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Intertrust cuts profit forecast, shares fall to record low

[NEW YORK] Intertrust, the Dutch fund and corporate services company, cut its full-year profit margin forecast on Tuesday due to one-off legal costs and a weak performance in its home market, sending its shares down 19 per cent to a record low.

US private equity group Blackstone owns about 23 per cent of the company, according to Thomson Reuters data. The sharp fall in the shares will have reduced the value of Blackstone's stake by about US$90 million.

Intertrust listed in Amsterdam in 2015 via an initial public offering when its shares started trading at about 15.50 euros. Its shares were down more than 16 per cent at around 15.00 euros by 0956 GMT.

The company now expects its full-year adjusted core profit (Ebita) margin to be between 37.5 and 38.5 per cent, and underlying revenue growth to be at least 3.5 per cent.

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Intertrust, which provides tax and regulatory compliance services, had previously targeted a core profit margin of about 39.9 per cent and underlying revenue growth of 4-5 per cent for the full year.

The company said the lower forecast reflected lower than expected revenue in the Netherlands, higher IT costs, and non-recurring items related to a legal claim and the connected legal fees.

The performance in the Netherlands was affected by higher staff turnover, partly the result of more people leaving the company due to "disappointing" bonuses, chief executive David de Buck said on a call with analysts.

"Conversion of the (order) backlog deteriorated ... probably they weren't able to bill enough hours which relates to the HR problem," Kempen & Co analyst Henk Veerman said, adding that the company had reported a strong (order) backlog for the Netherlands in the previous quarter.

An assessment of IT systems carried out in the first quarter resulted in a need for more investment the migration of existing systems on to new platforms, the company told analysts.

The company sees these costs remaining higher for the latter part of the year.

Morgan Stanley analysts said in a note to clients that the increased IT operating expenses do not "all sound one-off".

"(The company is) building a new plug and play platform, so when they do an acquisition they can immediately integrate that into the platform," Kempen & Co's Veerman said.

For the second quarter, Intertrust expects revenue to fall by 0.1 per cent to 118.1 million euros (S$187.906 million) and the adjusted Ebita margin to be 35.3 per cent.