Annual Report 2017

194

Rothschild & Co | Annual Report 2017

Statutory auditors’ report on the financial statements for the

nine-month period ended 31 December 2017

This is a translation into English of the statutory auditors’ report on the financial statements of the Company issued in French and it is provided solely

for the convenience of English speaking users.

This statutory auditors’ report includes information required by European regulation and French law, such as information about the appointment of the

statutory auditors or verification of the management report and other documents provided to shareholders.

This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France.

Opinion

In compliance with the engagement entrusted to us by your General

Meeting, we have audited the accompanying financial statements of

Rothschild & Co for the nine-month period ended 31 December 2017.

In our opinion, the financial statements give a true and fair view of the

assets and liabilities and of the financial position of the Company as at

31 December 2017 and of the results of its operations for the nine-month

period then ended in accordance with French accounting principles.

The audit opinion expressed above is consistent with our report to the

Audit Committee.

Basis for Opinion

Audit framework

We conducted our audit in accordance with professional standards

applicable in France. We believe that the audit evidence we have

obtained is sufficient and appropriate to provide a basis for our opinion.

Our responsibilities under those standards are further described in the

Statutory Auditors’ Responsibilities for the Audit of the Financial Statements

section of our report.

Independence

We conducted our audit engagement in compliance with independence

rules applicable to us, for the period from 1 April 2017 to the date of our

report and specifically we did not provide any prohibited non-audit services

referred to in Article 5(1) of Regulation (EU) No 537/2014 or in the French

Code of ethics (code de déontologie) for statutory auditors.

Justification of Assessments –

Key Audit Matters

In accordance with the requirements of Articles L.823-9 and R.823-7 of the

French Commercial Code (

Code de commerce

) relating to the justification

of our assessments, we inform you of the key audit matters relating to risks

of material misstatement that, in our professional judgement, were of most

significance in our audit of the financial statements of the current period,

as well as how we addressed those risks.

These matters were addressed in the context of our audit of the financial

statements as a whole, and in forming our opinion thereon, and we do not

provide a separate opinion on specific items of the financial statements.

Impairment of investments in Group, other

companies and portfolio holdings

Key audit matter

As at 31 December 31 2017, the company holds 1,701 million euros

through investments in Group, other companies and portfolio holdings,

which represent 88% of the total amount of assets.

The net asset value of these investments in Group, other companies

and portfolio holdings is determined by Management, depending on the

availability of the data and by using quotation prices, net or revalued share

in equity or references to recent transactions.

When the inventory value thus determined is lower than the acquisition cost

of these investments, an impairment is recognised.

The methodology and assumptions used to determine the inventory value

of investments in Group, other companies and portfolio holdings requiring

the exercise of judgement, and considering the relative importance of the

amount of these financial assets in the balance sheet of the Company, we

considered that the determination of impairment of investments in Group,

other companies and portfolio holdings is a key audit matter for the annual

accounts of the Company.

Paragraph III “Accounting principles, rules and methods” of the appendix

sets out the methods for recording an impairment to cover the risk of a

decline in the value of investments in Group, other companies and portfolio

holdings.

Our response

Our procedures consisted of:

• understanding the internal control and governance put in place by

Management to measure the inventory value of investments in Group,

other companies and portfolio holdings;

• considering the validity of the methodologies applied and the relevance

of the parameters and assumptions used by the Company to determine

the inventory values of these financial assets; and

• testing, on a sample basis, the inventory values used by the Company

for these financial assets and the correct application of the methods.

Lastly, we made sure that the information presented in the financial

statements is appropriate.