TIDMRCHA
RNS Number : 3255Z
Rothschild & Co Contin Fin CI Ltd
13 September 2022
Rothschild & Co Continuation Finance CI Limited
Half-yearly Report for the six-month period ended 30 June
2022
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 ("R&CoCL"). 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 2022, 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").
The Company's principal risk is credit exposure to other group
companies, as the notes issued by the Company have been on-lent to
R&CoCL and NMR. R&CoCL has 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 current market and geopolitical
headwinds but, nevertheless, have 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.
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
Paul O'Leary
Director
13 September 2022
Condensed Interim Statement of Comprehensive Income
For the six months ended 30 June 2022
6 months 6 months
to to
30 June 30 June
2022 2021
Note GBP GBP
----------------------------------- -------- ------------- ----------
Interest income 5,588,452 5,557,577
----------------------------------- --- -------------- --------------
Interest expense (5,578,767) (5,547,945)
----------------------------------- --- -------------- --------------
Operating profit 9,685 9,632
----------------------------------- --- -------------- --------------
Revaluation of loans 4 (8,238,750) (2,512,500)
----------------------------------- --- -------------- --------------
Revaluations of debt securities 9 8,238,750 2,512,500
----------------------------------- --- -------------- --------------
Administrative expenses (650) (650)
----------------------------------- --- -------------- --------------
Profit before tax 9,035 8,982
----------------------------------- --- -------------- --------------
Income tax expense 3 (1,717) (1,707)
----------------------------------- --- -------------- --------------
Profit for the financial period 7,318 7,275
----------------------------------- --- -------------- --------------
Other comprehensive income - -
----------------------------------- --- -------------- --------------
Total comprehensive income for
the financial period 7,318 7,275
----------------------------------- --- -------------- --------------
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 100,000 188,692 288,692
-------------------------------- ---------------- ---------- --------
Total comprehensive income for
the period - 7,318 7,318
-------------------------------- ---------------- ---------- --------
At 30 June 2022 100,000 196,010 296,010
-------------------------------- ---------------- ---------- --------
At 1 January 2021 100,000 173,441 273,441
-------------------------------- ---------------- ---------- --------
Total comprehensive income for
the period - 7,275 7,275
-------------------------------- ---------------- ---------- --------
At 30 June 2021 100,000 180,716 280,716
-------------------------------- ---------------- ---------- --------
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
Loans to group undertakings 4 137,390,000 145,628,750
----------------------------- ----- ------------ -------------- ------------- --------------
Current assets
Other financial assets 5 4,168,182 6,496,190
----------------------------- ----- ------------ -------------- ------------- --------------
Cash and cash equivalents 6 192,831 3,527,021
----------------------------- ----- ------------ -------------- ------------- --------------
4,361,013 10,023,211
----------------------------- ----- ------------ -------------- ------------- --------------
Current liabilities
Current tax payable (5,294) (3,577)
----------------------------- ----- ------------ -------------- ------------- --------------
Deferred tax 7 (23,750) (23,750)
----------------------------- ----- ------------ -------------- ------------- --------------
Other financial liabilities 8 (4,160,959) (9,832,192)
----------------------------- ----- ------------ -------------- ------------- --------------
Net current assets 171,010 163,692
----------------------------- ----- ------------ -------------- ------------- --------------
Total assets less
current liabilities 137,561,010 145,792,442
----------------------------- ----- ------------ -------------- ------------- --------------
Non-current liabilities
Subordinated guaranteed
notes 9 (137,265,000) (145,503,750)
----------------------------- ----- ------------ -------------- ------------- --------------
Net assets 296,010 288,692
----------------------------- ----- ------------ -------------- ------------- --------------
Shareholders' equity
Share capital 11 100,000 100,000
----------------------------- ----- ------------ -------------- ------------- --------------
Retained earnings 196,010 188,692
----------------------------- ----- ------------ -------------- ------------- --------------
Total shareholders'
equity 296,010 288,692
----------------------------- ----- ------------ -------------- ------------- --------------
Condensed Interim Cash Flow Statement
For the six months ended 30 June 2022
6 months 6 months to
to
30 June 30 June 2021
2022
Note GBP GBP
--------------------------------------- ----- -------------- --------------
Cash flow from operating activities
Profit for the financial period 7,318 7,275
--------------------------------------- ----- -------------- --------------
Income tax expenses 1,717 1,707
--------------------------------------- ----- -------------- --------------
Net cash inflow from operating
activities 9,035 8,982
--------------------------------------- ----- -------------- --------------
Cash flow from financing activities
Fair value movements of loans (8,238,750) (2,512,500)
--------------------------------------- ----- -------------- --------------
Fair value movements of debt
securities 8,238,750 2,512,500
--------------------------------------- ----- -------------- --------------
Net decrease in other financial
assets 2,328,008 2,358,883
--------------------------------------- ----- -------------- --------------
Net decrease in other financial
liabilities (5,671,233) (5,702,055)
--------------------------------------- ----- -------------- --------------
Net cash outflow from financing
activities (3,343,225) (3,334,190)
--------------------------------------- ----- -------------- --------------
Net decrease in cash and cash
equivalents (3,334,190) (3,334,190)
--------------------------------------- ----- -------------- --------------
Cash and cash equivalents at
beginning of the half-year 3,527,021 3,511,737
--------------------------------------- ----- -------------- --------------
Cash and cash equivalents at
end of the half-year 6 192,831 177,547
--------------------------------------- ----- -------------- --------------
Interest paid and received during the period were as
follows:
6 months to 6 months to
30 June 2022 30 June 2021
GBP GBP
------------------- ------------- -------------
Interest paid 11,250,000 11,250,000
------------------- ------------- -------------
Interest received 7,916,460 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 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 R&CoCL and their 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 (2020: GBPnil).
3. Taxation
6 months to 6 months to
30 June 2022 30 June 2021
GBP GBP
---------------------------- ------------- -------------
Current tax (1,717) (1,707)
---------------------------- ------------- -------------
Tax charged for the period (1,717) (1,707)
---------------------------- ------------- -------------
The current tax charge can be explained as follows:
6 months to 6 months to
30 June 2022 30 June 2021
GBP GBP
-------------------------------- ------------- -------------
Profit before tax 9,035 8,982
-------------------------------- ------------- -------------
United Kingdom corporation tax
at 19% (1,717) (1,707)
-------------------------------- ------------- -------------
Tax charged for the period (1,717) (1,707)
-------------------------------- ------------- -------------
4. Loans to Group Undertakings
At 30 June At 31 December
2022 2021
GBP GBP
------------------------ ------------ ---------------
At beginning of period 145,628,750 148,962,500
------------------------ ------------ ---------------
Fair value movements (8,238,750) (3,333,750)
------------------------ ------------ ---------------
At end of period 137,390,000 145,628,750
------------------------ ------------ ---------------
Due In 5 years or more 137,390,000 145,628,750
------------------------ ------------ ---------------
IFRS 9 requires the GBP125,000,000 loans to be carried at fair
value which as at 30 June 2022 was GBP137,390,000 (at 31 December
2021: GBP145,628,750). On an amortised cost basis, the value of the
loan at 30 June 2022 would be GBP125,000,000 (at 31 December 2021:
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 percent.
5. Other Financial Assets
At 30 June At 31 December
2022 2021
GBP GBP
------------------------------------ ----------- ---------------
Amounts owed by parent undertaking 2,500,910 3,939,705
------------------------------------ ----------- ---------------
Amounts owed by fellow subsidiary
undertaking 1,667,272 2,556,485
------------------------------------ ----------- ---------------
4,168,182 6,496,190
------------------------------------ ----------- ---------------
6. Cash and Cash Equivalents
At 30 June 2022 the Company held cash of GBP192,831 (31 December
2021: GBP3,527,021) at a fellow subsidiary undertaking.
7. Deferred Income Taxes
At 30 June At 31 December
2022 2021
GBP GBP
------------------------ ----------- ---------------
At beginning of period (23,750) (23,750)
------------------------ ----------- ---------------
At end of period (23,750) (23,750)
------------------------ ----------- ---------------
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 (2,354,100) (3,919,463)
--------------------------------------------- ------------ ---------------
Fair value of debt securities in issue 2,330,350 3,895,713
--------------------------------------------- ------------ ---------------
(23,750) (23,750)
--------------------------------------------- ------------ ---------------
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. Other Financial Liabilities
At 30 June At 31 December
2022 2021
GBP GBP
------------------ ----------- ---------------
Interest payable 4,160,959 9,832,192
------------------ ----------- ---------------
Interest is payable on the subordinated guaranteed notes at 9
percent.
9. Subordinated Guaranteed Notes
At 30 June At 31 December
2022 2021
GBP GBP
------------------------ ------------ ---------------
At beginning of period 145,503,750 148,837,500
------------------------ ------------ ---------------
Fair value movements (8,238,750) (3,333,750)
------------------------ ------------ ---------------
At end of period 137,265,000 145,503,750
------------------------ ------------ ---------------
Due In 5 years or more 137,265,000 145,503,750
------------------------ ------------ ---------------
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 2022 was GBP137,265,000 (at 31 December
2021: GBP145,503,750). On an amortised cost basis, the value of the
subordinated guaranteed notes at 30 June 2022 would be
GBP125,000,000 (at 31 December 2021: 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 classified 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 >5 yr column.
At 30 June 2022
Demand Demand 3mth - 1yr - 5yr >5 yr Total
- 3mth 1yr
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 2021
Demand Demand 3mth - 1yr - 5yr >5 yr Total
- 3mth 1yr
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
2022 2021
GBP GBP
------------------------------- ----------- ---------------
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
2022 2021
GBP GBP
-------------------------------------------------- ----------- ---------------
Subordinated perpetual loan to parent undertaking
- fair value 54,956,000 58,251,500
-------------------------------------------------- ----------- ---------------
Subordinated perpetual loan to fellow subsidiary
undertaking - fair value 82,434,000 87,377,250
-------------------------------------------------- ----------- ---------------
Amounts owed by parent undertaking 2,500,910 3,939,705
-------------------------------------------------- ----------- ---------------
Amounts owed by fellow subsidiary undertaking 1,667,272 2,556,485
-------------------------------------------------- ----------- ---------------
Cash at fellow subsidiary undertaking 192,831 3,527,021
-------------------------------------------------- ----------- ---------------
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
2022 30 June
2021
GBP GBP
-------------------------------------------- ----------- ----------
Interest receivable from parent undertaking 3,353,071 3,334,546
-------------------------------------------- ----------- ----------
Interest receivable from fellow subsidiary
undertaking 2,235,381 2,223,031
-------------------------------------------- ----------- ----------
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. 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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