Trust Company completes acquisition of the Guardian Trust

Media Release
For immediate release 15 March 2011

THE TRUST COMPANY COMPLETES ACQUISITION OF
GUARDIAN TRUST FOR NZD42 MILLION


The Trust Company Limited (ASX: TRU) today announced that it has completed its acquisition of The New Zealand Guardian Trust Company Limited (Guardian Trust) following receipt of approval from the Overseas Investment Office (OIO) of New Zealand.

The Trust Company CEO, Mr John Atkin, explained that the acquisition represents a significant milestone on The Trust Company’s path to becoming the region’s pre-eminent independent trustee.

“Guardian Trust is the leading trustee in New Zealand and is an excellent addition and fine complement to our existing business in Australia. The expanded footprint and cross-jurisdictional expertise provided from the Guardian Trust acquisition, strengthens our service offering to all our clients, particularly international banks, fund managers and property groups,” said Mr Atkin.

The acquisition had commercial effect from 1 March, when the parties entered into escrow settlement arrangements pending approval from the OIO.

The Trust Company acquired Guardian Trust for NZD42 million (AUD31.6 million) at a multiple of less than 5 times Guardian Trust’s forecast normalised EDITDA for 12 months ending June 2011. The acquisition is projected to be earnings per share (EPS) accretive from year one and will be paid for in cash in two instalments. The first instalment of NZD21 million was paid from existing cash reserves via an escrow facility on 1 March 2011 while the second instalment of NZD21 million, will be payable on 30 June 2011 from cash reserves and to the extent required, from a committed term debt facility.

The strong cultural alignment between the two companies, the potential revenue synergies and the scale benefits demonstrates the significance this acquisition will have for clients and shareholders.

“Our clients, not only in New Zealand, Singapore and Australia but importantly the large Northern Hemisphere investment funds, have readily seen the rationale for the merger and are enthused by the opportunities it presents.

“The strong contribution we expect from Guardian Trust will also be particularly welcome at a time when we are investing significantly in the transformation of our business. Having said this we are very conscious however of the need to ensure we capture for shareholders all the benefits coming from the acquisition, both on the revenue and cost side of the equation,” Mr Atkin stated.

Guardian Trust is widely recognised as New Zealand’s pre-eminent trustee with leading Corporate Clients and Personal Clients business lines. It employs approximately 200 staff in 14 locations across the North and South Islands of New Zealand, and boasts a well credentialed senior management team, led by Managing Director Mr John Botica. Mr Botica will continue in this role and the group will continue to trade under the name Guardian Trust in New Zealand, with origins dating back to 1882.

Mr Botica said: “Our staff are excited to be joining a group whose core focus is the provision of professional trustee services.”

Guardian Trust brings with it assets under administration (AUA) of approximately NZD6.5 billion (AUD4.8 billion), including over NZD500 million (AUD370 million) in charitable funds, and assets under supervision (AUS) of over NZD58 billion (AUD43 billion).

Full year 2011 revenues for Guardian Trust (as at 30 June 2011 and normalising out discontinued revenue streams) are forecast to be approximately NZD37 million (AUD27.4 million) with net assets on completion projected to be NZD3.5 million (AUD2.6 million).

Guardian Trust also has a strong Personal Clients Services, having implemented a significant restructuring of its operations over the last two years.

“Applying the client-focused operating model adopted by Guardian Trust across our entire Personal Clients business should allow us over time, to unlock the potential of that business and provide a more sophisticated international wealth management solution across the region.

“At the same time, the acquisition and consequent increased scale of our operations, allows us to enjoy greater cost synergies from the introduction of new information systems across our expanded business platform in three countries thereby reducing servicing costs for our client base,” Mr Atkin explained.

Over the last 12 months, The Trust Company’s Corporate Clients business has benefitted from the close integration of its Singaporean and Australian operations creating a market leading position in the rapidly growing MIT sector. In Singapore, The Trust Company has also developed a growing position in the Corporate Bond Trustee business with new trustee appointments on market leading bond issues for Singapore Airlines and CapitaMalls Asia. The broader coverage provided with Guardian Trust’s New Zealand business will further strengthen synergies and client relationships across the SE Asia region.

The Trust Company’s results for FY11 will be announced on 19 April 2011. Further details about the business of Guardian Trust and the acquisition will be provided at that time.

ENDS

About Guardian Trust
Guardian Trust, with origins dating back to 1882, has been serving New Zealanders for generations and is a market leader in personal and corporate trusts. Guardian Trust has assets under administration of over NZD6.5 billion on behalf of clients, and provides corporate trustee services for the issue of securities, with over NZD58 billion under supervision.

For more information visit www.guardiantrust.co.nz.

About The Trust Company

The Trust Company is one of Australia’s longest serving financial services companies with over 125 years of experience provides a wide range of financial services including:

• Personal Services offering Wealth Transfer Planning, Lifestyle Care, Health & Personal Injury services, Funds Management, Financial Planning, Estates & Trusts administration to intermediaries and the wider retail market.
• Corporate Services offering Property & Infrastructure Custody services, Responsible Entity services, Superannuation Compliance & Trustee services, Structured Finance Trustee services and REIT Trustee services to institutions.
• Philanthropy Services include setting up charitable structures, advice on taxation and charitable vehicles, funds management and assistance selecting charitable projects.

The Trust Company has offices in Sydney, Melbourne, Brisbane, Townsville, Perth and Singapore, with over 230 employees and a market capitalisation of approximately AUD202 million.

For more information visit www.thetrustcompany.com.au

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