TIDMRCHA

RNS Number : 7378J

Rothschilds Continuation Finance CI

30 June 2017

Rothschilds Continuation Finance (C.I.) Limited

Report of the Directors and Financial Statements for the year ended

31 March 2017

Report of the Directors

The Directors present their Directors' report and financial statements for the year ended 31 March 2017.

Principal Activities and Business Review

The principal activity of Rothschilds Continuation Finance (C.I.) Limited (the Company) is the raising of finance for the purpose of lending it to other companies, including members of the Rothschild Concordia SAS group. The results for the year are set out in the Statement of Comprehensive Income on page 7.

As at 31 March 2017, GBP125,000,000 perpetual subordinated notes were in issue by the Company.

Rothschild & Co SCA announced on 21 March 2017 that it will change its financial year end from 31 March to 31 December. There will therefore be a 9 month accounting period until 31 December 2017. Rothschilds Continuation Finance (C.I.) Limited will also change its year end in line with its ultimate parent.

Principal 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 a fellow Group company N M Rothschild & Sons Limited.

The Company's market risk exposure is limited to interest rate. Exposure to interest rate movements on the perpetual subordinated note issues has been passed to a fellow subsidiary N M Rothschild & Sons Limited ("NMR") and parent undertaking Rothschilds Continuation Limited ("RCL"), as the issue proceeds have been on-lent to NMR and RCL at a fixed margin of 1/64 per cent above the rate being paid.

Liquidity risk has similarly been transferred to NMR and RCL as the funds on-lent have the same maturity dates as the notes issued. The Company's principal credit risk is with NMR and RCL.

Since notes issued by the Company have been guaranteed by, and funds have been on-lent to, NMR and RCL, the Company's ability to meet its obligations in respect of notes issued by it is affected by NMR's and RCL's ability to make payments to the Company.

Currency risk is not considered significant as all material foreign currency balances and cash flows are matched.

Directors

The Directors who held office during the year were as follows:

 
 Anthony Coghlan 
 Mark Crump 
 David Oxburgh 
 

Directors' Indemnity

The Company has provided qualifying third-party indemnities for the benefit of its Directors. These were provided during the period and remain in force at the date of this report

Dividends

The Directors do not recommend the payment of a dividend (2016: GBPnil).

Auditor

Pursuant to Section 487 of the Companies Act 2006, the auditor will be deemed to be reappointed and KPMG LLP will therefore continue in office.

Audit Information

The Directors who held office at the date of approval of this Report of the Directors confirm that, so far as they are each aware, there is no relevant audit information of which the Company's auditor is unaware, and each Director has taken all the steps that he or she ought to have taken as a Director to make himself or herself aware of any relevant audit information and to establish that the Company's auditors are aware of that information.

By Order of the Board

 
 Anthony Coghlan   Peter Barbour 
  Director          Director 
 

23 June 2017

Statement of Directors' Responsibilities

in Respect of the Directors' Report and the Financial Statements

The Directors are responsible for preparing the Directors' Report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law they have elected to prepare the financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU and applicable law.

The financial statements are required by law to give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period.

In preparing these financial statements, the Directors are required to:

 
 --   select suitable accounting policies and then 
       apply them consistently; 
 --   make judgements and estimates that are reasonable 
       and prudent; 
 --   state whether applicable International Financial 
       Reporting Standards as adopted by the European 
       Union have been followed, subject to any material 
       departures disclosed and explained in the financial 
       statements; and 
 --   prepare the financial statements on the going 
       concern basis unless it is inappropriate to 
       presume that the Company will continue in business. 
 

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the company and to enable them to ensure that the financial statements comply with The Companies (Guernsey) Law, 2008. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the company and to prevent and detect fraud and other irregularities.

 
 By Order of the Board 
 
 Anthony Coghlan                                                   Peter Barbour 
  Director                                                          Director 
 23 June 2017 
 

Independent Auditor's Report to the Members of Rothschilds Continuation Finance (C.I.) Limited

We have audited the financial statements (the "financial statements") of Rothschilds Continuation Finance (C.I.) Limited (the "Company") for the year ended 31 March 2017 which comprise the Statement of Comprehensive Income, the Balance Sheet, Statement of Changes in Equity, the Cash Flow Statement and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards as adopted by the European Union.

This report is made solely to the Company's members, as a body, in accordance with section 262 of the Companies (Guernsey) Law, 2008. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective Responsibilities of Directors and Auditor

As explained more fully in the Statement of Directors' Responsibilities set out on page 4 the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Board of Directors; and the overall presentation of the financial statements. In addition we read all the financial and non-financial information in the Report of the Directors to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on financial statements

In our opinion the financial statements:

 
   give a true and fair view of the state of 
    the Company's affairs as at 31 March 2017 
    and of its profit for the year then ended; 
   are in accordance with International Financial 
    Reporting Standards as adopted by the European 
    Union; and 
   comply with the Companies (Guernsey) Law 
    2008. 
 

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies (Guernsey) Law 2008 requires us to report to you if, in our opinion:

 
   the Company has not kept proper accounting 
    records, or 
   the financial statements are not in agreement 
    with the accounting records; or 
   we have not received all the information 
    and explanations, which to the best of our 
    knowledge and belief are necessary for the 
    purpose of our audit. 
 

Pamela McIntyre (Senior Statutory Auditor)

for and on behalf of KPMG LLP, Statutory Auditor

Chartered Accountants

15 Canada Square

London E14 5GL

23 June 2017

Statement of Comprehensive Income

For the year ended 31 March 2017

 
                                              2017                  2016 
                              Notes            GBP                   GBP 
---------------------------  ------  -------------  -------------------- 
Interest income                         11,238,815            11,305,245 
---------------------------  ------  -------------  -------------------- 
Interest expense                      (11,219,178)          (11,280,822) 
---------------------------  ------  -------------  -------------------- 
Operating profit                            19,637                24,423 
---------------------------  ------  -------------  -------------------- 
Administrative expenses                    (1,300)                 (650) 
---------------------------  ------  -------------  -------------------- 
Profit before tax                 4         18,337                23,773 
---------------------------  ------  -------------  -------------------- 
Income tax expense                5        (3,667)               (4,755) 
---------------------------  ------  -------------  -------------------- 
Profit for the financial 
 year                                       14,670                19,018 
---------------------------  ------  -------------  -------------------- 
Other comprehensive income                       -                     - 
---------------------------  ------  -------------  -------------------- 
Total comprehensive income 
 for the financial year                     14,670                19,018 
---------------------------  ------  -------------  -------------------- 
 

All amounts are in respect of continuing activities.

Balance Sheet

At 31 March 2017

 
                                          2017            2017          2016            2016 
                           Notes           GBP             GBP           GBP             GBP 
------------------------  ------  ------------  --------------  ------------  -------------- 
Non-current assets 
Loans to group 
 undertakings                  6                   125,000,000                   125,000,000 
------------------------  ------  ------------  --------------  ------------  -------------- 
Current assets 
Other financial 
 assets                        7     1,358,519                     1,389,395 
------------------------  ------  ------------  --------------  ------------  -------------- 
Cash and cash 
 equivalents                   8       265,660                       252,024 
------------------------  ------  ------------  --------------  ------------  -------------- 
                                     1,624,179                     1,641,419 
------------------------  ------  ------------  --------------  ------------  -------------- 
Current liabilities 
Current tax payable                    (3,667)                       (4,755) 
------------------------  ------  ------------  --------------  ------------  -------------- 
Other financial 
 liabilities                   9   (1,356,164)                   (1,386,986) 
------------------------  ------  ------------  --------------  ------------  -------------- 
Net current assets                                     264,348                       249,678 
------------------------  ------  ------------  --------------  ------------  -------------- 
Total assets 
 less current 
 liabilities                                       125,264,348                   125,249,678 
------------------------  ------  ------------  --------------  ------------  -------------- 
Non-current liabilities 
Subordinated 
 guaranteed notes             10                 (125,000,000)                 (125,000,000) 
------------------------  ------  ------------  --------------  ------------  -------------- 
Net assets                                             264,348                       249,678 
------------------------  ------  ------------  --------------  ------------  -------------- 
Shareholders' 
 equity 
Share capital                 11                       100,000                       100,000 
------------------------  ------  ------------  --------------  ------------  -------------- 
Retained earnings                                      164,348                       149,678 
------------------------  ------  ------------  --------------  ------------  -------------- 
Total shareholders' 
 equity                                                264,348                       249,678 
------------------------  ------  ------------  --------------  ------------  -------------- 
 

Approved by the Board of Directors and signed on its behalf on 23 June 2017 by:

 
 Anthony Coghlan                                             Peter Barbour 
  Director                                                    Director 
 

Statement of Changes in Equity

For the year ended 31 March 2017

 
                               Share   Retained  Total Equity 
                             Capital   Earnings 
                                 GBP        GBP           GBP 
--------------------------  --------  ---------  ------------ 
At 1 April 2016              100,000    149,678       249,678 
--------------------------  --------  ---------  ------------ 
Total comprehensive 
 income for the financial 
 year                              -     14,670        14,670 
--------------------------  --------  ---------  ------------ 
At 31 March 2017             100,000    164,348       264,348 
--------------------------  --------  ---------  ------------ 
 
At 1 April 2015              100,000    130,660       230,660 
--------------------------  --------  ---------  ------------ 
Total comprehensive 
 income for the financial 
 year                              -     19,018        19,018 
==========================  ========  =========  ============ 
At 31 March 2016             100,000    149,678       249,678 
--------------------------  --------  ---------  ------------ 
 

Cash Flow Statement

For the year ended 31 March 2017

 
                                                2017       2016 
                                     Notes       GBP        GBP 
-----------------------------------  -----  --------  --------- 
Cash flow from operating 
 activities 
Profit for the financial 
 year                                         14,670     19,018 
-----------------------------------  -----  --------  --------- 
Income tax expense                             3,667      4,755 
-----------------------------------  -----  --------  --------- 
Operating profit before changes 
 in working capital and provisions            18,337     23,773 
                                            --------  --------- 
Net decrease/(increase) in 
 debtors                                      30,876   (49,401) 
-----------------------------------  -----  --------  --------- 
Net (decrease)/increase in 
 other financial liabilities                (30,822)     30,821 
-----------------------------------  -----  --------  --------- 
Cash generated from operations                18,391      5,193 
-----------------------------------  -----  --------  --------- 
Income taxes paid                            (4,755)    (5,104) 
-----------------------------------  -----  --------  --------- 
Net cash flow from operating 
 activities                                   13,636         89 
-----------------------------------  -----  --------  --------- 
Net increase in cash and 
 cash equivalents                             13,636         89 
-----------------------------------  -----  --------  --------- 
Cash and cash equivalents 
 at 1 April                                  252,024    251,935 
-----------------------------------  -----  --------  --------- 
Cash and cash equivalents 
 at 31 March                             8   265,660    252,024 
-----------------------------------  -----  --------  --------- 
 

Interest paid and received during the year were as follows :

 
                          2017         2016 
                           GBP          GBP 
------------------  ----------  ----------- 
Interest paid       11,250,000   11,250,000 
------------------  ----------  ----------- 
Interest received   11,269,691   11,255,844 
------------------  ----------  ----------- 
 

Notes to the Financial Statements

(forming part of the Financial Statements)

For the year ended 31 March 2017

   1.    Accounting Policies 

Rothschilds Continuation Finance (C.I.) Limited ("the Company") is a private limited company incorporated in Guernsey. The principal accounting policies which have been consistently adopted in the presentation of the financial statements are as follows:

   a.    Basis of preparation 

The financial statements are prepared and approved by the Directors in accordance with International Financial Reporting Standards ("IFRS") and International Financial Reporting Interpretations Committee ("IFRIC") interpretations, endorsed by the European Union ("EU") and with those requirements of the Companies (Guernsey) Law 2008 applicable to companies reporting under IFRS. The financial statements are prepared under the historical cost accounting rules and presented in its sterling, unless otherwise stated. The maturities of the Company's liabilities are matched with the maturities of its assets. There is, therefore a strong expectation that the Company has adequate resources to continue in operational existence for the foreseeable future and accordingly, the financial statements have been prepared on a going concern basis.The financial statements are presented in sterling, unless otherwise stated.

Standards affecting the financial statements

In the current year, there have been no new or revised Standards and Interpretations that have been adopted that have materially affected the amounts reported in these financial statements.

Future accounting developments

A number of new standards, amendments to standards and interpretations are effective for accounting periods ending after 31 March 2017 and therefore have not been applied in preparing these financial statements. None of these are expected to have a significant effect on future financial statements.

   b.    Interest receivable and payable 

Interest is recognised in the statement of comprehensive income using the effective interest rate method.

   c.    Taxation 

Tax payable on profits is recognised in the statement of comprehensive income.

   d.    Cash and cash equivalents 

For the purposes of the cash flow statement, cash and cash equivalents comprise balances with other group companies that are readily convertible to cash and are subject to an insignificant risk of changes in value.

   e.    Capital management 

The Company is not subject to any externally imposed capital requirements. It is dependent on Rothschilds Continuation Limited (the parent undertaking) to provide capital resources which are therefore managed on a group basis.

   f.     Financial assets and liabilities 

Financial assets and liabilities are recognised on trade date and derecognised on either trade date, if applicable, or on maturity or repayment.

On initial recognition, IAS 39 requires that financial assets be classified into the following categories; at fair value through profit or loss, loans and receivables, held-to-maturity investments, or available for sale investments. The company does not hold any assets that are classified as held-to-maturity or available for sale.

   g.    Loans and advances 

Loans and advances are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.

Loans and advances are intitially recorded at fair value, including any transaction costs and are subsequently measured at amortised cost using the effective interest rate method. Gains and losses arising on derecognition of loans and advances are recognised in other operating income.

   h.    Accounting Judgements and estimates 

The preparation of financial statements in accordance with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the accounting policies.

   2.    Financial Risk Management 

The Company follows the financial risk management policies of the parent undertaking, Rothschilds Continuation 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 12 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 material cash inflows and outflows from financial assets and liabilities are substantially matched.

   3.    Directors' Emoluments 

None of the Directors received any remuneration in respect of their services to the Company during the year (2016: GBPnil).

   4.    Profit Before Tax 
 
                                                2017          2016 
                                                 GBP           GBP 
--------------------------------------  ------------  ------------ 
  Is stated after 
  i. Income 
  Interest from loans to Group 
   undertakings 
  Parent undertaking                       4,495,462     4,520,163 
--------------------------------------  ------------  ------------ 
  Fellow subsidiary undertaking            6,743,194     6,780,244 
--------------------------------------  ------------  ------------ 
                                          11,238,656    11,300,407 
--------------------------------------  ------------  ------------ 
  Other interest receivable 
   from fellow subsidiary undertaking            159         4,838 
--------------------------------------  ------------  ------------ 
                                          11,238,815    11,305,245 
--------------------------------------  ------------  ------------ 
  ii. Charges 
  Interest payable on subordinated 
   guaranteed notes                       11,219,178    11,280,282 
--------------------------------------  ------------  ------------ 
 

The amount receivable by the auditors and their associates in respect of the audit of these financial statements is GBP3,511 (2016: GBP3,902). The audit fee is paid on a group basis by N M Rothschild & Sons Limited.

   5.    Taxation 
 
                                                     2017      2016 
                                                      GBP       GBP 
-----------------------------------------------  --------  -------- 
  Profit before tax                                18,337    23,773 
-----------------------------------------------  --------  -------- 
  United Kingdom corporation tax at 20% (2016: 
   20%)                                             3,667     4,755 
-----------------------------------------------  --------  -------- 
 
   6.    Loans to Group Undertakings 
 
                                    Subordinated 
                                 Perpetual Loans 
                           to Group Undertakings 
                                             GBP 
-------------------------  --------------------- 
At the beginning and end 
 of the year                         125,000,000 
-------------------------  --------------------- 
 

The interest rate charged on the subordinated perpetual loans to group undertakings is 9 1/64 per cent. The fair value of the loans was GBP157,312,500 as at 31 March 2017 (2016: GBP148,668,750). The fair value was estimated using market price at the balance sheet date for similar instruments (level 2) .

   7.    Other Financial Assets 
 
                               2017        2016 
                                GBP         GBP 
------------------------  ---------  ---------- 
Amounts owed by parent 
 undertaking                543,408     555,758 
------------------------  ---------  ---------- 
Amounts owed by fellow 
 subsidiary undertaking     815,111     833,637 
------------------------  ---------  ---------- 
                          1,358,519   1,389,395 
------------------------  ---------  ---------- 
 
   8.    Cash and Cash Equivalents 

At the year end the Company held cash of GBP265,660 (2016: GBP252,024) at a fellow subsidiary undertaking. The Company receives interest at 0%.

   9.    Other Financial Liabilities 
 
                        2017        2016 
                         GBP         GBP 
-----------------  ---------  ---------- 
Interest payable   1,356,164   1,386,986 
-----------------  ---------  ---------- 
 

Interest payable on the subordinated guaranteed notes is fixed at 9 per cent.

10. Subordinated Guaranteed Notes

 
                                       2017         2016 
                                        GBP          GBP 
------------------------------  -----------  ----------- 
GBP125,000,000 9% Perpetual 
Subordinated Guaranteed Notes   125,000,000  125,000,000 
------------------------------  -----------  ----------- 
 

The fair value of the subordinated guaranteed notes was GBP157,187,500 as at 31 March 2017 (2016: GBP148,543,750). The fair value was estimated using market price at the balance sheet date (level 1).

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 are shown up to five years only, with the prinicipal balance being shown in the > 5yr column.

 
             Demand   Demand-3m       3m -       1yr -        > 5yr        Total 
                                       1yr         5yr 
                GBP         GBP        GBP         GBP          GBP          GBP 
-----------  ------  ----------  ---------  ----------  -----------  ----------- 
Loan notes 
 in issue         -   2,804,795  8,445,205  45,000,000  125,000,000  181,250,000 
-----------  ------  ----------  ---------  ----------  -----------  ----------- 
 

11. Share Capital

 
                                   2017     2016 
                                    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 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 year end were as follows:

 
                                              2017         2016 
                                               GBP          GBP 
--------------------------------------  ----------  ----------- 
Subordinated perpetual loan 
 to parent undertaking                  50,000,000   50,000,000 
--------------------------------------  ----------  ----------- 
Subordinated perpetual loan 
 to fellow subsidiary undertaking       75,000,000   75,000,000 
--------------------------------------  ----------  ----------- 
Amounts owed by parent undertaking         543,408      555,758 
--------------------------------------  ----------  ----------- 
Amounts owed by fellow subsidiary 
 undertaking                               815,111      833,637 
--------------------------------------  ----------  ----------- 
Cash at fellow subsidiary undertaking      265,660      252,024 
--------------------------------------  ----------  ----------- 
 

Amounts recognised in the statement of comprehensive income in respect of related party transactions were as follows:

 
                                       2017        2016 
                                        GBP         GBP 
--------------------------------  ---------  ---------- 
Interest receivable from parent 
 undertaking                      4,495,462   4,520,163 
--------------------------------  ---------  ---------- 
Interest receivable from fellow 
 subsidiary undertaking           6,743,353   6,780,244 
--------------------------------  ---------  ---------- 
 

There were no loans made to Directors during the year (2016: none) and no balances outstanding at year-end (2016: GBPnil). There were no employees of the Company during the year (2016: none).

13. Parent Undertaking and Ultimate Holding Company

The largest group in which the results of the Company are consolidated is that headed by Rothschild 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 Rothschild & Co website at www.rothschildandco.com.

The Company's immediate parent company is Rothschilds 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.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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