Amundi: 1st quarter 2018 results

Amundi: 1^st quarter 2018 results

A strong start to the year, confirming Amundi's growth trend
Net inflows^[1]of €40bn, bringing AuM to €1,452bn
Sharp improvement in results:
Accounting net income of €221m, up 54% (vs. Q1 2017 reported)
Adjusted net income^[2] of €240m, up 15% (on a comparable basis^[3])

Business activity	Assets under management: €1,452bn at 31 March 2018, +5.8% vs. 31 March 2017[4] Strong and diversified net inflows1: +€39.8bn, driven by each client segment, region and investment expertise
Results	Sharp improvement in results: Accounting net income of €221m, up by a strong 54.3% vs Q1 2017 reported Adjusted net income2 of €240m, up 15% vs. Q1 2017 on a comparable basis3, with: Net asset management revenue up 6.8%3 Operating expenses[5] down 5.2%3 to €336m, reflecting the rapid implementation of Pioneer-related synergies A cost/income ratio2 of 50.7%, an improvement of 3.7 pts3 over Q1 2017
Integration of Pioneer and synergies	Rapid implementation of the Pioneer integration plan: workforce reduction already achieved by more than 50% legal merger achieved in eight countries first IT migrations successfully completed, others expected to take place by first-half 2019  In all, the €150m amount of synergies has been confirmed, and the phasing is set to be faster than announced, with 60% of synergies accounted for in 2018 (versus 40% projected)

Paris, 27 April 2018

Amundi's Board of Directors, chaired by Xavier Musca, convened on 26 April 2018 to review the financial statements for the first quarter of 2018.

Commenting on the figures, Yves Perrier, CEO, said:
"Amundi's very good performance in the first quarter of 2018, driven by all business lines and investment expertises, confirms the value of its business model, further strengthened by the acquisition of Pioneer, whose integration is on track with objectives but in advance with the announced timeline".

High level of activity in Q1 2018
strong and diversified net inflows of +€40bn,
bringing assets under management to €1,452bn
Amundi's assets under management amounted to €1,452bn at 31 March 2018, reflecting excellent business activity (net inflows of +€39.8 billion in Q1 2018), partially offset by a negative market effect (-€13.5 billion).
These strong net inflows were driven by both client segments, Retail and Institutionals, by all regions, and by all investment expertises. This demonstrates the strength of Amundi's diversified business model.
Note: all variation figures below are computed vs a combined Q1 2017 (3 months Amundi + 3 months Pioneer).

The Retail segment enjoyed a high level of activity with net inflows of +€21.7bn in Q1 2018 (versus +€13.4bn in Q1 2017 combined), generated by all distribution channels. The French networks continued to ramp up (+€2.6bn), driven by the higher proportion of unit-linked life insurance policy subscriptions (confirming the recovery observed since mid-2016). Inflows in the international networks remained strong (particularly in Italy with +€2.7bn in Medium/Long Term^[6] products), reflecting the success of the partnership with UniCredit. Inflows were very brisk for third-party distributors (+€4.1bn), with an excellent trend in Europe in particular (primarily in Italy and Germany) as well as in Asia. Inflows in the Asian joint ventures were particularly strong (+€12.1bn, with an especially high amount in China).
The Institutionals segment once again recorded significant net inflows, at +€18.1bn in Q1 2018 (versus +€15.8bn in Q1 2017 combined), balanced between treasury products and MLT products. Commercial activity during the quarter was robust, in particular for sovereign clients, with significant inflows in MLT assets, and for Corporate clients in treasury products.

Net inflows were also evenly split by asset class, driven by all investment expertises, and were of high quality, with a significant MLT asset component (+€28.1bn, or 71% of the total). This high level was above the average observed in previous quarters (average quarterly net inflows for MLT assets of +€9.1bn in 2017). These inflows, which include active products (+€9bn^[7]) and passive products (+€7bn⁷), were boosted by particularly high net inflows in China. Inflows for treasury products were driven by the Institutionals and Corporates segment.

From a geographic viewpoint, net inflows were once again driven by the international segment (+€25.4bn), which accounted for 64% of the total. Business activity was strong in all regions, with a significant contribution from Asia and Italy. Over one year, international assets under management increased by 9.9%, and they now represent 41% of Amundi's total AUM, and 57% of AUM excluding Crédit Agricole and Societe Generale insurance companies.
In France, Amundi has further reinforced its leadership position by achieving in the first quarter 2018 more than two thirds of the net inflows in open-ended funds domiciled in France^[8].

Q1 2018 results increased significantly
Solid gains in net asset management revenue and an improved cost/income ratio (-3.7 points^[9])
Sharp growth in accounting net income (€221m, up 54.3%^[10])
Adjusted net income of €240m⁹, up significantly (+15.0%^[11])

Amundi's Q1 2018 results reflect a very strong start to the year and confirm the Group's ability to grow while keeping costs under control, thanks in particular to Pioneer-related synergies.

Accounting data
Accounting income in Q1 2018 (including integration costs and the amortisation of distribution contracts) amounted to €221m, up by a sharp 54.3% compared with Q1 2017 reported, benefiting from the contribution of Pioneer (consolidated as from 1 July 2017) and the Group's strong financial performance.

Adjusted data
Net asset management revenue grew steadily (€667m, up 6.8%¹¹), thanks to:
A 2.9%¹¹ increase in net management fees (€615m), in line with the growth in AUM over 12 months;
A very high level of performance fees (€52m, up 95.3%¹¹), reflecting the funds' strong performance^[12] over the last 12 months.
The negative contribution of net financial income (-€5m) was linked to interest expense and to the mark-to-market effect on the investment portfolio. As a reminder, financial income in Q1 2017 included investment capital gains in view of the Pioneer acquisition.

Operating expenses fell significantly (€336m, down 5.2%¹¹), reflecting the rapid implementation of the Pioneer integration plan and thus of the announced synergies (workforce reductions in particular). The cost/income ratio therefore stood at 50.7%, a 3.7 point decrease¹¹ from Q1 2017, and gross operating income reached €326m, up 9.9%¹¹ vs. Q1 2017.
Taking into consideration the contribution (up 54,3%¹¹) from equity-accounted entities (primarily the Asian joint ventures) to income, and a tax charge of €95m, net income, Group share totalled €240m, up 15.0%¹¹ compared with Q1 2017 on a comparable basis.

Pioneer integration

The Pioneer integration plan is being implemented quickly: more than 50% of the workforce reductions had already been completed at end-March 2018, several major legal mergers have taken place (Germany, Italy, the United States, Switzerland, Luxembourg, Czech Republic, Japan and Taiwan) and the first IT migrations have been successfully completed in Germany and Czech Republic. The IT migration processes are underway for the other platforms and are expected to be completed in 2018 in Europe and in the first half of 2019 in the United States.
The good progress on the Pioneer integration suggests that the phasing of the synergies will be faster than announced, with 60% of synergies generated in 2018 (versus 40% projected).

***

Financial communication calendar
15 May 2018:                      General Shareholders' Meeting
22 May 2018:                      Ex-dividend date
24 May 2018:                      Dividend payment date
2 August 2018:                    Publication of first-half 2018 results
26 October 2018:               Publication of results for the first nine months of 2018

Amundi's financial disclosures for the first quarter of 2018 consist of this press release and the attached presentation, which are available on http://legroupe.amundi.com.

***

Combined income statement¹

€m		Q1 2018		Q1 2017		Change Q1/Q1
Net revenue2		663		652		1.7%
o/w net management fees		615		598		2.9%
o/w performance fees		52		27		95.3%
o/w Financial income and other net income 2		-5		27		NS
Adjusted operating expenses 3		-336		-355		-5.2%
Adjusted gross operating income 2-3		326		297		9.9%
Adjusted cost/income ratio 2-3		50.7%		54.4%		-3.7 pts
Cost of risk & Other		-4		-3		=
Equity-accounted entities		12		8		54.3%
Income before tax 2-3		334		301		11.1%
Taxes 2-3		-95		-93		2.4%
Adjusted net income, Group share 2-3		240		208		15.0%
Amortisation of distribution contracts after tax		-12		-3		NS
Pioneer integration costs after tax		-6		-4		NS
Net income, Group share		221		202		9.3%

1- Combined data in Q1 2017 and Q1 2018: 3 months Amundi + Pioneer.
2- Excluding amortisation of UniCredit, SG, and Bawag distribution contracts.
3- Excluding costs associated with the integration of Pioneer.

Change in assets under management from end-December 2016 to end-March 2018

Combined assets under management and net inflows by client segment

			AuM	AuM	% chg.		Inflows	Inflows		Inflows
(€bn)			31/03/2018	31/03/2017	vs. 31/03/2017		Q1 2018	Q1 2017		Q4 2017
French networks*			108	103	+5.2%		+2.6	+1.3		+1.0
International networks & JVs			250	220	+13.5%		+15.0	+9.2		+8.4
Third-party distributors			177	167	+5.6%		+4.1	+2.9		+4.8
Retail			534	490	+9.1%		+21.7	+13.4		+14.2
Institutionals** & sovereigns			366	349	+4.9%		+14.4	+7.8		-5.3
Corporates & employee savings			129	126	+2.3%		+2.1	+6.9		+5.0
CA & SG insurers			423	408	+3.6%		+1.5	+1.1		-0.8
Institutionals			918	883	+4.0%		+18.1	+15.8		-1.1
TOTAL			1,452	1,373	+5.8%		+39.8	+29.2		+13.1
o/w JVs			129	111	+16.2%		+12.1	+8.1		+6.0

^* French networks: net inflows on medium/long-term assets +€1.7bn in Q1 2018 (+€1.1bn in Q1 2017).
^** Including funds of funds
Combined assets under management and net inflows by asset class

			AuM	AuM	% chg.		Inflows	Inflows		Inflows
(€bn)			31/03/2018	31/03/2017	vs. 31/03/2017		Q1 2018	Q1 2017		Q4 2017
Equities			234	212	+10.1%		+8.9	+1.3		+3.7
Diversified			256	240	+7.1%		+5.8	+5.3		+5.7
Bonds			658	644	+2.2%		+13.3	+0.7*		-0.2
Real, alternative and structured assets			70	66	+5.0%		+0.1	+0.9		+1.2
Medium/long-term assets			1,218	1,162	+4.8%		+28.1	+8.2		+10.4
Treasury products			235	211	+11.3%		+11.7	+21.0		+2.7
TOTAL			1,452	1,373	+5.8%		+39.8	+29.2		+13.1

^* Impact of the ECB's reinternalisation of a mandate for -€6.9bn in Q1 2017.

Combined assets under management and net inflows by region

			AuM	AuM	% chg.		Inflows	Inflows		Inflows
(€bn)			31/03/2018	31/03/2017	vs. 31/03/2017		Q1 2018	Q1 2017		Q4 2017
France			851*	825	+3.1%		+14.3	+19.8		-8.3
Europe excl. France			327	297	+9.9%		+6.6	-0.1		+10.8
Asia			190	166	+14.4%		+14.8	+8.4		+8.3
Rest of world			85	84	+0.6%		+4.0	+1.1		+2.3
TOTAL			1,452	1,373	+5.8%		+39.8	+29.2		+13.1
TOTAL International			602	548	+9.9%		+25.4	+9.4		+21.4

^{* of which €40bnfor € CA et SG insurers}

Methodological appendix

Q1 2018 Income statement

Accounting data
In Q1 2018, the data corresponds to three months of activity for Amundi and three months of Pioneer's activity. This Q1 2018 is compared with a reported Q1 2017 that included only Amundi for three months.

Adjusted data
To present an income statement that is closer to the economic reality, the following adjustments have been made:
In Q1 2018: restatement of Pioneer-related integration costs and amortisation of distribution contracts (deducted from net revenues) with SG, BAWAG and UniCredit.
In Q1 2017: restatement of Pioneer-related integration costs and amortisation of distribution contracts (deducted from net revenues) with SG and BAWAG only (as the contract with UniCredit did not start until Q3 2017).

The combined data is different from the pro forma data (as presented in the 2017 Registration Document), which included restatements for the financing assumptions of the acquisition of Pioneer: additional financing costs, reduced financial income.

Costs associated with the integration of Pioneer Investments:
Q1 2018: €9m before tax and €6m after tax
Q1 2017: €5m before tax and €4m after tax

Amortisation of distribution contracts:
Q1 2018: €18m before tax and €12m after tax
Q1 2017: €4m before tax and €3m after tax 

Overview of amortisation of distribution contracts with UniCredit

When Pioneer was acquired, 10-year distribution contracts were entered into with UniCredit networks in Italy, Germany, Austria, and the Czech Republic; the gross valuation of these contracts came to €546m (posted to the balance sheet under Intangible Assets). At the same time, a Deferred Tax Liability of €161m was recognised. Thus the net amount is €385m which is amortised using the straight-line method over 10 years, as from 1 July 2017.

In the Group's income statement, the net of tax impact of this amortisation is €38m over a full year (or €55m before tax), posted under "Other revenues," and will be added to existing amortisations of the SG and Bawag distribution contracts of €11m after tax over a full year, or €17m before tax.

Alternative Performance Indicator^[13]

To present an income statement that better reflects the economic reality, Amundi publishes adjusted data, defined as follows: excluding the Pioneer integration costs and the amortisation of the distribution agreements with SG, Bawag and UniCredit since 1 July 2017 (see above).
Moreover, to show the new Group's performance on a like-for-like basis, Amundi also publishes combined data for Q1 2017, which includes 3 months of Amundi activity and 3 months of Pioneer activity in 2017
This adjusted and combined data is reconciled with the accounting data as follows:

		Q1 2018		Q1 2017		Change		Q1 2017		Change
€M		Actual		Combined*		Q1 2018/Q1 2017 combined*		Published		Q1 2018/Q1 2017 published
Net revenue  (a)		645		647		-0.4%		432		49.3%
+ Amortisation of distribution contracts after tax		18		4		NA		4		NA
Adjusted net revenue (b)		663		652		1.7%		436		51.9%
Operating expenses  (c)		-345		-360		-4.1%		-228		51.4%
+ Pioneer integration costs before tax		9		5		NA		5		NA
Adjusted operating expenses  (d)		-336		-355		-5.2%		-223		51.0%
Gross operating income  (e) = (a)+(c)		299		287		4.2%		204		46.8%
Adjusted gross operating income (f)=(b)+(d)		326		297		9.9%		214		52.8%
Cost/income ratio (c)/(a)		53.6%		55.6%		-2.0 pts		52.8%		+0.8 pt
Adjusted cost/income ratio (d)/(b)		50.7%		54.4%		-3.7 pts		51.0%		-0.3 pt
Cost of risk & Other  (g)		-4		-4		=		-2		NS
Equity-accounted entities (h)		12		8		54.3%		8		54.3%
Income before tax  (i) = (e)+(g) +(h)		307		291		5.5%		209		46.7%
Adjusted income before tax (j) = (f)+(g) +(h)		334		301		11.1%		219		52.6%
Taxes   (k)		-87		-89		-3.1%		-66		30.5%
Adjusted taxes (l)		-95		-93		2.4%		-70		36.0%
Net income, Group share  (i)+(k)		221		202		9.3%		143		54.3%
Adjusted net income, Group share  (j)+(l)		240		208		15.0%		149		60.4%

* Q1 2017 combined = 3 months Amundi + 3 months Pioneer

About Amundi

Amundi is Europe's largest asset manager by assets under management and ranks in the top 10^[14] globally. Thanks to the integration of Pioneer Investments, it now manages more than 1.45 trillion^[15] euros of assets across six main investment hubs^[16]. Amundi offers its clients in Europe, Asia-Pacific, the Middle-East and the Americas a wealth of market expertise and a full range of capabilities across the active, passive and real assets investment universes. Headquartered in Paris, and listed since November 2015, Amundi is the 1^st asset manager in Europe by market capitalization^[17].

Leveraging the benefits of its increased scope and size, Amundi has the ability to offer new and enhanced services and tools to its clients. Thanks to its unique research capabilities and the skills of more than 4 700 team members and market experts based in 37 countries, Amundi provides retail, institutional and corporate clients with innovative investment strategies and solutions tailored to their needs, targeted outcomes and risk profiles.

Amundi. Confidence must be earned.

Visit www.amundi.com for more information or to find the Amundi team closest to you.

Press contact:
Natacha Andermahr
Tel. +33 1 76 37 86 05
natacha.andermahr-sharp@amundi.com

Investor contacts:

Anthony Mellor

Tel. +33 1 76 32 17 16

anthony.mellor@amundi.com

Thomas Lapeyre
Tel. +33 1 76 33 70 54
thomas.lapeyre@amundi.com

DISCLAIMER:
This document may contain projections concerning Amundi's financial situation and results. The figures given do not constitute a "forecast" as defined in Article 2.10 of Commission Regulation (EC) No. 809/2004 of 29 April 2004.
This information is based on scenarios that employ a number of economic assumptions in a given competitive and regulatory context. As such, the projections and results indicated may not necessarily come to pass due to unforeseeable circumstances. The reader should take all of these uncertainties and risks into consideration before forming their own opinion.
The figures presented were prepared in accordance with IFRS guidelines as adopted by the European Union.
The information contained in this document, to the extent that it relates to parties other than Amundi or comes from external sources, has not been independently verified, and no representation or warranty has been expressed as to, nor should any reliance be placed on, the fairness, accuracy, correctness or completeness of the information or opinions contained herein. Neither Amundi nor its representatives can be held liable for any negligence or loss that may result from the use of this document or its contents, or anything related to them, or any document or information to which the document may refer.