Last checked at 27 Jan 2015 14:13
EFG Hermes Holding S.A.E.
Trading Update
Cairo, January 27th, 2015 - EFG Hermes today announces that its business continued to perform well in the fourth quarter of 2014, despite a challenging market backdrop that was driven by a sharp decline in oil prices and equity market volatility in the MENA region. Continuing the positive trend it experienced in the first three quarters of 2014, the Group estimates that it was able to achieve net profit in excess of LE100m for the fourth consecutive quarter. Accordingly, EFG-Hermes estimates that Group net profit for FY2014 will be in excess of LE 500 million based on unaudited management figures.
The Group's performance in FY2014 was boosted by strong revenue growth within its Investment Bank, where revenues increased significantly across all business lines with the exception of private equity. This has been supported by a leaner expense base for the division as a result of various cost optimisation initiatives undertaken by the Group in the past few years.
Brokerage: Despite volatility in most of the regional markets in the last quarter, brokerage operations witnessed a pick-up in average daily commission over the slower third quarter, reaching approximately US$206k a day. Average daily commission for the year stood at around US$240k up 68% over FY2013. The business benefitted from higher trading activity in Egypt, UAE and Saudi Arabia. Egypt continues to represent the largest share of commissions earned by the brokerage division. Brokerage revenues for FY2014 increased more than 60% y-o-y.
Asset Management: Assets under management dropped to US$3.0bn in the last quarter from US$3.3bn at the end of the third quarter. The 10% drop was market driven and in line with regional equity market performance. Net new money for the fourth quarter was marginally positive. Asset management revenues for FY2014 increased more than 30% y-o-y.
Investment Banking: Investment banking also experienced a strong quarter with the announcement of four landmark transactions: the US$689m IPO of Dubai Parks and Resorts in the UAE, the US$140m rights issue for SODIC, the US$1,579m IPO of Emaar Malls Group and the acquisition of SeaFox by Millennium Offshore Services. Investment banking revenues for FY2014 increased threefold y-o-y.
Private Equity: Assets under management increased to US$800m at the end of the year, up from US$600m at the end of the third quarter following the acquisition of a 49% stake in EDPR's French renewable energy business for US$208m. This transaction earmarks one of the Group's first investments under its revised private equity strategy, where EFG Hermes provides seed capital for a portion of the investment with the remaining equity provided by investors, as opposed to the more traditional fund structure model. Private equity revenues for FY2014 decreased y-o-y.
On the commercial banking side, Credit Libanais' total assets reached around US$9bn as at 31 December 2014, with the composition being largely unchanged and credit quality continuing to be very robust. Management expects net profit for FY2014 to be marginally lower than what was reported in FY2013 as a result of continued pressure on profitability.
Today EFG Hermes also announced the proposed sale of its treasury shares currently held on its balance sheet (via a wholly owned subsidiary) and representing 6.4% of its total share capital, via an accelerated bookbuilding process to institutional investors. Following the transaction, the outstanding number of shares will be 573,484,500. Proceeds from the sale of shares will be used to fund growth initiatives, in particular capital needs within the Group's brokerage business, seed capital for the Group's asset management and private equity operations as well as funding plans to enter into the leasing, working capital finance and consumer finance space in due course.
In this release EFG Hermes may make forward looking statements, including, for example, statements about future fund raising, investment banking revenues, private equity incentive fees and the Commercial bank business strategy. Such forward looking statements by their nature may involve a number of risks, uncertainties and assumptions that could cause actual results or events to differ materially from those expressed or implied by these statements. Examples may include financial market volatility; actions and initiatives taken by current and potential competitors; general economic conditions; and the effect of current, pending and future legislation, regulations and regulatory actions. Furthermore, forward looking statements contained in this document that reference past trends or activities should not be taken as a representation that such trends or activities will continue. EFG Hermes does not undertake any obligation to update or revise any forward looking statements.
Accordingly, readers are cautioned not to place undue reliance on forward looking statements, which speak only as of the date on which they are made.
This document is provided for informational purposes only. It does not constitute an offer to sell or a solicitation of an offer to buy any securities or interests described within it in any jurisdiction. We strongly advise potential investors to seek financial guidance when determining whether an investment is appropriate to their needs.
For further information:
Investor Relations Department
Email: investor-relations@efg-hermes.com
Tel: +20 (0)2 35356710
Fax: +20 (0)2 3535 7017
Head of Investor Relations - Hanzada Nessim
Email: hnessim@efg-hermes.com
Tel: +20 (0)2 35356502
Fax: +20(0)2 3535 7017
www.efg-hermes.com