TIDM68WN
RNS Number : 3678M
Rothschild & Co Continuation Fin
20 September 2021
Rothschild & Co Continuation Finance PLC
Half-yearly Report for the six-month period ended 30 June
2021
Interim Management Report
Summary of Important Events
Rothschild & Co Continuation Finance PLC (the "Company") is
a wholly-owned subsidiary of N M Rothschild & Sons Limited
("NMR") and was incorporated on 30 August 2000 to operate as a
finance vehicle for the benefit of NMR and its subsidiaries.
The principal activity of the Company is the raising of finance
for the purpose of lending it to NMR and other companies in NMR's
group (the "Group"). The Company raises finance by the issue of
perpetual subordinated notes guaranteed by NMR.
Risks and Uncertainties
The principal risks of the Company are credit risk, liquidity
risk, market risk and operational risk. The Company follows the
risk management policies of the parent undertaking, NMR.
COVID-19 has created significant disruption to the global
markets and economies. Management has performed an assessment to
determine whether there are any material uncertainties arising due
to the pandemic that could cast significant doubt on the ability of
the Company to continue as a going concern.
The Company's principal risk is credit exposure to NMR, as the
notes issued by the Company have been guaranteed by, and funds have
been on-lent to NMR. The Company is therefore reliant on the
ability of NMR to meet its obligations under these lending
arrangements. NMR is exposed to the aforementioned market
disruption but, nevertheless, has sufficient liquidity to continue
to operate for the next 12 months even in the scenario where
revenue is significantly reduced. Management has considered the
going concern basis of preparation as outlined in note 1 to the
financial statements.
The Company's processes are undertaken by another group
undertaking. As a result of events the activities of this group
undertaking continued in the period to be largely conducted
remotely with all employees supported by enhanced existing
technology and IT infrastructure. All critical systems continue to
operate effectively and there has been minimal disruption in
activity. The Company continues to carefully monitor and mitigate
the risk on an ongoing basis in order to minimise exposure
This half-yearly financial report has not been audited or
reviewed by the Company's auditors pursuant to the Auditing
Practices Board guidance on Review of Interim Financial
Information.
Responsibilities Statement
The Directors confirm that to the best of their knowledge:
- The condensed set of financial statements has been prepared
in accordance with IAS 34 Interim Financial Reporting;
and
- The interim management report includes a fair review of
(i) the important events that have occurred during the
first six months of the financial year, and their impact
on the condensed set of financial statements, and (ii)
the principal risks and uncertainties for the remaining
six months of the financial year.
By Order of the Board
Paul O'Leary
Director
20 September 2021
Condensed Interim Statement of Comprehensive Income
For the six months ended 30 June 2021
6 months to 6 months to
30 June 30 June
2021 2020
Note GBP GBP
----------------------------------- ----- ------------ -------------
Interest income 132,962 159,671
----------------------------------- ----- ------------ -------------
Interest expense (127,114) (153,090)
----------------------------------- ----- ------------ -------------
Operating profit 5,848 6,581
----------------------------------- ----- ------------ -------------
Revaluation of loans 4 3,275,554 (10,473,820)
----------------------------------- ----- ------------ -------------
Revaluation of debt securities 9 (3,284,759) 10,486,546
----------------------------------- ----- ------------ -------------
Foreign exchange translation
(losses)/gains (1,703) 1,502
----------------------------------- ----- ------------ -------------
(Loss)/profit before tax (5,060) 20,809
----------------------------------- ----- ------------ -------------
Taxation 3 2,710 (10,207)
----------------------------------- ----- ------------ -------------
(Loss)/profit for the financial
period (2,350) 10,602
----------------------------------- ----- ------------ -------------
Other comprehensive income - -
----------------------------------- ----- ------------ -------------
Total comprehensive (loss)/income
for the financial period (2,350) 10,602
----------------------------------- ----- ------------ -------------
Condensed Interim Statement of Changes in Equity
For the six months ended 30 June 2021
Retained
Share Capital Earnings Total
GBP GBP GBP
---------------------------------- ---------------- ---------- --------
At 1 January 2021 100,000 206,384 306,384
---------------------------------- ---------------- ---------- --------
Total comprehensive loss for the
period - (2,350) (2,350)
---------------------------------- ---------------- ---------- --------
At 30 June 2021 100,000 204,034 304,034
---------------------------------- ---------------- ---------- --------
At 1 January 2020 100,000 289,762 389,762
---------------------------------- ---------------- ---------- --------
Total comprehensive income for
the period - 10,602 10,602
---------------------------------- ---------------- ---------- --------
At 30 June 2020 100,000 300,364 300,364
---------------------------------- ---------------- ---------- --------
Condensed Interim Balance Sheet
At 30 June 2021
At 30 June At 31 December
2021 2021 2020 2020
Note GBP GBP GBP GBP
---------------------------- ----- --------- -------------- --------- --------------
Non-current assets
Loan to parent undertaking 4 114,248,685 110,973,131
---------------------------- ----- --------- -------------- --------- --------------
Current assets
---------------------------- ----- --------- -------------- --------- --------------
Other financial
assets 5 92,697 2,023
---------------------------- ----- --------- -------------- --------- --------------
Cash and cash equivalents 6 249,987 245,750
---------------------------- ----- --------- -------------- --------- --------------
342,684 247,773
---------------------------- ----- --------- -------------- --------- --------------
Current liabilities
Current tax liability (4,309) (5,270)
---------------------------- ----- --------- -------------- --------- --------------
Deferred tax liability 7 (36,693) (38,442)
---------------------------- ----- --------- -------------- --------- --------------
Other financial
liabilities 8 (90,766) -
---------------------------- ----- --------- -------------- --------- --------------
Net current assets 210,916 204,061
---------------------------- ----- --------- -------------- --------- --------------
Total assets 114,459,601 111,177,192
---------------------------------------------- -------------- --------- --------------
Non-current liabilities
Debt securities
in issue 9 (114,055,567) (110,770,808)
---------------------------- ----- --------- -------------- --------- --------------
Net assets 404,034 406,384
---------------------------- ----- --------- -------------- --------- --------------
Shareholders' equity
Share capital 11 100,000 100,000
---------------------------- ----- --------- -------------- --------- --------------
Retained earnings 304,034 306,384
---------------------------- ----- --------- -------------- --------- --------------
Total shareholders'
equity 404,034 406,384
---------------------------- ----- --------- -------------- --------- --------------
Condensed Interim Cash Flow Statement
For the six months ended 30 June 2021
6 months to 6 months to
30 June 30 June
2021 2020
Note GBP GBP
------------------------------------- ----- -------------- ---------------
Cash flow from operating activities
Net (loss)/profit for the
financial period (2,350) 10,602
------------------------------------- ----- -------------- ---------------
Taxation (2,710) 10,207
------------------------------------- ----- -------------- ---------------
Operating (loss)/profit before
changes in working capital
and provisions (5,060) 20,809
------------------------------------- ----- -------------- ---------------
Cash from operations (5,060) 20,809
------------------------------------- ----- -------------- ---------------
Net cash from operating activities (5,060) 20,809
------------------------------------- ----- -------------- ---------------
Net (increase)/decrease in
loans and interest receivable (3,366,228) 10,455,677
------------------------------------- ----- -------------- ---------------
Net increase/(decrease) in
debt securities in issue and
interest payable 3,375,525 (10,468,536)
------------------------------------- ----- -------------- ---------------
Net cash flow from financing
activities 9,297 (12,859)
------------------------------------- ----- -------------- ---------------
Net increase in cash and cash
equivalents 4,237 7,950
------------------------------------- ----- -------------- ---------------
Cash and cash equivalents
at beginning of period 245,750 230,368
------------------------------------- ----- -------------- ---------------
Cash and cash equivalents
at end of period 6 249,987 238,318
------------------------------------- ----- -------------- ---------------
Interest receipts and payments during the period were as
follows:
6 months to 6 months to
30 June 2021 30 June 2020
GBP GBP
------------------------------------------- ------------- -------------
Interest received from parent undertaking 42,288 141,528
------------------------------------------- ------------- -------------
Interest paid to note holders 36,348 135,080
------------------------------------------- ------------- -------------
The notes to the condensed interim financial statements form an
integral part of the condensed interim financial statements
Notes to the Condensed Interim Financial Statements
(forming part of the Condensed Interim Financial Statements)
For the six months ended 30 June 2021
1. Basis of Preparation
The condensed interim financial statements are prepared and
approved by the Directors in accordance with IAS 34 Interim
Financial Reporting. The condensed interim financial statements are
prepared under the historical cost accounting rules and should be
read in conjunction with the annual financial statements for the
year ended 31 December 2020, which have been prepared in accordance
with International Financial Reporting Standards.
The accounting policies and methods of valuation are identical
to those applied in the financial statements for the year ended 31
December 2020.
Going Concern
Management has performed an assessment to determine whether
there are any material uncertainties that could cast significant
doubt on the ability of the Company to continue as a going concern,
including the impact of COVID-19. No significant issues have been
noted. In reaching this conclusion, management considered:
- The financial impact of the uncertainty on the Company's
balance sheet;
- The Company's liquidity position based on current and
projected cash resources. The liquidity position has
been assessed taking into account the forecast liquidity
of NMR and its ability to continue to pay the interest
on the intercompany loan provided by the Company; and
- The operational resilience with respect to the impact
of the pandemic on existing IT and infrastructure.
Based on the above assessment of the Company's financial
position, the Directors have concluded that the Company has
adequate resources to continue in operational existence for the
foreseeable future (for a period of at least twelve months after
the date that the financial statements are signed). Accordingly,
they continue to adopt the going concern basis of accounting in
preparing the annual financial statements.
2. Directors' Emoluments
None of the directors received any remuneration in respect of
their services to the Company during the period (2020: GBPnil).
3. Taxation
6 months 6 months
to to
30 June 30 June
2021 2020
GBP GBP
-------------- --------- ---------
Current tax (961) 3,954
-------------- --------- ---------
Deferred tax (1,749) 6,253
-------------- --------- ---------
Total tax (2,710) 10,207
-------------- --------- ---------
The tax charge can be explained as follows:
6 months to 6 months
to
30 June 2021 30 June
2020
GBP GBP
-------------------------------------- ------------- ---------
Profit before tax (5,060) 20,809
-------------------------------------- ------------- ---------
United Kingdom corporation tax
at 19% (961) 3,954
-------------------------------------- ------------- ---------
Fair value movements not subject - -
to tax
-------------------------------------- ------------- ---------
Deferred tax income statement charge (1,749) 2,418
-------------------------------------- ------------- ---------
Effect of change in deferred tax
rate - 3,835
-------------------------------------- ------------- ---------
Tax charged for the period (2,710) 10,207
-------------------------------------- ------------- ---------
4. Non-Current Assets: Loan to Parent Undertaking
At 30 June At 31 December
2021 2020
GBP GBP
------------------------ ------------ ---------------
At beginning of period 110,973,131 104,620,334
------------------------ ------------ ---------------
Fair value movements 3,275,554 6,352,797
------------------------ ------------ ---------------
At end of period 114,248,685 110,973,131
------------------------ ------------ ---------------
Due
------------------------ ------------ ---------------
In 5 years or more 114,248,685 110,973,131
------------------------ ------------ ---------------
IFRS 9 requires the EUR150,000,000 loan to be carried at fair
value which as at 30 June 2021 was GBP114,248,685 (at 31 December
2020: GBP110,973,131). On an amortised cost basis, the value of the
loan at 30 June 2021 would be GBP128,745,419 (at 31 December 2020:
GBP134,882,343). The fair values are based on the market value of
the external debt securities (level 2).
The interest rate charged on the EUR150 million loan is
EUR-TEC10-CNO plus 36 basis points, capped at 9.01 per cent, fixed
on 05 February, 05 May, 05 August and 05 November each year.
The interest rate on the above loan at 30 June 2021 was 0.48%
(31 December 2020: 0.01%).
5. Current Assets: Other Financial Assets
At 30 June At 31 December
2021 2020
GBP GBP
--------------------- ----------- ---------------
Interest receivable 92,697 2,023
--------------------- ----------- ---------------
6. Cash and Cash Equivalents
At 30 June 2021 the Company held cash of GBP249,987 (31 December
2020: GBP245,750) at the parent undertaking. Of this balance,
GBP211,543 (31 December 2020: overdraft of GBP211,543) was held in
a sterling account. The equivalent of GBP38,444 (31 December 2020:
GBP34,207) was held in a euro account.
7. Deferred Income Taxes
At 30 June At 31 December
2021 2020
GBP GBP
---------------------------------- ----------- ---------------
At beginning of period (38,442) (32,598)
---------------------------------- ----------- ---------------
Recognised in income:
Income statement charge 1,749 (2,009)
---------------------------------- ----------- ---------------
Effect of change in deferred tax
rate - (3,835)
---------------------------------- ----------- ---------------
At end of period (36,693) (38,442)
---------------------------------- ----------- ---------------
Deferred tax assets less liabilities are attributable to the
following items:
At 30 June At 31 December
2021 2020
GBP GBP
---------------------------------------- ------------ ---------------
Fair value of intra group loans 2,754,379 4,542,758
---------------------------------------- ------------ ---------------
Fair value of debt securities in issue (2,791,072) (4,581,200)
---------------------------------------- ------------ ---------------
(36,693) (38,442)
---------------------------------------- ------------ ---------------
Both the intra-group loans and debt securities in issue are
taxed on an amortised cost basis of accounting and accordingly
taxable/deductible temporary differences arise following the
adoption of IFRS 9.
8. Current Liabilities: Other Financial Liabilities
At 30 June At 31 December
2021 2020
GBP GBP
----------------- ----------- ---------------
Interest payable (90,766) -
----------------- ----------- ---------------
9. Non-Current Liabilities: Debt Securities in Issue
At 30 June At 31 December
2021 2020
GBP GBP
------------------------ ------------ ---------------
At beginning of period 110,770,808 104,428,584
------------------------ ------------ ---------------
Fair value movements 3,284,759 6,342,224
------------------------ ------------ ---------------
At end of period 114,055,567 110,770,808
------------------------ ------------ ---------------
Due
------------------------ ------------ ---------------
In 5 years or more 114,055,567 110,770,808
------------------------ ------------ ---------------
Given the IFRS 9 requirement to fair value the related loans,
the Company has elected to fair value the debt securities in issue,
which as at 30 June 2021 was GBP114,055,567 (at 31 December 2020:
GBP110,770,808). On an amortised cost basis, the value of the debt
securities in issue at 30 June 2021 would be GBP128,745,419 (at 31
December 2020: GBP134,882,243). The fair value was derived from the
quoted market price at the balance sheet date (level 1).
The interest rate payable on the EUR150 million Perpetual
Subordinated Notes is EUR-TEC10-CNO plus 35 basis points, capped at
9 per cent, fixed on 05 February, 05 May, 05 August and 05 November
each year. From and including the interest payment date falling in
August 2016 and every interest payment date thereafter, the Company
may redeem all (i.e. not in part) of the Perpetual Subordinated
Notes at their principal amount.
The interest rate on the above notes at 30 June 2021 was 0.47%
(31 December 2020: 0%).
10. Maturity of Financial Liabilities
The following table shows contractual cash flows payable by the
Company on the perpetual subordinated notes, analysed by remaining
contractual maturity at the balance sheet date. Interest cash flows
on perpetual subordinated notes are shown up to five years only,
with the principal balance being shown in the perpetual column.
At 30 June 2021
3 months
or less 1 year 5 years
but not or less or less
payable but over but over
on
Demand demand 3 months 1 year Perpetual Total
GBP GBP GBP GBP GBP GBP
----------------------- ------- --------- --------- ----------- ------------- -------------
Perpetual subordinated
notes - 151,276 453,828 2,420,414 128,745,419 131,770,937
----------------------- ------- --------- --------- ----------- ------------- -------------
At 31 December 2020
3 months
or less 1 year 5 years
but not or less or less
payable but over but over
on
Demand demand 3 months 1 year Perpetual Total
GBP GBP GBP GBP GBP GBP
----------------------- ------- -------- -------- -------- ------------- -------------
Perpetual subordinated
notes - - - - 134,882,383 134,882,383
----------------------- ------- -------- -------- -------- ------------- -------------
11. Share Capital
At 30 June At 31 December
2021 2020
GBP GBP
--------------------------------- ----------- ---------------
Authorised, allotted, called up
and fully paid
100,000 Ordinary shares of GBP1
each 100,000 100,000
--------------------------------- ----------- ---------------
12. Related Party Transactions
Parties are considered to be related if one party controls, is
controlled by or has the ability to exercise significant influence
over the other party. This includes key management personnel, the
parent company, subsidiaries and fellow subsidiaries.
Amounts receivable from related parties at the period end were
as follows:
At 30 June At 31 December
2021 2020
GBP GBP
------------------------------------- ------------ ---------------
Cash and cash equivalents at parent
undertaking 249,987 245,750
------------------------------------- ------------ ---------------
Accrued interest receivable from
parent undertaking 92,697 2,023
------------------------------------- ------------ ---------------
Loans to parent undertaking 114,248,685 110,973,131
------------------------------------- ------------ ---------------
Amounts recognised in the condensed statement of comprehensive
income in respect of related party transactions were as
follows:
6 months to 6 months to
30 June 2021 30 June 2020
GBP GBP
----------------------------------------- ------------- -------------
Interest income from parent undertaking 132,962 159,671
----------------------------------------- ------------- -------------
There were no loans made to Directors during the period (6
months to 30 June 2020: none) and no balances outstanding at the
period end (at 31 December 2020: GBPnil). There were no employees
of the Company during the period (6 months to 30 June 2020:
none).
13. Parent Undertaking and Ultimate Holding Company and Registered Office
The largest group in which the results of the Company are
consolidated is that headed by Rothschild & Co Concordia SAS,
incorporated in France, and whose registered office is at 23bis,
Avenue de Messine, 75008 Paris. The smallest group in which they
are consolidated is that headed by Rothschild & Co SCA, a
French public limited partnership whose registered office is also
at 23bis, Avenue de Messine, 75008 Paris. The accounts are
available on the Rothschild & Co website at
www.rothschildandco.com.
The Company's immediate parent company is N M Rothschild and
Sons Limited, incorporated in England and Wales and whose
registered office is at New Court, St Swithins Lane, London EC7N
8AL.
The Company's registered office is located at New Court, St
Swithin's Lane, London EC4N 8AL.
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IR DKKBDABKDBCB
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