GlobeOp Financial Services S.A. ("GlobeOp" or "the Company", LSE:GO.), a leading independent provider of business process outsourcing, financial technology services and analytics to the hedge fund industry and other targeted sectors of the financial services industry, today issued a pre-close trading update relating to the year ending December 2010.
Business performance has been strong during the second half of the year. Highlights include:
• Growth in Assets under Administration (AuA) to $148 billion(1) as at 30 November 2010, a 24% increase since 30 June
• Strategic new business wins
• Strong growth in Adjusted Operating Profit(2)
• Continued operating leverage and cost structure efficiency
• $84 million in cash as at 30 November 2010
Hans Hufschmid, chief executive officer, said: "Trading during the second half of the year has been in line with management's expectations. Revenues, adjusted operating profit2 and cash flows have remained strong. GlobeOp continues to experience excellent operating leverage as we maintain our focus on cost efficiency. During the second half of 2010 we have added significant new business while our existing clients have again performed well. As a result, Assets under Administration (AuA) increased to a record total of $148 billion as at 30 November 2010, growing 24% since 30 June 2010.
GlobeOp has had a very successful year thus far. Traditional hedge fund related-business has grown and new strategic mandates indicate the widening appeal of our solutions in adjacent markets. So far in 2010 GlobeOp has won a significant lift-out mandate with European Credit Management Limited ("ECM"), added 29 other new middle-, back-office and fund administration (MBA) customers and expanded relationships with existing hedge fund clients. Morgan Stanley also selected GlobeOp to provide independent middle and back office services for its managed account platform ALPHAS. In addition, GlobeOp added General Motors' treasury department as a Transaction Solutions client for OTC derivative collateral management services.
The integration with ECM is progressing well as GlobeOp's primary focus remains exceptional client satisfaction. The mandate has been generating revenue since July. As anticipated, the lift-out will result in integration and other non-recurring costs of approximately $2.5 million in the second half of 2010 but operating results on this mandate are improving. We expect it to yield a steadily increasing profit contribution in the first half of 2011 as the integration approaches completion.
As we close out 2010 and prepare to enter the new year, business momentum is strong and we see substantial opportunities for GlobeOp. The appointment of a new head of global sales in late August and an expanding pipeline of new business add to our optimism. As such, we look forward to a promising 2011."
1 Assets under Administration. Consistent with past disclosure the performance of clients' funds for the current month is not included in the measurement of AuA at the end of that month. Thus, November 2010 client fund performance is not within the 30 November 2010 figure.
2 A non-IFRS financial measure that is calculated by the Company as operating profit prior to depreciation and amortization expense, employee costs related to share-based compensation and integration costs