ROTHSCHILD (EPA:ROTH) - Financial information for the third quarter 2013/2014
Directive transparence : information réglementée Information financière trimestrielle
14/02/2014 18:12
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Release Paris, 14 February 2014
Financial information
3rd quarter
2013/2014
* Global Financial Advisory third quarter revenues were down 16% compared to the
same period in the prior year against a backdrop of continued low M&A volumes,
but up 27% quarter on quarter due to higher deal completions activity
particularly in Europe and the US
* Wealth and Asset Management third quarter revenue rose driven by strong
performance fees on Rothschild funds and growth of assets under management
* Merchant Banking third quarter revenues increased year on year due to higher
dividend income and lower provisions. The business continues to develop fund
initiatives
3rd Quarter Revenues YTD Revenues
In EURm 2012/2013 2013/2014 2012/2013 2013/2014
Global Financial Advisory 239.5 200.0 548.0 499.6
Asset Management 99.9 115.4 278.5 285.1
Of which Wealth and Asset
Management 72.9 86.8 212.8 230.5
Of which Merchant Banking 27.0 28.6 65.7 54.6
Other 16.1 15.2 43.1 41.2
Total before statutory
adjustments 355.5 330.6 869.6 825.9
Statutory adjustments
(see appendix 2) 2.5 (8.8) (7.2) (11.1)
Total Group revenues 358.0 321.8 862.4 814.8
We have two main activities within our Group: Global Financial Advisory which
focuses on providing advice in the areas of M&A, debt, restructuring and equity;
and Asset Management which comprises Wealth & Asset Management and Merchant
Banking. In addition, we have a Specialist Finance business, (included in
"Other"), which predominantly relates to the legacy banking business.
Global Financial Advisory
Global Financial Advisory revenues for the three months to December 2013 were
EUR200 million (of which M&A advisory was EUR119 million and financing advisory
was EUR81 million), down 16% compared to the same period in the prior year but
up 27% compared to the three months to September 2013 following strong quarter
on quarter revenue increases in our core European markets and in the US.
For the nine months to December 2013, Global Financial Advisory revenues were
EUR499.6 million, 9% down compared to the same period last year. By way of
comparison, for the nine months to December 2013, global M&A deal values were
down by 11% and global M&A deal numbers were down 12% (1) compared to the same
period in the prior year.
We continue to work on some of the largest and most complex transactions
announced globally. For example, Rothschild is currently acting as financial
advisor to Westfield on the separation of its US$18 billion international
business and simultaneous A$29 billion merger of its Australian/NZ business with
Westfield Retail Trust, to Nestlé on the EUR3.1 billion acquisition of 50% of
Galderma, and simultaneous disposal of its stake in L'Oréal for EUR3.4 billion
in cash, and to AZ Electronic Materials on the £1 .6 billion recommended cash
offer by Merck.
Moreover, we continue to advise on more European M&A transactions than any of
our competitors.Rothschild advised the following clients on significant M&A and
Financing advisory assignments that completed in the three months to December
2013:
* AMR corporation, parent of American Airlines, on its Chapter 11 restructuring
and merger with US Airways (US$34.0 billion)
* Government of Kazakhstan on the take private of Eurasian Natural Resources
Corporation PLC (US$4. 7 billion)
* Promotora de Informaciones SA, the listed Spanish media company, on the
restructuring of its existing debt and raising of a new money facility
(US$3.3 billion combined)
* The management and shareholders (Cinven, Carlyle and Altice) on the IPO of
Numericable, the sole major cable operator in France (EUR0. 8 billion)
* Nationwide on their capital securities issue, counting as Common Equity Tier
1 Capital (£0.6 billion)
* Casino on the acquisition of remaining stake in Grupo Pão de Açúcar Arle,
Brazil's leading food retailer (US$0. 8 billion)
* Gafisa, a leading Brazilian diversified home builder, on the disposal of a 70%
stake in Alpha ville to Blackstone and Pátria (US$0. 7 billion)
* Hellenic Bank on their recapitalisation exercise (EUR0.4 billion)
(1) Source: Thomson Reuters. Completed transactions (M&A transactions including
Financial Advisers)
Wealth & Asset Management
Wealth & Asset Management revenues for the three months to December 2013 were
EUR86.8 million, up 19% compared to the same period in the prior year (EUR72.9
million) and up 20% quarter on quarter.
During the first nine months of 2013/2014, Wealth & Asset Management generated
revenues of EUR230.5 million, 8% better than the same period last year (EUR212.8
million).
Revenue growth was mostly driven by strong performance fees on Rothschild funds
and the rise of assets under management. In a market where economic and
financial uncertainty is high, Rothschild funds have out-performed their
benchmark over the calendar year 2013.
Assets under management were higher at EUR41.2 billion as at 31 December 2013
(EUR38.4 billion as at 31 March 2013 and EUR39.7 billion as at 30 September
2013) due to market appreciation of EUR2.4 billion and net inflows of EUR0.4
billion during the first nine months. The net new assets were driven by inflows
in Wealth Management (EUR1.0 billion), partially offset by outflows in Asset
Management (EUR0.6 billion), especially in RAM Inc, our US-based Asset
Management business.
Our European onshore Wealth Management businesses are growing in the United
Kingdom, France, Belgium, Switzerland and Germany. Strategic investments (the
hire of an onshore Italian team and a Swiss international team), made earlier in
the year, have started to yield results and are generating positive asset
inflow. Looking ahead, in Wealth Management, the Group expects to convert the
current healthy asset pipeline into positive net client inflows over the
remainder of the year, as it was for the first nine months. However, the
continuing pressure on our businesses arising from increased regulation,
especially in Switzerland, and including the uncertainty in respect of the US
Department of Justice Program, means that conditions will remain difficult in
2013/2014.
Our institutional Asset Management business continues to invest in product
development and expects to see the benefit of this in the year 2014/2015.
Merchant Banking
Merchant Banking revenues for the three months to December 2013 were EUR28.6
million, up 6% compared to the same period in the prior year (EUR27.0
million).
During the first nine months to December 2013, Merchant Banking generated
revenues of EUR54.6 million compared to EUR65.7 million the previous year. These
revenues include:
* EUR24.7 million of management fees (EUR24.7 million for nine months to
December 2012)
* EUR27.7 million of capital gains (EUR41 .4 million for nine months to December
2012)
* EUR5.4 million of other income, including interest and dividends (EUR15.0
million for nine months to December 2012)
* less EUR3.2 million of provisions (EUR1 5.4 million for nine months to
December 2012)
During the first nine months to December 2013, this division invested EUR49.9
million, of which EUR21.1 million was in proprietary investments and EUR28.8
million was in funds managed by Merchant Banking. Disposal proceeds amounted to
EUR54.1 million generating capital gains of EUR27.7 million.
The fundraising of Five Arrows Credit Solutions (FACS), a fund targeted at
capturing opportunities in the European high yielding junior credit market (for
both primary and secondary opportunities) is proceeding well. It held its first
closing at EUR235 million in May 2013 and, following further closings, is
approaching its target completion of EUR400 million.
Specialist finance
The legacy banking book continues to reduce in line with our plans to exit this
corporate lending business. Legacy drawings fell to EUR400 million as at 31
December 2013, down from EUR570 million as at 31 March 2013.
Outlook
Faced with continuing difficult economic trends with a consequent impact on M&A,
plus an evolving and complex regulatory framework, especially in the Wealth
Management business in Switzerland, the Group is focusing on profitability,
flexibility, cost discipline and capturing the synergies between our core
businesses. Because of this we are well positioned to benefit from improved
market conditions as and when they arise.
Appendix 1: Quarterly progression of revenues
In EURm 2012/2013 2013/2014
Global Financial Advisory 1st quarter 136.9 141.6
2nd quarter 171.6 158.0
3rd quarter 239.5 200.0
YTD 548.0 499.6
Asset Management (2) 1st quarter 101.5 82.9
2nd quarter 77.1 86.8
3rd quarter 99.9 115.4
YTD 278.5 285.1
Other (3) 1st quarter 13.2 13.3
2nd quarter 13.8 12.7
3rd quarter 16.1 15.2
YTD 43.1 41.2
Statutory adjustments 1st quarter (5.8) (2.3)
2nd quarter (3.9) 0.0
3rd quarter 2.5 (8.8)
YTD (7.2) (11.1)
Total Group Revenues 1st quarter 245.8 235.5
2nd quarter 258.6 257.5
3rd quarter 358.0 321.8
YTD 862.4 814.8
(2) Asset Management comprises Wealth & Asset Management and Merchant Banking
business
(3) Other comprises Central cost, legacy business, including Specialist Finance,
and other
Appendix 2: Notes to financial information for 2013/2014
1. In line with the new segmental information presented in the annual 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 2012/2013 and 2013/2014 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 annual 2012/2013
Paris Orléans' consolidated accounts. Accordingly, figures for 2012/ 2013
have been restated.
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 EUR142,208,216. 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
. 25 June 2014 after market close Financial year 2013/2014 results