ROTHSCHILD (EPA:ROTH) - Press release – Financial information 1st quarter 2018

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15/05/2018 17:45

Press release - Financial information

1st quarter 2018

Paris, 15 May 2018

First quarter marked by a good start in Private Wealth & Asset Management and
Merchant Banking but lower advisory activity

* Rothschild Global Advisory: revenue down 20% to EUR262 million (Q1 2017:
  EUR328 million, our record Q1) but only down 6% on a 12 months rolling basis
  to March 2018. Pipeline remains strong

* Rothschild Private Wealth & Asset Management: revenue up 2% to EUR131 million
  (Q1 2017: EUR128 million)

* Rothschild Merchant Banking: revenue up 29% to EUR25 million (Q1 2017: EUR19
  million) and 43% when compared to the average first quarter revenue for the
  previous three years

* First quarter revenue for 2018 was negatively impacted by currency
  translation effects of EUR22 million

In EUR million                  1st Quarter
                              2018       2017      %Var

Rothschild Global Advisory   261.7      328.2      -20%
Rothschild Private Wealth &
Asset Management             131.0      128.3        2%
Rothschild Merchant Banking   25.2       19.5       29%
Other                          6.9        3.5       97%
Total before IFRS
reconciliation               424.8      479.5      -11%
IFRS reconciliation           (4.7)       7.7     -161%
Total Group revenues         420.1      487.2      -14%

1. Rothschild Global Advisory

Our Rothschild Global Advisory business (Global Advisory) focuses on providing
advice in the areas of M&A and strategic advisory, and Financing Advisory
encompassing Debt, Restructuring and Equity Advisory.

Global Advisory revenue for the three months to March 2018 was EUR262 million,
down 20% compared to the same period in 2017, our record Q1 (3 months to March
2017: EUR328 million) but only down 6% on a 12 months rolling basis to March
2018 in the context of a 14% decline quarter on quarter in global completed M&A
activity by value (-10% on a 12 months rolling basis).

Our M&A business continues to outperform and continued to rank 1st globally by
number of completed transactions for the first three months of 2018(1).

In Europe, we retained our position as market leader, advising on more M&A
transactions than any of our competitors, a position we have held for more than
a decade(1).

In Financing Advisory, we ranked 2nd globally by number of completed
restructuring transactions for the first three months of 2018(2), and
maintained our position as adviser on more European equity assignments than any
other independent financial adviser(3).

The quality of our people is our principal competitive advantage and we
constantly search for new talent. During the first quarter, we recruited a new
head for our Chinese global advisory activities. In 2017, as part of our
ongoing investment in the North American market, eight new MDs joined our
business and we look forward to the arrival of two more Managing Directors here
during the second quarter of the financial year 2018.

Rothschild Global Advisory advised the following clients on significant
assignments completed in the quarter:

* Energy Future (adviser to second lien creditors) on its restructuring
  (US$41.8 billion, United States)
* Zodiac Aerospace on its combination with Safran (EUR35 billion, France)
* Maersk on its sale of Maersk Oil to Total (US$7.4 billion, Denmark and
  France)
* PAI Partners and British Columbia Investment Management Corporation on their
  acquisition of Refresco (EUR3.3 billion, France, Canada and the Netherlands)
* Greece's Public Debt Management Agency on its seven year bond issuance with a
  3.375% coupon (EUR3 billion, Greece)
* Ferguson on its sale of STARK to Lone Star (EUR1.025 billion, UK and Denmark)

In addition, we continue to work on some of the largest and most complex
announced transactions globally, including acting as financial adviser to:

* Westfield on its combination with Unibail-Rodamco (EUR61 billion, Australia
  and France)
* Prudential on its demerger into Prudential and M&G Prudential (£47 billion,
  UK)
* Essilor on its combination with Luxottica (EUR47 billion, France and Italy)
* Melrose Industries on its hostile cash and share offer for GKN (£8.1 billion,
  UK) (4)
* KapStone on its sale to WestRock (US$4.9 billion, United States)
* Mommert Holding on its sale of ZKW to LG Electronics and LG Corporation
  (EUR1.1 billion, Germany, Austria, South Korea)

(1) Source: Thomson Reuters, completed transactions. Excludes accountancy firms
(2) Source: Thomson Reuters
(3) Source : Dealogic
(4) Completed in Q2 2018

2. Rothschild Private Wealth & Asset Management

Rothschild Private Wealth & Asset Management (Private Wealth & Asset
Management) is made up of Rothschild Martin Maurel (France, Belgium and
Monaco), Rothschild Wealth Management & Trust (Switzerland, UK, Germany, Italy
and Asia) and Rothschild Asset Management Inc. (North America).

Revenue for the three months to March 2018 was EUR131 million, up 2% (Q1 2017:
EUR128 million).

The table below presents the progress in assets under management.

In EUR billion                     1st Quarter
                                   2018    2017

AuM opening (1 January)            67.3    54.0
Martin Maurel merger                 -     10.0
Net new assets                      1.1     0.8
Market, exchange rate              (1.9)    1.8
AuM closing (31 March)             66.5    66.6

Assets under management were EUR66.5 billion as at 31 March 2018 versus EUR66.6
billion as at 31 March 2017 (EUR67.3 billion as at 31 December 2017). The first
three months of 2018 have seen strong business activity with net inflows of
EUR1.1 billion (of which EUR0.8 billion were driven by Private Wealth). Market
depreciation and exchange rate effects reduced assets by EUR1.9 billion.

Following the merger of the two private banks in France of Rothschild & Cie
Banque and Banque Martin Maurel in 2017 to create Rothschild Martin Maurel, the
operational integration is on track, and will be finalised by the end of 2018.

3. Rothschild Merchant Banking

Rothschild Merchant Banking (Merchant Banking) revenue for the three months to
March 2018 was EUR25.2 million, up 29% (Q1 2017: EUR19.5 million). When
compared to the average of the last three years, first quarter revenue is up
43%.

Revenue from Merchant Banking comprises two main sources:

* Recurring revenue of EUR16.1 million was made up of management fees net of
  placement fees (Q1 2017: EUR13.4 million),
* Investment performance related revenue of EUR9.1 million (Q1 2017: EUR6.1
  million) comprised:
  - EUR3.3 million of carried interest (Q1 2017: EUR2.2 million),
  - EUR5.8 million of realised and unrealised investment gains and dividends
    (Q1 2017: EUR3.9 million),

Rothschild & Co's investments in the division during the first quarter 2018
amounted to EUR19 million, all of which was attributable to the Group's own
investments in funds managed by Merchant Banking.

Disposals and distributions generated proceeds of EUR18 million of which EUR4
million was distributed by FAPI I and EUR7 million was distributed by
Rothschild Credit Management's ("RCM") Oberon II fund.

During the quarter, RCM held a first closing of Elsinore - a multi-strategy
credit fund (EUR63 million) and launched Oberon USA (EUR55 million) marking a
geographical expansion of its already successful European-based senior secured
credit strategy. Shortly after the end of the quarter, Merchant Banking's Five
Arrows Direct Lending (FADL), the European mid-market direct lending fund, held
a final closing to reach EUR655 million of committed capital.

Just after the end of the quarter, Merchant Banking's FAPI I fund passed the
milestone of having distributed a total amount in excess of invested capital.
With strong prospects for exiting the remaining portfolio investments, it is
expected that the fund will generate a highly satisfactory return over its
life.

At the beginning of 2018, Merchant Banking decided to update its definition of
Assets under Management (AuM) to align it with generally accepted industry
practices. The application of this new definition(5) results in an increase of
the reported AuM figure as at December 2017 from EUR7.5 billion to EUR8.3
billion.

AuM as at 31 March 2018 stood at EUR8.5 billion.

4. Outlook

In Global Advisory, although global completed M&A activity for the first
quarter of 2018 has been lower, the market conditions for M&A remain positive.
We have been particularly active in some of the largest and most complex
recently announced transactions globally, and so we are cautiously optimistic
for our 2018 revenue.

Private Wealth & Asset Management is well positioned to deliver continuing net
asset inflows and improving profitability. Our strategy of focussing on our
core target markets, leveraging our network and targeting entrepreneurs and
high net worth individuals is bearing fruit across our geographies.

Merchant Banking is committed to growing its assets under management in both
Private Equity and Private Debt funds. Following the recent successful FADL
fundraising, we will continue to expand our product offering both in Europe and
the US. We remain cautious in our capital deployment efforts, focusing on
attractive risk-reward opportunities with appropriate downside protection
features.

Financial calendar:

* 17 May 2018               AGM
* 25 September 2018         Half year results 2018 (January - June)
* 13 November 2018          Third quarter information 2018 (July - September)

For further information:

Investor Relations
Marie-Laure Becquart
Tel.: +33 (0)1 40 74 65 26
marie-laure.becquart@rothschild.com

Media Relations
Caroline Nico
Tel.: +33 (0)1 40 74 43 44
caroline.nico@rothschild.com

For more information, please visit the Group's websites:
www.rothschildandco.com, www.rothschild.com

About Rothschild & Co

With a team of c.3,500 talented financial services specialists on the ground in
over 40 countries across the world, our integrated global network of trusted
professionals provide in-depth market intelligence and effective long-term
solutions for our clients in Global Advisory, Private Wealth, Asset Management,
and Merchant Banking. Rothschild & Co is family-controlled and independent and
has been at the centre of the world's financial markets for over 200 years.

Rothschild & Co is a French partnership limited by shares (société en
commandite par actions) listed on Euronext in Paris, Compartment A with a share
capital of EUR154,895,024. Paris trade and companies registry 302 519 228.
Registered office: 23 bis avenue de Messine, 75008 Paris, France.

(5) Merchant Banking's reported AuM are now calculated on the basis of the
funds' Net Asset Value plus all investors' undrawn/callable capital
commitments, according to the rules specified in the funds' prospectus. In
addition, the reported AuM also include the value of co-investments by
investors that have direct exposure to assets included in the portfolio of the
funds, in those cases where Merchant Banking maintains a strong influence over
these co-investments.

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10/10/2023 15:46

ROTHSCHILD (EPA:ROTH) - Press release – Financial information 1st quarter 2018

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