ABC arbitrage: Results 2022

 2022 Results: M€29.2

2022 ROE: 18% – 2022 Distributions: €0.41 (83%)

The Board of Directors of ABC arbitrage, presided by the Chairman Dominique Ceolin, met on March 16, 2023 to approve the consolidated financial statements for fiscal year 2022.

• Context – 2022 has been a complex year around the world and in the financial markets. The war in Ukraine, very European from an economic point of view, created major international de-correlations across markets, initially leaving the European continent struggling alone. Ultimately, global inflation tensions, even beyond energy, drove global indices significantly down. Volatility, the main market parameter favorable to the group’s activities, was sustainably above its historical average in 2022. Nonetheless, the M&A market suffered, coherently, from this global situation as the main global indices fell by nearly 20%.
• Business Performance – In 2022, ABC arbitrage has closed its strategic plan ABC 2022 for the years 2020, 2021 and 2022. The group had defined quantitative and qualitative objectives, most of which were achieved².. 
• ➢         With €92m, the cumulative net income over the 3 years exceeds the stated objectives, with annual ROE significantly above the threshold of 15%, the level of out-performance defined by the group.
• ➢         The dividend policy has been confirmed with a cumulative distribution of €1.29 and a share of added value at more than 40% for the group’s employees.
• ➢         An evolution of the governance and a new RH policy have been achieved with success.
• ➢         Target assets under management (“AUM”), in contrast, has not been achieved, with client assets standing at  €372m as at March 1st 2023
• Dividend Policy – A quarterly distribution policy has been in place for over two years.
• ➢         Distribution of €0.10 per share in October 2022;
• ➢         Distribution of €0.10 per share in December 2022;
• ➢         Interim dividend of €0.10 per share on April 18, 2023 for payment on April 20;
• ➢         Proposition at the General Meeting of June 9, 2023 of a final dividend of €0.11 per share. The total distribution for fiscal year 2022 will amount to €0.41 per share, i.e. a payout ratio of more than 83%.

Retained earnings  will be invested in the development of new products with significant performance prospects. The terms and timetable of this final dividend will be presented at a later date.

• Outlook – The group presents its new strategic plan Springboard 2025 for the 3 years to come. This plan has been built based on the conclusions of the plan ABC 2022 and the the long term needs of the group:
• ➢         To generate  cumulative net income over 3 years of more than €100m with an annual ROE above 15%.
• ➢         To maintain a payout ratio of approximately 80%, implying a potential cumulative distribution of more than €1.3 per share over the three years.
• ➢         To develop investment management capacity to facilitate accommodating 1 billion euros of AUM, with €800m from external clients of the group with a profitability above 2% on those external assets.
• ➢         To continue with the necessary hires for the group’s ambitions, reaching almost 140 employees in 2025 (+33% compared to 2022).
• ➢         To continue significant IT investment, in service the group’s trading strategies.
• ➢         To continue evolving the group’s organizational and governance structure to serve productivity.

The first quarter of 2023 saw markets rise significantly, despite the geopolitical and economical context, until the bankruptcies of Silvergate and Silicon Valley Bank during the week of March 6th. Even if it’s too early to define all the forward looking scenarios around these bankruptcies, the group’s rhythm of activity for the first quarter 2023, as in 2022, is below that of 2021 due to the low volatility of the first weeks. The group continues to develop its know-how to extract the best possible performances from the current situations, in particular with the significant increase of current volatility.

¹ At this date, the audit procedures carried out by the statutory auditors are still in progress.
² The details of the ABC 2022 plan and the Springboard 2025 plan will be available on March 21st 2023, at 11:30 AM on the ABC arbitrage group website

Attachment

• 2023 ABCA CP Resultats 2022 VEng