EFG-Hermes reports year end net profit of EGP 1.281bn

The firm's consolidated revenue has more than doubled over the year to reach EGP2.6bn. Total operating revenue increased 132 % over the year to EGP2.33bn. Net operating profit for the year increased over 2 fold to EGP1.55bn, corresponding to a net operating margin of 65.7%. Net profit after tax and minority interest increased 82.5% over 2006 levels to record EGP1.281bn.

"We delivered another strong year. The diversity and quality of our businesses, the confidence of our clients and the talent and teamwork of our people continue to drive our performance across the region and allowed us to close the year with substantial growth in profitability and returns to our shareholders, "says Yasser El Mallawany, Chairman and CEO of EFG-Hermes.

"It was a remarkable year for EFG-Hermes, with solid financial performance. Once again, the launch of new products and expansion into new markets whether physically or by tapping new classes of investors have all contributed to the superior results the Firm is enjoying today," says Hassan Heikal, Co-Chairman and CEO of EFG-Hermes.

2007 Highlights

• EFG-Hermes core revenue drivers for the year 2007 remain the agency and fee generating activities that locked in 70.9% of total revenues.
• Investment Banking closed several deals with sizes at or above the $1bn mark including the sale of the Egyptian Fertiliser Group to Abraaj Capital, the sale of Al Watany Bank of Egypt to the National Bank of Kuwait, the partial sale of Al Habtoor Engineering to Leighton Holdings as well both the private placement and IPO for the Talaat Mustafa Group.
• Brokerage arms in both Egypt and the UAE (on DFM) continued to maintain number one positions, with the positioning on ADSM improving to number 2. The Saudi Brokerage arm ended the year in number 2 position among the nine independent brokerage companies despite having started trading properly only in 3Q 07.
• Asset under management in listed equities and money market funds more than tripled over 2006 levels as new clients were introduced to the firm and new products were launched.
• The firm launched Horus III, the largest single private equity fund in Egypt and North Africa.
• The Research Team has widely increased the breadth of coverage across the region to reach 102 stocks (including stocks under review) across eight countries.
• During 2007, EFG-Hermes Qatar LLC has been granted a license by the Qatar Financial Centre Authority (QFCA) for investment banking and asset management business.
• The largest single shareholder in EFG-Hermes changed from Abraaj Capital to Dubai Financial Group (DFG) during November 2007.
• In addition to coverage by HSBC, Merrill Lynch initiated coverage on the stock in September.

Business Segment Review
Investment Banking
Revenues from the Investment Banking division accounted for 25% of total revenues generated from fee income and agency business.

Asset Management
Total assets under management within the Group reached the equivalent of USD 6.5 billion. Of the increase over the year, around 75% were new cash inflows.

Private Equity
Besides successfully closing the Horus III Fund (at $585m), Private Equity's increased contribution was as result both of an increase in management fees due to the near doubling of funds under management to reach $885m as well as success fees from several sizeable exits.

Brokerage
Although Brokerage operations remain the core contributor to the consolidated operating revenue, it accounted for 30% of the business as opposed to 44% in 2006.