Equity story - Rothschild & Co
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Equity story
September 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 35 Appendices 38
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 Management Merchant Banking
Geography Global European European / US
⚫ M&A and strategic advisory
⚫ Debt financing and debt ⚫ Wealth Management ⚫ Private equity
Offerings
restructuring advisory ⚫ Asset Management ⚫ Private debt
⚫ Equity advisory
# Front ⚫ c.1,160 bankers in 53 offices ⚫ c.280 relationship managers and
⚫ c.100 professionals
office over 40 countries investment managers
Size ⚫ #8 globally by revenue ⚫ c.€71bn of AuM ⚫ c.€14.5bn of AuM
Revenue Profit before tax
€140m
8% €53m
Key figures 17% €171m
€1,45m
(LTM €510m 64% €78m
57%
June 2020) 28%
26%
Global Advisory Wealth & Asset management Merchant Banking
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
4Our 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 timeKey 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 & Asset
⚫ Expend Merchant Banking platform outside Europe, Management clients
notably in the US
⚫ Bolt-on targeted European deals in Wealth Management
5Strong 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
9,109 around
20.9% development
+60%
19.6% opportunities
3,307 and cash returns
19.3% 19.6%
5,693
to shareholders
267 Capital
ratio min:
2,443 10.5%
144
5,535
CET 1 with
3,106 buffer min:
7%
31 Dec 2016 30 June 2020
31 Dec 2016 30 June 2020
CET 1 / Tier 1 ratio Tier 2
Credit risk Market risk Operational risk… 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 ⚫ 2019 Dividend cancelled due
€0.68 €0.72
€0.63 to ACPR Covid
recommendation
⚫ Intention to pay when
appropriate
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 Pay-out ratio calculated excluding exceptional items
6Our financial targets
H1
Target 2019 2018 2017
2020
Group Compensation Low to mid 60’s
targets ratio1 through the cycle 67.3% 61.8% 60.8% 62.4%
Return on 10 to 15%
tangible equity2 through the cycle 6.8% 12.6% 18.0% 17.2%
Businesses Global Advisory: Mid to high-teens
targets Profit before tax through the cycle 15% 16% 20% 18%
margin3
Wealth & Asset
Around 20%
Management: 17% 15% 18% 17%
by 2022
Profit before tax margin4
Merchant Banking: Above 15%
3 years average RORAC through the cycle 25% 28% 28% 26%
1 Calculation detailed slide FP 32
2 Excluding exceptional items
3 Pre-US investments
4 Excluding the Trust business sold in February 2019
7Encouraging a culture of responsible business
Our Corporate Responsibility strategy sets out our ambitions across five main pillars
Investment Community
Business practices People Environment
solutions investment
⚫ Safeguarding ⚫ Talent development ⚫ ESG integration in ⚫ Considering ⚫ Financial support to
confidentiality opportunities and investment decisions to environmental risks charities, social
assignments to support create long-term value and opportunities of our enterprises and
⚫ Effective compliance
career for investors business activities individuals
systems and
technology ⚫ Balanced approach to ⚫ Engagement policy for ⚫ Responsibly managing ⚫ Professional expertise
work a constructive dialogue greenhouse gas for social purpose
⚫ Stringent anticorruption
with companies on emissions and organisations, helping
and anti-bribery ⚫ Equal opportunities for
ESG issues proactively reducing to drive change for
standards all via development, an
our impact young people
effective reward ⚫ Innovative responsible
⚫ Impactful governance
strategy and investment solutions ⚫ Championing ⚫ Volunteering to help
and oversight
transparency in responsible young people to
promotions consumption and succeed in life
resource use
Our commitment: we encourage a culture of responsible business and proactively take responsibility for the impact
we have as a business on our people, our industry, our communities and our planet.
82 Business lines
1 Global Advisory
2 Wealth & Asset Management
3 Merchant Banking
10Introduction to Global Advisory
Geography Global We fieldc.1,160
advisory bankers in
Offerings ⚫ M&A and strategic advisory over40 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.255 MDs
Key #8 #2
numbers globally by globally by
revenue1 number of
completed
transactions
€1.14bn €171m 800 200 100 30 30
of revenue of PBT in Europe in US and in Asia- in Latin in Africa &
(64% of total (57% of total Canada Pacific America Middle East
revenue)1 PBT)1
1: LTM 2020 = last twelve months as at 30 June 2020
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
Sector and ⚫ Our network of sector specialists provides our clients with a global picture of
reach of a global
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: 8th position by revenue and 2nd by number
of deals
Ranking of top 10 advisers by advisory revenue (in €m) – 12m to June 2020
% Var 1 Ranking by % of Total
# deals revenue
Goldman Sachs 2,772 (19)% 1 7%
JP Morgan 2,117 (7)% 3 2%
Morgan Stanley 1,852
(6)% 4 5%
Evercore 1,447
(11)% 10 78%
BoA / Merrill Lynch 1,252
18% 7 53%
Lazard 1,178 6
(6)% 2%
Citigroup 1,164
(5)% 8 2%
1,144 (3)% 2 63%
Houlihan Lokey 1,029 5
- 100%
Jefferies 864
21% 9 23%
12m to June 2020 12m to June 2019
1: Variation calculated on local currency
Source: Company’s filings, Dealogic completed transactions
13Global M&A market by deal values
The rise and fall of M&A
Facing Page 14
5,000
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 LTM
June
Announced deal value ($bn) Completed deal value ($bn) 2020
H1 20 vs
16 vs 15 17 vs 16 18 vs 17 19 vs 18 H1 19
% var Announced (17%) (6%) 16% (3%) (49%)
Source: Dealogic % var Completed (5%) (5%) 17% (12%) (14%)
Annualised data for 2020 based on June data
Note: Q2 20 completion includes 4 deals totalled $260bn (3 US domestic) all announced in 2019 or 2018; Allergan (US) / Abbvie (US) $86bn; Saudi Basic Industries (SA) / Saudi Aramco (SA) $69bn; Sprint
(US / T-Mobile (US) $68bn; United Technologies (US) / Raytheon (US) $36bnResilient model over the cycle
Complementary mix of M&A and Financing Advisory
Revenue progression (in €m)
1,271
1,171 1,183
1,160 1,144
26%
1,037
24% 25%
947 32% 28%
14%
852
774 29%
740 741
699 711 692
689
36%
33% 29%
23% 31%
45% 36% 34%
74%
86% 76% 75%
68% 72%
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 LTM
2020
M&A Advisory Financing Advisory (debt & equity advisory)
1 LTM 2020 = last twelve months as at 30 June 2020
14Profits through the cycle
1,400
Profit Before Tax (in €m) and PBT margin - pre US investment costs 1 60%
1,271
1,190 1,171 1,183
1,200 1,160 1,144
50%
1,040
1,000
880 40%
800 741
689
30%
600
19% 18% 18% 20%
16% 17% 20%
400 16%
12%
13% 15%
255
225 212 211
180 182 171 10%
200 142
96 80
- -
2012/13 2013/14 2014/15 2015/16 2016/17 2016 2017 2018 2019 LTM 2020
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%
ratio2
Notes
1 US investment costs were €23m for 2016, €25m for 2017, €22m for 2018, €16m for 2019 and €7m in H1 2020. 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
Resilient through H1 2020 despite the slowing-effects of Covid-19 on the M&A market
Overview Rothschild & Co North America H1 progression since buildout
LT Rank #20 #15 #8
6 offices
New York, Washington and Toronto and more recently Los $60
$52
Angeles (2014), Chicago (2016) and Palo Alto (2018)
$40 $34
$23
$20
c.200 44
advisory bankers MDs $0
2014 2017 2020
Value ($bn)
31 4 1
⚫ As recruits begin to mature, we are starting to see the payoff
newly hired MDs since 2014 new MDs in H1 2020 ⚫ Rothschild & Co North America has demonstrated its strong and
growing coverage presence
Selction of landmark deals advised by Rothschild & Co North America (NA) in H1 2020
Restructuring Deals M&A Deals
#2 Tupperware
Bond Holders
Chesapeake
Energy
PG&E
Group of Insurance Claims
#8 Lytx Aflac Alstom
NA Any NA
Announced Announced US$8.2bn
Acquisition of Bombardier
US$2.5bn Transportation &
Restructuring ~US$600m ~US$9bn ~US$23bn M&A Deals + sale to a
Value cornerstone investment
confidential from CDPQ
by Value Current Current Current by Value consortium
2020 2020 2020
Source: Refinitiv, any US or Canadian involvement for H1 2020
Note
1 Inclusive of 2 promotions
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 & Asset Management
3 Merchant Banking
18Our offering
Facing Page 19
Wealth Management Asset Management Europe
Externally
managed Alternatives
3% 9%
Cash
10% Bonds &
Execution convertibles
only 36%
32%
Equity
12%
Discretionary
57%
Advisory
8% 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 30 June 2020Introduction to Wealth and Asset Management
Geography ⚫ European Wealth Management €50bn Asset Management €26bn1
Main ⚫ France, UK, Switzerland, ⚫ France €19bn ⚫ Europe €19bn1 c.50
locations Belgium, Italy, Monaco and c.230
Germany ⚫ Switzerland €12bn # Client ⚫ USA €7bn # Portfolio
⚫ UK Advisors Managers
€11bn
Offerings ⚫ Wealth Management
⚫ Belgium €3bn
⚫ Asset Management
⚫ Germany €3bn
# clients ⚫ Monaco €1bn
⚫ c.20,000 ⚫ Italy €1bn
# Front office ⚫ c.275 clients advisors and
portfolio managers
Key
numbers c.€71bn of AuM as at 30 June 2020
€78m +€1.8bn of NNA in Wealth
€510m Management in H1 2020
of revenue of PBT
(28% of total group revenue)2 (26% of total group PBT)2 -€1.5bn of NNA in Asset Management
in H1 2020
Notes
1: Of which €5bn managed on behalf of Wealth Management clients
2: LTM 2020 = last twelve months as at 30 June 2020
19Strong growth in AuM over time and track record of
attracting new business
Wealth vs. Asset Management AuM split Net new Assets (in €bn)
Martin Maurel
merger: 76.0
Wealth management
+€10bn
71.3
67.3
64.8
33%
30% 2.5
54.0 2.2
37% 1.8
34% 1.3
0.8
41% 2016 2017 2018 2019 6m 2020
67% 70%
63% 66% Asset Management
59%
1.0
0.4
(0.1)
(0.7)
(1.5)
31/12/2016 31/12/2017 31/12/2018 31/12/2019 30/06/2020
2016 2017 2018 2019 6m 2020
Wealth management Asset management
20Steady growth of revenue…
Facing Page 21
Revenue1 (in €m) and annualised bps progression
800 350
CAGR 17-20: Asset
700
+3% 300 Management
19%
600 +3%
250
497 510
500 470 480 22
Wealth
21 Management
20 20 200 81%
400
150
300 RoW
380 404 419 17%
370
100
200 72 73 71 72
France
Switzerland
48%
17%
50
100
80 80 72 68 UK
- - 18%
2017 2018 2019 LTM 2020
NII Fees and commissions Others Revenue bps margin
Notes
1 Revenues are calculated excluding Trust business following its sale in February 2019
2 France includes France, Belgium and Monaco
3 LTM 2020 = last twelve months as at 30 June 2020… while maintaining a healthy PBT thanks to cost control
Profit Before Tax (in €m) and PBT margin
600 40%
510
497 35%
500 470 480
30%
400
25%
17% 17%
300 20%
15% 15%
15%
200 15% 15%
11% 10%
100 81 82 73 78
5%
- -
2017 2018 2019 LTM 2020
Revenue PBT excluding MM costs PBT margin - PBT margin -
excluding MM costs including MM costs
Revenue
72bps 73 71 72
bps margin
% NNI / total 15% 17% 15% 13%
Revenue
Notes
1. PBT are calculated excluding Trust business following its sale in February 2019
2. Martin Maurel integration costs were €27m in 2017 and €9m in 2018
3. LTM 2020 = last twelve months as at 30 June 2020
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 & Asset Management
3 Merchant Banking
23Strong AuM growth
Merchant Banking continues to scale across all 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 €8.3bn
Private Debt
⚫ Credit management
Key
c.€14.5bn c.100
numbers of AuM of which 8% from investment professionnals
Rothschild & Co 155 professionals
24 nationalities
€140m €52m
of revenue of PBT
(8% of total group revenue)1 (17% of total group PBT)1
Note
1: LTM 2020 = last twelve months as at 30 June 2020
24Private Equity offering
Mid-market focus through directs, secondaries, co-investments and multi-managers
Facing Page 25
Corporate Private Equity €3.3bn Multi-Strategies (FAMS) €2.9bn
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 Small-cap Mid-market Mid-cap direct Multi-managers &
Co-investments
buyouts buyouts buyouts 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 (2020):
fundraising FAMI II (2016): €155m
FAPI III (2019): €1.3bn FASO V (2019): €1.0bn fundraising
34 investments in 10 countries 15+ years track record across more than 50 transactions
40 investment professionals 25 investment professionalsPrivate Debt offering
Credit solutions across the capital structure for mid-cap and large companies
Direct Lending €1.6bn Credit Management €6.7bn
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 €3.7bn
FADL: €657m (2018)
Oberon IV (2018): fundraising Europe: 7 CLOs
FADP III: fundraising Elsinore I (2018):€85m
Oberon USA (2018): open- FA GLI (2019): €230m (Contego)
Managed Account: €117m
ended North America: 6 CLOs
35 investments across Europe Managed Accounts: €1.9bn (Ocean Trails)
12 investment professionals 23 investment professionals
25Net asset value (NAV)
NAV remains stable with December 2019 position which reflects the robustness of our portfolio
approach
Facing Page 26
Net asset value (in €m)
NAV of €588m
for a total
commitment of
c.€1.2bn (c.8% of
AuM)
25 (10)
617 3 0 588
(44)
22
(54)
179
172
438 416
Asset value Additions Value creation Disposals Asset value
31/12/2019 30/06/2020
Private Equity Private DebtA disciplined investment philosophy
We base our asset selection on stringent criteria centred on risk-adjusted returns
Our core
Key investing principles sector focus2
⚫ 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
⚫ “Mission critical” products
⚫ “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 sustainable ⚫ Operating leverage and financial leverage is a
tail winds dangerous combination
⚫ Dominant domestic franchises and/or export ⚫ Beware 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
Notes
1 Calculation based on NAV, excluding carried interest shares
2 Excluding FAMS (multi-strategies) and Credit Management
26Strong revenue growth with increasing contribution of
recurring revenue
Facing Page 27
Breakdown of revenue (in €m)
250
197
200 185
175
150 133 58 140
22
69 15
100 93 48
53 103
36 91
31
29
50 70
61
51
0
2016 2017 2018 2019 LTM 2020
Recurring Revenue Carried interest Gains (realised and unrealised)
Revenue –
131 145 164 186 171
3 years averageGood 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
160 200.0%
140
120
120 111 150.0%
102
100
82
80 100.0%
60 52
40 62% 65% 50.0%
58% 56%
20 37%
0 -
2016 2017 2018 2019 LTM 2020
Profit before tax PBT margin
RORAC1 –
25% 26% 28% 28% 25%
3 years average
Notes
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
2 LTM 2020 = last twelve months as at 30 June 2020
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
2016 2017 2018 2019 H1 2020
Exceptionals Martin Maurel integration costs 4 18 7 - -
impact on Others (pensions credit, swap settlement cost,
Net Income – special tax credit, provision, legacy assets and - (7) 10 (10) 5
Group share IT transition costs)
Total exceptionals (gains) / costs 4 11 17 (10) 5
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 H1 2020
Revenue 1,713 1,910 1,976 1,872 838
Staff costs (1,013) (1,087) (1,098) (1,065) (523)
Administrative expenses (268) (320) (309) (289) (122)
Depreciation and amortisation (32) (34) (30) (66) (34)
Impairments (14) (13) (4) (6) (8)
Operating Income 386 456 535 446 151
Other income / (expense) (net) 7 21 (4) 19 (1)
Profit before tax 393 477 531 465 150
Consolidated net income 331 412 454 397 122
Net income - Group share 179 236 286 243 60
Earnings per share € 2.60 € 3.18 € 3.88 € 3.38 € 0.82
Net income - Group share excl. exceptionals 183 247 303 233 65
EPS excl. exceptionals € 2.66 € 3.33 € 4.10 € 3.24 € 0.88
ROTE (excluding exceptional items) 14.4% 17.2% 18.0% 12.6% 6.8%
30Profit bridge between H1 2019 and H1 2020
Lower profits predominantly explained by the decline of investment revenue in Merchant Banking
which directly impacts Group net income
Revenue (in €m) Profit after tax and minority interest (in €m)
134
898
€70m
decline in
838
110
MB 53 11 60
investment
revenue (70)
(10) (5)
PATMI MB investment Property 2020 IT Others PATMI
H1 2019 revenue decline disposal transition costs H1 2020
Stable in H1 2019
784 revenue of 782
GA & WAM EPS (in €)
1.88
H1 2019 H1 2020 0.15 0.82
(1.00)
GA & WAM MB Other (0.15) (0.06)
EPS MB investment Property 2020 IT Others EPS
H1 2019 revenue decline disposal transition costs H1 2020
in H1 2019
31Compensation ratio target: low to mid 60%’s through the
cycle
Facing Page 32
(in €m) 2016 2017 2018 2019 H1 2020
Revenue 1,713 1,910 1,976 1,872 838
Total staff costs1 (1,119) (1,211) (1,225) (1,176) (570)
Compensation ratio 65.3% 63.4% 62.0% 62.8% 68.0%
Adjusted accounting Compensation ratio
(INCLUDING deferred bonus accounting)2
64.0% 62.4% 60.8% 61.8% 67.3%
Adjusted awarded Compensation ratio
65.0% 62.1% 62.3% 61.6% 66.3%
(EXCLUDING deferred bonus accounting)
Headcount 2,946 3,502 3,633 3,559 3,557
⚫ 50% of personnel costs within Rothschild & Co is discretionary
⚫ If we assume the same level of MB investment performance revenue in H1 2020 as in H1 2019:
– Adjusted accounting compensation ratio would be 62.1% (vs 61.4%)
– Adjusted awarded compensation ratio would be 61.1% (vs 59.9%)
Notes
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%
Notes
1 IFRS reconciliation 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" or administrative expenses; 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
32Non-controlling interests
Facing Page 33
P&L Balance sheet
(in €m) H1 2020 HY 2019 (in €m) 30/06/2020 31/12/2019
Interest on perpetual
8 9 Perpetual subordinated debt 288 303
subordinated debt
Preferred shares 1 55 55 Preferred shares 1 46 138
Other Non-controlling interests (1) (1) Other Non-controlling interests 4 5
TOTAL 62 63 TOTAL 338 446
Note
1 Mainly relates to the profit share distributed to French partnersSummary balance sheet
(in €bn) 30/06/2020 31/12/2019 Var
Cash and amounts due from central banks 3.9 4.4 (0.5)
Loans and advances to banks 2.4 2.0 0.4
Loans and advances to customers 3.3 3.3 0.0
of which Private client lending 2.9 2.8 0.1
Debt and equity securities 2.8 2.8 -
Other assets 1.6 1.7 (0.1)
Total assets 14.0 14.2 (0.2)
Due to customers 9.7 9.5 0.2
Other liabilities 1.8 2.1 (0.3)
Shareholders' equity - Group share 2.2 2.2 -
Non-controlling interests 0.3 0.4 (0.1)
Total capital and liabilities 14.0 14.2 (0.2)
Private client lending / Deposits % 30% 29%
Net book value per share €30.60 €31.23
Net tangible book value per share €26.33 €27.08
334
Shareholding structure and
governanceShareholding structure as at 31 August 2020
Facing Page 35
Share capital Voting rights
Treasury
shares
5.5%
Enlarged Float Enlarged
family 29.3% family
Float concert
concert
37.9% 63.5%
51.2%
Jardine
Jardine Matheson
Matheson Group
Group 7.3%
5.4%Rothschild & Co at a glance
As at 30 August 2020
Enlarged family concert Float
51.2% of share capital 43.3% of share capital
(63.5% voting rights) (36.5% voting rights)
Managing
Rothschild & Co Gestion Partner 5.5%
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
35Strong 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: – 15 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
36Appendices
Regional M&A market by deal values (US$bn)
Facing Page 38
Europe North America
% 2020 annualised vs 2019 % 2020 annualised vs 2019
2,400 2,400
Announced: -29% Announced: -56%
Completed: -22% Completed: -18%
1,800 1,800
1,200
1,200
600
600
0
0 201 3 201 4 201 5 201 6 201 7 201 8 201 9 202 0
201 3 201 4 201 5 201 6 201 7 201 8 201 9 202 0
Announced - NA Completed - NA
Announced - Europe Completed - Europe
Asia Rest of the world
% 2020 annualised vs 2019 % 2020 annualised vs 2019
Announced: -35% 1,200
1,200 Announced: -50%
Completed: -31% Completed: +20%
800
800
400
400
0
0 201 3 201 4 201 5 201 6 201 7 201 8 201 9 202 0
201 3 201 4 201 5 201 6 201 7 201 8 201 9 202 0 Announced - RoW Completed - RoW
Announced - Asia Completed - Asia
Source: Dealogic - Annualised data for 2020 based on June dataM&A market by deal values
Global M&A by deal values (US$bn)
5,000
4,500 Deal Values > 2020
2019 Var %
$10bn annualised
Announced 1,196 447 -63%
4,000 Completed 1,037 924 -11%
3,500 o/w USA
Announced 942 234 -75%
3,000 % USA / Global 79% 52%
Completed 740 678 -8%
2,500 % USA / Global 71% 73%
2,000
1,500
1,000
500
-
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Announced deal value ($bn) Completed deal value ($bn)
20 annualised
16 vs 15 17 vs 16 18 vs 17 19 vs 18 vs 2019
% var Announced (17%) (6%) 16% (3%) (44%)
% var Completed (5%) (5%) 17% (12%) (19%)
Source: Dealogic - Annualised data for 2020 based on June data
38Regional M&A market by deal number
Facing Page 39
Europe North America
% 2020 annualised vs 2019 % 2020 annualised vs 2019
Announced: -38% 4,000 Announced: -34%
4,000 Completed: -36% Completed: -29%
3,000 3,000
2,000 2,000
1,000 1,000
0 0
201 3 201 4 201 5 201 6 201 7 201 8 201 9 202 0 201 3 201 4 201 5 201 6 201 7 201 8 201 9 202 0
Announced - Europe Completed - Europe Announced - NA Completed - NA
Asia Rest of the world
% 2020 annualised vs 2019 % 2020 annualised vs 2019
4,000 Announced: -29% 4,000 Announced: -29%
Completed: -22% Completed: -22%
3,000 3,000
2,000 2,000
1,000 1,000
0 0
201 3 201 4 201 5 201 6 201 7 201 8 201 9 202 0 201 3 201 4 201 5 201 6 201 7 201 8 201 9 202 0
Announced - Asia Completed - Asia Announced - RoW Completed - RoW
Source: Dealogic - Annualised data for 2020 based on June dataM&A market by deal number
Global M&A by deal number
10,000
9,000 Deal nb > 2020
2019 Var %
$10bn annualised
8,000 Announced 45 22 -51%
Completed 35 30 -14%
7,000
o/w USA
6,000 Announced 35 10 -71%
% USA / Global 78% 45%
5,000
Completed 26 24 -8%
4,000 % USA / Global 74% 80%
3,000
2,000
1,000
0
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 2020
Global announced Global completed
20 annualised
16 vs 15 17 vs 16 18 vs 17 19 vs 18 vs 2019
% var Announced (6%) (3%) (0%) 0% (43%)
% var Completed (3%) (2%) (3%) 1% (41%)
Source: Dealogic - Annualised data for 2020 based on June data
39Global Advisory
M&A and Strategic Advisory – example of transactions
Facing Page 40
Company Deal Country Sector Value
Ingenico ⚫ Mixed tender offer by Worldline General €9.6bn
Engineering
Asahi Group ⚫ US$11.3bn acquisition of Carlton & United Consumer US$11.3bn
Breweries from AB InBev
EQT, ADIA ⚫ US$10.1bn acquisition of Nestle Skin Health Healthcare US$10.1bn
and PSP
Investments
⚫ £4.2bn recommended cash offer from Advent Aerospace £4.2bn
Cobham and Defence
⚫ €7.5bn acquisition of Bombardier Transportation Transport and €7.5bn
Alstom and cornerstone investment from CDPQ Infrastructure
Consortium ⚫ Acquisition of thyssenkrupp’s Elevator General €17.2bn
(Advent, Technology business for €17.2bn Engineering
Cinven &
RAG)
⚫ £4.7bn sale of RPC Group plc to Berry Global Industrial £4.7bn
RPC
Group Materials
Greene King ⚫ £4.6bn recommended cash offer by CK Asset Retail £4.6bn
HoldingsGlobal 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
⚫ 20 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
40Global Advisory
Financing advisory – example of transactions
Facing Page 41
Company Deal Country Sector Value
Arqiva ⚫ Debt advice on £3.2bn multi-class debt and Infrastructure £3.2bn
swap reorganization for Arqiva
PG&E ⚫ Advised Ad Hoc Group of Insurance US$20bn
Energy and Power
Subrogation Claimholders
IAG ⚫ Rights Issue of up to €2.74bn Transport €2.74bn
⚫ €1.9bn privatisation IPO Retail €1.9bn
FDJ
⚫ €2.6bn restructuring and acquisition of Nyrstar Business €2.6bn
Trafigura Services
⚫ Debt advice on the €3.6bn restructuring and Retail €3.85bn
Rallye signature of a €233m back-up facility
Hamburg ⚫ €2.3bn Liability Management Exercise FIG €2.3bn
commercial
Bank
German ⚫ €9bn stabilisation package for Deutsche Government/ €9bn
Finance Lufthansa Public Sector
MinistryEuropean IPO market
IPO volumes in Europe since 2008 (>€200m)
65
62
48
48
38
34
39
28 29
28
25 19 27 26 25
15
10 16
7 14 6
11 4
4 8 6
Source Dealogic
Value of IPOs (€bn) Number of IPOs
20 annualised
17 vs 16 18 vs 17 19 vs 18 vs 19
% Value 10% (12)% (45)% (59)%
% Number 66% (29)% (56)% (60)%
41Selected 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
42Rothschild & Co volume by trading platforms
As at 30 August 2020
Base 100 Volume (in ‘000’s)
93,860
31% 29% 28%
32%
42% 40% 23,934,305 68,610
21,328,115
17% 23%
35% 53,051 59,481
31% 47,279
18% 24% 15,056,967
13,580,947
12,056,131
52% 49% 18,000
39% 36% 38% 36% 4,626,081
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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