ROTHSCHILD (EPA:ROTH) - Press release – Financial information 3rd quarter 2018

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13/11/2018 17:40

Press release - Financial information
3rd quarter 2018
Paris, 13 November 2018

Strong first nine months to September with a very satisfactory third quarter

* Global Advisory: record nine months revenue, up 14% to EUR932 million (9
  months to September 2017: EUR820 million) driven by strong M&A performance.
  Third quarter up 11% to EUR296 million (Q3 2017: EUR267 million)

* Wealth & Asset Management: nine months revenue up 4% to EUR391 million (9
  months to September 2017: EUR375 million). Third quarter up 7% to EUR130
  million (Q3 2017: EUR121 million)

* Merchant Banking: nine months revenue up 10% to EUR128 million (9 months to
  September 2017: EUR117 million) and 32% when compared to the average nine
  months revenue for the previous three years. Third quarter revenue down 54%
  to EUR23 million (Q3 2017: EUR50 million) due to a particularly strong
  Q3 2017 which saw significant value accretion

* Nine months revenue for 2018 was negatively impacted by currency translation
  effects of EUR29 million

                           Third Quarter      Nine Months (January-September)
In EUR million         2018     2017  % Var     2018     2017       % Var
Global Advisory         296      267   +11%      932      820        +14%
Wealth & Asset
Management              130      121    +7%      391      375         +4%
Merchant Banking         23       50   (54%)     128      117        +10%
Other businesses
and corporate centre      2        6   (67%)      17       24        (29%)
Total before IFRS
reconciliation
                        451      444    +2%    1,468    1,336        +10%
IFRS reconciliation       3       -     n/a       (8)       4         n/a
Total Group Revenue     454      444    +2%    1,460    1,340         +9%

1. Global Advisory

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

Third quarter revenue was EUR296 million, up 11% (Q3 2017: EUR267 million).

Global Advisory achieved record revenue for the first nine months of 2018 of
EUR932 million, up 14% (9 months to September 2017: EUR820 million). This
increase resulted in the business maintaining its position among the top
advisory firms, ranking 4th by global financial advisory revenue for the 12
months to September 2018.

Our M&A business continues to outperform and continued to rank 1st globally by
number of completed transactions for the first nine 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.

In Financing Advisory, we ranked 5th globally and 1st in Europe by number of
completed restructuring transactions for the first nine months of 2018, and
maintained our leading position as adviser on more European equity assignments
than any other independent financial adviser.

The quality of our people is our principal competitive advantage and we
continue to add to and strengthen our senior team. So far this year, as part of
our ongoing investment in the North American market, six new Managing Directors
joined our business. Elsewhere, so far this year, we have also recruited new
Managing Directors in the Asia Pacific region and in Equity Advisory.

We recently announced that Global Advisory has entered into a strategic
alliance with Intrepid Financial Partners to collaborate on providing companies
and investors in the North American energy sector with restructuring and debt
advisory services.

Global Advisory advised the following clients on significant advisory
assignments that completed in the three months to September 2018:

* Essilor on its combination with Luxottica (EUR47 billion, France and Italy)
* CVC Capital Partners on its sale of Sky Betting and Gaming to The Stars Group
(US$ 4.7 billion, United Kingdom and Canada)
* Fidessa Group on its recommended all-cash offer by ION Investment (£1.5
  billion, United Kingdom)
* Sasol on its dual tranche senior notes offering (US$2.25 billion, United
  States)
* Côte d'Ivoire on its notional EUR/USD derivatives transaction (US$1.4
  billion, Ivory Coast)
* Chevron on the disposal of its 75% interest in Chevron South Africa and 100%
  interest in Chevron Botswana (US$1 billion, United States and South Africa)

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

* The Coca-Cola Company on its acquisition of Costa Coffee (US$5.1 billion,
  United States and United Kingdom)
* Prudential on its demerger into Prudential and M&G Prudential (£47 billion,
  United Kingdom)
* Pinnacle Foods on its sale to Conagra Brands (US$10.9 billion, United States)
* VTG on its unsolicited public takeover offer by Morgan Stanley Infrastructure
(EUR3.6 billion, Germany and United States)
* Lufax Holding on its Series C Equity Financing (US$1.4 billion, China)
* SIG Combibloc Group on its IPO on SIX Swiss Exchange (EUR1.5 billion,
  Switzerland)(2)

(1) Source: Thomson Reuters, completed transactions. Excludes accountancy firms
(2)Completed in October 2018

2. Wealth & Asset Management

Wealth & Asset Management is made up of Rothschild Martin Maurel in France and
Monaco, our Wealth Management businesses in Switzerland, the UK, Belgium,
Germany, Italy and Asia, and our Asset Management business in Europe and in
North America.

Third quarter revenue was EUR130 million, up 7% (Q3 2017: EUR121 million).

Revenue for the first nine months of 2018 was EUR391 million, up 4% (9 months
to September 2017: EUR375 million). This was due to an increase in commissions
and net interest income.

Assets under management were EUR69.9 billion as at 30 September 2018 (EUR67.3.
billion as at 31 December 2017). The first nine months of 2018 have seen strong
business activity with net inflows of EUR2.0 billion, of which EUR0.1 billion
inflows in the third quarter. Net new assets were mainly driven by Wealth
Management for EUR2.1 billion offset by outflows of EUR0.1 billion in Asset
Management. Market appreciation and exchange rate effects increased assets by
EUR0.6 billion.

In France, the operational integration of Rothschild Martin Maurel is well on
track and will be finalised by the end of 2018.

In October 2018, the group signed an agreement for certain members of the
management to buy-out its wealth planning and trust services businesses. Annual
revenue for this business is around EUR40 million. The net proceeds for this
sale will be used for the further development of its core business.

The table below presents the progress in assets under management.

                         Third quarter     Nine months to September
In EUR billion        2018        2017        2018        2017
AuM opening           68.9        66.8        67.3        54.0
Martin Maurel merger     -           -           -        10.0
Net new assets         0.1         0.3         2.0         1.6
Market and exchange
rate                   0.9           -         0.6         1.5
AuM closing           69.9        67.1        69.9        67.1

3. Merchant Banking

Merchant Banking is the investment arm of the Rothschild & Co Group which
deploys the firm's and third parties' capital in private equity and debt
opportunities.

Third quarter revenue was EUR23 million, down 54% (Q3 2017: EUR50 million) due
to a particularly strong Q3 2017 which saw significant value accretion.

Revenue for the nine months of 2018 was EUR128 million, up 10% (9 months to
September 2017: EUR117 million). When compared to the average of the last three
years, the nine months revenue is up 32%.
Nine months revenue comprises two main sources:

* Recurring revenue of EUR52 million was made up of management fees net of
  placement fees (9 months to September 2017: EUR45 million),
* Investment performance related revenue of EUR76 million (9 months to
  September 2017: EUR72 million) comprised:
- EUR26 million of carried interest (9 months to September 2017: EUR18
   million),
- EUR50 million of realised and unrealised investment gains and dividends (9
   months to September 2017: EUR54 million).

Rothschild & Co's investments in the division during the first nine months of
2018 amounted to EUR52 million, of which EUR44 million was attributable to the
Group's own investments in funds managed by Merchant Banking and EUR8 million
was in proprietary investments. Disposals and distributions generated proceeds
of EUR166 million of which EUR147 million was from managed funds (the majority
- EUR125 million - from FAPI I following several successful portfolio company
exits) and EUR19 million was from proprietary investments.

During the third quarter, Rothschild Credit Management kept on growing its AuM
base primarily through new mandates dedicated to institutional investors,
whereas primary equity funds (FAPI) decreased following significant
distributions in the first fund.

AuM as at 30 September 2018 stood at EUR9.3 billion, the same level as at 30
June 2018 (31 December 2017: EUR8.5 billion).

4. Outlook

In Global Advisory, the value of globally announced M&A deals in the market
increased to record levels in the first nine months of 2018, principally driven
by an increase in large transactions. Announced activity in Q3, however, slowed
compared to Q2 and the value and number of M&A completions in 2018 has been
lower than last year. Given this, whilst we believe the general environment
continues to be supportive for M&A, we remain alert to signs of an inflection
point in the cycle. Year to date, we have succeeded in gaining market share, as
evidenced by the progress in our advisory revenue ranking, and during the
remainder of 2018 we expect healthy activity levels in our business. We are
therefore on track for advisory revenue for the full year to be an improvement
on last year. In the future, our focus remains on growing our market share,
particularly our North American M&A franchise whose revenue has increased over
time as a result of ongoing investment, and where we foresee strong potential
for growth.

Wealth & Asset Management is well positioned to deliver net asset inflows and
improve profitability. Our strategy of focussing on our core target markets,
leveraging our network and targeting entrepreneurs is bearing fruit across our
geographies. In France, the operational integration of Rothschild & Cie and
Martin Maurel will be finalised by the end of the year 2018.

Merchant Banking is committed to growing its assets under management in both
Private Equity and Private Debt funds. Following some recent successful
fundraisings, 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 markets have been challenging with a high level of volatility in
recent weeks. If this continues through the end of 2018, market sentiment could
be impacted with a negative effect on our businesses. Nevertheless, we still
expect our annual results to improve reasonably compared to 2017.

Financial calendar:

* 12 March 2019          Full year results 2018 (January - December)
* 14 May 2019            First quarter information 2019 (January - March)
* 16 May 2019            Annual General Meeting

For further information:

Rothschild & Co                            Media Contact
Investor Relations                         DGM
Marie-Laure Becquart                       Olivier Labesse
Tel: +33 1 40 74 65 26                     Tel: +33 1 40 70 11 89
Marie-laure.becquart@rothschildandco.com   labesse@dgm-conseil.fr

Media Relations
Caroline Nico
Tel: + 33 1 40 74 43 44
Caroline.nico@rothschildandco.com

A. Quarterly progression of revenue

In EUR million                       2018         2017          Var

Global Advisory   1st quarter        261.7        328.2         (20%)
                  2nd quarter        374.4        225.4         +66%
                  3rd quarter        295.9        266.7         +11%
                        Total        932.0        820.3         +14%

Wealth & Asset
Management        1st quarter        131.0        128.3          +2%
                  2nd quarter        130.4        125.7          +4%
                  3rd quarter        129.4        121.2          +7%
                        Total        390.8        375.2          +4%

Merchant Banking  1st quarter         25.2         19.5         +29%
                  2nd quarter         79.8         47.4         +68%
                  3rd quarter         23.2         50.1         (54%)
                        Total        128.2        117.0         +10%

Other businesses
and corporate
centre            1st quarter          6.9          3.5         +97%
                  2nd quarter          8.3         13.5         (39%)
                  3rd quarter          1.9          6.0         (68%)
                        Total         17.1         23.0         (26%)

IFRS
reconciliation    1st quarter        (4.7)          7.7          n/a
                  2nd quarter        (6.5)         (3.4)        (91%)
                  3rd quarter         3.5          (0.2)         n/a
                        Total        (7.7)          4.1          n/a

Total Group
Revenue           1st quarter       420.1         487.2         (14%)
                  2nd quarter       586.4         408.6         +44%
                  3rd quarter       453.9         443.8          +2%
                        Total     1,460.4       1,339.6          +9%

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, 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 EUR154,925,024. Paris trade and companies registry 302 519 228.
Registered office: 23 bis avenue de Messine, 75008 Paris, France.

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ROTHSCHILD (EPA:ROTH) - Press release – Financial information 3rd quarter 2018

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