e7352dc4-892c-40ae-ac84-ac3d4203fac5.pdf




Half-year financial report

First half of the 2015/2016 financial year

Contents


  1. Half-year activity report 3

  2. Condensed half-year consolidated financial statements 13

  3. Statutory Auditors' review on the half-year consolidated financial information 52
  4. Persons responsible for the half-year financial report 53


1. Half-year activity report


The Supervisory Board of Rothschild & Co SCA met on 24 November 2015 to review the consolidated financial statements for the half year from 1 April 2015 to 30 September 2015; these accounts had been previously approved by Rothschild & Co Gestion SAS, Managing Partner of Rothschild & Co.


Summary Income Statement



(in €m)


6 months 2014/2015

6 months 2015/2016


Var


Var %

Revenue 1

673

679

6

1%

Staff costs

(382)

(417)

35

9%

Administrative expenses

(116)

(122)

6

5%

Depreciation and amortisation

(18)

(20)

2

11%

Impairments

(10)

(1)

(9)

(90)%

Operating Income 1

147

119

(28)

(19)%

6

125

(29)

96

(57)

39

0.56 €

Other income / expense (net)

26

(20)

(77)%

Profit before tax

173

(48)

(28)%

Income tax

(36)

(7)

(19)%

Consolidated net income

137

(41)

(30)%

Non-controlling interests

(58)

(1)

(2)%

Net income - Group share

79

(40)

(51)%

Earnings per share

1.15 €

(0.59)

(51)%

1 The foreign exchange translation effect between the first six months 2015/2016 and the same period in 2014/2015 is:

  • a positive impact on revenue of €50 million

  • a negative impact on operating income of €1 million


Business activities


We have two main activities within our Group: (1) Global Financial Advisory which focuses on providing advice in the areas of M&A, debt, restructuring and equity; and (2) Asset Management in a broad sense which comprises Wealth & Asset Management and Merchant Banking. In addition, we have a Banking business which predominantly relates to the legacy banking business.

Performance by business

The analysis of revenue and operating income by business is as follows:


(in €m)

Banking

Revenues

397

255

38

(11)

679

Operating expenses

(350)

(194)

(59)

44

(559)

Impairments

-

-

2

(3)

(1)

Operating income

47

61

(19)

30

119

Swap settlement cost

-

-

8

-

8

Operating income before swap


47


61


(11)


30


127

Global Financial Advisory


Wealth & Asset Management and Merchant


Other 1


IFRS Reconciliation

2


6 months to Sept 2015



settlement


Operating margin % 12% 24% 19%



Global Financial Advisory Wealth & Asset Management and Merchant


Other 1


IFRS Reconciliation

2


6 months to Sept 2014

(in €m)

Banking

Revenue

413

243

28

(11)

673

Operating expenses

(356)

(161)

(41)

42

(516)

Impairments

-

-

(3)

(7)

(10)

Operating income

57

82

(16)

24

147

Operating margin %

14%

34%

22%

  1. Other comprises central costs, legacy businesses, including Banking & Asset Finance and other

  2. IFRS Reconciliation mainly represents the treatment of profit share paid to French partners as non-controlling interests, the application of IAS 19 for defined benefit pension schemes, the reallocation of impairments and the accounting for deferred bonuses over the period earned.


The swap settlement cost of €8 million relates to the cost of settling interest rate swaps following the refinancing, on more favourable terms, of the debt that relates to our London office property.


Global Financial Advisory


Global Financial Advisory revenue for the six months to September 2015 was €397 million, compared to €413 million for the same period in the prior year, which was our best first half year since the financial crisis. Operating income was €47 million compared to €57 million due to lower revenues and higher investment costs.

M&A advisory revenue was €277 million for the first six months, compared to €257 million for the same period in the prior year (+8%); reflecting a continuation of the momentum seen last year. We remain among the top M&A advisers in the world, ranking 4th globally by number of completed transactions in the 6 months1. In Europe, we continue to be the market leader, advising on more M&A deals than any of our competitors - a position we have held for more than a decade.

Whilst M&A market activity, as measured by completed deal values, can vary significantly from quarter to quarter, the trend in global M&A has been strong this year, principally fuelled by a large number of US domestic mega-cap transactions. However, based on the number of deals completed, a key indicator in our activity, the market is at lower levels than in the same period of last year. Overall, in our key markets, we believe M&A activity is broadly flat in the first half year versus last year. In this context, our current pipeline for the financial year to March 2016 remains strong and above last year's levels at the same point in time.



1 Source: Thomson Reuters

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