TIDMRCHA
RNS Number : 6453Z
Rothschild & Co Contin Fin CI Ltd
21 September 2020
Rothschild & Co Continuation Finance CI Limited
Half-yearly Report for the six-month period ended 30 June
2020
Interim Management Report
Summary of Important Events
Rothschild & Co Continuation Finance CI Limited (the
"Company") is a wholly-owned subsidiary of Rothschild & Co
Continuation Limited. The principal activity of the Company is the
raising of finance for the purpose of lending it to companies who
are members of the Rothschild Concordia SAS group. In the period
ended 30 June 2020, GBP125,000,000 perpetual subordinated
guaranteed notes were in issue by the Company.
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 fellow subsidiary undertaking, N.M.
Rothschild & Sons Limited ("NMR").
Since the start of January 2020, COVID-19 has created
significant disruption to the global markets and economies. As part
of the financial statements for the year ended 31 December 2019,
management concluded that the impact of COVID-19 was a
non-adjusting post balance sheet event. Management has continued to
assess 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 and none have been
identified.
The Company's principal risk is credit exposure to other group
companies, as the notes issued by the Company have been on-lent to
Rothschild & Co Continuation Limited ("R&CoCL") and NMR.
R&CoCL has also guaranteed, on a subordinated basis, the notes
issued. The Company's ability to meet its obligations in respect of
notes issued by it is therefore reliant on NMR and R&CoCL to
make payments to the Company. Both R&CoCL and NMR are exposed
to the aforementioned market disruption but, nevertheless, have
sufficient liquidity to continue to operate for the next 12 months
even in the scenario where revenue is significantly reduced.
The Company's processes are undertaken by another group
undertaking. As a result of recent events the activities of this
group undertaking are now being conducted remotely with all
employees supported by enhanced existing technology and IT
infrastructure. The business has accordingly invoked the relevant
sections of Business Continuity plans. These plans have now been
operational for a period of time and all critical systems continue
to operate effectively and they have encountered 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.
Responsibility 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
Peter Barbour
Director
16 September 2020
Condensed Interim Statement of Comprehensive Income
For the six months ended 30 June 2020
6 months 6 months
to to
30 June 30 June
2020 2019
Note GBP GBP
----------------------------------- ------- ---------- ------------
Interest income 5,619,328 5,557,577
----------------------------------- --- -------------- ------------
Interest expense (5,609,589) (5,547,945)
----------------------------------- --- -------------- ------------
Operating profit 9,739 9,632
----------------------------------- --- -------------- ------------
Revaluation of loans 4 (5,872,750) (525,000)
----------------------------------- --- -------------- ------------
Revaluations of debt securities 9 5,872,750 525,000
----------------------------------- --- -------------- ------------
Administrative expenses (650) (650)
----------------------------------- --- -------------- ------------
Profit before tax 9,089 8,982
----------------------------------- --- -------------- ------------
Income tax expense 3 (4,227) (1,707)
----------------------------------- --- -------------- ------------
Profit for the financial period 4,862 7,275
----------------------------------- --- -------------- ------------
Other comprehensive income - -
----------------------------------- --- -------------- ------------
Total comprehensive income for
the financial period 4,862 7,275
----------------------------------- --- -------------- ------------
Condensed Interim Statement of Changes in Equity
For the six months ended 30 June 2020
Share Capital Retained Total
Earnings
GBP GBP GBP
-------------------------------- --------------- ---------- --------
At 1 January 2020 100,000 160,604 260,604
-------------------------------- --------------- ---------- --------
Total comprehensive income for
the period - 4,862 4,862
-------------------------------- --------------- ---------- --------
At 30 June 2020 100,000 165,466 265,466
-------------------------------- --------------- ---------- --------
At 1 January 2019 100,000 145,269 245,269
-------------------------------- --------------- ---------- --------
Total comprehensive income for
the period - 7,275 7,275
-------------------------------- --------------- ---------- --------
At 30 June 2019 100,000 152,544 252,544
-------------------------------- --------------- ---------- --------
Condensed Interim Balance Sheet
At 30 June 2020
At 30 June At 31 December
2020 2020 2019 2019
Note GBP GBP GBP GBP
----------------------------- ----- ------------ -------------- ------------- --------------
Non-current assets
Loans to group undertakings 4 147,502,500 153,375,000
----------------------------- ----- ------------ -------------- ------------- --------------
Current assets
Other financial assets 5 4,199,058 6,477,665
----------------------------- ----- ------------ -------------- ------------- --------------
Cash and cash equivalents 6 162,263 3,514,978
----------------------------- ----- ------------ -------------- ------------- --------------
4,361,321 9,992,643
----------------------------- ----- ------------ -------------- ------------- --------------
Current liabilities
Current tax payable (5,324) (3,597)
----------------------------- ----- ------------ -------------- ------------- --------------
Deferred tax 7 (23,750) (21,250)
----------------------------- ----- ------------ -------------- ------------- --------------
Other financial liabilities 8 (4,191,781) (9,832,192)
----------------------------- ----- ------------ -------------- ------------- --------------
Net current assets 140,466 135,604
----------------------------- ----- ------------ -------------- ------------- --------------
Total assets less
current liabilities 147,642,966 153,510,604
----------------------------- ----- ------------ -------------- ------------- --------------
Non-current liabilities
Subordinated guaranteed
notes 9 (147,377,500) (153,250,000)
----------------------------- ----- ------------ -------------- ------------- --------------
Net assets 265,466 260,604
----------------------------- ----- ------------ -------------- ------------- --------------
Shareholders' equity
Share capital 11 100,000 100,000
----------------------------- ----- ------------ -------------- ------------- --------------
Retained earnings 165,466 160,604
----------------------------- ----- ------------ -------------- ------------- --------------
Total shareholders'
equity 265,466 260,604
----------------------------- ----- ------------ -------------- ------------- --------------
Condensed Interim Cash Flow Statement
For the six months ended 30 June 2020
6 months to 6 months to
30 June 2020 30 June 2019
Note GBP GBP
------------------------------------- ----- ------------- -------------
Cash flow from operating activities
Profit for the financial period 4,862 7,275
------------------------------------- ----- ------------- -------------
Income tax expenses 4,227 1,707
------------------------------------- ----- ------------- -------------
Operating profit before changes
in working capital and provisions 9,089 8,982
------------------------------------- ----- ------------- -------------
Fair value movements of loans 5,872,500 525,000
------------------------------------- ----- ------------- -------------
Fair value movements of debt
securities (5,872,500) (525,000)
------------------------------------- ----- ------------- -------------
Net decrease in other financial
assets 2,278,607 2,358,883
------------------------------------- ----- ------------- -------------
Net decrease in other financial
liabilities (5,640,411) (5,702,055)
------------------------------------- ----- ------------- -------------
Cash utilised from operations (3,352,715) (3,334,190)
------------------------------------- ----- ------------- -------------
Net cash used in operating
activities (3,352,715) (3,334,190)
------------------------------------- ----- ------------- -------------
Net decrease in cash and cash
equivalents (3,352,715) (3,334,190)
------------------------------------- ----- ------------- -------------
Cash and cash equivalents
at beginning of period 3,514,978 3,481,151
------------------------------------- ----- ------------- -------------
Cash and cash equivalents
at end of period 6 162,263 146,961
------------------------------------- ----- ------------- -------------
Interest paid and received during the period were as
follows:
6 months to 6 months to
30 June 2020 30 June 2019
GBP GBP
------------------- ------------- -------------
Interest paid 11,250,000 11,250,000
------------------- ------------- -------------
Interest received 7,897,935 7,916,460
------------------- ------------- -------------
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 2020
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 2019, 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 2019.
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 R&CoCL and their ability to continue to pay
the interest on the intercompany loan provided by the
Company. Considerations included a stressed scenario
where both NMR's and R&CoCL's revenues could be reduced
by more than 50% as compared to the prior year; 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 (2019: GBPnil).
3. Taxation
6 months to 6 months to
30 June 2020 30 June 2019
GBP GBP
---------------------------- ------------- -------------
Current tax 1,727 1,707
---------------------------- ------------- -------------
Deferred tax 2,500 -
---------------------------- ------------- -------------
Tax charged for the period 4,227 1,707
---------------------------- ------------- -------------
The current tax charge can be explained as follows:
6 months to 6 months to
30 June 2020 30 June 2019
GBP GBP
-------------------------------- ------------- -------------
Profit before tax 9,089 8,982
-------------------------------- ------------- -------------
United Kingdom corporation tax
at 19% 1,727 1,707
-------------------------------- ------------- -------------
Tax charged for the period 1,727 1,707
-------------------------------- ------------- -------------
4. Loans to Group Undertakings
At 30 June At 31 December
2020 2019
GBP GBP
------------------------ ------------ ---------------
At beginning of period 153,375,000 154,187,500
------------------------ ------------ ---------------
Fair value movements (5,872,500) (812,500)
------------------------ ------------ ---------------
At end of period 147,502,500 153,375,000
------------------------ ------------ ---------------
Due
In 5 years or more 147,502,500 153,375,000
------------------------ ------------ ---------------
IFRS 9 requires the GBP125,000,000 loans to be carried at fair
value which as at 30 June 2020 was GBP147,502,500 (at 31 December
2019: GBP153,375,000). On an amortised cost basis, the value of the
loan at 30 June 2020 would be GBP125,000,000 (at 31 December 2019:
GBP125,000,000). The fair values are based on the market value of
the external debt securities (level 2).
The interest rate charged on the subordinated perpetual loans to
group undertakings is 9 1/64 per cent.
5. Other Financial Assets
At 30 June At 31 December
2020 2019
GBP GBP
------------------------------------ ----------- ---------------
Amounts owed by parent undertaking 1,679,623 3,939,705
------------------------------------ ----------- ---------------
Amounts owed by fellow subsidiary
undertaking 2,519,435 2,537,960
------------------------------------ ----------- ---------------
4,199,058 6,477,665
------------------------------------ ----------- ---------------
6. Cash and Cash Equivalents
At 30 June 2020 the Company held cash of GBP162,263 (31 December
2019: GBP3,514,978) held at a fellow subsidiary undertaking.
7. Deferred Income Taxes
At 30 June At 31 December
2020 2019
GBP GBP
----------------------------------- ----------- ---------------
At beginning of period (21,250) (21,250)
----------------------------------- ----------- ---------------
Recognised in income:
Effect of change in deferred tax (2,500) -
rate
----------------------------------- ----------- ---------------
At end of period (23,750) (21,250)
----------------------------------- ----------- ---------------
Deferred tax assets less liabilities are attributable to the
following items:
At 30 June At 31 December
2020 2019
GBP GBP
--------------------------------------------- ------------ ---------------
Fair value of intra group loans (4,275,475) (4,823,750)
--------------------------------------------- ------------ ---------------
Fair value of debt securities in issue 4,251,725 4,802,500
--------------------------------------------- ------------ ---------------
(23,750) (21,250)
--------------------------------------------- ------------ ---------------
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.
In the 11 March 2020 Budget, it was announced that the UK tax
rate will remain at the current 19% and not reduce to 17% from 1
April 2020. This had a consequential effect on the Company's future
deferred tax charge. This change has been reflected in the period
to 30 June 2020, increasing the deferred tax liability by
GBP2,500.
8. Other Financial Liabilities
At 30 June At 31 December
2020 2019
GBP GBP
------------------ ----------- ---------------
Interest payable 4,191,781 9,832,192
------------------ ----------- ---------------
Interest is payable on the subordinated guaranteed notes at 9
per cent.
9. Subordinated Guaranteed Notes
At 30 June At 31 December
2020 2019
GBP GBP
------------------------ ------------ ---------------
At beginning of period 153,250,000 154,062,500
------------------------ ------------ ---------------
Fair value movements (5,872,500) (812,500)
------------------------ ------------ ---------------
At end of period 147,377,500 153,250,000
------------------------ ------------ ---------------
Due
In 5 years or more 147,377,500 153,250,000
------------------------ ------------ ---------------
Given the IFRS 9 requirement to fair value the related loans,
the Company has elected to fair value the subordinated guaranteed
notes, which as at 30 June 2020 was GBP147,377,500 (at 31 December
2019: GBP153,250,000). On an amortised cost basis, the value of the
subordinated guaranteed notes at 30 June 2020 would be
GBP125,000,000 (at 31 December 2019: GBP125,000,000). The fair
value was derived from the quoted market price at the balance sheet
date (level 1).
10. Maturity of Financial Liabilities
The following table shows contractual cash flows payable by the
Company on the subordinated guaranteed notes, analysed by remaining
contractual maturity at the balance sheet date. Interest cash flows
on the loan notes are shown up to five years only, with the
principal balance being shown in the > 5yr column.
At 30 June 2020
Demand Demand 3m - 1yr 1yr - 5yr >5 yr Total
- 3m
GBP GBP GBP GBP GBP GBP
---------------- ------ -------- ----------- ----------- ------------ ------------
Loan notes
in issue - - 11,250,000 45,000,000 125,000,000 181,250,000
---------------- ------ -------- ----------- ----------- ------------ ------------
At 30 June 2019
Demand Demand 3m - 1yr 1yr - 5yr >5 yr Total
- 3m
GBP GBP GBP GBP GBP GBP
---------------- ------ -------- ----------- ----------- ------------ ------------
Loan notes
in issue - - 11,250,000 45,000,000 125,000,000 181,250,000
---------------- ------ -------- ----------- ----------- ------------ ------------
11. Share Capital
At 30 June At 31 December
2020 2019
GBP GBP
------------------------------- ----------- ---------------
Authorised
Ordinary shares of GBP1 each 100,000 100,000
------------------------------- ----------- ---------------
Allotted, called up and fully
paid
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 and fellow subsidiaries.
Amounts recognised in respect of related parties at the period
end were as follows:
At 30 June At 31 December
2020 2019
GBP GBP
-------------------------------------------------- ----------- ---------------
Subordinated perpetual loan to parent undertaking
- fair value 59,001,000 61,350,000
-------------------------------------------------- ----------- ---------------
Subordinated perpetual loan to fellow subsidiary
undertaking - fair value 88,501,500 92,025,000
-------------------------------------------------- ----------- ---------------
Amounts owed by parent undertaking 1,679,623 3,939,705
-------------------------------------------------- ----------- ---------------
Amounts owed by fellow subsidiary undertaking 2,519,435 2,537,960
-------------------------------------------------- ----------- ---------------
Cash at fellow subsidiary undertaking 162,263 3,514,978
-------------------------------------------------- ----------- ---------------
Amounts recognised in the statement of comprehensive income in
respect of related party transactions were as follows:
6 months to 6 months
30 June to
2020 30 June
2019
GBP GBP
-------------------------------------------- ----------- ----------
Interest receivable from parent undertaking 3,371,597 3,334,546
-------------------------------------------- ----------- ----------
Interest receivable from fellow subsidiary
undertaking 2,247,731 2,223,031
-------------------------------------------- ----------- ----------
There were no loans made to Directors during the period (6
months to 30 June 2019: none) and no balances outstanding at the
period end (at 31 December 2019: GBPnil). There were no employees
of the Company during the period (6 months to 30 June 2019:
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. 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 Rothschild & Co
Continuation Limited, incorporated in England and Wales and whose
registered office is at New Court, St Swithins Lane, London EC4N
8AL.
The Company's registered office is located at St Julian's Court,
St Peter Port, Guernsey, GY1 3BP.
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IR DFLFLBKLZBBE
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