Annual Report 2017

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Rothschild & Co | Annual Report 2017 25
1. Overview
4. Financial statements
3.
Management report
2. Business review
2015
(12m to Mar)
2016
(12m to Mar)
2017
(12m to Mar)
2016
(12m to Dec)
2017
(12m to Dec)
142
180
225
212
211
Financing Advisory M&A Advisory Financing Advisory M&A Advisory
2013
2014
2015
2016
2017
692
852
947
1,171
1,183
66%
64%
71%
76%
68%
34%
36%
29%
24%
32%
(1) Source: Company filings.
(2) Source: Thomson Reuters, completed and announced transactions. Excludes accountancy firms.
(3) Source: Dealogic: internal analysis.
(4) Source: Thomson Reuters.
Revenue
(in millions of euros, 12 months to December)
Profit before tax – pre US investment costs
(in millions of euros)
For 2017, Rothschild Global Advisory delivered another
record annual revenue performance of €1,183 million, 1%
higher than 2016 (€1,171 million) and ranked 6th globally by
financial advisory revenue for the year to December 2017,
maintaining its position from the previous quarter(1).
Operating income for the year, excluding ongoing investment
in the development of our North American M&A franchise
was €211 million (2016: €212 million), representing an
operating income margin of 17.8% (2016: 18.1%). Including
this investment, the operating income would have been
€185 million (2016: €189 million) or a margin of 15.7%
(2016: 16.2%).
The compensation ratio, which shows total staff costs on
an awarded basis including social taxes as a percentage of
revenue, was 65.0% in 2017 (2016: 65.6%) after adjusting
for the effects of leaver costs and senior hiring in North
America.
In M&A advisory, we continue to outperform compared to
the overall market. We ranked 1st globally and in Europe by
numbers of both completed and announced transactions
in 2017, the same position as in the previous year(2). M&A
advisory revenue for the year was €804 million, down 9%
year-on-year from a record performance last year (2016:
€888 million), in the context of an 11% decline in global
completed M&A activity by value.
Financing Advisory revenue increased by 34% to
€379 million (2016: €283 million), with particularly
strong activity levels in our European Debt Advisory
and Restructuring and Equity Advisory businesses as well
as in our US restructuring franchise. During the year, we
continued to be highly active in large and complex debt
advisory and restructuring situations, providing independent
advice to clients on c.200 transactions with a total value
of c.US$230 billion(3). For restructuring assignments
completed during the year, we ranked 2nd by number of
transactions globally and 1st by number of transactions
in Europe(4). We also provided equity advisory services
during the year related to transactions with a total value
of c.US$40 billion, and we continue to advise on more
European equity assignments than any other independent
adviser(3).
The quality of our people is our principal competitive
advantage and we continue to add to and strengthen
our senior team. During 2017, fourteen new Managing
Directors were hired into our offices in the US, the UK, Japan
and Switzerland. In the US, we recruited eight Managing
Directors into our M&A advisory team, focusing on clients
in the Healthcare, Consumer, Retail and Technology sectors,
the latter recruitment being alongside the opening of a new
office in Silicon Valley. We also made investments elsewhere
during the year by opening two new offices: a new wholly-
owned subsidiary in Tokyo employing the full team from our
previous alliance partner Global Advisory Japan, as well as
the establishment of a new office in Switzerland.
Financial results for 2017