BHF KLEINWORT BENSON Press Release
Key highlightsRegulated Information
Results for the year ended 31 December 2014
Significant operational progress across the Group
Brussels, 27 March 2015 - BHF Kleinwort Benson Group (the "Company" or "BHF KB")
today issued its results for the year ended 31 December 2014
Successful transformation into a financial services group
• Renaming to BHF Kleinwort Benson Group SA highlights the group's focus on Private Banking, Asset Management and Financial Markets & Corporates
• Completion of the acquisition of BHF-BANK in March 2014
• Agreement on the conversion of the co-investors'1 ownership in Kleinwort Benson Group2 ("KBG") into shares of
BHF Kleinwort Benson in September 2014
• Re-organisation to a single-tier holding structure underway
Significant operational progress improves results3 across the group
• Assets under Management4 (AuM) grew to €54.2 billion, an increase of €4.7 billion or 9.4%
• Operating income rose by €4.7 million or 1.4% to €334.6 million
• Adjusted underlying operating loss5 of €23.5 million, representing a €18.8 million improvement on prior year
• Ongoing efficiency programmes already yielded €17.0 million of recurring cost savings against the €20 million costs saving target identified at the time of the acquisition of BHF-BANK
• Statutory consolidated profit6 of €71.6 million (2013: €66.4 million loss) benefited from negative goodwill arising on the acquisition of BHF-BANK
Leonhard Fischer, Chief Executive Officer of BHF Kleinwort Benson, commented:
"We have seen good operational progress across the franchise in 2014. Our new name, BHF Kleinwort Benson Group, reflects the importance of our brands. The group has undergone significant change during this year and I am confident that we have built the foundations that will enable continued operational progress towards our targets."
1 The co-investors refer to the following investors: Fosun Group, AQTON SE (the wholly-owned strategic investment company of German entrepreneur Stefan
Quandt), and entities affiliated with Timothy C. Collins
2 KBG is the holding company that owns 100% of Kleinwort Benson Bank, Kleinwort Benson Channel Islands, Kleinwort Benson Investors and 91% of BHF-BANK
3 Operational progress is presented on a pro-forma basis for comparability. Pro-forma results include the results of BHF-BANK as if it had been part of the group from 1 January 2013
4 Opening AuM restated to exclude a €1.4 billion fixed-term advisory mandate from Kleinwort Benson Investors ("KBI") former parent KBC Asset Management NV
5 Adjusted results exclude the impact of non-recurring items which management believe should be excluded when analysing the operating results
6 Statutory results include the results of BHF-BANK for the 9 months since the date of acquisition
Press Release 27 March 2015 1
BHF Kleinwort Benson
1. Strategic update Successful transformation into a financial services group
During the year, BHF KB completed the acquisition of BHF-BANK and took several decisive steps in the simplification of its legal structure.
In March 2014, BHF KB and KBG acquired BHF-BANK for a final purchase price of € 347 million. The combination of BHF-BANK and Kleinwort Benson creates a Merchant Bank with a business proposition focused on Private Banking, Asset Management and Financial Markets & Corporates. KBG acquired 91% of BHF-BANK with BHF KB acquiring 9% of BHF-BANK directly through the issuance of new shares. KBG financed the transaction through the issuance of new shares to BHF KB and to a group of co-investors that collectively owned 35.13% of KBG.
Since this initial transaction, the structure was simplified further in September 2014 with the conversion of the co- investors' ownership in KBG into BHF KB shares through a capital increase of 41,198,419 new shares issued at their par value of €5.56 and bringing the total number of issued BHF KB shares to132,244,164. After the capital increase, BHF KB now fully owns KBG and the co-investors hold 31.2%7 of BHF KB.
As previously announced in our interim results in August 2014, the conversion of the co-investors holding in BHF KB shares will allow for the further reorganisation of the group's legal structure towards a more cost-efficient single- tier holding structure. Such reorganisation is scheduled to take place over the next few months and further updates will be communicated in due course.
7 Excluding shares held by Timothy C. Collins and affiliated entities prior to the conversion
Press Release 27 March 2015 2
BHF Kleinwort Benson
2. Key Figures BHF KB Group8Consolidated income statement
Year ended:
Year ended:
Change in EU R
Change in %
(In EU R millions) | Year ended: 31 Dec 14 | Year ended: 31 Dec 13 | Change in EU R millions | Change in % |
Assets under management Loans Assets under control Net new money | 54,242 4,091 58,332 3.1% | 49,588 3,436 53,024 3.4% | 4,654 655 5,309 - | 9.4% 19.1% 10.0% - |
Consolidated Balance Sheet10
(In EU R millions) | Year ended: 31 Dec 14 | Year ended: 31 Dec 13 | Change in EU R millions | Change in % |
Total assets Total equity Tier 1 capital Tier 1 capital ratio | 9,376 798 781 17% | 9,501 843 697 17% | -125 -45 84 - | -1.3% -5.3% 12.1% - |
Capital Structure
(In EU R millions) | Year ended: 31 Dec 14 | Year ended: 31 Dec 13 | Change in EU R millions | Change in % |
Total equity (In EU R millions) Total number of shares Book v alue per share (€) Year end share price (€) M arket capitalisation (In EU R millions) | 798 132,244,164 6.03 4.61 610 | 522 85,545,547 6.10 3.69 316 | 275 46,698,617 - - 294 | 52.7% 54.6% -1.2% 24.9% 93.1% |
8 Pro-forma results include the results of BHF-BANK as if it had been part of the group from 1 January 2013
9 Operating income and operating expenses exclude items which management believe are non-recurring in nature and hence should be excluded when analysing the operating results. Non-recurring items principally include (i) acquisition related costs, (ii) costs in relation to the settlement of the PBGC liability, (iii) restructuring costs (iv) tax and VAT refunds and (v) provision releases
10 The comparative balance sheet and client asset data have been restated to include BHF-BANK in order to ensure comparability
Press Release 27 March 2015 3
BHF Kleinwort Benson
Statutory consolidated profit of €71.6 million (2013: €66.4 million loss) benefited from negative goodwill arising on the acquisition of BHF-BANK. Detailed statutory numbers, which only include the results for BHF-BANK since the date of acquisition, are available in section 3. In this section, we focus the comments on the pro-forma results, reflecting BHF-BANK as if it had been part of the group since 1 January 2013.
Significant operational progress improves results across the groupStrong Growth in group AuM to €54.2 billion
At the headline level, AuM increased during the year by €4.7 billion or 9.4% to €54.2 billion (2013: €49.6 billion). Excluding the expected outflow of a €1.4 billion fixed-term advisory mandate with KBI's former parent company, KBC Asset Management NV, the increase was attributable to net new money (€1.7 billion) and positive market and foreign exchange movements. Net flows benefited from continued strong growth in KBI's AuM during the year while private banking in Germany also continued to attract new assets.
Adjusted operating/underlying loss reduced by €18.8 million to €23.5 million reflecting a significant improvement in the trading performance of the underlying operating businesses
During the year, total operating income increased by 1.4% to €334.6 million (2013: €330.0 million), driven by an improvement of both net fees and commission as well as net interest income. Net fee and commission income increased by 10.8% to €247.9 million (2013: €223.8 million) in line with the increase in AuM across the group and continued strengthening of margins.
Net interest income increased by12.5% to €62.9 million (2013: €55.9 million), mainly driven by growth in the loan book during the year as BHF-BANK and Kleinwort Benson both increased lending to high quality counterparties. Interest margins remained stable against the background of subdued interest rates.
Other income decreased as the 2013 pro-forma number included a gain on the sale of real estate and certain tax refunds within BHF-BANK.
Operating expenses decreased by €17.0 million (4.6%) to €356.9 million (2013: €373.9 million). This operating expense reduction across the group is a significant step towards the €20 million cost saving target identified at the time of the acquisition of BHF-BANK.
Efficiency programmes and sustained cost discipline at BHF-BANK and Kleinwort Benson have also resulted in significant headcounts reductions. Full Time Equivalent ("FTE") employees were reduced by 4.3% to 1,026 and by
5.3% to 676 respectively.
Loan loss provisions of €1.3 million remained very low with the growth in lending volumes achieved without increasing the portfolio's conservative risk profile.
Excluding non-recurring expenses for both periods, operating expenses included Group costs of €23.4 million (2013: €27.5 million). The reduction of the Group costs by 15% resulted from ongoing efforts to reduce headcount and property costs. As a result of the further reorganisation of the group's structure, the annualised run rate for the fixed Group costs will further reduce in the course of 2015 and additional subletting arrangements will substantially reduce the group's share of the London premises costs.
Non-recurring items of €24.6 million included expenses associated with the acquisition of BHF-BANK, taxes resulting from the conversion of the co-investors' minority interest in KBG into shares of BHF KB and the company's share of Asahi Tec's settlement of its claim with the US Pension Benefit Guaranty Corporation. These expenses were partly offset by the release of tax provisions and tax refunds.
Press Release 27 March 2015 4
BHF Kleinwort Benson
Balance Sheet & capital ratios remain strong
On a statutory basis, the group's total assets increased by €6.4 billion to €9.4 billion at 31 December 2014 (2013:
€3.0 billion) as the acquisition of BHF-BANK has had a significant impact on the Company's consolidated statement of financial position.
On a pro-forma basis, loans increased by 19.1% to €4,091 million (2013: €3,436 million). This is the result of an increase in the loan book within both BHF-BANK and Kleinwort Benson as the business continued to offer lending opportunities to both new and existing clients within its target market and risk appetite.
The loan to deposit ratio consequently increased to 34% and we are confident that we can continue to further grow the loan book without compromising its high quality and its low risk profile.
Across the group, we are committed to maintaining a solid capital and liquidity position with key metrics comfortably exceeding local regulatory requirements. At 31 December 2014, our group tier one ratio was 17%.
We are confident that despite the macro-economic and geopolitical challenges, we can develop our franchise to assist our clients to grow and protect their wealth. We are committed to continue to focus on further improving operating results for the group during 2015 towards our targets for 2017.
BHF Kleinwort Benson
Pro-forma11
Target
Year ended: 31 Dec 13 | Year ended: 31 Dec 14 | 2017 |
Net new money12 3.1% Cost sav ings - Operating profit (€42.4 million) | 3.4% €17.0 million | 4-6% >€20 million |
Net new money12 3.1% Cost sav ings - Operating profit (€42.4 million) | (€23.5 million) | >€60 million |
11 BHF KB Group results restated to include the results of BHF-BANK as if it had been part of the group from 1 January 2013
12 Net new money includes BHF-BANK, KBI and KBWM AuM movement, excluding market impact and foreign exchange expressed as a % of AuM at the start of the year. AuMs have been restated to exclude fixed-term advisory mandate from KBI's former parent KBC Asset Management NV (YE2013: €1.4 billion;YE2012 €0.8 billion)
Press Release 27 March 2015 5
BHF Kleinwort Benson
3. Supplementary financial data Consolidated Condensed Statutory Income Statement13(In EU R millions)
Statutory
Year ended:
31 Dec 14
Year ended:
31 Dec 13
Net fee and commission income 209.8 96.0
Net interest income 52.5 12.2
Gains / losses from financial instruments at fair v alue 1.4 2.9
Other income and expense 19.8 (5.6)
Operating income 283.5 105.5
Operating expenses (343.8) (156.6) M ov ements in loan loss prov isions (0.1) (0.1) Negativ e goodw ill 131.4 - Operating profit (loss) 71.0 (51.2) Share of profit of equity accounted inv estees (net of income tax) 0.8 0.5
P rofit (loss) before income tax 71.8 (50.7) Income tax benefit (expense) (0.2) (0.3) Loss from discontinued operations (net of income tax) - (15.4)
P rofit (loss) for the period 71.6 (66.4)
Segmental Operating profitP ro-forma | |||
(In EU R millions) | Year ended: 31 Dec 14 | Year ended: 31 Dec 13 | Change |
BHF-BANK Kleinw ort Benson Group | 2.2 (4.9) (20.8) | (2.5) (11.4) (28.5) | 4.7 6.4 7.7 |
Adjusted operating loss | (23.5) | (42.4) | 18.8 |
13 Statutory results include the BHF-BANK results from the date of acquisition with no restatement of comparatives
Press Release 27 March 2015 6
BHF Kleinwort Benson
(In EU R millions) | P ro-Forma | |
(In EU R millions) | Year ended: 31 Dec 14 | Year ended: 31 Dec 13 |
Net fee and commission income Net interest income Gains / losses from financial instruments at fair v alue Other operating income | 144.2 | 129.0 44.1 13.9 32.9 |
Net fee and commission income Net interest income Gains / losses from financial instruments at fair v alue Other operating income | 40.9 16.3 10.2 | 129.0 44.1 13.9 32.9 |
Operating income | 211.6 | 219.9 |
Operating expenses M ov ements in loan loss prov isions | (208.1 ) (1.3 ) | (224.1 ) 1.6 |
Adjusted operating profit / (loss) | 2.2 | (2.5 ) |
Non-recurring items14 | 10.0 | (14.6 ) |
Operating profit (loss) | 12.2 | (17.1 ) |
Client assets
(In EU R millions) | Year ended: 31 Dec 14 | Year ended: 31 Dec 13 |
Assets under M anagement Loans | 40,377 3,413 | 38,451 2,901 |
Assets under control | 43,790 | 41,352 |
(In EU R millions) | Year ended: 31 Dec 14 | Year ended: 31 Dec 13 |
Net fee and commission income Net interest income Gains / losses from financial instruments at fair v alue Other operating income | 103.7 | 94.7 11.9 3.9 0.5 |
Net fee and commission income Net interest income Gains / losses from financial instruments at fair v alue Other operating income | 21.9 (8.7 ) 3.7 | 94.7 11.9 3.9 0.5 |
Operating income | 120.5 | 111.1 |
Operating expenses M ov ements in loan loss prov isions | (125.4 ) 0.0 | (122.4 ) (0.1 ) |
Adjusted operating loss | (4.9 ) | (11.4 ) |
Non-recurring items16 | (4.6 ) | (2.3 ) |
Operating loss before tax | (9.5 ) | (13.7 ) |
Client assets
(In EU R millions) | Year ended: 31 Dec 14 | Year ended: 31 Dec 13 |
Assets under M anagement Loans | 13,864 678 | 11,137 535 |
Assets under control | 14,542 | 11,672 |
14 In 2014, non-recurring items primarily relate to tax refunds received during the period and the release of certain provisions made in 2013
15 Kleinwort Benson refers to the combination of Kleinwort Benson Bank, Kleinwort Benson Channel Islands and Kleinwort Benson Investors
16 Non-recurring items primarily relate to restructuring expenses
Press Release 27 March 2015 7
BHF Kleinwort Benson
Consolidated statement of financial position(In EU R millions) | Year ended: 31 Dec 14 | Year ended: 31 Dec 13 |
Assets | ||
Cash and balances w ith central banks | 208.8 | 202.4 |
Placements w ith, and loans and adv ances to other banks | 1,483.5 | 635.1 |
Inv estment securities | 4,175.1 | 1,451.2 |
Deriv ativ e assets | 664.9 | 3.4 |
Loans and adv ances to customers | 2,530.9 | 538.7 |
Current tax assets | 8.8 | 0.4 |
Accrued income and other assets | 129.3 | 51.4 |
Inv estments in equity accounted inv estees | 18.5 | 17.6 |
Property, plant and equipment | 65.5 | 14.3 |
Intangible assets | 57.2 | 42.8 |
Deferred tax assets | 33.5 | 0.5 |
Total assets | 9,376.0 | 2,957.8 |
Liabilities and equity | ||
Loans and deposits due to other banks | 1,216.0 | 89.0 |
Loans and deposits due to customers | 6,124.6 | 2279.0 |
Other financial liabilites | 1.3 | 0.0 |
Deriv ativ e liabilities | 735.9 | 6.1 |
Current tax liabilities | 18.7 | 1.8 |
Accrued expenses and other liabilities | 124.1 | 40.1 |
Prov isions | 107.8 | 14.8 |
Deferred tax liabilities | 6.9 | 4.8 |
Subordinated capital | 243.1 | 0.0 |
Total liabilities | 8,578.4 | 2,435.6 |
Share capital | 735.7 | 475.9 |
Share premium | 32.2 | 32.2 |
Reserv es | (7.1) | (16.0) |
Retained earnings | 36.8 | 30.1 |
Total equity attributable to owners of the Company | 797.6 | 522.2 |
Total equity and liabilities | 9,376.0 | 2,957.8 |
Press Release 27 March 2015 8
BHF Kleinwort Benson
Consolidated statement of cash flow(In EU R millions) | Year ended: 31 Dec 14 | Year ended: 31 Dec 13 |
Net cash used in operating activ ities | (511.3) | 187.8 |
Net cash from inv esting activ ities | 223.3 | (498.7) |
Net cash from financing activ ities | 185.1 | 0.0 |
N et variance in cash and cash equivalents | (102.9) | (310.9) |
Cash and cash equiv alents at the beginning of the period | 669.9 | 1,009.4 |
Effect of exchange rate fluctuations | 33.6 | (28.6) |
Cash and cash equivalents at the end of the period | 600.6 | 669.9 |
of w hich cash and balances w ith banks | 208.8 | 202.4 |
of w hich loans and adv ances due to credit institutions17 | 392.7 | 468.0 |
of w hich loans and deposits repaybale on demand | (0.9) | (0.5) |
Total | 600.6 | 669.9 |
The statutory auditor, KPMG Bedrijfsrevisoren - Réviseurs d'Entreprises, represented by Olivier Macq, has confirmed that the audit procedures, which have been substantially completed, have not revealed any material misstatement in the accounting information included in the Company's annual announcement.
17 Only loans and balances due to credit institutions with an original maturity of 3 months or less are included within cash and cash equivalents for the purposes of the cash flow statement
Press Release 27 March 2015 9
About BHF Kleinwort Benson Group SA
BHF Kleinwort Benson (Euronext: BHFKB) is a limited liability company incorporated under the laws
of Belgium, having its registered office at Avenue Louise 326, 1050 Brussels, Belgium. BHF Kleinwort Benson is a merchant bank with principal activities in private banking, asset management and financial markets
& corporates.
For further information visit: www.BHFKleinwortBenson.com
Our updated Corporate Presentation is available on our corporate website www.BHFKleinwortBenson.com.
This press release contains certain forward-looking statements concerning the Company's operations, economic performance and financial condition. Such forward-looking statements are based on management's current expectations, estimates and projections and are subject to a number of assumptions and involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The Company has no obligation to publicly update or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this press release.
Numbers presented throughout this presentation may not add up precisely to the totals provided in the tables and text. Percentages, percent changes and absolute variances are calculated based on the underlying figures and not on the rounded figures which are displayed in the tables and text and may not precisely reflect the percentages, percent changes and absolute variances that would be derived based on figures that are rounded.
Press Release 27 March 2015 10
|
distributed by
|
