ROTHSCHILD (EPA:ROTH) - Financial information for the first quarter 2013/2014
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09/08/2013 18:36
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Release Paris, 9 August 2013
Financial information
1st quarter
2013/2014
Resilient first quarter revenues
* Global Financial Advisory first quarter revenue robust in all geographies
* Wealth and Asset Management first quarter revenue slightly increased in
challenging market conditions
* Merchant Banking revenues decreased due to less investment profits and
dividends. The business is developing with new fund initiatives
in EUR million 2013/2014 2012/2013
First quarter First quarter
revenues revenues
Global Financial Advisory 141.6 136.9
Asset Management (1) 82.9 101.5
Of which Wealth and Asset Management 71.4 67.7
Of which Merchant Banking 11.5 33.8
Other (2) 13.3 13.2
Total before statutory adjustments 237.8 251.6
Statutory adjustments (see appendix 1) (2.3) (5.8)
Total Group revenues (see appendix 1) 235.5 245.8
(1) Asset management comprises Wealth and Asset Management and Merchant Banking
businesses
(2) Other comprises Central cost, Legacy businesses, including Specialist
Finance, and other
Global Financial Advisory
Global Financial Advisory revenues for the 3 months to June 2013 were EUR141.6
million (of which M&A advisory was EUR87.7 million and Financing advisory was
EUR53.9 million), up 3% compared to the same period in the prior year (3 months
to June 2012 revenue was EUR136.9 million of which M&A advisory was EUR88.7
million and Financing advisory was EUR48.2 million) but down 26% quarter on
quarter, reflecting the volatility of M&A completion activity. In comparison,
global M&A deal values for the 3 months to June 2013 were down by 10% (3)
compared to the same period in the prior year.
Revenue for the first quarter was flat across most franchises and regions
compared to the same point last year, although we are cautiously optimistic
that the volume of completed advisory assignments will accelerate into the
second half of the year subject to market conditions, as we continue to work
on some of the largest and most complex announced transactions globally. For
example, Rothschild is acting as sole financial advisor to Publicis on its
recently announced $35.1 billion cross-border merger with Omnicom to create
Publicis Omnicom Group, as well as to AMR Corporation, parent of American
Airlines, on its Chapter 11 restructuring process and $26 billion planned
merger with US Airways Group.
Rothschild advised the following clients on significant M&A and Financing
Advisory assignments that completed in the quarter to June 2013:
* Central Bank of Cyprus on the restructuring and recapitalisation of the
country's banking system
* Severn Trent in relation to the unsolicited offer from the Long River
Partners consortium
* Almeida Junior on the acquisition of Westfield's 50% stake in Westfield
Almeida Junior, a Brazilian JV, to regain full control
* Salini in relation to its merger with Impreglio, the Italian construction
company (EUR1.7 billion)
* Harry Winston Diamond Corporation on the sale of its brand diamond jewellery
and timepiece division, Harry Winston Inc. to Swatch Group ($1.0 billion)
* 3i Group and Management on the sale of Civica to OM ERS Private Equity (£390
million)
* Khazanah Nasional (strategic investment fund of the Government of Malaysia)
on its acquisition of CIMB Aviva in consortium with Sun Life Financial
(US$600 million)
* Mid Europe Partners on the sale of LUX MED Group, the largest private
healthcare provider in Poland, to Bupa (EUR400 million)
* Groupe FNAC on its demerger from Kering
* Koninklijke KPN on its rights issue (EUR3.0 billion)
* Open Grid Europe on its refinancing (EUR2.7 billion)
* CEVA Group (adviser to sponsors) on its out-of-court EUR1.3 billion exchange
offers and EUR230 million recapitalisation
* Volkswagen on its issuance of new Mandatory Convertible Notes (EUR1.27
billion)
(3) Source: Thomson Reuters. Completed transactions
Wealth & Asset Management
This quarter has seen significant volatility in global equity markets. Despite
this, our assets under management stayed firm at EUR38.4 billion this quarter,
the same as at the end of March 2013. Net new assets were slightly positive.
In this challenging environment, revenues for the first quarter of 2013/2014
increased to EUR71.4 million, compared to EUR67.7 million for the same quarter
last year. The pipeline for new assets remains strong.
Continuing pressures on our businesses, including those from increased
regulation, have not changed our previously announced strategic focus of
developing a more systematic approach to winning new clients as well as
strengthening our organisation.
Merchant Banking
During the first quarter Merchant Banking generated revenues of EUR11.5 million
compared to EUR33.8 million in the same period last year, due to lower
investment profits and dividends. The first quarter of 2012/2013 included EUR16
million from the sale of one particular investment. Investment revenues are
inherently variable in this business as it depends on the timing of
realisations.
The division invested EUR17.1 million during the quarter, of which around half
was in equity and debt funds managed by Merchant Banking and half was in Paris
Orléans proprietary investments. Disposals generated proceeds of EUR14.3
million of which EUR11.5 million was reimbursements and return of capital from
proprietary investments which did not generate any capital gains.
The Group is expanding its Merchant Banking offering, with the launch of a new
fund initiative, Five Arrows Credit Solutions (FACS), a fund targeted at
capturing opportunities in the European high yielding junior credit market (on
both primary and secondary opportunities). It held its first closing at EUR235
million in May 2013 with a targ et completion of EUR400 million.
Specialist finance
The legacy banking book continues to reduce in line with our plans to exit this
business. Legacy drawings fell to EUR499 million as at 30 June 2013, down from
EUR570 million as at 31 March 2013.
Outlook
Faced with a challenging and fluctuating environment with weak M&A volume
especially in Europe, our focus is very much on profitability, flexibility,
cost discipline and capturing the synergies between our core businesses. We
believe that if we continue to offer our clients outstanding service in all
that we do, we will be well positioned to benefit from improved market
conditions as and when they arise.
Appendix I: notes to financial information for 1st quarter 2013/2014
1. In line with the new segmental information presented in the 2012/2013 Paris
Orléans' consolidated accounts, the Group's revenues by business have been
changed to reflect better the businesses of the Group (this applies to both
2013/2014 and 2012/2013 data).
2. Statutory adjustments for revenues mainly represent reallocation of
impairments, offset by various other IFRS adjustments. The segmental
analysis is prepared from non-IFRS data used internally.
3. Revenues now exclude dividend income relating to Banque Privée Edmond de
Rothschild SA, in line with the treatment adopted in the 2012/2013 Paris
Orléans' consolidated accounts. Accordingly, figures for the first quarter
of 2012/ 2013 have been restated.
Appendix 2: Change in accounting standards since 1 April 2013
IAS 19 Employee Benefits (revised) results in changes to the recognition and
measurement of defined benefits expenses and certain disclosures.
The most significant impact for the Group is to increase the pension expense in
the Income Statement by the difference between the current expected return on
plan assets and the return calculated applying the IAS 19 discount rate.
Had these changes been effective for the year ended 31 March 2013, the income
statement charge for defined benefit pensions would have been EUR8.1 million g
reater, althoug h actuarial losses recognised in other comprehensive income
would have been reduced by the same amount.
The Profit before tax would have decreased by EUR8.1 million and the Net Result
- Group share by EUR5.7 million.
About Paris Orléans, the parent company of Rothschild
Paris Orléans operates in the following areas:
* Global Financial Advisory provides advisory services for mergers and
acquisitions, debt financing and restructuring, and equity capital markets;
* Wealth and Asset Management, including institutional asset management; and
* Merchant Banking which comprises third party private equity business and
proprietary investments.
Paris Orléans SCA is a French partnership limited by shares (société en
commandite par actions) with a share capital of EUR141,806,058. Paris trade and
companies registry 302 519 228. Registered office: 23 bis avenue de Messine,
75008 Paris, France. Paris Orléans is listed on NYSE Euronext in Paris,
Compartment A - ISIN Code: FR0000031684
For information, please contact:
Paris Orléans Investor relations:
23 bis, avenue de Messine Marie-Laure Becquart
75008 Paris mlb@paris-orleans.com
Internet: www.paris-orleans.com Tel.: +33 (0)1 53 77 65 10
UK Press and Media French Press and Media
Smithfield - +44 (0)20 7360 4900 DGM Conseil - + 33 1 40 70 11 89
John Kiely - Michel Calzaroni -
jkiely@smithfieldgroup.com m.calza@dgm-conseil.fr
Alex Simmons - Olivier Labesse -
asimmons@smithfieldgroup.com labesse@dgm-conseil.fr
Financial calendar
* 26 September 2013 - 9.30 am - CET Annual Shareholders General Meeting
* 26 November 2013 after market close Results of the first half-year of
the 2013/2014 financial year
* 14 February 2014 after market close Financial information for the third
quarter of FY 2013/2014
* 25 June 2014 after market close Financial year 2013/2014 results