28/11/2017: Rothschild & Co: 9 months 2017 - Half year results release

Paris, 28 November 2017

• Overall revenue increased by €50 million (+6%) to €852 million for the six months to 30 September 2017 (6m to September 2016: €802 million)
  • Rothschild Global Advisory: revenue down by 8% to €492 million (6m to September 2016:

    €537 million) but still representing our second best year revenue performance for a first half period since the financial crisis

  • Rothschild Private Wealth and Asset Management: revenue up 37% to €247 million (6m to September 2016: €180 million) driven by Martin Maurel consolidation
  • Rothschild Merchant Banking: revenue up 34% to €97 million (6m to September 2016: €73 million) thanks to continuing value accretion combined with higher management fees. When compared to the average first half year revenue for the previous three periods, revenue is up 28%

• Net income - Group share excluding exceptionals1 of €95 million, up 36% (6m to September 2016:

  €70 million) and Net income - Group share including exceptionals of €88 million, up 31% (6m to September 2016: €67 million)

• Earnings per share (EPS) excluding exceptionals of €1.28 (6m to September 2016: €1.01) and EPS including exceptionals of €1.18 (6m to September 2016: €0.97)

• Negative foreign exchange translation effects of €16 million on revenue but positive on Net income -

Group share of €1 million

"We are satisfied to see that our profitability continues to progress, reflecting our focus on investing in our three core businesses, growing and developing our talent and offering the highest possible service to all our clients. For the first time and in the interests of better transparency for our shareholders, we are disclosing separately the profitability of our three businesses," said Nigel Higgins and Olivier Pécoux, Managing Partners of Rothschild & Co.

"Our Global Advisory business continues to perform well, despite global completed M&A activity reducing and we were pleased that our Financing Advisory business achieved good growth when compared to the same period last year. We maintain our leading position in Europe in both M&A advisory and Financing Advisory and remain a leading bank globally. Our pipeline for the end of the year in M&A remains strong.

"In Private Wealth and Asset Management, we have a clear roadmap to improve profitability which is already starting to produce beneficial results, with our operating margin increasing strongly when compared to previous years. Despite the challenging environment for this business, we are building revenue, reducing costs and refocusing the business. In France the integration of Martin Maurel is advancing to plan.

"We are particularly pleased with the strong revenue and profit growth in Merchant Banking. This recent business, launched in 2010, is now reaching a critical size where its contribution to the group is becoming significant."

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1 Exceptional items are integration costs related to the merger with Martin Maurel (6m to September 2017: €11 million versus 6m to September 2016 : €4 million)

1. Summary Income Statement

   (in €m)	Page	6m to Sept 2017 1	6m to Sept 2016
   Revenue	3 - 6	852	802
   Staff costs	6	(488)	(473)
   Administrative expenses	6	(146)	(129)
   Depreciation and amortisation	(14)	(17)
   Impairments	6	(4)	(1)
   Operating Income	200	182
   Profit before tax	206	187
   Consolidated net income	176	160
   Net income - Group share		88	67
   Net income - Group share excl. exceptionals		95	70
   Earnings per share 2		1.18 €	0.97 €
   EPS excl. exceptionals		1.28 €	1.01 €
   ROTE		11.5%	11.1%
   ROTE excl. exceptionals		12.4%	11.6%

   Var	Var %
   50	6%
   15	3%
   17	13%
   (3)	(18)%
   3	300%
   18	10%
   19	10%
   16	10%
   21	31%
   25	36%
   0.21 €	21%
   0.27 €	27%

   1 The foreign exchange translation effect between 6m to September 2016 and 6m to September 2017 is:

   • a negative impact on revenue of €16 million

   • a €1 million positive impact on Net income - Group share

   2 Diluted EPS is €1.15 (6m to September 2016: €0.96)

   An analysis of exceptional items is shown in Appendix B.

   A description of Alternative Performance Measures is shown in Appendix G.

   The Supervisory Board of Rothschild & Co SCA met on 28 November 2017 to review the consolidated financial statements from 1 April 2017 to 30 September 2017; these accounts had been previously approved by Rothschild & Co Gestion SAS, Managing Partner of Rothschild & Co.

2. Business activities
3. Rothschild Global Advisory

   Our Rothschild Global Advisory business (Global Advisory) focuses on providing advice in M&A advisory, and Financing Advisory encompassing debt, restructuring and equity advisory.

   For the six months to September 2017, Global Advisory revenue was €492 million, down 8% (6m to September 2016: €537 million), but representing our second best revenue performance for a first half year

   period since the financial crisis (6m to September 2016 was our record first half year revenue performance post crisis). For the last twelve months to September 2017, the business ranked 6th by global advisory revenue.

   Operating income for the same period was €61 million representing a 12% operating margin (6m to September 2016: €71 million and 13% respectively). Consistent with expectations outlined in previous full year results announcements, the operating income margin includes ongoing investment in the development of our US M&A franchise; excluding this investment the margin would have been 14% (6m to September 2016: 15%).

   M&A advisory revenue for the first six months was €314 million, down 21% compared to the same period in 2016/17, due to lower completions activity in the UK and some parts of Europe offset by improvements in

   France and North America. Despite this lower performance in M&A Advisory for the twelve months to September 2017, we ranked 1st by completed deal numbers in Europe and 2nd globally by the same measure. Financing Advisory revenue increased by 27% to €178 million in the six months to September 2017 (6m to September 2016: €140 million), with activity levels in our Debt and Restructuring Advisory businesses being particularly strong. In Restructuring, we ranked 1st in Europe and 3rd globally by numbers of completed

   transactions during the six month period. Equity Advisory revenue also rose in the six months to September 2017, as we maintained our position as adviser on more European equity capital market 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. During the first six months of the financial year, five new Managing Directors joined our North America business, focused on clients in the Healthcare, Retail, Consumer and Technology Products sectors, the latter recruitment being alongside the forthcoming opening of our new office in Silicon Valley. We also made investments elsewhere in the period by opening two new offices: a new wholly owned subsidiary in Tokyo, employing the full team from our previous alliance partner Global Advisory Japan, as well as the establishment of a new office in Switzerland.

   Rothschild & Co advised the following clients on significant advisory assignments that completed in the six months to September 2017:

   • Arnault Family Group on its tender offer on minority shareholders of Christian Dior, with advice to Christian Dior on its disposal of Christian Dior Couture to LVMH (€12 billion and €6.5 billion, France)
   • Metro on its demerger into METRO and CECONOMY (€15 billion, Germany)
   • Intel Corporation on its acquisition of Mobileye (US$15.3 billion, United States and Israel)
   • Premier Oil on its refinancing of debt facilities (US$3.8 billion, United Kingdom)
   • Irish Department of Finance on its privatisation IPO of Allied Irish Banks (€3.4 billion, Ireland)
   • Ant Financial on its debt raising (US$3.5 billion, China).

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

   • Government of Puerto Rico on its restructuring of financial claims and pension obligations (US$100 billion, United States)
   • Essilor on its combination with Luxottica (€47 billion, France and Italy)
   • Zodiac Aerospace on its combination with Safran (€35 billion, France)
   • Vodafone group on its merger of Vodafone India with Idea Cellular (US$23 billion, UK and India)
   • Seadrill on its chapter 11 restructuring (US$8.8 billion, Bermuda)
   • A.P. Moller-Maersk on its sale of Maersk Oil to Total (US$7.45 billion, Denmark and France).

     For further examples of Rothschild's completed and ongoing advisory assignments, please refer to Appendix F.

4. 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 six months to September 2017 was €247 million, up 37% (6m to September 2016:

   €180 million) mainly due to organic growth and the consolidation of Martin Maurel (representing €50 million of revenue).

   In a highly evolving market that has been challenging on several fronts including regulatory change (MIFID II) and fee pressure from clients, we have undertaken a number of initiatives to build revenue, cut costs and refocus the business on its core activities.

   This resulted in growth in profitability in this division with Operating income, excluding Martin Maurel integration costs of €11 million, rising to €38 million for the first six months to September 2017 (6m to September 2016: €3 million after excluding Martin Maurel integration costs of €4 million). This represents a 15% operating margin (6m to September 2016: 2%) significantly better than the previous years.

   In July 2017, the legal merger of the two private banks in France of Rothschild & Co Group and Martin Maurel Group was completed and the French private bank activity is now operating under the name "Rothschild Martin Maurel". The operational integration is progressing as anticipated.

   Assets under Management increased by 1% to €67.1 billion in the six months to September 2017 due to net inflows of €0.8 billion, market appreciation offset by negative exchange rate effects of €0.3 billion. Net new assets were driven by inflows of €1.0 billion in Private Wealth across all major geographies and outflows of

   €0.2 billion in Asset Management.

   The table below presents the progress in assets under management.

   In € billion	6m to September 2017	6m to September 2016	12m to September 2017
   AuM opening	66.6	50.2	51.1
   Martin Maurel merger	-	-	10.0
   Net new assets	0.8	0.1	1.9
   Market and exchange rate	(0.3)	0.8	4.1
   AuM closing	67.1	51.1	67.1

5. Rothschild Merchant Banking

Rothschild 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.

Merchant Banking generated revenue for the six months to 30 September 2017 of €97 million, up 34% (6m to September 2016: €73 million). When compared to the average first half year revenue for the last three periods, revenue is up 28%.