156 / 204
154
Rothschild & Co | Annual Report 2017
Note 17 – Structured entities
A structured entity is one which has been designed so that voting or similar rights are not the dominant factor in deciding who controls the entity. It will
often have restricted activities and a narrow or well-defined objective and can include some investment funds.
In most cases it is clear under IFRS 10 that the Group need not consolidate its investments in structured entities. However, some structured entities are
managed by the Group in the form of funds in which the Group’s own money is also invested. In these situations, a judgement must be made as to whether
there is a need to consolidate these funds or not. To do this, a combined assessment of two key indicators is made:
• remuneration and other economic interests in aggregate; and
• kick-out rights.
To assess economic interests it is considered, at a particular level of returns, how much of any further increase in the performance of a fund accrues to the
manager (“the variability of the economic interest”). The level of returns at which this is measured is the level at which performance fees begin to accrue.
A high level of variability would support the conclusion that a manager might be a principal (and would probably consolidate the managed fund).
Meanwhile, a low level of variability would indicate that a manager might be an agent for the other investors (and would probably not consolidate).
Additionally, negligible rights for the investors to remove the manager or transfer their funds might indicate that a manager is a principal (and would
probably consolidate) while strong rights might suggest that a manager is an agent (and would probably not consolidate).
The Group’s judgement is guided by both IFRS 10 and its understanding of market practice.
Interest in unconsolidated structured entities
The following table shows the Group’s interest in unconsolidated structured entities which it manages.
In thousands of euro
31/12/2017
Equity funds
Debt funds
TOTAL
Total assets within the underlying vehicles
1,761,700
4,114,640
5,876,340
Assets under management including third party commitments
3,106,626
4,829,769
7,936,395
Interest held in the Group’s balance sheet:
Financial assets designated at FVTPL
340,305
58,248
398,553
Financial assets available for sale
–
45,113
45,113
Loans and receivables
28,472
4,421
32,893
Total assets in the Group’s balance sheet
368,777
107,782
476,559
Off-balance sheet commitments made by the Group
249,558
61,629
311,187
Group’s maximum exposure
618,335
169,411
787,746
Note 18 – Non-controlling interests
Non-controlling interests (NCI) represent the share of fully consolidated subsidiaries that is not directly or indirectly attributable to the Group. These
interests comprise the equity instruments which have been issued by these subsidiaries and which are not held by the Group. The Group’s income, net
assets and distributions which are attributable to NCI arise from the following sources:
01/04/17
31/12/17
(9 months)
31/12/2017
01/04/17
31/12/17
(9 months)
01/04/16
31/03/17
(12 months)
31/03/2017
01/04/16
31/03/17
(12 months)
In thousands of euro
Net income Amounts in the
balance sheet
Distributions
Net income Amounts in the
balance sheet
Distributions
Preferred shares
110,348
170,036
1,051
160,013
60,103
128,520
Perpetual subordinated debt
10,646
288,999
10,636
13,748
305,372
13,748
Rothschild Holding AG group
1,606
58,271
744
2,502
79,563
2,351
Other
1,710
22,903
849
4,128
26,537
1,113
TOTAL
124,310
540,209
13,280
180,391
471,575
145,732
Notes to the consolidated financial statements