Earnings Release • Feb 12, 2015
Earnings Release
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| In €m | 3rd Quarter Revenues | 9 Months Revenues | |||||
|---|---|---|---|---|---|---|---|
| 2013/2014 | 2014/2015 | % Var | 2013/2014 | 2014/2015 | % Var | ||
| Global Financial Advisory | 200.0 | 250.4 | +25% | 499.6 | 663.3 | +33% | |
| Asset Management | 115.4 | 122.6 | +6% | 285.1 | 365.6 | +28% | |
| Of which Wealth & Asset Management |
86.8 | 86.6 | 0% | 230.5 | 242.1 | +5% | |
| Of which Merchant Banking | 28.6 | 36.0 | +26% | 54.6 | 123.5 | +126% | |
| Other 1 | 16.4 | 16.1 | -2% | 42.4 | 45.0 | +6% | |
| Total before statutory adjustments |
331.8 | 389.1 | +17% | 827.1 | 1,073.9 | +30% | |
| Statutory adjustments 2 | (9.9) | (9.9) | - | (12.3) | (21.4) | -74% | |
| Total Group revenues | 321.9 | 379.2 | +18% | 814.8 | 1,052.5 | +29% |
1 Comprises Central cost, Legacy businesses, including Banking & Asset Finance, and other
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
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 in a broad sense which comprises Wealth & Asset Management and Merchant Banking. In addition, we have a Banking & Asset Finance business which predominantly relates to the legacy banking business.
Global Financial Advisory revenues for the three months to December 2014 were €250.4 million, up 25% compared to the same period in the prior year (three months to December 2013 revenue was €200.0 million), and up 27% quarter on quarter.
Revenue for the nine months to December was €663.3 million, up 33% compared to the same period in the prior year (nine months to December 2013 revenue was €499.6 million). This represents our strongest nine months to December and third quarter revenue since financial year 2007/2008. In comparison, for the nine months to December 2014, global completed M&A deal values were up 19% and global completed deal numbers were up 6% compared to the same period in the prior year1 .
For the nine months to December 2014, M&A advisory revenue was up 32% and Financing advisory revenue up 35% compared to the same period in the prior year. Revenue performance was particularly strong compared to the same stage last year in our European and Australian businesses. We saw significant improvements across all product areas.
In M&A advisory, we remain among the lead advisers by volume, ranking 5th globally by number of completed deals2 . In Europe we continue to be the market leader, advising on more deals than any of our competitors – a position we have held for more than a decade2 . We advised on many of the most high-profile transactions to complete during the nine months to December 2014, reflecting our integrated global model which provides us with a competitive advantage with regards to complex cross-border transactions.
In Financing advisory, during the nine months to December 2014 we advised on 23 IPOs (of which 4 were during the quarter to December 2014) and continued to advise on more European equity assignments than any other independent adviser3 . We also continue to be highly active in large and complex debt advisory and restructuring situations.
For further examples of Rothschild's advisory assignments, please refer to Appendix 2.
Wealth & Asset Management revenues for the three months to December 2014 were €86.6 million, flat compared to the same period in the prior year, but up 9% quarter on quarter.
For the nine months to December 2014, Wealth & Asset Management generated revenues of €242.1 million, 5% better than the same period last year (€230.5 million). Revenue growth was driven by the rise of assets under management. The recent changes in monetary policy in Switzerland will have a modestly negative effect on Group profits.
Assets under management were €47.8 billion as at 31 December 2014 (€42.3 billion as at 31 March 2014 and €45.2 billion as at 30 September 2014). This represents an increase of €5.5 billion for the nine months (+€2.6 billion for the third quarter), thanks to net inflows of €2.6 billion and market appreciation and exchange rate effects of €2.9 billion. Net inflows were strong across our onshore
1 Source : Thomson Reuters
2 Source : Thomson Reuters, completed basis in the 9 months to December 2014 excludes accounting firms 3
Source: Dealogic
Wealth Management locations in the UK, France, Belgium, Germany and Switzerland (+ €2.0 billion) and in Asset Management (+€0.6 billion).
The table below presents the AuM progression over the third quarter and since the start of the financial year on a comparative basis.
| In € billion | 3rd Quarter | 9 Months | |||
|---|---|---|---|---|---|
| 2013/2014 | 2014/2015 | 2013/2014 | 2014/2015 | ||
| AuM opening for the period | 39.7 | 45.2 | 38.4 | 42.3 | |
| Net new assets | 0.3 | 1.1 | 0.4 | 2.6 | |
| Market and exchange rate impact | 1.2 | 1.5 | 2.4 | 2.9 | |
| AuM closing for the period | 41.2 | 47.8 | 41.2 | 47.8 |
Our European onshore Wealth Management business is growing in terms of assets under management and revenues, with strong asset inflows, combined with positive market performance. The recovery in equity markets had a positive impact on assets under management, as clients became more active.
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. Investments have been made in London in the Investment team and in Paris and Brussels in the Commercial teams. The pipeline for new assets remains strong.
Our Institutional Asset Management is reaping the rewards of its investment efforts in the development of its European product offering. Indeed, for the three months to December 2014, the inflow momentum has been positive in continental Europe, in the French institutional market, as well as in Switzerland, Italy and Benelux.
In the the nine months to December 2014, we have continued to strengthen our visibility and activity in continental Europe by reinforcing our dedicated sales teams, and by diversifying our product range available to local investors.
Merchant Banking revenues for the three months to December 2014 were €36.0 million, up 26% compared to the same period in the prior year (€28.6 million).
During the first nine months to December 2014, Merchant Banking generated revenues of €123.5 million compared to €54.6 million the previous year. These revenues include:
During the first nine months to December 2014, this division invested €117.1 million, of which €44.0 million was in proprietary investments and €73.1 million was in funds managed by Merchant Banking. Disposal proceeds amounted to €199.2 million.
Good progress is being made towards a first close of Five Arrows Principal Investments II (FAPI II), the follow-on fund to the original €583 million Five Arrows Principal Investments – a 2010 vintage fund
focused on European mid-cap opportunities. A first closing at more than half the targeted final amount is scheduled for February 2015. A final closing is expected to take place during the summer.
During the quarter to December 2014 Merchant Banking's Debt Fund Business completed the securitization of its second Contego CLO vehicle – at €360m.
The legacy banking book continues to reduce in line with our plans to exit this corporate lending business. Legacy drawings fell to €245 million as at 31 December 2014, down from €396 million as at 31 March 2014.
We expect revenues to continue to benefit from the good momentum seen in the first nine months of 2014 through to the end of the financial year. However, continuing economic uncertainty makes it difficult to predict the medium term outlook with any degree of confidence.
The Group is very well positioned for long term growth and success. We remain focused on our priorities of improving profitability, cost discipline and capturing the synergies between our three core businesses.
| In €m | 2013/2014 | 2014/2015 | Var % | |
|---|---|---|---|---|
| Global Financial Advisory | 1st quarter | 141.6 | 216.2 | +53% |
| 2nd quarter | 158.0 | 196.7 | +24% | |
| 3rd quarter | 200.0 | 250.4 | +25% | |
| YTD | 499.6 | 663.3 | +33% | |
| Asset Management 1 | 1st quarter | 82.9 | 114.4 | +38% |
| 2nd quarter | 86.8 | 128.6 | +48% | |
| 3rd quarter | 115.4 | 122.6 | +6% | |
| YTD | 285.1 | 365.6 | +28% | |
| 1st quarter | 13.3 | 16.7 | +26% | |
| Other 2 | 2nd quarter | 12.7 | 12.2 | -4% |
| 3rd quarter | 16.4 | 16.1 | -2% | |
| YTD | 42.4 | 45.0 | +6% | |
| 1st quarter | (0.6) | - | n/a | |
| Statutory adjustments | 2nd quarter | (1.8) | (11.5) | n/a |
| 3rd quarter | (9.9) | (9.9) | +0% | |
| YTD | (12.3) | (21.4) | -74% | |
| 1st quarter | 237.2 | 347.3 | +46% | |
| Total Group Revenues | 2nd quarter | 255.7 | 326.0 | +27% |
| 3rd quarter | 321.9 | 379.2 | +18% | |
| YTD | 814.8 | 1,052.5 | +29% |
1 Asset Management comprises Wealth & Asset Management and Merchant Banking business
2 Other comprises Central cost, legacy business, including Banking & Asset Finance, and other
Paris Orléans operates in the following areas:
Paris Orléans SCA is a French partnership limited by shares (société en commandite par actions) with a share capital of €142,274,072. 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
Marie-Laure Becquart [email protected] Tél. : +33 (0)1 53 77 65 10 www.paris-orleans.com
France DGM Conseil - + 33 1 40 70 11 89 Michel Calzaroni – [email protected] Olivier Labesse – [email protected]
United Kingdom Smithfield - + 44 20 7360 4900 John Kiely – [email protected] Alex Simmons [email protected]
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