Efg-hold.gdr S Regulatory News (EFGD)

6 Mar 2006 09:57

EFG-Hermes Holdings SAE05 March 2006 EFG-HERMES REPORTS RECORD GROWTH IN 2005 • Operating Revenues up 337% to EGP796 million from EGP182 million • Net Operating Profit up 582% to EGP524 million from EGP90 million • Net Operating Margin up to 66% from 49% • Net Income Before Taxes and Provisions up 564% to EGP472 million • Net Income up approximately 560% to a range of EGP348-356 million* in 2005, from EGP52 million in 2004 • EFG-Hermes is reporting a range of EGP348 - EGP356 million for 2005 netincome. A final figure will only be reached after finalizing the tax treatmentof EFG-Hermes offshore subsidiaries under the new tax law in Egypt. To ensuretimely disclosure and transparency, management has decided to disclose thefirm's operating performance for 2005, and to postpone the announcement of thefirm's full financial statements until the tax-related issues are finalised. Strategic Outlook 2005 has been a transformational year for EFG Hermes cementing its position as aleading investment bank in the region: Following years of consolidation andinstitution building, the firm experienced solid and consistent growth acrossall lines of business. Furthermore, 2005 marked the execution of regionalexpansions, with remarkable success being achieved in the UAE. We expect to addtwo more regional markets during 2006. EFG-Hermes continued to add to its human capital selectively, with headcountreaching today 420; of which 60 are part of a 4-5 year management stock-basedincentive scheme that aligns the interests of core staff with those ofshareholders. Our accounting policies have been a reflection of our strategy to operate tointernational standards. Two new conservative measures were adopted in 2005: I- The recognition of asset management incentive fees was deferred untilactual realization became effective for 2005. II- Provisions for bonuses are now charged / provisioned in the year they areaccrued rather than in the year they are paid. As a result, 2005 carries adouble charge for bonuses; one for those earned in 2004 but paid in 2005 andone for those earned in 2005 but that will be paid in 2006. EFG-Hermes Management has been aggressive and swift in creating value for thefirm whenever possible without compromising the focus on core operations. A casein point is the acquisition of 20% of Banque Audi at a price of USD60 (bookvalue USD454 million, currently trading at USD76.75 per share, U5D1,747million). It is worth noting that EFG-Hermes records investments at book ormarket whichever is lower i.e. no capital gains on any investment is recorded onour P&L unless realized. Similarly to Banque Audi, we have a 33% stake in SODlCrecorded on our books at EGP12.5 per share, significantly lower than its currentmarket price. FINANCIAL HIGHLIGHTS Revenues EFG-Hermes continued to deliver exceptional performance in 2005 with operatingrevenues increasing 337% to EGP796 million in 2005, compared to EGP182 millionin/2004. Operating revenues for the fourth quarter stood at EGP338 million(42.6% of total operating revenues). Asset management incentive fees of EGP119.4million that were deferred from the previous three quarters, pursuant to aconservative policy to record only realized revenues, were recognized at yearend. The remaining EGP219.6 million of operating revenues generated during 4Q05 were up 136% from EGP93 million in 3QO5. It should be noted that whatdifferentiates EFG-Hermes from other investment banks in the region is thequality of its revenues as they represent pure agency fees i.e. with no capitalemployed or risks associated to proprietary positions. The following table showsrevenues generated from different divisions which represent pure fees andcommissions from operations. To view the full announcement paste the following link into your web browser to download the PDF document related to this announcement: http://www.rns-pdf.londonstockexchange.com/rns/3210z_-2006-3-6.pdf This information is provided by RNS The company news service from the London Stock Exchange