SuperLife’s former owners appear almost certain to earn a final $10 million bonus payment, figures from the NZX 2015 annual report show.
According to the NZX report, the group has set aside 90 per cent of the SuperLife earnout bonus “based on the expected probabilities” of the business hitting its December 2017 target of at least $1.57 billion in funds under management (FUM).
The NZX has made a provision of almost $8.3 million to meet the potential $10 million December 2017 SuperLife payout, the accounts show.
SuperLife recorded FUM of just over $1.4 billion as at the end of December 2015, representing an annual growth rate of 14.1 per cent, the NZX report says.
NZX paid $20 million upfront for SuperLife in December 2014 with its then-owners – Michael Chamberlain and Owen Nash – due another $15 million pending certain targets. This January the NZX issued $5 million in ordinary shares to cover the first tranche of the SuperLife “deferred consideration”.
In contrast to SuperLife, Apteryx has only a 50/50 chance of meeting targets that would trigger a further payment from the NZX, the report says.
The stock market operator purchased the investment administration platform from interests associated with hedge fund-of-funds firm NZAM in July last year for $1.5 million
“Up to $2.5 million in cash will become payable at 30 September 2016 if the business has Funds Under Administration of $3.0 billion and monthly revenue of $0.25 million, with this amount reducing over a six month period to nil if these two targets are not met by 31 March 2017,” the NZX report says.
“… Based on the expected probabilities of achieving the earnout, the Group has accrued for 50% of the… contingent consideration that will be paid.”
As at the end of last year, Apteryx reported funds under administration of just over $1.3 billion.
“In the year ended 31 December 2015 the Apteryx business contributed revenue of $0.69 million and a loss after tax of $0.24 million to the Group’s results,” the NZX says.
SuperLife added $6.4 million in revenue for the NZX over the December calendar year, the report says, as well as seeding a new range of exchange-traded funds (ETFs) for the group’s subsidiary, Smartshares.
“The funds invested by SuperLife into the ETF products was the largest contributor to the 31.1% growth in Smartshares revenue, coupled with growth in external FUM,” the NZX report says.
At the same time, SuperLife added almost $3.6 million to NZX staff costs during the year with a further $1.2 million in remuneration to Apteryx personnel.
Tim Bennett, NZX chief, says in the report the two entities added 60 new staff to the organisation.
The NZX was also spending more on IT upgrades for both SuperLife and Apteryx, the annual report says.
“Our funds services acquisitions have provided a platform for significant growth,” Bennett says. “This year, our focus is to grow these businesses and promote the benefits of passive funds beyond ETFs and KiwiSaver, and for Apteryx to reach breakeven through customer acquisition and the further build out of its new platform.”