Annual Report 2020
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Annual Report 2020 Driving our transformational journey We are on a transformational journey The world has changed dramatically; it demands more flexibility, more resilience and more strategic thinking from business leaders than ever before. With businesses needing to work more flexibly, and the safeguarding of their reputation at the top of the agenda, technology and governance grow in importance. That’s why Intertrust Group is on a transformational journey, and in 2020 we have continued to combine our expert knowledge with ongoing innovations in technology to deliver the power our clients need to succeed. Our focus on protecting our clients’ reputations and gatekeeping the industry has continued against the backdrop of the Covid-19 pandemic. Our bespoke corporate, fund, capital market and private wealth services enable our clients to invest, grow and thrive anywhere in the world. Sitting at the heart of international business, our local, expert knowledge and innovative, proprietary technology combine to deliver a compelling proposition – all of which will continue to keep our clients one step ahead. Table of contents Management Board Report Introduction Intertrust Group at a glance 4 Message from the CEO 6 Our business model 10 Core services 14 Our market 18 Strategy Strategic ambitions 22 Key Strategic Accomplishments 23 Environmental, social and governance strategy 28 Business performance Financial performance 42 Shares and shareholders 44 Governance Compliance and Risk Management 48 Statement by the Management Board 53 Report from the Supervisory Board 54 Remuneration report 60 Corporate governance 72 Financial Statements Consolidated Financial Statements Consolidated statement of profit or loss 86 Consolidated statement of comprehensive income 86 Consolidated statement of financial position 87 Consolidated statement of changes in equity 88 Consolidated statement of cash flows 89 Notes to the consolidated financial statements 90 Company Financial Statements Company statement of profit or loss 153 Company statement of financial position 154 Company statement of changes in equity 155 Notes to the Company financial statements 156 Other information 158 Independent auditor's report 159 Office locations 175 Glossary 178 Intertrust N.V. 3 Annual Report 2020 Introduction Strategy Business performance Governance Financial Statements Intertrust Group at a glance Intertrust Group at a glance At Intertrust Group our 4,000+ employees are dedicated to providing world- leading, specialised administration services to clients in over 30 jurisdictions. This is amplified by the support we offer across our approved partner network which covers a further 100+ jurisdictions. Our focus on bespoke corporate, fund, capital market and private wealth services enables our clients to invest, grow and thrive anywhere in the world. We report on three geographical regions: the Americas, Western Europe and the Rest of the World. Americas Western Europe Rest of the World Bahamas Belgium Australia Brazil France China British Virgin Islands Germany Cyprus Canada Italy Denmark Cayman Islands Luxembourg Finland Curaçao Netherlands Guernsey United States of America Switzerland Hong Kong India1 Ireland Japan Jersey New Zealand Norway Singapore Spain Sweden United Arab Emirates United Kingdom Revenue Revenue Revenue € 134.5 € 232.8 € 197.2 million million million Percentage of Total Revenue Percentage of Total Revenue Percentage of Total Revenue 24% 41% 35% 1 Excluding Fund Services in India and the United States of America. Intertrust N.V. 4 Annual Report 2020 Introduction Strategy Business performance Governance Financial Statements Intertrust Group at a glance Performance Scale People Total revenue Offices ELLA € 564.5 45+ 78,641 million worldwide of ELLA in house training course taken Adjusted Ebita margin Active Employee engagement NPS 32.8% in 30+ increase by 20 points jurisdictions (Your Voice survey) Cash flow from operating activities FTEs Voluntary attrition € 175.1 4,000+ million worldwide falls to 17.6% Intertrust N.V. 5 Annual Report 2020 Introduction Strategy Business performance Governance Financial Statements Message from the CEO Message from the CEO Moving forward in our transformational journey It is with great pleasure that I introduce Intertrust dividend in 2020. We continued to monitor the Group’s 2020 annual report, my first as CEO of the development of the pandemic and its impact on our Group. people and services throughout 2020 and assessed our capital allocation options accordingly. Having carefully I would like to begin by thanking my predecessor, considered the situation, we have made the decision to Stephanie Miller, for her immense contribution, and in prioritise deleveraging to below 3.4x by the end of 2021, particular for her leadership during an exceptionally an annual pay-out of 20% of adjusted net income for full challenging year. I know I speak on behalf of everyone year 2021, supplemented by possible additional across the firm in expressing gratitude for her shareholder returns in the form of share buybacks or a dedication in building the solid foundations of the special dividend depending on cash surplus and value business over the past few years. creation potential. Resilient financial results Steady strategic transformation 2020 presented a unique set of challenges to all 2020 marked the start of a strategic transformation businesses as the emergence of the Covid-19 pandemic journey for Intertrust Group. In addition to our three drove significant changes to the way we operate. The core strategic pillars - Clients & Services, Innovation & highly unusual and uncertain environment impacted our Technology and People - we also increased our focus on ability to meet the financial targets we set out at the ESG with the launch of our new ESG strategy, which is of beginning of the year, however, I am pleased to report increasing importance to all our stakeholders. that the Group delivered a stable set of financial results against this difficult backdrop. I am particularly proud of Despite the pandemic, we successfully progressed the the extraordinary strength and tenacity of our people, corporate integration of Viteos into the Group, ensuring who came together to overcome challenges and deliver all our businesses were aligned and focused on with accuracy and timeliness everything our clients delivering against the same strategy. In addition to expect from Intertrust Group. reinforcing our operating efficiency and providing the Group with a robust technology platform, the While our business remains highly cash generative and integration has greatly improved our ability to cross sell well-capitalised, unsurprisingly, the challenges services to our existing clients. associated with the pandemic have had an impact on our revenue streams, primarily in Corporates and Private As part of our transformation, we made strong progress Wealth. However, shortfalls in new business revenues in migrating key operational functions to our Centre of were in part offset by our ability to capture a greater Excellence. Migrations were completed in the Americas, share of wallet from our existing clients. the Netherlands, Hong Kong, Singapore, Spain, Jersey, and Guernsey. These were all successfully accomplished Our Fund Services business delivered a strong in spite of the challenging circumstances created by the performance as clients relied on end-to-end services, pandemic which led to us having to hire, train and build and our Capital Markets business also performed well, extended teams remotely, while simultaneously following increased demand for liquidity in the market. delivering the high quality of service our clients expect. These strong results were offset by revenue declines in Although we have yet to physically meet the majority of Corporates and Private Wealth due to lower transaction our 800+ new colleagues in the Centre of Excellence, and activity levels overall, primarily as a result of everyone has taken the uniqueness of the situation in Covid-19. their stride. As a result we delivered EUR 7.9 million of net run rate savings, exceeding our target of 20% of Despite this highly unusual environment, I am pleased to EUR 20 million for this year. The migration exercise will see we delivered stable revenue, highlighting the be completed in 2021 and we are on track to deliver the inherent resilience of the business. Our margin was 90% of total net run rate savings promised. We are still lower than last year, essentially reflecting the broadly on our transformational journey and much is still to be stable underlying revenue development, the done to integrate the business and execute on our corresponding mix effect, as well as higher costs strategy, which will be my core focus in 2021. primarily linked to the migration programme. Due to uncertainty associated with the impact of the pandemic on our operations, the Management Board took the prudent decision to propose to withhold the final 2019 dividend and not to distribute an interim Intertrust N.V. 6 Annual Report 2020 Introduction Strategy Business performance Governance Financial Statements Message from the CEO A key part of this process was the centralisation of our Following the launch of Intertrust Law, we are now well technology capability, which was previously dispersed positioned to provide a one-stop shop for our clients in across our global footprint. Creation of a global delivery the Cayman Islands, adding offshore legal services to our model enabled us to build business operations