Equity story - Rothschild & Co
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Equity story
March 2020
Disclaimer
This presentation has been prepared solely for information purposes and must not be construed as or
considered as constituting or giving any investment advice. It does not take into account, in any way
whatsoever, the investment objectives, financial situation or specific needs of its recipients.
This presentation and its contents may not be copied or disseminated, in part or as a whole, without prior
written consent of Rothschild & Co.
This presentation may contain forward-looking information and statements pertaining to Rothschild & Co SCA
(“Rothschild & Co”), its subsidiaries (together, the “Rothschild & Co Group”) and its and their results. Forward-
looking information is not historical. It reflects objectives that are based on management’s current
expectations or estimates and is subject to a number of factors and uncertainties, that could cause actual
figures to differ materially from those described in the forward-looking statements including those discussed or
identified in the documentation publicly released by Rothschild & Co, including its annual report.
Rothschild & Co does not undertake to update such forward-looking information and statements unless
required by applicable laws and regulations. Subject to the foregoing, Rothschild & Co has no obligation to
update or amend such information and statements, neither as a result of new information or statements, nor
as a result of new events or for any other reason.
No representation or warranty whatsoever, express or implied, is made as to the accuracy, completeness,
consistency or the reliability of the information contained in this document. It may not be considered by its
recipients as a substitute to their judgment.
This presentation does not constitute an offer to sell or a solicitation to buy any securities.
This presentation is qualified in its entirety by the information contained in Rothschild & Co’ financial
statements, the notes thereto and the related annual financial report. In case of a conflict, such financial
statements, notes and financial reports must prevail. Only the information contained therein is binding on
Rothschild & Co and the Rothschild & Co Group. If the information contained herein is presented differently
from the information contained in such financial statements, notes and reports, only the latter is binding on
Rothschild & Co and the Rothschild & Co Group.
For more information on Rothschild & Co: www.rothschildandco.com
2
Contents Sections 1 Investment case 5 2 Business lines 10 3 Financials 30 4 Shareholding structure and governance 34 Appendices 37
1 Investment case
High level of synergies across our businesses
Facing Page 4
1
Increased opportunities
in client referrals to GA
3 Market intelligence
Network of contacts
1/3 of commitments of the
Five Arrows funds1 from Sourcing opportunities
Rothschild & Co distribution
network Fundraising
2
10%-20% of asset inflows in
Wealth Management from
other businesses
Note
1 Excluding CLOs and co-investments
One Group organised around three pillars
Global Advisory Wealth & Asset Merchant Banking
Management
Geography Global European European / US
⚫ M&A and strategic advisory
Offerings ⚫ Wealth Management ⚫ Private equity
⚫ Debt financing and debt
⚫ Asset Management ⚫ Private debt
restructuring advisory
⚫ Equity advisory
⚫ Investor advisory
# Front ⚫ c.1,160 bankers in 53 offices ⚫ c.275 relationship managers and ⚫ c.90 professionals
office over 40 countries investment managers
Size ⚫ #7 globally by revenue ⚫ c.€76bn of AuM ⚫ c.€14bn of AuM
⚫ c.€1.16bn of revenue
With 3,500 financial services employees in 40 countries across the world,
we provide independent advice on M&A, strategy and financing,
as well as investment and wealth management
solutions to large institutions, families, individuals and governments
4
Our strategy
Facing Page 5
⚫ Focus on our three core businesses
Focused
⚫ Global Advisory, Wealth & Asset Management and Merchant Banking
⚫ Grow our businesses organically and through targeted acquisitions
Grow
⚫ Development of activity in existing and adjacent businesses, with a strong focus on cultural, strategic and
scale
financial fit
Create ⚫ Improve synergies between three core businesses
value ⚫ Focus on long term performance and value creation
Deliver ⚫ Strong capital position
strong ⚫ Tight cost controls
returns ⚫ Focus on delivering consistent returns over time
Key drivers for building long-term value creation
Expand core Grow private Human capital
businesses asset offering management
⚫ US organic investment in Global Advisory ⚫ New initiatives and ⚫ Recruitment
⚫ Ancillary advisory acquisitions successor funds ⚫ Retention
⚫ Development of Investor advisory franchise ⚫ Make available to our ⚫ Succession management
Wealth and Asset
⚫ Expend Merchant Banking platform outside Europe, Management clients
notably in the US
⚫ Bolt on targeted European deals in Wealth Management
5
Strong capital position …
Fully loaded solvency ratios around 20%
Facing Page 6
Risk weighted assets (in €m) Group solvency ratio
Strong capital
position gives us
Stable the optionality
ratios
9,069
around
development
+59% 20.9%
19.5% opportunities
3,307
19.3% 19.5% and cash returns
5,693 to shareholders
230
Capital
ratio min:
2,443 10.5%
144
5,532
CET 1 with
3,106 buffer min:
7%
31 Dec 2016 31 Dec 2019 31 Dec 2016 31 Dec 2019
Credit risk Market risk Operational risk CET 1 / Tier 1 ratio Tier 2
… coupled with a progressive dividend policy
Dividend progression over 5 years
Steady
increase of
+35% dividend over
since 2016 time
+8%
€0.85
€0.79
€0.68 €0.72
€0.63
2015/16 2016/17 2017 2018 2019
Payout
ratio 1 32% 26% 22% 19% 26%
In addition in 2018, share buy back as part of Edmond de Rothschild deal of €132m
1 Payout ratio is calculated excluding exceptional items
6Our financial targets
Target 2019 2018 2017 2016
Group Compensation Low to mid 60’s
targets ratio1 through the cycle 61.8% 60.8% 62.4% 64.0%
Return on 10 to 15%
tangible equity2 through the cycle 12.6% 18.0% 17.2% 14.4%
Businesses Global Advisory: Mid to high-teens
targets Profit before tax through the cycle 16% 20% 18% 18%
margin3
Wealth & Asset
Around 20%
Management: 15% 18% 17% 2%
by 2022
Profit before tax margin4
Merchant Banking: Above 15%
3 years average RORAC through the cycle 28% 28% 26% 25%
1 Calculation detailed slide 47
2 Excluding exceptional items
3 Pre-US investments
4 Excluding the Trust business sold in February 2019
7Encouraging a culture of responsible business
Investment Community
Ethics People solutions Environment investment
⚫ Safeguarding ⚫ Talent development ⚫ ESG integration to ⚫ Responsibly ⚫ Financial support to
confidentiality opportunities, feedback create long-term value managing greenhouse charities, social
⚫ Effective compliance and assignments ⚫ Engagement policy for gas emissions and enterprises and
systems and ⚫ Flexible working a constructive proactively reducing individuals
technology approach dialogue with our negative impact ⚫ Professional expertise
⚫ Stringent ⚫ Equal opportunities for companies on ESG ⚫ Championing for social purpose
anticorruption and all via development, an issues responsible organisations, helping
anti-bribery standards effective reward strategy ⚫ Investment solutions consumption and to drive change for
and transparency in that contribute to resource use young people
⚫ Impactful governance
and oversight promotions Sustainable ⚫ Volunteering to help
Development Goals young people to
achievement succeed in life
82 Business lines
1 Global Advisory
2 Wealth and Asset Management
3 Merchant Banking
10Introduction to Global Advisory
Geography Global We field c.1,160
advisory bankers in
Offerings ⚫ M&A and strategic advisory over 40 countries
⚫ Debt and restructuring - more than any other
advisory advisory house
⚫ Equity advisory
⚫ Investor advisory
⚫ Rating advisory
⚫ Sovereign advisory
# Front ⚫ c.1,160 bankers of which
office c.240 MDs
Key #7 #2
numbers globally by globally by
revenue number of
completed
transactions
€1.16bn €182m 800 200 100 30 30
of revenue of PBT in Europe in US and in Asia- in Latin in Africa &
(62% of total (50% of total Canada Pacific America Middle East
group revenue) group PBT)
11A history of long-term value creation in the mid-cap segment
Facing Page 12
We provide our clients with deep knowledge of the dynamics of every sector, and unrivalled insight on capital markets. This is gained through the
shared perspectives of our specialists and senior advisers across global markets.
General
Consumer,
Aerospace and Business Energy and Financial Engineering
Automotive Retail and
Defence Services Power Institutions and Capital
Leisure
Goods
Government Telecoms,
Industrial Mining and Transport and
and Public Healthcare Real Estate Media and
Materials Metals Infrastructure
Sector TechnologyOur differentiators
Global ⚫ Network of bankers in 54 offices over 40 countries, pooling a wealth of local We combine an
scale knowledge and sector expertise advisory only
⚫ Advise on more transactions across both M&A and Financing than anybody in our
platform with the
core markets, ranking #2 by number of deals
⚫ This provides us with a unique insight that helps us advise all clients
scale and
geographic
Our network of sector specialists provides our clients with a global picture of
reach of a global
Sector and ⚫
market industry dynamics and the current strategies of their participants investment bank
knowledge ⚫ The scale and reach of our financing and investor advisory offering give us deeper
insight into capital markets than any other adviser
Advice ⚫ Our advice is independent and unbiased, based on a long-term view to deliver
only each client’s interests
12Leading position: 7th position by revenue and 2nd by number
of deals
Ranking by advisory revenue (in €m) – 12m to December 2019
Ranking by % of Total
# deals revenue
Goldman Sachs 2,855 1 9%
JP Morgan 2,123 3 2%
Morgan Stanley 1,894
4 5%
Evercore 1,479
10 80%
Lazard 1,213
5 53%
BoA / Merrill Lynch 1,196
7 1%
1,160 2 62%
Citigroup 1,124 6 2%
Houlihan Lokey 1,026
20 100%
Barclays 885
8 4%
2019 2018
Source: Company’s filings, Thomson Reuters, global ranking by # of deals based on completed transactions
13Global M&A market by deal values
The rise and fall of M&A
Facing Page 14
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
-
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Announced Deal Value ($bn) Completed Deal Value ($bn)
16 vs 15 17 vs 16 18 vs 17 19 vs 18
% var Announced (17)% (4)% 19% (3)%
% var Completed (0)% (8)% 15% (14)%
Source: Refinitiv
Note: 2019 announced value includes 3 US domestic deals >$80bn with a cumulative value of $267bn (Bristol-Myers Sqibb / Celgene, United Technologies / Raytheon and AbbVie / Allergan (vs none in 2018)Resilient model over the cycle
Complementary mix of M&A and Financing Advisory
Revenue progression (in €m)
1,271
1,171 1,183
1,160
26%
1,037
24% 25%
947 32%
14%
852
774 29%
740 741
699 711 692
689
36%
33% 29%
23% 31%
45% 36% 34%
74%
86% 76% 75%
68%
71%
77% 67% 71% 64%
69% 66%
55% 64%
2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2013 2014 2015 2016 2017 2018 2019
M&A Advisory Financing Advisory (debt & equity advisory)
14Steady growth in profit
Revenue growth and tight cost control leads to increasing profit
Profit Before Tax (in €m) and PBT margin - pre US investment costs 1
1,400 60%
1,271
1,190 1,171 1,183
1,200 1,160
50%
1,040
1,000
880 40%
800 741
689
30%
600
19% 18% 18% 20%
16% 17% 20%
400 12%
13% 16%
255
225 212 211
180 182 10%
200 142
96 80
- -
2012/13 2013/14 2014/15 2015/16 2016/17 2016 2017 2018 2019
Revenue Profit before tax % PBT margin
Compensation 65.1% 65.9% 65.0% 64.8% 64.6% 65.6% 65.0% 63.4% 64.9%
ratio 2
1 US investment costs were €23m for 2016, €25m for 2017, €22m for 2018 and €16m for 2019. Our US investment costs are expected to be around 2% of revenue subject to the right opportunities
2 On an awarded basis and pre US investment costs
15Our response to market changes
Fully integrated investor engagement business
Facing Page 16
Disruption of traditional equity markets Our response: New investor advisory franchise
⚫ Governance matters
Boards
90% Activism, governance, shareholder
of active funds integrate ESG considerations into engagement strategy
investments decisions
⚫ Rise of passive investors M&A Investor Financing
Advisory Advisory Advisory
⚫ Activists see these changes as an opportunity
⚫ De-equitisation of listed market, since 2000
Shareholder Engagement
c.50% decline in LSE c.36% decline in US
listed companies listed companies
⚫ Private Equity companies chose ECM exits less often Corporate Shareholder Advisory
in 2018 and 2019 versus previous years Investor Perceptions
Equity Marketing
⚫ Structural shift amongst long-term capital providers
– Recent pivot towards direct investing : sovereign
wealth, pension fund and family office
ShareholdersOur North America development
Overview Broadening sector coverage
6 offices Debt
Activism
Restructuring
New York, Washington and Toronto and more recently Los Metals &
Advisory Mining
Angeles (2014), Chicago (2016) and Palo Alto (2018)
Technology Financial
Sponsors
FIG / Asset Established presence Equity
c.200 40 Management
Enhanced since 2016
Advisory
advisory bankers MDs Retail Initiated since 2016 Consumer
Enhanced in 2019
Healthcare Industrials
30 5
new M&A MDs since 2014 new MDs in 2019 Infrastructure Telecoms
& Power Business
Chemicals Paper & Services
Our North American progression1 Packaging
Var Market
2014 2019
14-19 % change
Deal value $43bn $56bn 30% 23% Objective to build a
comprehensive platform
Deal number 76 115 51% 14% in North America
League table position consistent with our overall global franchise
#19 #14 36%
(# of Announced deals)
Source: Refinitiv, any US or Canadian involvement on announced transactions
16Strategy of Global Advisory
1 Enhance our leading position in Europe Maintain leading
global position
2 Grow market share in North America Resilient business
model while
adapting to market
3 Deliver considered growth in Rest of World
evolution
4 Develop ancillary business areas, including Investor facing activities
5 Enhance cross-selling synergies between the businesses
171 Global Advisory
2 Wealth and Asset Management
3 Merchant Banking
18Our offering
Facing Page 19
Wealth Management Asset Management Europe
Externally
managed Alternatives
4% 6%
Cash
11%
Bonds &
Execution convertibles
only 34%
31%
Equity
16%
Discretionary
58%
Advisory
7%
Diversified
33%
⚫ 4 brands:
⚫ Focus more on high net worth individuals (>€1m in – Conviction: actively managed funds
France and >€5m in other geographies) – Valor: diversified solutions without any benchmark
⚫ Transforming the business mix to increase AuM under – Thematic: identifying durable themes (ie. real
discretionary management estate, ageing population, gold mines funds)
– 4change: coupling responsibility and performance
Note
1 Data as at 31 December 2019Introduction to Wealth and Asset Management
Geography ⚫ European Wealth Management €51bn Asset Management €30bn1
Main ⚫ France, UK, Switzerland, ⚫ France €19bn ⚫ Europe €20bn 1 c.50
locations Belgium, Italy, Monaco and c.225
Germany ⚫ Switzerland €12bn # Client ⚫ USA €10bn # Portfolio
⚫ UK Advisors Managers
€11bn
Offerings ⚫ Wealth Management
⚫ Belgium €4bn
⚫ Asset Management
⚫ Germany €3bn
# clients ⚫ Monaco €1bn
⚫ c.20,000 ⚫ Italy €1bn
# Front office ⚫ c.275 clients advisors and
portfolio managers
Key
numbers c.€76bn of AuM as at 31 December 2019
€497m €73m €2.4bn
of revenue of PBT
(27% of total group revenue) of NNA in 2019
(20% of total group PBT)
1: Of which €5bn managed on behalf of Wealth Management clients
19Strong growth in AuM over time and track record of
attracting new business
Wealth vs. Asset Management AuM split Net new Assets (in €bn)
CAGR 15-19:
90.0
+10%
80.0 76.0
Martin Maurel
70.0 merger: 67.3
+€10bn 64.8
33%
60.0
54.0
51.0 37% 34%
50.0
41%
40.0 40%
2.6 2.4
30.0
0.3 1.5
67% 1.8 1.7
20.0 63% 66%
0.4
60% 59% 2.3 1.0 2.5
2.2
10.0 1.3
0.8
(0.1)
(0.7)
-
31/12/2015 31/12/2016 31/12/2017 31/12/2018 31/12/2019
2015/16 2016 2017 2018 2019
Wealth management Asset management Wealth management Asset management
20Steady growth of revenue…
Facing Page 21
Revenue1 (in €m) and annualised bps progression
800 350
700 CAGR 17-19:
300
+3%
Asset
600 +3% Management
250 22%
+2% 497
500 470 480
21
20 20 200
Wealth
Management
400
78%
150
300
+3% 380
+6% 404
370
100 RoW
200 72 73 71 19%
France
50 UK 47%
100 17%
- -10%
80 80 72
- - Sw itzerland
2017 2018 2019 17%
NII Fees and commissions Others Revenue bps margin
Note
1 Revenues are calculated excluding Trust business following its sale in February 2019
2 France includes France, Belgium and Monaco… while maintaining a healthy PBT thanks to cost control
Profit Before Tax (in €m) and PBT margin
600 40%
497 35%
500 470 480
30%
400
25%
17% 17%
300 20%
15%
15%
200 15% 15%
11% 10%
100 81 82 73
5%
- -
2017 2018 2019
Revenue PBT excluding MM costs PBT margin - PBT margin -
excluding MM costs including MM costs
Revenue 72bps 73 71
bps margin
% NNI / total 15% 17% 15%
Revenue
Note
1. PBT are calculated excluding Trust business following its sale in February 2019
2. Martin Maurel integration costs were €27m in 2017, €9m in 2018 and nil on 2019
21Strategy of Wealth & Asset Management
1 Growth in core markets Build a strong
European Wealth
management
2 Cost control and improving profitability: around 80% CIR by 2022 in a low interest rate platform
environment
3 Refocus Asset Management on France
4 Strive to maximise synergies across the division and between the division and group
221 Global Advisory
2 Wealth and Asset Management
3 Merchant Banking
23Strong AuM growth
Merchant Banking continues to scale across all our strategies
Facing Page 24
Asset under management (in €bn)
€19.0bn
€14.0bn
x4.8
€8.2bn
€4.9bn
€2.9bn
2013 2015 2017 2019 obj 2022
Private Equity Secondaries / Co-investments Direct Lending Credit Management
Note
For illustrative purposes only. The above information is based on a variety of assumptions including that fundraising efforts will reach multi-year targets. Actual results may differ.Introduction to Merchant Banking
Geography Europe and US
5 offices
Offerings Paris, London, Luxembourg, New York, Los Angeles
⚫ Corporate private equity €6.2bn
Private Equity
⚫ Multi-strategies
⚫ Direct lending funds €7.8bn
Private Debt
⚫ Credit management
Key
c.€14bn c.90
numbers of AuM of which 9% from investment professionnals
Rothschild & Co 155 professionals
24 nationalities
€197m €111m
of revenue of PBT
(11% of total group revenue) (30% of total group PBT)
24Private Equity offering
Mid-market focus through directs, secondaries, co-investments and multi-managers
Facing Page 25
Corporate Private Equity €3.6bn Multi-Strategies (FAMS) €2.6bn
FAPI FAGC FACP FASO FAMI FAPEP
Five Arrows Principal Five Arrows Growth Five Arrows Capital Five Arrows Secondary Five Arrows Minority Five Arrows Private
Investments Capital Partners Opportunities Investments Equity Programme
Mid-market Mid-market Mid-cap Multi-managers &
Small-cap buyout Co-investments
buyout buyout Secondaries fof platform
FAPI I (2010): €583m FASO III (2012): €259m FAPEP I (2017): €195m
FAGC (2020): FAMI I (2013): €100m
FAPI II (2015): €781m FACP (2018): $655m FASO IV (2016): €459m FAPEP II (2019):
fundraising FAMI II (2016): €155m
FAPI III (2019): €1.3bn FASO V (2019): €1.0bn fundraising
33 investments in 10 countries 15+ years track record across more than 50 transactions
36 investment professionals 21 investment professionalsPrivate Debt offering
Credit solutions across the capital structure for mid-cap and large companies
Direct Lending €1.2bn Credit Management €6.6bn
FACS FADL FADP Oberon Elsinore GLI CLO
Five Arrows Five Arrows Five Arrows & managed accounts & managed accounts Five Arrows Global management
Credit Solutions Direct Lending Debt Partners Loan Investments
Debt financing solutions to privately- Senior,
Unlevered senior
owned businesses across the European subordinated and CLO Equity CLO vehicles
secured credits
mid-market CLO credits
FACS: €415m (2014)
Oberon I-III (2013-17): €965m €3.5bn
FADL: €655m (2018)
Oberon IV (2018): fundraising Elsinore I (2018): Europe: 5 CLOs
FADP III: fundraising
Oberon USA (2018): open- fundraising FA GLI (2019): €205m (Contego)
ended Managed Account: €100m North America: 4 CLOs
Managed Accounts: €1.8bn (Ocean Trails)
31 investments across Europe
11 investment professionals 23 investment professionals
25Strong value creation in portfolio for shareholders
Facing Page 26
Net asset value
NAV of €617m
84 for a total
9 (22) commitment of
126 75 c.€1bn (c.9% of
(82) 617
AuM)
52
511 74 (104) 179
140
438
371
Asset value Additions Value creation Disposals Asset value
31/12/2018 31/12/2019
Private Equity Private DebtA disciplined investment philosophy
We base our asset selection on stringent criteria centred on risk-adjusted returns
Our core
Our key investing principles sector focus
⚫ Attractive and durable returns on invested capital
⚫ High and sustainable barriers to entry
⚫ Strong free cash flow conversion and yield
⚫ Superior long-term organic growth Healthcare
⚫ Multiple value creation levers and active portfolio engagement
Key product & company themes Views on managing risks
⚫ “Installed base” of customers (recurring sales) ⚫ Input price volatility can be a killer
⚫ “Asset-lite” businesses with disproportionate ⚫ Understand business performance through Data &
profit scaling several cycles Software
⚫ Secular growth prospects driven by ⚫ Operating leverage and financial leverage is a
sustainable tail winds dangerous combination
⚫ Dominant domestic franchises and/or export ⚫ Awareness of the impact of regulatory change
champions Technology-
Enabled
46% on core 58% on core
sectors focus sectors focus Business
in 20151 in 2019 Services
1 Calculation based on NAV, excluding carried interest shares
26Strong revenue growth with increasing contribution of
recurring revenue
Facing Page 27
Breakdown of revenue (in €m)
300
250
CAGR 16-19:
250
+14% +13%
197
200
185
175 200
186
164
150 58
133 145 -15%
150
131
69
100 93 +32% 48
53 100
36 91
31
29 70 % Recurring /
50 61 +31% total50revenue :
51 46%
38%
0 -
2016 2017 2018 2019
Recurring Revenue Carried interest Gains (realised and unrealised) Revenue - average 3 yearsGood return on capital tied to successful business growth,
investment performance and delivery of strategic priorities
Profit Before Tax (in €m) and RORAC1
200 250.0%
180 CAGR 16-19:
+11%
160 200.0%
140
+9%
120
120 111 150.0%
102
100
82
80 100.0%
60
40 62% 65% 50.0%
59% 56%
20
0 -
2016 2017 2018 2019
Profit before tax PBT margin
3 year average
25% 26% 28% 28%
RORAC 1
Note
1 RORAC stands for Return On Risk Adjusted Capital – an internal measure of risk capital invested in the business, being profit before tax divided by risk weighted capital
27Strategy of Merchant Banking
1 Grow Assets under Management as a multi-asset manager A niche player
⚫ Accelerate the roll out of core multiple products in Europe and the US in private assets in
⚫ Raise new funds targeted at specific opportunities, where we believe we have a distinct Europe
investment advantage and US with a
growing
contribution
to group profits
2 Pursue attractive risk reward propositions
and return on
⚫ Focus on 3 core sectors “asset light” (healthcare, business services and data services)
capital
with high visibility on future revenues and earnings
⚫ Strong organic growth coupled with multiple opportunities for value creation
⚫ Sustainable returns on invested capital with strong free cash flow generation
3 Continue to grow profitability for the group
⚫ A mix of management fees, carry and capital gains
⚫ Increasing share of recurring revenue from management fees and lowering “invested
assets-to-AuM” ratio
283 Financials
Comments on P&L
Facing Page 30
⚫ Revenue growth
Improving
⚫ Cost control
operating margin ⚫ Targeted headcount optimisation
Compensation ⚫ Target of an adjusted compensation ratio: in low to mid 60%’s through the cycle
costs
Exceptionals 2016 2017 2018 2019
impact on Martin Maurel integration costs 4 18 7 -
Net Income –
Group share Others (pensions credit, swap settlement cost,
- (7) 10 (10)
special tax credit, provision, legacy assets)
Total exceptionals (gains) / costs 4 11 17 (10)
Non-controlling ⚫ Comprise the profit share distributed to French partners and interest on perpetual debt
interestsSummary P&L
Strong momentum over recent financial years
In €m 2016 2017 2018 2019
Revenue 1,713 1,910 1,976 1,872
Staff costs (1,013) (1,087) (1,098) (1,065)
Administrative expenses (268) (320) (309) (289)
Depreciation and amortisation (32) (34) (30) (66)
Impairments (14) (13) (4) (6)
Operating Income 386 456 535 446
Other income / (expense) (net) 7 21 (4) 19
Profit before tax 393 477 531 465
Consolidated net income 331 412 454 397
Net income - Group share 179 236 286 243
Earnings per share € 2.60 € 3.18 € 3.88 € 3.38
Net income - Group share excl. exceptionals 183 247 303 233
EPS excl. exceptionals € 2.66 € 3.33 € 4.10 € 3.24
ROTE (excluding exceptional items) 14.4% 17.2% 18.0% 12.6%
30Compensation ratio target: low to mid 60%’s through the
cycle
Facing Page 31
(in €m) 2016 2017 2018 2019
Revenue 1,713 1,910 1,976 1,872
1
Total staff costs (1,119) (1,211) (1,225) (1,176)
Compensation ratio 65.3% 63.4% 62.0% 62.8%
Adjusted accounting Compensation ratio
2 64.0% 62.4% 60.8% 61.8%
(INCLUDING deferred bonus accounting)
Adjusted awarded Compensation ratio 65.0% 62.1% 62.3% 61.6%
(EXCLUDING deferred bonus accounting)
Headcount 2,946 3,502 3,633 3,559
1 Total staff costs include profit share paid to French Partners and effects of accounting for deferred bonuses over the period in which they are earned, as opposed to “awarded” basis but exclude
redundancy costs, revaluation of share-based employee liabilities and acquisition costs treated as employee compensation under IFRS
2 Ratio adjusted with FX effects, UK Guaranteed minimum pension provision and GA US investments costsPerformance by business – 12 months
Global Wealth & Asset Merchant Corporate IFRS
(in €m) 2019
Advisory Management Banking centre reconciliation 1
Revenue 1,160 497 197 24 (6) 1,872
Operating expenses & impairments (994) (424) (86) (53) 131 (1,426)
Operating income 166 73 111 (29) 125 446
Operating income excl. exceptional charges / profit 166 73 111 (29) 126 447
Operating margin % 14% 15% 56% - - 24%
Global Wealth & Asset Merchant Corporate IFRS
(in €m) 2018
Advisory Management Banking centre reconciliation 1
Revenue 1,271 480 175 58 (8) 1,976
Operating expenses & impairments (1,038) (404) (73) (92) 166 (1,441)
Operating income 233 76 102 (34) 158 535
Operating income excl. exceptional charges / profit 233 85 102 (34) 165 551
Operating margin % 18% 18% 58% - - 28%
1 The reconciliation to IFRS mainly reflects: the treatment of profit share paid to French partners as non-controlling interests; accounting for deferred bonuses over the period that they are earned; the application of IAS 19
for defined benefit pension schemes; adding back non-operating gains and losses booked in "net income/(expense) from other assets"; removing realised gains on sales of investment securities where the unrealised
gain was in the available-for-sale reserve at 31 December 2017 before the introduction on IFRS 9; and reallocating impairments and certain operating income and expenses for presentational purposes.
2 Wealth & Asset Management numbers are calculated excluding Trust business following its sale in February 2019
31Non-controlling interests
Facing Page 32
P&L Balance sheet
(in €m) 2019 2018 (in €m) 31/12/2019 31/12/2018
Interest on perpetual
17.3 17.7 Perpetual subordinated debt 303 291
subordinated debt
Preferred shares 1 136.2 146.3 Preferred shares 1 138 159
Other Non-controlling interests 0.3 3.5 Other Non-controlling interests 5 6
TOTAL 153.8 167.5 TOTAL 446 456
Note
1 Mainly relates to the profit share distributed to French partnersSummary balance sheet
(in €bn) 31/12/2018 31/12/2019
Cash and amounts due from central banks 4.7 4.4
Loans and advances to banks 2.0 2.0
Loans and advances to customers 2.9 3.3
of which Private client lending 2.5 2.8
Debt and equity securities 2.1 2.8
Other assets 1.5 1.7
Total assets 13.2 14.2
Due to customers 8.7 9.5
Other liabilities 2.0 2.1
Shareholders' equity - Group share 2.0 2.2
Non-controlling interests 0.5 0.4
Total capital and liabilities 13.2 14.2
Key ratios
Loan to Deposit ratio 33% 35%
Private client lending / Deposit 29% 29%
Liquid assets / gross assets 60% 57%
Equity per share €28.7 €31.2
Tangible Equity per share €24.5 €27.1
324
Shareholding structure and
governanceShareholding structure as at 31 December 2019
Facing Page 34
Share capital Voting rights
Treasury
shares
5.9%
Enlarged Float Enlarged
family 30.0% family
Float concert concert
39.0% 49.7% 62.7%
Jardine
Jardine Matheson
Matheson Group
Group 7.3%
5.4%Rothschild & Co at a glance
As at 31 December 2019
Enlarged family concert Float
49.7% of share capital 44.4% of share capital
(62.7% voting rights) (37.3% voting rights)
Managing
Rothschild & Co Gestion Partner 5.9%
Global Advisory Merchant Banking Wealth Management Asset Management
c.45 countries UK Switzerland Europe
Five Arrows Managers LLP Rothschild & Co Rothschild &Co Asset
Bank Zurich Management Europe
France
Five Arrow Managers
France US
Rothschild Martin Maurel Rothschild & Co
Luxembourg Asset Management
R&Co Investment Managers
SA UK
US Rothschild & Co
Wealth Management
Five Arrows Managers LLC
34Strong corporate governance
1 Group management 2 Board and board’s 3 Aligned shareholders and
committees senior management
Rothschild & Co Gestion, Managing Partner of Rothschild & ⚫ A Supervisory board composed of: ⚫ Equity Scheme introduced in October
Co. Represented by: – 14 recognised professionals, 2013 for 57 global partners from 10
including 7 independent members countries
Alexandre de Rothschild
Executive Chairman – 8 different nationalities ⚫ Extended to 10 new global partners in
December 2015
⚫ 4 specialised committees: ⚫ Extended to 21 new global partners in
Assisted by a management board: – Audit Committee December 2017
Robert Leitao – Risk Committee ⚫ Extended to 6 new global partners in
Managing Partner / Co-Chairman of the GEC – Remuneration & Nomination December 2019 and new subscription
Committee from 49 existing global partners
– Corporate responsibility Committee
François Pérol
Managing Partner / Co-Chairman of the GEC
Marc-Olivier Laurent
Managing Partner
Group Executive Committee (GEC) with 12 members
(Business heads and significant Support function heads)
Governance complying
Accomplished management team Alignment of interests
with best practice
35Appendices
Regional M&A market by deal values (US$bn)
Facing Page 37
Europe North America
3000 % 2017 vs 2016 % 2018 vs 2017 % 2019 vs 2018 3000 % 2017 vs 2016
A: -10% A: +40% Announced: -25% A: -12%
C: -9% C: +16% Completed: -25% C: -2%
2000 2000
% 2018 vs 2017
A: +26%
1000 1000 C: +25%
% 2019 vs 2018
- -
Announced: +2%
Completed: -19%
Announced M&A - North America Completed M&A - North America
Announced M&A - Europe Completed M&A - Europe
Asia Rest of the world
2000 2000
% 2017 vs 2016 % 2018 vs 2017 % 2019 vs 2018 % 2017 vs 2016 % 2018 vs 2017 % 2019 vs 2018
A: -6% A: +19% Announced: -20% A: +8% A: +11% Announced: +16%
C: -9% C: -11% Completed: -1% C: +4% C: +27% Completed: -16%
1000
1000
-
-
Announced M&A - RoW Completed M&A - RoW
Announced M&A - Asia Completed M&A - Asia
Source Thomson Reuters
Verizon deal has been excluded from European data due to the size ($130bn – announced in 2013 and completed in 2014)M&A market by deal values
Global M&A by deal values (US$bn)
Deal Values > $10bn
2018 2019 %
4,500
Announced 935 1,197 28%
Completed 1,142 905 -21%
4,000
o/w US
3,500 Announced 632 969 53%
Completed 934 668 -29%
3,000
2,500
2,000
1,500
1,000
500
-
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Announced Deal Value ($bn) Complete Deal Value ($bn)
16 vs 15 17 vs 16 18 vs 17 19 vs 18
% var Announced (17)% (4)% 19% (3)%
% var Completed (0)% (8)% 15% (14)%
Source: Refinitiv
Note: 2019 announced value includes 3 US domestic deals >$80bn with a cumulative value of $267bn (Bristol-Myers Sqibb / Celgene, United Technologies / Raytheon and
AbbVie / Allergan (vs none in 2018)
37Regional M&A market by deal number
Facing Page 38
Europe North America
% 2017 to 2016 % 2018 vs 2017 % 2019 vs 2018 % 2017 to 2016
A: -1% A: +3% Announced: -3% 6,000 A: +5%
6,000 C: -4% C: 0% Completed: -2% C: +1%
4,000 % 2018 vs 2017
4,000 A: +6%
C: +3%
2,000
2,000
% 2019 vs 2018
0 Announced: -6%
0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Completed: -5%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Announced M&A - North America Completed M&A - North America
Announced M&A - Europe Completed M&A - Europe
Asia Rest of the world
% 2017 to 2016 % 2018 vs 2017 % 2019 vs 2018 % 2017 to 2016 % 2018 vs 2017 % 2019 vs 2018
A: +1% A: -1% Announced: -12% A: +9% A: -1% Announced: -11%
4,000 C: -1% C: -10% Completed: -5% 4,000 C: 0% C:+ 0% Completed: -9%
3,000 3,000
2,000 2,000
1,000 1,000
0 0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Announced M&A - Asia Completed M&A - Asia Announced M&A - RoW Completed M&A - RoW
Source Thomson ReutersM&A market by deal number
Global M&A by deal number
Deal number > $10bn
12,000 2018 2019 %
Announced 40 43 8%
Completed 47 31 -34%
10,000 o/w US
Announced 27 35 30%
Completed 35 23 -34%
8,000
6,000
4,000
2,000
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Global announced - M&A Global completed - M&A
16 vs 15 17 vs 16 18 vs 17 19 vs 18
% var Announced (1)% 3% 4% (7)%
% var Completed (1)% 1% (2)% (5)%
Source Thomson Reuters
38Global Advisory
M&A and Strategic Advisory – example of transactions
Facing Page 39
Company Deal Country Sector Value
Maersk ⚫ US3.5bn demerger and listing of Maersk Drilling Energy and US$3.5bn
on NASDAQ Copenhagen Power
Jardines ⚫ £4.3bn recommended cash offer for Jardine FIG £4.3bn
Lloyd Thompson by Marsh & Mclennan
Skia ⚫ €2.2bn acquisition of Parex from CVC by Sika Industrials €2.2bn
⚫ €3.25bn sale of Antelliq to Merck Consumer €3.25bn
Antelliq
Novenergia ⚫ €1.1bn sale of Novenergia to Total Eren Energy and €1.1bn
Power
Brambles ⚫ US$2.51bn sale of IFCO to Triton and Luxinva Business US$2.51bn
Services
Dia ⚫ €2.1bn public tender offer by L1 and concurrent Retail €2.1bn
refinancing and recapitalization plan
Teck ⚫ US$1.2bn sale of 30% of the Quebrada Blanca Mining US$1.2bn
ProjectGlobal Advisory
Long-term clients
⚫ 16 deals ⚫ 36 deals ⚫ 18 deals ⚫ 8 deals
⚫ Multiple assignments
⚫ 20 years ⚫ 22 years ⚫ 20 years over 100+ years ⚫ 11 years
⚫ 19 deals ⚫ 9 deals ⚫ 8 deals
⚫ 7 deals ⚫ Multiple assignments
⚫ 14 years ⚫ 26 years over 100+ years ⚫ 13 years
⚫ 20 years
⚫ 19 deals ⚫ 8 deals ⚫ 8 deals
⚫ 16 deals ⚫ 13 deals
⚫ 14 years ⚫ 12 years ⚫ 19 years
⚫ 10 years ⚫ 21 years
⚫ 15 deals ⚫ 16 deals ⚫ 16 deals
⚫ 18 deals ⚫ 14 deals
⚫ 16 years ⚫ 24 years ⚫ 25 years
⚫ 28 years ⚫ 22 years
39Global Advisory
Financing advisory – example of transactions
Facing Page 40
Company Deal Country Sector Value
IKKS Group ⚫ €370m debt restructuring Consumer €370m
Products
Finerge ⚫ Debt advice on €798m refinancing of onshore Transport and €798m
wind portfolio Infrastructure
EG Group ⚫ Debt advice on €1.6bn cross border debut high Consumer €1.6bn
yield bond refinancing Products
Traton ⚫ €1.6bn IPO of TRATON SE on Frankfurt Stock Automotive €1.6bn
Group Exchange
Ministry of ⚫ Debt advice on €1.0bn EUR-denominated Industrial €1.0bn
Finance Eurobond issuance Materials
Ukraine
The ⚫ £242m IPO of Watches of Switzerland on Consumer £242m
Watches of London Stock Exchange Products
Switzerland
Group
Eutelsat ⚫ Debt advice on its €600m 8-year senior TMT €600m
⚫ unsecured bond refinancing
Ferguson ⚫ Debt advice on US$1.5bn of US Private Industrial US$1.5bn
Placement notes MaterialsEuropean IPO market
IPO volumes in Europe since 2008 (>€200m)
65
62
48
48
38 39 34
28
29
28
25 19 27 26 25
15
10 16
7 14
11 4
8
4
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Source Dealogic Value of IPOs (€bn) Number of IPOs
16 vs 15 17 vs 16 18 vs 17 19 vs 18
% Value (46)% 10% (12)% (45)%
% Number (53)% 66% (29)% (56)%
40Selected sample of transactions in Merchant Banking
A history of long-term value creation in the mid-cap segment
Sample of recent transactions
Private Equity Private Debt
Leading player on the Developer of high Provider of legal and IT support and
Nuclear measurement Specialist systems and
privately managed quality tests for tax information and technology services
tools outsourcing services
nurseries market medical diagnosis publications provider
France United Kingdom Denmark Global UK UK
Provider of Repair and
Provider of patient Benchmarking and
Maintenance Specialized education Fast-food restaurant Multi-regional chain for
safety and risk technical data in the
Information for and care chain routine laboratory
management software automotive sector
garages
United Kingdom France United Kingdom UK France France
Healthcare Technology-enabled
Digital platform Generic Leading European
tech-enabled insurance distribution Global computer
for the real estate pharmaceuticals petrol forecourt
procurement platform platform and service products and services
intermediation market company operator
provider
Germany Netherlands France USA Germany Europe
Software company Education sector leading provider of Leading Global Nordic payment
focused on the (kindergartens and educational travel in Dutch cable operator hospitality service processor
banking sector primary schools) the US provider
United Kingdom China USA Netherlands USA Scandinavia
41Rothschild & Co volume by trading platforms
As at 28 February 2020
Base 100 Volume (in ‘000’s)
15% 93,860
31% 29% 28% 23,934,305
42% 40%
40% 59,481
17% 23% 53,051 56,141
35% 47,279 15,056,967
13,580,947 14,195,604
18% 24%
12,056,131
52% 18,000
49% 45%
39% 4,626,081
36% 38%
2015 2016 2017 2018 2019 2020
2015 2016 2017 2018 2019 2020
annualised
annualised
Volume Euronext Volume Electronic
Volume Euronext Volume Electronic
Volume OTC
Volume OTC
xxx Daily average volume trading on all platforms
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