TIDM68WN
RNS Number : 2042E
Rothschilds Continuation FinancePLC
14 July 2016
Rothschilds Continuation Finance PLC
Report of the Directors and Financial Statements
for the year ended 31 March 2016
Strategic Report
Business Model and Strategic Objectives
Rothschilds 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 typically by the
issue of notes guaranteed by NMR, both under the terms of its
GBP2,000,000,000 Euro Medium Term Note Programme, which was
established on 20 February 2001, and separately as perpetual
subordinated notes. Note issues are made from time to time,
depending on the Group's funding requirements. As at 31 March 2016,
only perpetual subordinated notes were in issue by the Company.
Business Update and Key Performance Indicators
Net interest income for the year ended 31 March 2016 was
GBP12,098, an increase of GBP776 (7%) on the prior year. The
Company's profit before tax was GBP24,409 compared to a loss of
GBP10,476 in the prior year. The fluctuation from loss to profit is
mainly due to foreign exchange rate movements. Whilst interest cash
flows are largely matched, the Company is exposed to exchange rate
fluctuations on its euro denominated bank balance. The Company did
not issue or redeem any notes during the year.
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 the parent undertaking, NMR.
The Company's market risk exposure is limited to interest rate
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 and systems or from external events is managed by
maintaining a strong framework of internal controls.
On 23 June the UK voted to leave the EU. At the date of signing
these financial statements the Directors do not foresee any
immediate impact on the Company but acknowledge the uncertainty
that exists. The Directors will continue to keep this under
review.
By Order of the Board
Peter Barbour, Director
New Court, St Swithin's Lane, London EC4N 8AL
13 July 2016
Report of the Directors
The Directors present their Directors' report and the financial
statements for the year ended 31 March 2016.
Dividends
The Directors do not recommend the payment of a dividend (2015:
GBPnil).
Directors
The Directors who held office during the year were as
follows:
Peter Barbour
Christopher Coleman
Paul Copsey (resigned 31 March 2016)
Mark Crump
Andrew Didham (resigned 17 July 2015)
Adam Greenbury (resigned 17 July 2015)
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.
Auditor
In accordance with Section 489 of the Companies Act 2006, a
resolution for the re-appointment of KPMG LLP as auditor of the
Company is to be proposed at the forthcoming Annual General
Meeting.
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 auditors are 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
Helen Horton, Company Secretary
New Court, St. Swithin's Lane, London EC4N 8AL
13 July 2016
Statement of Directors' Responsibilities in Respect of the
Strategic Report, the Directors' Report and the Financial
Statements
The Directors are responsible for preparing the Strategic
Report, 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 (IFRS) as adopted by
the EU and applicable law.
Under company law the directors must not approve the financial
statements unless they are satisfied that they 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 they have been prepared in accordance
with IFRS as adopted by the EU; 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 adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the Companies Act 2006. 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
Peter Barbour, Director
13 July 2016
Independent Auditor's Report to the Members of Rothschilds
Continuation Finance PLC
We have audited the financial statements of Rothschilds
Continuation Finance PLC for the year ended 31 March 2016 set out
on pages 7 to 15. The financial reporting framework that has been
applied in their preparation is applicable law and International
Financial Reporting Standards (IFRS) as adopted by the EU.
This report is made solely to the Company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
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 Directors' Responsibilities
Statement 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
A description of the scope of an audit of financial statements
is provided on the Financial Reporting Council's website at
www.frc.org.uk/auditscopeukprivate.
Opinion on financial statements
In our opinion the financial statements:
-- give a true and fair view of the Company's affairs as
at 31 March 2016 and of its profit for the year then
ended;
-- have been properly prepared in accordance with IFRS
as adopted by the EU; and
-- have been prepared in accordance with the requirements
of the Companies Act 2006.
Opinion on the other matter prescribed by the Companies Act
2006
In our opinion the information given in the Strategic Report and
the Directors' Report for the financial year for which the
financial statements are prepared is consistent with the financial
statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters
where the Companies Act 2006 requires us to report to you if, in
our opinion:
-- adequate accounting records have not been kept, or returns
adequate for our audit have not been received from branches
not visited by us; or
-- the financial statements are not in agreement with the
accounting records and returns; or
-- certain disclosures of directors' remuneration specified
by law are not made; or
-- we have not received all the information and explanations
we require for our audit.
Ravi Lamba (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
15 Canada Square
London E14 5GL
14 July 2016
Statement of Comprehensive Income
For the year ended 31 March 2016
2016 2015
Note GBP GBP
---------------------------------------------- ---- ----------- ------------
Interest income 1,226,636 2,150,047
---------------------------------------------- ---- ----------- ------------
Interest expense (1,214,538) (2,138,725)
---------------------------------------------- ---- ----------- ------------
Operating profit 12,098 11,322
---------------------------------------------- ---- ----------- ------------
Foreign exchange translation profits/(losses) 12,311 (21,798)
---------------------------------------------- ---- ----------- ------------
Profit/(loss) before tax 24,409 (10,476)
---------------------------------------------- ---- ----------- ------------
Taxation 5 (4,882) 2,200
---------------------------------------------- ---- ----------- ------------
Profit/(loss) for the financial
year 19,527 (8,276)
---------------------------------------------- ---- ----------- ------------
Other comprehensive income - -
---------------------------------------------- ---- ----------- ------------
Total comprehensive income/(loss)
for the financial year 19,527 (8,276)
---------------------------------------------- ---- ----------- ------------
All amounts are in respect of continuing activities.
Balance Sheet
At 31 March 2016
2016 2016 2015 2015
Note GBP GBP GBP GBP
---------------------------- ---- --------- ------------- --------- -------------
Non-current assets
Loan to parent undertaking 6 118,732,883 109,095,000
---------------------------- ---- --------- ------------- --------- -------------
Current assets
---------------------------- ---- --------- ------------- --------- -------------
Cash and cash equivalents 8 274,077 247,646
---------------------------- ---- --------- ------------- --------- -------------
Other financial assets 7 183,211 150,551
---------------------------- ---- --------- ------------- --------- -------------
Current tax asset - 2,200
---------------------------- ---- --------- ------------- --------- -------------
457,288 400,397
---------------------------- ---- --------- ------------- --------- -------------
Current liabilities
Current tax payable (4,882) -
---------------------------- ---- --------- ------------- --------- -------------
Other financial liabilities 9 (181,397) (148,915)
---------------------------- ---- --------- ------------- --------- -------------
Net current assets 271,009 251,482
---------------------------- ---- --------- ------------- --------- -------------
Total assets less current
liabilities 119,003,892 109,346,482
---------------------------- ---- --------- ------------- --------- -------------
Non-current liabilities
Debt securities in issue 10 (118,732,883) (109,095,000)
---------------------------- ---- --------- ------------- --------- -------------
Net assets 271,009 251,482
---------------------------- ---- --------- ------------- --------- -------------
Shareholders' equity
Share capital 12 100,000 100,000
---------------------------- ---- --------- ------------- --------- -------------
Retained earnings 171,009 151,482
---------------------------- ---- --------- ------------- --------- -------------
Total shareholders' equity 271,009 251,482
---------------------------- ---- --------- ------------- --------- -------------
Approved by the Board of Directors and signed on its behalf on
13 July 2016 by:
Peter Barbour, Director
Statement of Changes in Equity
For the year ended 31 March 2016
Retained Total
Share Capital Earnings Equity
GBP GBP GBP
----------------------------- ------------- --------- -------
At 1 April 2015 100,000 151,482 251,482
----------------------------- ------------- --------- -------
Total comprehensive profit
for the financial year - 19,527 19,527
----------------------------- ------------- --------- -------
At 31 March 2016 100,000 171,009 271,009
----------------------------- ------------- --------- -------
At 1 April 2014 100,000 159,758 259,758
----------------------------- ------------- --------- -------
Total comprehensive loss for
the financial year - (8,276) (8,276)
----------------------------- ------------- --------- -------
At 31 March 2015 100,000 151,482 251,482
----------------------------- ------------- --------- -------
Cash Flow Statement
For the year ended 31 March 2016
2016 2015
Note GBP GBP
---------------------------------------- ---- ----------- -------------
Cash flow from operating activities
Net profit/(loss) for the financial
year 19,527 (8,276)
---------------------------------------- ---- ----------- -------------
Taxation 4,882 (2,200)
---------------------------------------- ---- ----------- -------------
Operating profit/(loss) before
changes in working capital
and provisions 24,409 (10,476)
---------------------------------------- ---- ----------- -------------
Cash from/(used in ) operations 24,409 (10,476)
---------------------------------------- ---- ----------- -------------
Taxation received/(paid) 2,200 (1,751)
---------------------------------------- ---- ----------- -------------
Net cash from/(used in) operating
activities 26,609 (12,227)
---------------------------------------- ---- ----------- -------------
Cash from financing activities
---------------------------------------- ---- ----------- -------------
Net (increase)/decrease in loans
and interest receivable (9,670,543) 15,176,641
---------------------------------------- ---- ----------- -------------
Net increase/(decrease) in debt
securities in issue and interest
payable 9,670,365 (15,176,418)
---------------------------------------- ---- ----------- -------------
Net cash flow from financing activities (178) 223
---------------------------------------- ---- ----------- -------------
Net increase/(decrease) in cash
and cash equivalents 26,431 (12,004)
---------------------------------------- ---- ----------- -------------
Cash and cash equivalents at 1
April 247,646 259,650
---------------------------------------- ---- ----------- -------------
Cash and cash equivalents at 31
March 8 274,077 247,646
---------------------------------------- ---- ----------- -------------
Interest receipts and payments during the year were as
follows:
2016 2015
GBP GBP
------------------------------------------ --------- ----------
Interest received from parent undertaking 1,193,976 2,466,188
------------------------------------------ --------- ----------
Interest paid to note holders 1,182,056 2,454,643
------------------------------------------ --------- ----------
Notes to the Financial Statements
(forming part of the Financial Statements)
For the year ended 31 March 2016
1. Accounting Policies
Rothschilds Continuation Finance PLC ("the Company") is a
company incorporated in England and Wales. 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 Act 2006 applicable to companies reporting under IFRS.
The financial statements are prepared under the historical cost
accounting rules.
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 at least twelve months from
the date the financial statements are signed 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
or Interpretations that have been adopted that have materially
affected the amounts reported in these financial statements.
Future accounting polices
A number of new standards, amendments to standards and
interpretations are effective for accounting periods ending after
31 March 2016 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 receivable and payable is recognised in the statement
of comprehensive income using the effective interest rate
method.
c. Foreign currencies
Transactions in foreign currencies are accounted for at the
exchange rates prevailing at the time of the transaction. Gains and
losses resulting from the settlement of such transactions, and from
the translation at period end exchange rates of monetary items that
are denominated in foreign currencies, are 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 banks with original maturities
of three months or less.
e. Taxation
Tax payable on profits is recognised in the statement of
comprehensive income.
f. Capital management
The Company is not subject to any externally imposed capital
requirements.
g. 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 finanacial 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 investments.
i. 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.
ii. Financial liabilities
All financial liabilities are carried at amortised cost using
the effective interest rate method.
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, 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 13 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.
3. Audit Fee
The amount receivable by the auditors and their associates in
respect of the audit of these financial statements is GBP5,386
(2015: GBP5,280). The audit fee is paid on a group basis by N M
Rothschild & Sons Limited.
4. Directors' Emoluments
None of the Directors received any remuneration in respect of
their services to the Company during the year (2015: GBPnil).
5. Taxation
2016 2015
GBP GBP
-------------------------------------- ------ ---------
Profit/(loss) before tax 24,409 (10,476)
-------------------------------------- ------ ---------
United Kingdom corporation tax charge
at 20% (2015: 21%) 4,882 (2,200)
-------------------------------------- ------ ---------
Tax charge/(credit) for the year 4,882 (2,200)
-------------------------------------- ------ ---------
6. Non-current Assets: Loan to Parent Undertaking
2016 2015
GBP GBP
--------------------------------------- ----------- ------------
Amounts owed by parent undertaking
--------------------------------------- ----------- ------------
EUR150,000,000 Perpetual floating rate
subordinated loan 118,732,883 109,095,000
--------------------------------------- ----------- ------------
Due
--------------------------------------- ----------- ------------
In 5 years or more 118,732,883 109,095,000
--------------------------------------- ----------- ------------
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 31 March 2016
was 1.01% (2015: 0.92%) and the fair value was GBP53,014,232 (2015:
GBP60,711,299). The above loans were valued from quoted market
prices of a similar instrument (level 2).
7. Current Assets: Other Financial Assets
2016 2015
GBP GBP
------------------------------------ ------- --------
Amounts owed by parent undertaking:
Interest receivable 183,211 150,551
------------------------------------ ------- --------
8. Cash and Cash Equivalents
At the year end the Company held cash of GBP274,077 (2015:
GBP247,646) at the parent undertaking. Of this balance, GBP86,811
(2015: GBP83,398) was held in a sterling account on which the
effective interest rate at 31 March 2016 was 0.25% (2015: 0.5%).
The equivalent of GBP187,266 (2015: GBP163,248) was held in a euro
account on which the effective interest rate at 31 March 2016 was
0.0% (2015: 0.25%).
9. Current Liabilities: Other Financial Liabilities
2016 2015
GBP GBP
----------------- ------- --------
Interest payable 181,397 148,915
----------------- ------- --------
10. Non-current Liabilities: Debt Securities in Issue
2016 2015
GBP GBP
---------------------------- ----------- ------------
Perpetual Subordinated Notes
EUR150,000,000 118,732,883 109,095,000
---------------------------- ----------- ------------
Repayable
In 5 years or more 118,732,883 109,095,000
---------------------------- ----------- ------------
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 31 March 2016
was 1.00% (2015: 0.91%) and their fair value was GBP52,836,133
(2015: GBP60,547,656). The fair value was derived from the quoted
market price at the balance sheet date (level 1).
11. 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 cashflows
on perpetual subordinated notes are estimated and 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
Demand on demand 3 months 1 year Perpetual Total
GBP GBP GBP GBP GBP GBP
----------------------- ------ --------- -------- --------- ----------- -----------
Perpetual subordinated
notes - 296,832 890,497 4,749,315 118,732,883 124,669,527
----------------------- ------ --------- -------- --------- ----------- -----------
12. Share Capital
2016 2015
GBP GBP
------------------------------------------ ------- -------
Authorised, allotted, called up and fully
paid
100,000 Ordinary shares of GBP1 each 100,000 100,000
------------------------------------------ ------- -------
13. 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 year end were as
follows:
2016 2015
GBP GBP
---------------------------------------- ----------- ------------
Cash at parent undertaking 274,077 247,646
---------------------------------------- ----------- ------------
Accrued interest receivable from parent
undertaking 183,211 150,551
---------------------------------------- ----------- ------------
Loans to parent undertaking 118,732,883 109,095,000
---------------------------------------- ----------- ------------
Amounts recognised in the statement of comprehensive income in
respect of related party transactions were as follows:
2016 2015
GBP GBP
---------------------------------------- --------- ----------
Interest income from parent undertaking 1,226,636 2,150,047
---------------------------------------- --------- ----------
There were no loans made to Directors during the year (2015:
none) and no balances outstanding at year-end (2015: GBPnil). The
Directors did not receive any remuneration in respect of their
services to the Company. There were no employees of the Company
during the year (2015: none).
14. Parent Undertaking, Ultimate Holding Company and
Registered Office
The largest group in which the results of the Company are
consolidated is that headed by Rothschild 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.
The Company's immediate parent company is N M Rothschild &
Sons Limited.
The Company's registered office is located at New Court, St
Swithin's Lane, London, EC4N 8AL.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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