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Rothschild & Co | Annual Report 2017
Note 9 – Intangible fixed assets
In thousands of euro
01/04/2017
Additions
Disposals/
write-offs
Amortisation/
impairment
(note 28)
Exchange rate
movement
Other
movements
31/12/2017
Gross intangible fixed assets
Brand names
157,485
–
–
–
–
157,485
Other tangible assets
48,406
947
(5,216)
(466)
(98)
43,573
Total intangible assets – gross
amount
205,891
947
(5,216)
(466)
(98)
201,058
Amortisation and allowances
Brand names
–
–
–
–
–
–
Other intangible assets
(35,807)
5,216
(8,199)
182
124
(38,484)
Total amortisation and
allowances
(35,807)
5,216
(8,199)
182
124
(38,484)
TOTAL
170,084
947
–
(8,199)
(284)
26
162,574
The brand names contain mainly the use of the “Rothschild” name, which was recognised following the acquisition of a subsidiary in 2007. The asset was
considered as having an indefinite useful life and is, therefore, not amortised, but is instead subject to an annual impairment test.
As at 31 December 2017, the Group performed its annual impairment test for the Rothschild brand name. It valued the brand using the “royalty relief”
method, whereby the value of the brand is based on the theoretical amount that would be paid if the brand were licensed from a third party, and not
owned. The key assumptions used for the test were:
• income is determined on the basis of a business plan of the acquired group, which is derived from a three-year plan drawn up through the Group’s
budget process and then extended in perpetuity to a terminal value, using a long-term growth rate;
• royalty rate = 2%;
• growth rate in perpetuity = 2%; and
• discount rate = 8.5%.
Results of sensitivity tests on the Rothschild brand name show that:
• a 50 bp increase in discount rates combined with a 50 bp reduction in perpetual growth rates would reduce the value by €39 million;
• a 25 bp decrease in the royalty rate would reduce the value by €43 million; and
• a 10% decrease in the income in the future business plan cash flows would reduce the value by €33 million.
Such decreases would not result in an impairment.
Note 10 – Goodwill
Over the last ten years, the Group has completed a number of strategic capital transactions that have resulted in the recognition of various amounts of
goodwill. During that period, the management of the Group’s businesses has evolved and is now at a point where the original cash-generating units, RCB
(now called RMM) and Concordia Holding SARL (previously called Concordia BV) are no longer appropriate. In their place are the businesses of Rothschild
Global Advisory, Rothschild Private Wealth & Asset Management, and Rothschild Merchant Banking – these match the revised segmental information
presented for the first time in this nine-month financial period to 31 December 2017.
In thousands of euro
Rothschild
Global
Advisory
Rothschild
Private
Wealth & Asset
Management
Rothschild
Merchant
Banking
TOTAL
As at 1 April 2017
108,003
11,417
4,423
123,843
Currency translation
(87)
(111)
(483)
(681)
AS AT THE END OF THE PERIOD
107,916
11,306
3,940
123,162
Notes to the consolidated financial statements