
concerning future events are reasonable, there are inherent difficulties in predicting certain important factors
that could impact the future performance or results of the Company’s business. Accordingly, such statements
should not be regarded as representations as to whether such anticipated events will occur nor that expected
objectives will be achieved. The Company expressly disclaims any intention or obligation to revise or update
any forward-looking statements, whether as a result of new information, future events, or otherwise.
In this presentation, the Company makes references to EBITDA and EBITDA margin, neither of which is defined
under International Financial Reporting Standards, as issued by the International Accounting Standards Board
and as adopted by the European Union (“IFRS”). The items excluded from EBITDA and EBITDA margin are
significant in assessing the Company’s operating results and liquidity. EBITDA and EBITDA margin have
limitations as analytical tools and should not be considered in isolation from, or as a substitute for, analysis of
the Company’s results as reported under IFRS. Other companies in the Company’s industry and in other
industries may calculate EBITDA and EBITDA margin differently from the way that the Company does, limiting
their usefulness as comparative measures.
3
H1 2016 GROUP PERFORMANCE
Highlights:
• Revenue and EBITDA growth in Q2 2016:
- on a management basis*: 4.4% and 0.6% respectively
- on a like-for-like basis**: 8.4% and 5.7% respectively
• Revenue and EBITDA growth in H1 2016:
- on a management basis*: 5.5% and 1.4% respectively
- on a like-for-like basis**: 8.5% and 5.4% respectively
• Ongoing M&A activity
- Acquisition of UCMS (Central Eastern Europe), Extor (Poland), Swain (Canada) and
Affiance (the Netherlands) completed. Acquisition of Axiss (Cayman) completed in
July 2016.
- Pipeline of opportunities continues to build in line with defined criteria
• Average employee number (FTEs) now exceeds 6,300
* In compliance with local requirements, 51% of the accounting business acquired in Brazil is held by individual accountants, who are also
local partners of TMF Group in its accounting business in Brazil. As such, the entity which holds the accounting business is accounted for as
an associate under IFRS. However, for presentation purposes, TMF Group EBITDA on a management basis includes the operational result
generated by the associate as if it were a subsidiary.
** On a constant currency basis, excluding impact of acquisitions and disposals
4
Q2 2016 GROUP PERFORMANCE
Financial performance vs. Q2 2015
€m
Q2 2016
Key points
Q2 2015 Change
%
Revenue
131.0
125.5
4.4%
Adjusted EBITDA*
32.9
32.7
0.6%
Adjusted EBITDA margin*
25.1%
26.1%
1.0 pps
Cash flow from operations
27.8
24.8
12.1%
Consolidated net interest
expense
25.8
24.6
4.9%
-
12.7
16.8
(2.5)
(1.2)
14.7
14.7
(2.2)
(2.6)
13.6%
14.3%
13.6%
Bank / Bond
Shareholder**
Interest income
FX (income) / loss
*Adjusted EBITDA and adjusted cash generated from operating activities exclude exceptional items. Expenses
incurred for acquisitions, litigation or redundancy and restructuring costs are classified as exceptional items.
** Not cash paying
•
Strong growth in GBS in all
regions
•
Increase in cash flow due to
higher cash conversion from
working capital
•
Increase in the net interest
expense due to compounding
impact of shareholders’ loan
interest and FX effect, partly
compensated by reduced
interest on the Bonds
5
Q2 2016 GROUP PERFORMANCE
Operational metrics vs. Q2 2015
Selected KPIs
Key points
Q2 2016
Q2 2015
Change
No. of employees*
6,515
5,928
587
Annualised Revenue per
employee (€000)
80.4
84.7
5.1%
Annualised Staff costs per
employee (€000)
44.1
46.1
4.3%
No. of offices**
124
117
7
No. of jurisdictions**
84
84
• Increase in the average
number of employees
due to organic growth
and acquisitions in Q2
2016
• New offices partly from
acquisitions
* Average number over the period (FTE), on a management basis
** Net of office closures due to KCS and PwC Apriori office rationalisation
6
Q2 2016 GROUP PERFORMANCE
Revenue by Geography
Revenue by Business segments
(€m)
(€m)
Global Business Services
Change %
131.0
4.4%
Change %
125.5
77.1
6.6%
15.3
17.0
11.1%
18.9
22.0
16.4%
38.1
38.1
72.3
25.8
27.3
41.7
26.7
26.2
3.5%
(4.0%)
APAC
31.2
4.3%
Americas
EMEA
Q2 2016
53.2
Change %
53.9
1.3%
12.9
12.5
0.8%
10.8
11.3
(9.7%)
29.6
30.0
6.5%
Benelux
Q2 2015
Q2 2016
HR & Payroll
Trust & Corporate Services
10.6%
Corporate
29.9
Corporate Secretarial
Accounting & Tax
Q2 2015
46.1
-
Private Clients & Other
Structured Finance
International Structuring
Q2 2015
Q2 2016
7
H1 2016 GROUP PERFORMANCE
Financial performance vs. H1 2015
€m
H1 2016
Key points
H1 2015 Change
%
Revenue
256.1
242.7
5.5%
Adjusted EBITDA*
64.5
63.6
1.4%
Adjusted EBITDA margin*
25.2%
26.2%
1.0 pps
Cash flow from operations
65.3
68.1
4.1%
Consolidated net interest
expense
49.7
55.9
11.1%
-
26.3
33.6
(4.9)
(5.3)
28.3
29.3
(4.5)
2.8
7.1%
14.7%
8.9%
Bank / Bond
Shareholder**
Interest income
FX (income) / loss
*Adjusted EBITDA and adjusted cash generated from operating activities exclude exceptional items. Expenses
incurred for acquisitions, litigation or redundancy and restructuring costs are classified as exceptional items.
** Not cash paying
•
Strong growth in GBS in all
regions, in Americas partly due
to the acquisition of PwC
Apriori
•
Decrease in cash flow due to
lower cash conversion from
working capital
•
Decrease in the net interest
expense due to reduced
interest on the Bonds and FX
effect, partly offset by the
compounding impact of
shareholders' loan interest
8
H1 2016 GROUP PERFORMANCE
Operational metrics vs. H12015
Selected KPIs
H1 2016
Key points
H12015
Change
No. of employees*
6,312
5,730
582
Annualised Revenue per
employee (€000)
81.1
84.7
4.3%
Annualised Staff costs per
employee (€000)
44.9
46.0
2.4%
No. of offices**
124
117
7
No. of jurisdictions**
84
84
• Increase in the average
number of employees
due to the acquisition of
PwC Apriori in Brazil in
2015 and acquisitions in
Q2 2016
• New offices partly from
acquisitions
* Average number over the period (FTE), on a management basis
** Net of office closures due to KCS and PwC Apriori office rationalisation
9
H1 2016 GROUP PERFORMANCE
Revenue by Geography
Revenue by Business segments
(€m)
(€m)
Global Business Services
Change %
256.1
5.5%
Change %
242.7
53.1
136.2
5.8%
9.0%
32.7
10.5%
34.9
42.0
20.3%
71.7
73.7
2.8%
29.6
50.2
148.4
Corporate Secretarial
48.8
50.4
3.3%
Accounting & Tax
H1 2015
81.7
88.7
APAC
62.3
2.5%
H1 2016
Trust & Corporate Services
8.6%
Corporate
60.8
Americas
EMEA
106.5
Change %
107.7
1.1%
25.8
25.5
(1.2%)
23.2
22.5
(3.0%)
57.5
59.7
3.8%
Benelux
H1 2015
H1 2016
HR & Payroll
Private Clients & Other
Structured Finance
International Structuring
H1 2015
H1 2016
10
COUNTRY GROWTH PROFILE VS. H1 2015
Growth at constant H1 2016 foreign exchange rates
Revenue
growth (%)
Revenue growth* (€m)
H1 2016 vs. H1 2015
< 0%
-1.7
12 countries
0 – 5%
3.8
18 countries
5 – 10%
1.8
9 countries
10 – 20%
3.7
13 countries
>20%
16.9
27 countries
* Excludes the revenue from International Licensing and Collection (Freeway) and International Pensions and the corporate revenue – the
revenue from TMF Group clients that is not distributed to countries
11
H1 2016 CORPORATE COST INVESTMENT
Corporate costs by function
Key points
€m
1.9
0.5
36.8
1.4
31.5
H1 2015
0.5
Sales
0.3
IT
• Increase in corporate costs
following continued
investments in the sales
capability and support
functions
0.7
Operations Marketing Service line Other
support
support
H1 2016
12
AXISS ACQUISITION
Historical performance (EUR m, FY14– FY15)
Company
• Established in 2008, Axiss is a boutique
management company providing high level
fiduciary, corporate and accounting services
to a select group of clients
+67.1%
1.2
0.7
Services
• The range of services includes fiduciary
services to regulated and unregulated
mutual funds and holding companies and
corporate, registered office, accounting
and family office services. All services fall
within the Trust & Corporate service line.
Acquisition
Rationale
• Adds necessary scale in a key strategic
country
• Achieve growth and critical mass sooner
than any alternative organic growth
strategy
• Experienced leadership team for TMF
Cayman
FY14
FY15
13
AFFIANCE ACQUISITION
Historical performance (EURm, FY14 – FY15)
Company
• Affiance is a privately owned Dutch trust
services company with a pure focus on the
Turkish corporate market
• C. 75 clients
+13.7%
0.8
Services
Acquisition
Rationale
• Services include trust services in the
Netherlands to Turkish corporate clients.
All services fall within the Trust &
Corporate service line.
FY14
0.9
FY15
• Opportunity for further consolidation
within the trust and corporate services
marketplace
• High quality and profitable book of
business that can enhance our existing
operations in the Netherlands
• Enhances the business development skills
in the country
* Financial year ending January 31
14
CAPITAL STRUCTURE
Capitalization
Key points
€m
June
2016
Mar
2016
Change
%
Cash and cash equivalents
55.2
87.0
36.6%
Secured Notes
450.0
450.0
-
Senior Notes
195.0
195.0
-
Revolving credit facility
29.3
29.3
-
Other loans
7.7
7.6
1.3%
Total External Debt
682.0
681.9
0.0%
Gross leverage*
5.24x
5.26x
0.02x
Total External Net Debt**
626.8
594.9
5.4%
Net Leverage
4.82x
4.59x
0.23x
Pro-forma Net leverage***
4.76x
4.51x
0.25x
• Cash and cash equivalents
increased mainly as a
result of a higher cash
flows from working
capital
* Based on EBITDA on a statutory basis
**Net Debt excludes capitalized finance costs, long-term supply arrangements, advance client payments, deferred consideration and Subordinated Shareholder Funding
*** Includes pro-forma LTM EBITDA of acquired businesses
15
OUTLOOK
Our priorities continue to be:
•
To drive top line growth through cross selling within our existing client
base and helping new and existing clients expand internationally
•
To continue to identify, evaluate and execute acquisition opportunities
•
To drive productivity levels across our business operations
•
To reduce net leverage
16
INVESTOR RELATIONS
Provisional Financial Calendar
•
•
•
•
•
Q3 2016 results: Thursday, 24 November 2016
Q4 2016 / Full year 2016 results: Thursday 30 March 2017
Q1 2017: Wedneyday 17 May 2017
Q2 2017: Thursday 24 August 2017
Q3 2017: Thursday 23 November 2017
Contacts
Gordon Stuart, CFO
[email protected]
Kate Martin
Global Director of Communications and Content
[email protected]
17
APPENDIX
18
APPENDIX
H1 2016 Group performance at constant currency
Revenue by Geography (€m)
Revenue by Business segments (€m)
Global Business Services
Change %
256.1
230.7
Change %
148.4
17.5%
11.0%
126.3
53.1
28.7
8.6%
32.0
48.9
50.4
32.7
13.9%
42.0
31.3%
Corporate Secretarial
65.6
73.7
H1 2015
H1 2016
HR & Payroll
12.3%
Accounting & Tax
22.3%
41.2
Trust & Corporate Services
78.6
88.7
12.8%
Other
APAC
60.8
62.3
2.5%
Americas
EMEA
Change %
104.4
107.7
25.5
25.5
-
21.7
22.5
3.7%
57.2
59.7
4.4%
Private Clients & Other
H1 2016
Structured Finance
International Structuring
Benelux
H1 2015
3.2 %
H1 2015
H1 2016
19
APPENDIX
Performance on a like-for-like basis*
€m
Q2 2016
Q2 2015
Revenue
128.2
118.3
EBITDA
32.5
25.3%
EBITDA margin
Change
%
H1 2016
H1 2015
Change
%
8.4%
250.4
230.7
8.5%
30.7
5.7%
63.4
60.1
5.4%
26.0%
0.7 pps
25.3%
26.1%
0.8 pps
• Due to TMF’s broad geographical footprint, the Group is exposed to fluctuation of
currencies other than Euro
• On a like for like basis, the TMF Group recorded a higher revenue and EBITDA in Q2 2016
vs. Q2 2015 and H1 2016 vs H1 2015
• The excluded acquisitions are PwC Apriori in Brazil, Law Debenture in UK, UCMS in Central
Eastern Europe, Extor in Poland and Swain in Canada.
* On a constant currency basis, excluding acquisitions and disposals
20
APPENDIX
Consolidated Balance Sheet
EURm
2016
2015
June
December
Variance
Assets
Non-current assets
815
798
2.1%
Trade receivables
132
115
14.8%
Other receivables
Other current assets
31
75
27
68
14.8%
10.3%
Clients' funds held under trust
64
81
(21.0%)
Cash and cash equivalents*
259
209
23.9%
Current assets
561
501
12.0%
1,376
1,299
5.9%
TOTAL ASSETS
Total equity
(287)
(252)
13.9%
1,410
1,298
8.6%
Deferred tax liabilities
32
31
3.2%
Other long term liabilities
18
20
(10.0%)
Other liabilities
203
202
0.5%
Total liabilities
1,663
1,551
7.2%
TOTAL EQUITY AND LIABILITIES
1,376
1,299
5.9%
2015
June
December
Variance
Other liabilities
Trade and other payables
Provisions
Current tax liabilities
Clients' funds ledger balances
Liabilities
Loans and borrowings*
EURm
2016
Total short term liabilities
* Under the new cash pool agreement, TMF Group is not able to offset the bank overdrafts against the cash at bank
124
103
20.4%
6
9
(33.3%)
9
9
0.0%
64
81
(21.0%)
203
202
0.5%
21
APPENDIX
Quarterly evolution – Revenue and EBITDA (€m)
96.4
98.3
105.1
114.5
16%
7%
Q1
2014
18%
5%
Q2
2014
Q3
2014
Q4
2014
y-o-y %
117.2
22%
125.5 119.4 129.9
28%
14%
125.1 131.0
25.2
13%
7%
Q1
2015
Q2
2015
35.2
Q3
2015
Q4
2015
4%
Q1
2016
Q2
2016
25.9
30.8
29.2
30.8%
26.1%
26.4%
27.8%
Q1
2014
Q2
2014
Q3
2014
Revenue
Q4
2014
36.6
32.7
30.3
26.3%
26.1%
25.4%
Q1
2015
Q2
2015
Q3
2015
Margin (%)
28.1%
Q4
2015
31.6
32.9
25.3%
25.1%
Q1
2016
Q2
2016
EBITDA
Cash Flow from operations (€m)
43.4
32.6
130%
Q1 2014
22.8
27.2
88%
93%
Q2 2014
Q3 2014
% of EBITDA
28.5
141%
24.8
28.0
114%
37.5
119%
27.8
86%
92%
81%
Q4 2014
40.7
76%
Q1 2015
Q2 2015
Q3 2015
Q4 2015
Q1 2016
Q2 2016
CF from operations
22
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Disclaimer
Whilst we have taken reasonable steps to provide accurate and up to date information in this publication, we do not give any warranties or representations, whether express or implied, in this
respect. The information is subject to change without notice. The information contained in this publication is subject to changes in (tax) laws in different jurisdictions worldwide.
None of the information contained in this publication constitutes an offer or solicitation for business, a recommendation with respect to our services, a recommendation to engage in any transaction
or legal, tax, financial, investment or accounting advice. No action should be taken on the basis of this information without first seeking independent professional advice. We shall not be liable for any
loss or damage whatsoever arising as a result of your use of or reliance on the information contained herein.
This is a publication of TMF Group B.V., P.O. Box 23393, 1100 DW Amsterdam Zuidoost, the Netherlands ([email protected]). TMF Group B.V. is part of TMF Group, consisting of a number of
companies worldwide. A full list of the names, addresses and details of the regulatory status of the companies are available on our website: www.tmf-group.com.
© 2014 TMF Group B.V.