TIDM68WN
RNS Number : 3430N
Rothschild & Co Continuation Fin
23 September 2019
Rothschild & Co Continuation Finance PLC
Half-yearly Report for the six-month period ended 30 June
2019
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.
Comparative numbers in the six months to 30 June 2018 have been
amended to reflect the impact of IFRS 9 on accounting for financial
instruments.
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 market risk exposure is limited to interest rate
risk and currency exchange rate movements. Exposure to interest
rate movements on the perpetual subordinated note issues has been
passed to NMR, as the issue proceeds have been lent onwards to NMR
at a fixed margin of one basis point above the rate being paid.
Currency risk is not considered significant as all material foreign
currency balances and cash flows are matched.
Liquidity risk has similarly been transferred to NMR as the
funds on-lent have the same maturity dates as the notes issued. The
Company's principal credit risk is with NMR. Since notes issued by
the Company have been guaranteed by, and funds have been on-lent
to, NMR, 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.
Operational risk arising from inadequate or failed internal
processes, people or systems or from external events is managed by
maintaining a strong framework of internal controls.
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
Peter Barbour
Director
Condensed Interim Statement of Comprehensive Income
For the six months ended 30 June 2019
6 months to 6 months to
30 June 30 June
2019 2018
Note GBP GBP
--------------------------------- ----- ------------ -------------
Interest income 554,857 792,051
--------------------------------- ----- ------------ -------------
Interest expense (551,247) (786,006)
--------------------------------- ----- ------------ -------------
Operating profit 3,610 6,045
--------------------------------- ----- ------------ -------------
Revaluation of loans 4 (2,642,185) (13,120,001)
--------------------------------- ----- ------------ -------------
Revaluation of debt securities 9 2,642,563 13,119,245
--------------------------------- ----- ------------ -------------
Foreign exchange translation
gains/(losses) 505 (951)
--------------------------------- ----- ------------ -------------
Profit before tax 4,493 4,338
--------------------------------- ----- ------------ -------------
Taxation 3 (846) (839)
--------------------------------- ----- ------------ -------------
Profit for the financial period 3,647 3,499
--------------------------------- ----- ------------ -------------
Other comprehensive income - -
--------------------------------- ----- ------------ -------------
Total comprehensive income for
the financial period 3,647 3,499
--------------------------------- ----- ------------ -------------
Condensed Interim Statement of Changes in Equity
For the six months ended 30 June 2019
Retained
Share Capital Earnings Total
GBP GBP GBP
-------------------------------- ---------------- ---------- --------
At 1 January 2019 100,000 290,090 390,090
-------------------------------- ---------------- ---------- --------
Total comprehensive income for
the period - 3,647 3,647
-------------------------------- ---------------- ---------- --------
At 30 June 2019 100,000 293,737 393,737
-------------------------------- ---------------- ---------- --------
At 31 December 2017 100,000 112,711 212,711
-------------------------------- ---------------- ---------- --------
Transition to IFRS 9 - 165,773 165,773
-------------------------------- ---------------- ---------- --------
At 1 January 2018 100,000 278,484 378,484
-------------------------------- ---------------- ---------- --------
Total comprehensive income for
the period - 3,499 3,499
-------------------------------- ---------------- ---------- --------
At 30 June 2018 100,000 281,983 381,983
-------------------------------- ---------------- ---------- --------
Condensed Interim Balance Sheet
At 30 June 2019
At 30 June At 31 December
2019 2019 2018 2018
Note GBP GBP GBP GBP
---------------------------- ----- ---------- ------------- ---------- -------------
Non-current assets
Loan to parent undertaking 4 96,296,164 99,189,288
---------------------------- ----- ---------- ------------- ---------- -------------
Current assets
---------------------------- ----- ---------- ------------- ---------- -------------
Cash and cash equivalents 6 227,644 392,172
---------------------------- ----- ---------- ------------- ---------- -------------
Other financial
assets 5 142,088 252,361
---------------------------- ----- ---------- ------------- ---------- -------------
369,732 644,533
---------------------------- ----- ---------- ------------- ---------- -------------
Current liabilities
Bank overdrafts 6 - (168,639)
---------------------------- ----- ---------- ------------- ---------- -------------
Current tax liability (3,234) (2,452)
---------------------------- ----- ---------- ------------- ---------- -------------
Deferred tax liability 7 (34,254) (34,190)
---------------------------- ----- ---------- ------------- ---------- -------------
Other financial
liabilities 8 (139,998) (250,275)
---------------------------- ----- ---------- ------------- ---------- -------------
Net current assets 192,246 188,977
---------------------------- ----- ---------- ------------- ---------- -------------
Total assets less current liabilities 96,488,410 99,378,265
----------------------------------------------- ------------- ---------- -------------
Non-current liabilities
Debt securities
in issue 9 (96,094,673) (98,988,175)
---------------------------- ----- ---------- ------------- ---------- -------------
Net assets 363,737 390,090
---------------------------- ----- ---------- ------------- ---------- -------------
Shareholders' equity
Share capital 11 100,000 100,000
---------------------------- ----- ---------- ------------- ---------- -------------
Retained earnings 293,737 290,090
---------------------------- ----- ---------- ------------- ---------- -------------
Total shareholders'
equity 393,737 390,090
---------------------------- ----- ---------- ------------- ---------- -------------
Condensed Interim Cash Flow Statement
For the six months ended 30 June 2019
6 months to 6 months to
30 June 30 June
2019 2018
Note GBP GBP
------------------------------------- ----- -------------- ---------------
Cash flow from operating activities
Net profit for the financial
period 3,647 3,499
------------------------------------- ----- -------------- ---------------
Taxation 846 839
------------------------------------- ----- -------------- ---------------
Operating profit before changes
in working capital and provisions 4,493 4,338
------------------------------------- ----- -------------- ---------------
Cash generated from operations 4,493 4,338
------------------------------------- ----- -------------- ---------------
Net cash from operating activities 4,493 4,338
------------------------------------- ----- -------------- ---------------
Net decrease in loans and
interest receivable 3,003,397 13,084,072
------------------------------------- ----- -------------- ---------------
Net decrease in debt securities
in issue and interest payable (3,003,779) (13,083,345)
------------------------------------- ----- -------------- ---------------
Net cash flow used in financing
activities (382) 727
------------------------------------- ----- -------------- ---------------
Net increase in cash and cash
equivalents 4,111 5,065
------------------------------------- ----- -------------- ---------------
Cash and cash equivalents
at beginning of period 223,533 215,608
------------------------------------- ----- -------------- ---------------
Cash and cash equivalents
at end of period 6 227,644 220,673
------------------------------------- ----- -------------- ---------------
Interest receipts and payments during the period were as
follows:
6 months to 6 months to
30 June 2019 30 June 2018
GBP GBP
------------------------------------------- ------------- -------------
Interest received from parent undertaking 665,130 756,122
------------------------------------------- ------------- -------------
Interest paid to note holders 661,524 750,106
------------------------------------------- ------------- -------------
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 2019
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 2018, 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 2018.
2. Directors' Emoluments
None of the directors received any remuneration in respect of
their services to the Company during the period (2018: GBPnil).
3. Taxation
6 months 6 months
to to
30 June 30 June
2019 2018
GBP GBP
-------------- --------- ---------
Current tax 782 968
-------------- --------- ---------
Deferred tax 64 (129)
-------------- --------- ---------
Total tax 846 839
-------------- --------- ---------
The tax charge can be explained as follows:
6 months to 6 months
to
30 June 2019 30 June
2018
GBP GBP
---------------------------------- ------------- ---------
Profit before tax 4,493 4,338
---------------------------------- ------------- ---------
United Kingdom corporation tax
at 19% 854 824
---------------------------------- ------------- ---------
Fair value movements not subject
to tax (72) 144
---------------------------------- ------------- ---------
Deferred tax 64 (129)
---------------------------------- ------------- ---------
Tax charged for the period 846 839
---------------------------------- ------------- ---------
4. Non-Current Assets: Loan to Parent Undertaking
At 30 June At 31 December
2019 2018
GBP GBP
---------------------------------- ------------ ---------------
At beginning of period 99,189,288 133,151,064
---------------------------------- ------------ ---------------
Revaluation due to transition to
IFRS 9 - (13,674,614)
---------------------------------- ------------ ---------------
99,189,288 119,476,450
---------------------------------- ------------ ---------------
FX movements (250,939) 924,751
---------------------------------- ------------ ---------------
Fair value movements (2,642,185) (21,211,913)
---------------------------------- ------------ ---------------
At end of period 96,296,164 99,189,288
---------------------------------- ------------ ---------------
Due
---------------------------------- ------------ ---------------
In 5 years or more 96,296,164 99,189,288
---------------------------------- ------------ ---------------
IFRS 9 requires the EUR150,000,000 loan to be carried at fair
value which as at 30 June 2019 was GBP96,296,164 (at 31 December
2018: GBP99,189,288). On an amortised cost basis, the value of the
loan at 30 June 2019 would be GBP134,326,754 (at 31 December 2018:
GBP134,075,815). 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 effective interest rate on the above loan at 30 June 2019
was 0.68% (31 December 2018: 1.13%).
5. Current Assets: Other Financial Assets
At 30 June At 31 December
2019 2018
GBP GBP
--------------------- ----------- ---------------
Interest receivable 142,088 252,361
--------------------- ----------- ---------------
6. Cash and Cash Equivalents
At 30 June 2019 the Company held cash of GBP227,644 (31 December
2018: GBP223,533) at the parent undertaking. Of this balance,
GBP227,644 (31 December 2018: overdraft of GBP168,639) was held in
a sterling account. The equivalent of GBPnil (31 December 2018:
GBP392,172) was held in a euro account.
7. Deferred Income Taxes
At 30 June At 31 December
2019 2018
GBP GBP
------------------------- ----------- ---------------
At beginning of period (34,190) -
------------------------- ----------- ---------------
Transition to IFRS 9 - (33,954)
------------------------- ----------- ---------------
Recognised in income
Income statement charge (64) (236)
------------------------- ----------- ---------------
At end of period (34,254) (34,190)
------------------------- ----------- ---------------
Deferred tax assets less liabilities are attributable to the
following items:
At 30 June At 31 December
2019 2018
GBP GBP
---------------------------------------- ------------ ---------------
Fair value of intra group loans 6,465,200 5,930,710
---------------------------------------- ------------ ---------------
Fair value of debt securities in issue (6,499,454) (5,964,900)
---------------------------------------- ------------ ---------------
(34,254) (34,190)
---------------------------------------- ------------ ---------------
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
2019 2018
GBP GBP
------------------ ----------- ---------------
Interest payable 139,998 250,275
------------------ ----------- ---------------
9. Non-Current Liabilities: Debt Securities in Issue
At 30 June At 31 December
2019 2018
GBP GBP
---------------------------------- ------------ ---------------
At beginning of period 98,988,175 133,151,064
---------------------------------- ------------ ---------------
Revaluation due to transition to
IFRS 9 - (13,874,341)
---------------------------------- ------------ ---------------
98,988,175 119,276,723
---------------------------------- ------------ ---------------
FX movements (250,939) 924,751
---------------------------------- ------------ ---------------
Fair value movements (2,642,563) (21,213,299)
---------------------------------- ------------ ---------------
At end of period 96,094,673 98,988,175
---------------------------------- ------------ ---------------
Due
---------------------------------- ------------ ---------------
In 5 years or more 96,094,673 98,988,175
---------------------------------- ------------ ---------------
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 2019 was GBP96,094,673 (at 31 December 2018:
GBP98,988,175). On an amortised cost basis, the value of the debt
securities in issue at 30 June 2019 would be GBP134,326,754 (at 31
December 2018: 134,075,815). 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 (but not some only) of the Perpetual Subordinated
Notes at their principal amount.
The effective interest rate on the above notes at 30 June 2019
was 0.67% (31 December 2018: 1.12%).
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.
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 - 224,997 674,992 3,599,957 134,326,754 138,826,700
----------------------- ------- --------- --------- ----------- ------------- -------------
11. Share Capital
At 30 June At 31 December
2019 2018
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
2019 2018
GBP GBP
------------------------------------- ----------- ---------------
Cash and cash equivalents at parent
undertaking 227,644 223,533
------------------------------------- ----------- ---------------
Accrued interest receivable from
parent undertaking 142,088 252,361
------------------------------------- ----------- ---------------
Loans to parent undertaking 96,296,164 99,189,288
------------------------------------- ----------- ---------------
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 2019 30 June 2018
GBP GBP
----------------------------------------- ------------- -------------
Interest income from parent undertaking 554,857 792,051
----------------------------------------- ------------- -------------
There were no loans made to Directors during the period (6
months to 30 June 2018: none) and no balances outstanding at the
period end (at 31 December 2018: GBPnil). There were no employees
of the Company during the period (6 months to 30 June 2018:
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.
23 September 2019
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
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Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR CKNDBQBKDPCB
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September 23, 2019 10:34 ET (14:34 GMT)
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