TIDM68WN
RNS Number : 3251Z
Rothschild & Co Continuation Fin
13 September 2022
Rothschild & Co Continuation Finance PLC
Half-yearly Report for the six-month period ended 30 June
2022
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.
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 current market and geopolitical
headwinds 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.
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
13 September 2022
Condensed Interim Statement of Comprehensive Income
For the six months ended 30 June 2022
6 months to 6 months to
30 June 30 June
2022 2021
Note GBP GBP
----------------------------------- ----- ------------- ------------
Interest income 693,444 132,962
----------------------------------- ----- ------------- ------------
Interest expense (687,002) (127,114)
----------------------------------- ----- ------------- ------------
Operating profit 6,442 5,848
----------------------------------- ----- ------------- ------------
Revaluation of loans 4 (24,717,418) 3,275,554
----------------------------------- ----- ------------- ------------
Revaluation of debt securities 9 24,722,319 (3,284,759)
----------------------------------- ----- ------------- ------------
Foreign exchange translation
gains/(losses) 1,277 (1,703)
----------------------------------- ----- ------------- ------------
Profit/(loss) before tax 12,620 (5,060)
----------------------------------- ----- ------------- ------------
Taxation 3 (3,329) 2,710
----------------------------------- ----- ------------- ------------
Profit/(loss) for the financial
period 9,291 (2,350)
----------------------------------- ----- ------------- ------------
Other comprehensive income - -
----------------------------------- ----- ------------- ------------
Total comprehensive income/(loss)
for the financial period 9,291 (2,350)
----------------------------------- ----- ------------- ------------
Condensed Interim Statement of Changes in Equity
For the six months ended 30 June 2022
Retained
Share Capital Earnings Total
GBP GBP GBP
---------------------------------- ---------------- ---------- --------
At 1 January 2022 100,000 304,687 404,687
---------------------------------- ---------------- ---------- --------
Total comprehensive loss for the
period - 9,291 9,291
---------------------------------- ---------------- ---------- --------
At 30 June 2022 100,000 313,978 413,978
---------------------------------- ---------------- ---------- --------
At 1 January 2021 100,000 206,384 306,384
---------------------------------- ---------------- ---------- --------
Total comprehensive income for
the period - (2,350) (2,350)
---------------------------------- ---------------- ---------- --------
At 30 June 2021 100,000 204,034 304,034
---------------------------------- ---------------- ---------- --------
Condensed Interim Balance Sheet
At 30 June 2022
At 30 June At 31 December
2022 2022 2021 2021
Note GBP GBP GBP GBP
----------------------------- ----- ---------- ------------- --------- ---------------
Non-current assets
Loan to parent undertaking 4 89,830,851 114,548,269
----------------------------- ----- ---------- ------------- --------- ---------------
Current assets
----------------------------- ----- ---------- ------------- --------- ---------------
Other financial assets 5 382,306 96,278
----------------------------- ----- ---------- ------------- --------- ---------------
Cash and cash equivalents 6 258,459 250,897
----------------------------- ----- ---------- ------------- --------- ---------------
640,765 347,175
----------------------------- ----- ---------- ------------- --------- ---------------
Current liabilities
Current tax liability (3,406) (1,009)
----------------------------- ----- ---------- ------------- --------- ---------------
Deferred tax liability 7 (36,800) (35,869)
----------------------------- ----- ---------- ------------- --------- ---------------
Other financial liabilities 8 (380,262) (94,390)
----------------------------- ----- ---------- ------------- --------- ---------------
Net current assets 220,297 215,907
----------------------------- ----- ---------- ------------- --------- ---------------
Total assets less current liabilities 90,051,148 114,764,176
------------------------------------------------ ------------- --------- ---------------
Non-current liabilities
Debt securities in
issue 9 (89,637,170) (114,359,489)
----------------------------- ----- ---------- ------------- --------- ---------------
Net assets 413,978 404,687
----------------------------- ----- ---------- ------------- --------- ---------------
Shareholders' equity
Share capital 11 100,000 100,000
----------------------------- ----- ---------- ------------- --------- ---------------
Retained earnings 313,978 304,687
----------------------------- ----- ---------- ------------- --------- ---------------
Total shareholders'
equity 413,978 404,687
----------------------------- ----- ---------- ------------- --------- ---------------
Condensed Interim Cash Flow Statement
For the six months ended 30 June 2022
6 months 6 months to
to
30 June 30 June
2022 2021
Note GBP GBP
--------------------------------------- ----- --------------- --------------
Cash flow from operating activities
Net profit/(loss) for the financial
period 9,291 (2,350)
--------------------------------------- ----- --------------- --------------
Taxation 3,329 (2,710)
--------------------------------------- ----- --------------- --------------
Net cash inflow/(outflow) from
operating activities 12,620 (5,060)
--------------------------------------- ----- --------------- --------------
Cash flow from financing activities
Net decrease/(increase) in loans
and interest receivable 24,431,389 (3,366,228)
--------------------------------------- ----- --------------- --------------
Net (decrease)/increase in debt
securities in issue and interest
payable (24,436,447) 3,375,525
--------------------------------------- ----- --------------- --------------
Net cash (outflow)/inflow from
financing activities (5,058) 9,297
--------------------------------------- ----- --------------- --------------
Net increase in cash and cash
equivalents 7,562 4,237
--------------------------------------- ----- --------------- --------------
Cash and cash equivalents at
beginning of half-year 250,897 245,750
--------------------------------------- ----- --------------- --------------
Cash and cash equivalents at
end of half-year 6 258,459 249,987
--------------------------------------- ----- --------------- --------------
Interest receipts and payments during the period were as
follows:
6 months to 6 months to
30 June 2022 30 June 2021
GBP GBP
------------------------------------------- ------------- -------------
Interest received from parent undertaking 407,416 42,288
------------------------------------------- ------------- -------------
Interest paid to note holders 401,130 36,348
------------------------------------------- ------------- -------------
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 2022
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 2021, 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 2021.
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.
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.
Financial Risk Management
The Company follows the financial risk management policies of
the parent undertaking, N M Rothschild & Sons Limited. The key
risks arising from the Company's activities involving financial
instruments, which are monitored at the group level, are as
follows:
- Credit risk - the risk of loss arising from client or
counterparty default is not considered a significant risk
to the Company as all asset balances are with other group
companies as detailed in note 14 Related Party Transactions.
- Market risk - exposure to changes in market variables
such as interest rates, currency exchange rates, equity
and debt prices is not considered significant as the terms
of financial assets substantially match those of financial
liabilities.
- Liquidity risk - the risk that the Company is unable to
meet its obligations as they fall due or that it is unable
to fund its commitments is not considered significant
as the risk has been transferred to NMR. As the funds
on-lent to NMR have the same maturity dates as the notes
issued, the Company's ability to meet its obligations
in respect of notes issued by it is affected by NMR's
ability to make payments to the Company.
2. Directors' Emoluments
None of the directors received any remuneration in respect of
their services to the Company during the period (2021: GBPnil).
3. Taxation
6 months 6 months
to to
30 June 30 June
2022 2021
GBP GBP
-------------- --------- ---------
Current tax (2,398) 961
-------------- --------- ---------
Deferred tax (931) 1,749
-------------- --------- ---------
Total tax (3,329) 2,710
-------------- --------- ---------
The tax charge can be explained as follows:
6 months to 6 months
to
30 June 2022 30 June
2021
GBP GBP
----------------------------------------------- ------------- ---------
Profit/(loss) before tax 12,620 (5,060)
----------------------------------------------- ------------- ---------
United Kingdom corporation tax
at 19% (2,398) 961
----------------------------------------------- ------------- ---------
Deferred tax income statement (charge)/credit (931) 1,749
----------------------------------------------- ------------- ---------
Tax charged for the period (3,329) 2,710
----------------------------------------------- ------------- ---------
4. Non-Current Assets: Loan to Parent Undertaking
At 30 June At 31 December
2022 2021
GBP GBP
------------------------ ------------- ---------------
At beginning of period 114,548,269 110,973,131
------------------------ ------------- ---------------
Fair value movements (24,717,418) 3,575,138
------------------------ ------------- ---------------
At end of period 89,830,851 114,548,269
------------------------ ------------- ---------------
Due
------------------------ ------------- ---------------
In 5 years or more 89,830,851 114,548,269
------------------------ ------------- ---------------
IFRS 9 requires the EUR150,000,000 loan to be carried at fair
value which as at 30 June 2022 was GBP89,930,851 (at 31 December
2021: GBP114,548,269). On an amortised cost basis, the value of the
loan at 30 June 2022 would be GBP129,121,116 (at 31 December 2021:
GBP125,853,708). 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 2022 was 1.87%
(31 December 2021: 0.51%).
5. Current Assets: Other Financial Assets
At 30 June At 31 December
2022 2021
GBP GBP
--------------------- ----------- ---------------
Interest receivable 382,306 96,278
--------------------- ----------- ---------------
6. Cash and Cash Equivalents
At 30 June 2022 the Company held cash of GBP258,459 (31 December
2021: GBP250,897) at the parent undertaking. Of this balance,
GBP208,282 (31 December 2021: GBP208,282) was held in a sterling
account. The equivalent of GBP50,177 (31 December 2021: GBP42,615)
was held in a euro account.
7. Deferred Income Taxes
At 30 June At 31 December
2022 2021
GBP GBP
----------------------------------- ----------- ---------------
At beginning of period (35,869) (38,442)
----------------------------------- ----------- ---------------
Recognised in income:
Income statement (charge)/credit (931) 2,573
----------------------------------- ----------- ---------------
At end of period (36,800) (35,869)
----------------------------------- ----------- ---------------
Deferred tax assets less liabilities are attributable to the
following items:
At 30 June At 31 December
2022 2021
GBP GBP
---------------------------------------- ------------ ---------------
Fair value of intra group loans 7,465,150 2,148,033
---------------------------------------- ------------ ---------------
Fair value of debt securities in issue (7,501,950) (2,183,902)
---------------------------------------- ------------ ---------------
(36,800) (35,869)
---------------------------------------- ------------ ---------------
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
2022 2021
GBP GBP
------------------ ----------- ---------------
Interest payable 380,262 94,390
------------------ ----------- ---------------
9. Non-Current Liabilities: Debt Securities in Issue
At 30 June At 31 December
2022 2021
GBP GBP
------------------------ ------------- ---------------
At beginning of period 114,359,489 110,770,808
------------------------ ------------- ---------------
Fair value movements (24,722,319) 3,588,681
------------------------ ------------- ---------------
At end of period 89,637,170 114,359,489
------------------------ ------------- ---------------
Due
------------------------ ------------- ---------------
In 5 years or more 89,637,170 114,359,489
------------------------ ------------- ---------------
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 2022 was GBP 89,637,170 (at 31 December 2021:
GBP114,359,489). On an amortised cost basis, the value of the debt
securities in issue at 30 June 2022 would be GBP129,121,116 (at 31
December 2021: GBP125,853,708). 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 2022 was 1.86%
(31 December 2021: 0.50%).
10. Maturity of Financial Liabilities
The following table shows contractual cash flows payable by the
Company on the perpetual subordinated notes classified 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 2022
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 - 603,641 1,810,924 9,658,259 129,121,116 141,193,940
----------------------- ------- --------- ----------- ----------- ------------- -------------
At 31 December 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 - 157,317 471,951 2,517,074 125,853,708 129,000,050
----------------------- ------- --------- --------- ----------- ------------- -------------
11. Share Capital
At 30 June At 31 December
2022 2021
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
2022 2021
GBP GBP
------------------------------------- ----------- ---------------
Cash and cash equivalents at parent
undertaking 258,459 250,897
------------------------------------- ----------- ---------------
Accrued interest receivable from
parent undertaking 382,306 96,278
------------------------------------- ----------- ---------------
Loans to parent undertaking 89,830,851 114,548,269
------------------------------------- ----------- ---------------
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 2022 30 June 2021
GBP GBP
----------------------------------------- ------------- -------------
Interest income from parent undertaking 693,444 132,962
----------------------------------------- ------------- -------------
There were no loans made to Directors during the period (6
months to 30 June 2021: none) and no balances outstanding at the
period end (at 31 December 2021: GBPnil). There were no employees
of the Company during the period (6 months to 30 June 2021:
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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