REG - Rothschild & Co - Half-year Report

Rothschild & Co SCAAnnouncement

20/09/2021 18:15

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

2021


30 June

2020








Note


£


£




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
 







 
Share Capital


Retained Earnings


 
Total








£


£


£




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


£


£


£


£




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

2021


30 June

2020








Note


£


£




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








£


£




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: £nil).  
 
3.   Taxation
 







6 months to

30 June 2021


6 months to 
30 June 2020








£


£




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








£


£




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








£


£




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 €150,000,000 loan to be carried at fair value which as at 30 June 2021 was £114,248,685 (at 31 December 2020: £110,973,131).  On an amortised cost basis, the value of the loan at 30 June 2021 would be £128,745,419 (at 31 December 2020: £134,882,343).  The fair values are based on the market value of the external debt securities (level 2).  
 
The interest rate charged on the €150 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








£


£




Interest receivable


92,697


2,023



 
6.   Cash and Cash Equivalents 
 
At 30 June 2021 the Company held cash of £249,987 (31 December 2020: £245,750) at the parent undertaking. Of this balance, £211,543 (31 December 2020: overdraft of £211,543) was held in a sterling account.  The equivalent of £38,444 (31 December 2020: £34,207) was held in a euro account.  
 
7.   Deferred Income Taxes
 







At 30 June


At 31 December








2021


2020








£


£




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 2021


At 31 December 2020








£


£




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








£


£




Interest payable


(90,766)


-



 
 
9.   Non-Current Liabilities: Debt Securities in Issue 
 







At 30 June


At 31 December








2021


2020








£


£




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 £114,055,567 (at 31 December 2020: £110,770,808).  On an amortised cost basis, the value of the debt securities in issue at 30 June 2021 would be £128,745,419 (at 31 December 2020: £134,882,243). The fair value was derived from the quoted market price at the balance sheet date (level 1).  
 
The interest rate payable on the €150 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 on


but over


but over
















Demand


demand


3 months


1 year


Perpetual


Total








£


£


£


£


£


£




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 on


but over


but over
















Demand


demand


3 months


1 year


Perpetual


Total








£


£


£


£


£


£




Perpetual subordinated notes


 
-


-


-


-


 
134,882,383


 
134,882,383



 
 
11.   Share Capital
 







At 30 June


At 31 December








2021


2020








£


£




Authorised, allotted, called up and fully paid












100,000 Ordinary shares of £1 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








£


£




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








£


£




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: £nil).  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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