TIDM68WN
RNS Number : 9518J
Rothschild & Co Continuation Fin
29 April 2022
Rothschild & Co Continuation Finance PLC
Report of the Directors and Financial Statements
for the year ended 31 December 2021
Strategic Report
Business Model and Strategic Objectives
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 the
Rothschild & Co Group ("the Group"). The only current debt
securities in issue are the perpetual subordinated notes guaranteed
by NMR.
Business Update and Key Performance Indicators
As mentioned above, the Company operates as a finance vehicle
which issues debt and lends it onto other Rothschild & Co Group
companies on substantially the same terms. The only debt currently
in issue is perpetual subordinated notes. Given the nature of this
debt and the related loans to its parent undertaking, the Directors
consider that accrual accounting best reflects the purpose of the
Company as a pass through financing vehicle and to match the
EUR150m loan asset and subordinated guaranteed notes in issue. On
this basis, the loan asset and subordinated guaranteed notes would
be matched on the balance sheet at GBP126m to reflect the real
asset and liability position of the Company.
However, IFRS 9 requires the Company to report the loan asset,
and the Company has elected to report the subordinated guaranteed
notes in issue, at fair value of cGBP114m. Both the loans and
subordinated guaranteed notes will continue to be taxed on an
amortised cost basis so a net deferred tax liability of GBP35,869
(2020: GBP38,442 liability) has been recognised on the difference
between this and the carrying values. Negative movements in the
valuation of the asset and liability resulted in a small accounting
loss being reported for the year. However, the Company has
increased its cash balances and remains well capitalised.
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.
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 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.
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.
S172 statement
The Board has a duty under s172 of the Companies Act 2006 to
promote the success of the Company for the benefit of its members
as a whole, and in doing so have regard (amongst other matters)
to:
a) the likely consequences of any decision in the long term,
b) the interests of the Company's employees,
c) the need to foster the Company's business relationships with
suppliers, customers and others,
d) the impact of the Company's operations on the community and the environment,
e) the desirability of the Company maintaining a reputation for
high standards of business conduct, and
f) the need to act fairly as between members of the Company.
During the year the Board has considered its duties under s172
and how it fulfils its obligations thereof. Given that the Company
has no staff and limited suppliers, the key stakeholders are
thought to be shareholders, regulators and tax authorities:
Shareholders
The Board is appointed by the shareholders to oversee, govern
and make decisions on their behalf and so is directly responsible
for protecting and managing their interests in the Company. It does
this by setting the strategies, policies and corporate governance
structures described earlier. As part of the wider R&Co Group,
some of these responsibilities are managed at a group level and
described in greater detail in the R&Co financial statements
that are available on
www.rothschildandco.com/en/investor-relations/.
Regulators and tax authorities
The Company insists on the highest standards of professionalism
and integrity from those that act on its behalf who are expected to
refrain from any conduct or behaviours that could be perceived
unfavourably. This extends to dealing honestly and openly with
regulators and tax authorities and in compliance with all the
relevant laws and regulations in place.
By Order of the Board
Paul O'Leary
Director
27 April 2022
Report of the Directors
The Directors present their Directors' report and the financial
statements for the year ended 31 December 2021.
Dividends
During the year, the Company did not pay any dividends (2020:
GBPnil).
Directors
The Directors who held office during the year were as
follows:
Peter Barbour
Christopher Coleman
Mark Crump
Paul O'Leary
Directors' Indemnity
The Company has provided qualifying third-party indemnities for
the benefit of its Directors. These were provided during the year
and remain in force at the date of this report.
Corporate Governance
The Directors have been charged with governance in accordance
with the perpetual subordinated notes transaction documents
describing the structure and operation of the transaction. The
responsibilities of the Directors to both noteholders and
shareholders were established at the time of issuance.
Additionally, the Company is an integral part of the wider R&Co
Group and, as such, benefits from the Group's wider control
frameworks and structures, whilst also ensuring that the
obligations and requirements of the Company are fully met.
The Company follows the internal control policies of its
subsidiary, NMR in maintaining its financial records and preparing
its financial reporting. Moreover, the key risks arising from the
Company's activities involving the perpetual subordinated notes are
monitored as part of the Group's control structures. However, it is
the Directors opinion that these risks are limited in nature due to
the low level of transactions occurring and the risk management
framework in place.
Due to the nature of the perpetual subordinated notes which have
been issued, the Company is largely exempt from the disclosure
requirements of the Financial Conduct Authority pertaining to the
Disclosure and Transparency Rules ("DTR") as detailed in the DTR
7.1 Audit committees and 7.2 Corporate governance statements (save
for DTR 7.2.5 requiring a description of the features of the
internal control and risk management systems), which would
otherwise require the Company respectively, to have an audit
committee in place and include a corporate governance statement in
the Directors' Report. The Directors are therefore satisfied that
there is no requirement for an audit committee, or a supervisory
board entrusted to carry out the functions of an audit committee or
to publish a more extensive corporate governance statement.
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
Paul O'Leary
Director
27 April 2022
Statement of Directors' responsibilities in respect of the
strategic report, Directors' report and the financial
statements
The Directors are responsible for preparing the Strategic
Report, 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
UK-adopted international accounting standards 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 its profit or
loss 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,
relevant and reliable;
-- state whether they have been prepared in accordance
with UK-adopted international accounting standards;
-- assess the Company's ability to continue as a going
concern, disclosing, as applicable, matters related
to going concern; and
-- use the going concern basis of accounting unless
they either intend to liquidate the Company or
to cease operations, or have no realistic alternative
but to do so
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
its financial statements comply with the Companies Act 2006. They
are responsible for such internal control as they determine is
necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error,
and 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.
Under applicable law and regulations, the Directors are also
responsible for preparing a Strategic Report, Directors' Report,
Directors' Remuneration Report and Corporate Governance Statement
that complies with that law and those regulations.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the UK governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
Responsibility statement of the Directors in respect of the
annual financial report
We confirm that to the best of our knowledge:
-- the financial statements, prepared in accordance with
the applicable set of accounting standards, give a
true and fair view of the assets, liabilities, financial
position and profit or loss of the Company; and
-- the strategic report includes a fair review of the
development and performance of the business and the
position of the issuer, together with a description
of the principal risks and uncertainties that they
face.
Independent Auditor's Report to the Members of Rothschild &
Co Continuation Finance PLC
1. Our opinion is unmodified
We have audited the financial statements of Rothschild & Co
Continuation Finance Plc ("the Company") for the year ended 31
December 2021 which comprise the statement of comprehensive income,
balance sheet, statement of changes in equity, cash flow statement,
and the related notes, including the accounting policies in note
1.
In our opinion the financial statements:
-- give a true and fair view of the state of Company's
affairs as at 31 December 2021 and of its loss for
the year then ended;
-- have been properly prepared in accordance with UK-adopted
international accounting standards; and
-- have been prepared in accordance with the requirements
of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our
responsibilities are described below. We believe that the audit
evidence we have obtained is a sufficient and appropriate basis for
our opinion. Our audit opinion is consistent with our report to the
audit committee.
We were first appointed as auditor by the Directors in 2001. The
period of total uninterrupted engagement is for the 22 financial
periods ended 31 December 2021. We have fulfilled our ethical
responsibilities under, and we remain independent of the Company in
accordance with, UK ethical requirements including the FRC Ethical
Standard as applied to listed public interest entities. No
non-audit services prohibited by that standard were provided.
Materi al ity: GBP1.14 m (31 December
financial statements as a whole 2020: GBP1.11 million
)
1% (31 December 2020:
1%) of Total Assets
=========================================== =============================
Ri sks of material misstatement vs December 2020
=========================================== =============================
Recurring risks Valuation of loans No change
to parent undertaking
and Debt securities
in issue
================== =========================== =========================
2. Key audit matters: our assessment of risks of material
misstatement
Key audit matters are those matters that, in our professional
judgement, were of most significance in the audit of the financial
statements and include the most significant assessed risks of
material misstatement (whether or not due to fraud) identified by
us, including those which had the greatest effect on: the overall
audit strategy; the allocation of resources in the audit; and
directing the efforts of the engagement team. We summarise below
the key audit matter (unchanged from 2020), in arriving at our
audit opinion above, together with our key audit procedures to
address this matter and, as required for public interest entities,
our results from those procedures. This matter was addressed, and
our results are based on procedures undertaken, in the context of,
and solely for the purpose of, our audit of the financial
statements as a whole, and in forming our opinion thereon, and
consequently are incidental to that opinion, and we do not provide
a separate opinion on this matter.
Valuation of Loans Low Risk, high value: Our procedures included:
to parent undertaking
and debt securities The amount of the * Test of details: We involved our valuation
in issue intercompany loan specialists to independently determine the fair value
receivable represents of the loan to the parent undertaking and the debt
Loan to parent 99% (December 2020: securities in issue at 31 December 2021.
undertaking 99%) of the Company's
(GBP 114.55 million; total assets.
31 December 2020:
GBP 110.97 million) The terms of the loan * We assessed whether the Company's disclosures in
to parent are similar relation to fair value were in compliance with the
to the debt securities relevant standards.
Debt securities in in issue. The fair
issue (GBP114.36 value of debt
million ; 31 December securities
2020: GBP110.77 in issue is based Our results:
million) on available quotes
from brokers and * We found the valuation of loans to parent undertaking
Refer to page 21 third-party and debt securities in issue, and the relevant
(Note 6) and page transactions where disclosures to be acceptable. (December 2020:
23 (Note 11) (financial available. As a acceptable)
disclosure ) result,
valuation is not at
a high risk of
material
misstatement or
subject
to significant
judgement.
However, due to its
materiality in the
context of the
financial
statements, valuation
of loan to parent
undertaking and debt
securities in issue
is considered to be
an area that has the
greatest effect on
our audit.
The IFRS 13 fair value
measurement
disclosures
are key to explaining
the valuation
techniques,
key judgements,
assumptions
and material inputs.
========================= ======================== =================================================================
3. Our application of materiality and an overview of the scope
of our audit
Materiality for the Company financial statements as a whole was
set at GBP1.14 million (2020: GBP1.11 million), determined with
reference to a benchmark of total assets (of which it represents 1%
(2020: 1%)). In line with our audit methodology, our procedures on
individual account balances and disclosures were performed to a
lower threshold, performance materiality, so as to reduce to an
acceptable level the risk that individually immaterial
misstatements in individual account balances add up to a material
amount across the financial statements as a whole.
Performance materiality was set at 75% (2020: 75%) of
materiality for the financial statements as a whole, which equates
to GBP0.86 million (2020: GBP0.83 million). We applied this
percentage in our determination of performance materiality because
we did not identify any factors indicating an elevated level of
risk.
We agreed to report to the Board any corrected or uncorrected
identified misstatements exceeding GBP0.06 million (2020: GBP0.06
million), in addition to other identified misstatements that
warranted reporting on qualitative grounds.
Our audit of the Company was undertaken to the materiality level
specified above and was all performed at the Company's head office
in London.
4. Going concern
The Directors have prepared the financial statements on the
going concern basis as they do not intend to liquidate the Company
or to cease its operations, and as they have concluded that the
Company's financial position means that this is realistic. They
have also concluded that there are no material uncertainties that
could have cast significant doubt over its ability to continue as a
going concern for at least a year from the date of approval of the
financial statements ("the going concern period").
We used our knowledge of the Company, its industry, and the
general economic environment to identify the inherent risks to its
business model and analysed how those risks might affect the
Company's financial resources or ability to continue operations
over the going concern period. The risks that we considered most
likely to adversely affect the Company's available financial
resources over this period was the availability of funding and
liquidity in the event of a market wide stress scenario including a
prolonged global impact of the COVID-19 pandemic.
We considered whether these risks could plausibly affect the
liquidity in the going concern period by comparing severe, but
plausible downside scenarios that could arise from these risks
individually and collectively against the level of available
financial resources indicated by the Company's financial
forecasts.
Our procedures also included an assessment of whether the going
concern disclosure in note 1 to the financial statements gives a
full and accurate description of the Directors' assessment of going
concern.
Our conclusions based on this work:
-- we consider that the Directors' use of the going concern
basis of accounting in the preparation of the financial
statements is appropriate;
-- we have not identified, and concur with the Directors'
assessment that there is not, a material uncertainty
related to events or conditions that, individually
or collectively, may cast significant doubt on the
Company's ability to continue as a going concern for
the going concern period;
-- we found the going concern disclosure in note 1 to
be acceptable.
However, as we cannot predict all future events or conditions
and as subsequent events may result in outcomes that are
inconsistent with judgements that were reasonable at the time they
were made, the above conclusions are not a guarantee that the
Company will continue in operation.
5. Fraud and breaches of laws and regulations - ability to
detect
Identifying and responding to risks of material misstatement due
to fraud
To identify risks of material misstatement due to fraud ("fraud
risks") we assessed events or conditions that could indicate an
incentive or pressure to commit fraud or provide an opportunity to
commit fraud. Our risk assessment procedures included:
-- Enquiring of members, and senior management and inspection
of policy documentation as to the Company's high-level
policies and procedures to prevent and detect fraud,
including the internal audit function, and the Company's
channel for "whistleblowing", as well as whether they
have knowledge of any actual, suspected or alleged
fraud;
-- Reading Board minutes; and
-- Using analytical procedures to identify any unusual
or unexpected relationships.
We communicated identified fraud risks throughout the audit team
and remained alert to any indications of fraud throughout the
audit.
As required by auditing standards, we perform procedures to
address the risk of management override of controls, in particular
the risk that management may be in a position to make inappropriate
accounting entries. On this audit we do not believe there is a
fraud risk related to revenue recognition because of the limited
opportunity to commit fraud due to the fact that revenue
transactions are not complex and there are no judgmental aspects
involved.
We did not identify any additional fraud risks.
We performed procedures including identifying journal entries
and other adjustments to test based on risk criteria and comparing
the identified entries to supporting documentation. These included
those posted by senior finance management, those posted and
approved by the same user, those posted to unusual accounts, and
any unusual pairings identified.
Identifying and responding to risks of material misstatement due
to non-compliance with laws and regulations;
We identified areas of laws and regulations that could
reasonably be expected to have a material effect on the financial
statements from our general commercial and sector experience, and
through discussion with the Directors and other management (as
required by auditing standards), and from inspection of the
Company's regulatory and legal correspondence and discussed with
the Directors and other management the policies and procedures
regarding compliance with laws and regulations. As the Company is
regulated, our assessment of risks involved gaining an
understanding of the control environment including the entity's
procedures for complying with regulatory requirements.
We communicated identified laws and regulations throughout our
team and remained alert to any indications of non-compliance
throughout the audit.
The potential effect of these laws and regulations on the
financial statements varies considerably.
Firstly, the Company is subject to laws and regulations that
directly affect the financial statements including financial
reporting legislation (including related companies legislation),
distributable profits legislation, and taxation legislation and we
assessed the extent of compliance with these laws and regulations
as part of our procedures on the related financial statement
items.
Secondly, the Company is subject to many other laws and
regulations where the consequences of non-compliance could have a
material effect on amounts or disclosures in the financial
statements, for instance through the imposition of fines or
litigation. We identified the following areas as those most likely
to have such an effect: anti-bribery, and certain aspects of
company legislation recognising the financial and regulated nature
of the Company's activities and its legal form. Auditing standards
limit the required audit procedures to identify non-compliance with
these laws and regulations to enquiry of the Directors and other
management and inspection of regulatory and legal correspondence,
if any. Therefore if a breach of operational regulations is not
disclosed to us or evident from relevant correspondence, an audit
will not detect that breach.
Context of the ability of the audit to detect fraud or breaches
of law or regulation
Owing to the inherent limitations of an audit, there is an
unavoidable risk that we may not have detected some material
misstatements in the financial statements, even though we have
properly planned and performed our audit in accordance with
auditing standards. For example, the further removed non-compliance
with laws and regulations is from the events and transactions
reflected in the financial statements, the less likely the
inherently limited procedures required by auditing standards would
identify it.
In addition, as with any audit, there remained a higher risk of
non-detection of fraud, as these may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of
internal controls. Our audit procedures are designed to detect
material misstatement. We are not responsible for preventing
non-compliance or fraud and cannot be expected to detect
non-compliance with all laws and regulations.
6. We have nothing to report on the other information in the
Annual Report
The Directors are responsible for the other information
presented in the Annual Report together with the financial
statements. Our opinion on the financial statements does not cover
the other information and, accordingly, we do not express an audit
opinion or, except as explicitly stated below, any form of
assurance conclusion thereon.
Our responsibility is to read the other information and, in
doing so, consider whether, based on our financial statements audit
work, the information therein is materially misstated or
inconsistent with the financial statements or our audit knowledge.
Based solely on that work we have not identified material
misstatements in the other information.
Strategic report and Directors' report
Based solely on our work on the other information:
-- we have not identified material misstatements in the
strategic report and the Directors' report;
-- in our opinion the information given in those reports
for the financial year is consistent with the financial
statements; and
-- in our opinion those reports have been prepared in
accordance with the Companies Act 2006.
7. We have nothing to report on the other matters on which we
are required to report by exception
Under the Companies Act 2006, we are required 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.
We have nothing to report in these respects.
8. Respective responsibilities
Directors' responsibilities
As explained more fully in their statement set out on page 6,
the Directors are responsible for: the preparation of the financial
statements including being satisfied that they give a true and fair
view; such internal control as they determine is necessary to
enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error; assessing the
Company's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern; and using the going
concern basis of accounting unless they either intend to liquidate
the Company or to cease operations, or have no realistic
alternative but to do so.
Auditor's responsibilities
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue our
opinion in an auditor's report. Reasonable assurance is a high
level of assurance, but does not guarantee that an audit conducted
in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in aggregate,
they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial
statements.
A fuller description of our responsibilities is provided on the
FRC's website at www.frc.org.uk/auditorsresponsibilities .
9. The purpose of our audit work and to whom we owe our
responsibilities
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.
Richard Rawstron (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
15 Canada Square
London E14 5GL
28 April 2022
Statement of Comprehensive Income
For the year ended 31 December 2021
2021 2020
Note GBP GBP
----------------------------------------------- ----- ------------ ------------
Interest income 355,247 250,033
----------------------------------------------- ----- ------------ ------------
Interest expense (344,304) (234,068)
----------------------------------------------- ----- ------------ ------------
Net interest income 10,943 15,965
----------------------------------------------- ----- ------------ ------------
Revaluation of loan to parent undertaking 6 3,575,138 6,352,797
----------------------------------------------- ----- ------------ ------------
Revaluation of debt securities in
issue 11 (3,588,681) (6,342,224)
----------------------------------------------- ----- ------------ ------------
Foreign exchange translation (losses)/profits (2,671) 1,198
----------------------------------------------- ----- ------------ ------------
(Loss)/profit before tax (5,271) 27,736
----------------------------------------------- ----- ------------ ------------
Tax credit/(charge) 5 3,574 (11,114)
----------------------------------------------- ----- ------------ ------------
(Loss)/profit for the financial year (1,697) 16,622
----------------------------------------------- ----- ------------ ------------
Other comprehensive income - -
----------------------------------------------- ----- ------------ ------------
Total comprehensive income for the
financial year (1,697) 16,622
----------------------------------------------- ----- ------------ ------------
All amounts are in respect of continuing activities.
The notes on pages 19 to 26 form an integral part of these
financial statements
Balance Sheet
At 31 December 2021
2021 2021 2020 2020
Note GBP GBP GBP GBP
---------------------------- -------- ---------- -------------- --------- --------------
Non-current assets
Loan to parent undertaking 6 114,548,269 110,973,131
--------------------------------- --- ---------- -------------- --------- --------------
Current assets
--------------------------------- --- ---------- -------------- --------- --------------
Other financial assets 7 96,278 2,023
--------------------------------- --- ---------- -------------- --------- --------------
Cash and cash equivalents 8 250,897 245,750
--------------------------------- --- ---------- -------------- --------- --------------
347,175 247,773
--------------------------------- --- ---------- -------------- --------- --------------
Current liabilities
Current tax liability (1,009) (5,270)
--------------------------------- --- ---------- -------------- --------- --------------
Deferred tax liability 9 (35,869) (38,442)
--------------------------------- --- ---------- -------------- --------- --------------
Other financial liabilities 10 (94,390) -
--------------------------------- --- ---------- -------------- --------- --------------
Net current assets 215,907 204,061
--------------------------------- --- ---------- -------------- --------- --------------
Total assets less current liabilities 114,764,176 111,177,192
-------------------------------------------------- -------------- --------- --------------
Non-current liabilities
Subordinated Guaranteed
Notes 11 (114,359,489) (110,770,808)
--------------------------------- ---- --------- -------------- --------- --------------
Net assets 404,687 406,384
--------------------------------- ---- --------- -------------- --------- --------------
Shareholders' equity
Share capital 13 100,000 100,000
--------------------------------- ---- --------- -------------- --------- --------------
Retained earnings 304,687 306,384
--------------------------------- ---- --------- -------------- --------- --------------
Total shareholders'
equity 404,687 406,384
--------------------------------- ---- --------- -------------- --------- --------------
Approved by the Board of Directors and signed on its behalf on
27 April 2022 by:
Paul O'Leary, Director
The notes on pages 19 to 26 form an integral part of these
financial statements
Statement of Changes in Equity
For the year ended 31 December 2021
Share Retained Total
Capital Earnings Equity
GBP GBP GBP
-------------------------------- --------- ---------- --------
At 31 December 2020 100,000 306,384 406,384
-------------------------------- --------- ---------- --------
Total comprehensive income for
the financial year - (1,697) (1,697)
-------------------------------- --------- ---------- --------
At 31 December 2021 100,000 304,687 404,687
-------------------------------- --------- ---------- --------
At 31 December 2019 100,000 289,762 389,762
-------------------------------- --------- ---------- --------
Total comprehensive income for
the financial year - 16,622 16,622
-------------------------------- --------- ---------- --------
At 31 December 2020 100,000 306,384 406,384
-------------------------------- --------- ---------- --------
The notes on pages 19 to 26 form an integral part of these
financial statements
Cash Flow Statement
For the year ended 31 December 2021
2021 2020
Note GBP GBP
------------------------------------------- ----- ------------ ------------
Cash flow from operating activities
Net (loss)/profit for the financial
year (1,697) 16,622
------------------------------------------- ----- ------------ ------------
Tax (credit)/charge (3,574) 11,114
------------------------------------------- ----- ------------ ------------
Operating (loss)/profit before changes
in working capital and provisions (5,271) 27,736
------------------------------------------- ----- ------------ ------------
Fair value movements of loans (3,575,138) (6,352,797)
------------------------------------------- ----- ------------ ------------
Fair value movements of debt securities 3,588,681 6,342,224
------------------------------------------- ----- ------------ ------------
Cash from operations 8,272 17,163
------------------------------------------- ----- ------------ ------------
Taxation paid (3,260) (1,746)
------------------------------------------- ----- ------------ ------------
Net (increase)/decrease in debtors (94,255) 47,690
------------------------------------------- ----- ------------ ------------
Net increase/(decrease) in financial
liabilities 94,390 (47,725)
------------------------------------------- ----- ------------ ------------
Net cash from operating activities 5,147 15,382
------------------------------------------- ----- ------------ ------------
Net increase in cash and cash equivalents 5,147 15,382
------------------------------------------- ----- ------------ ------------
Cash and cash equivalents at beginning
of year 245,750 230,368
------------------------------------------- ----- ------------ ------------
Cash and cash equivalents at end
of year 8 250,897 245,750
------------------------------------------- ----- ------------ ------------
Interest receipts and payments during the year were as
follows:
2021 2020
GBP GBP
------------------------------------------- -------- --------
Interest received from parent undertaking 260,992 297,723
-------------------------------------------- -------- --------
Interest paid to note holders 249,914 281,793
-------------------------------------------- -------- --------
The notes on pages 19 to 26 form an integral part of these
financial statements
Notes to the Financial Statements
(forming part of the Financial Statements)
For the year ended 31 December 2021
1. Accounting Policies
Rothschild & Co Continuation Finance PLC ("the Company") is
a public limited 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 accounting standards in
conformity with the requirements of the Companies Act 2006 (adopted
"IFRS").
Functional and presentation currency
These financial statements are presented in sterling, which is
the Company's functional currency.
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 N.M. Rothschild & Sons Limited ("NMR") and its ability
to continue to pay the interest on the intercompany
loan provided by the Company. This included severe but
plausible downside scenarios for NMR as part of their
assessment including scenarios with a significant reduction
in revenues; 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.
Standards affecting the financial statements
There were no new standards or amendments to standards that have
been applied in the financial statements for the year ended 31
December 2021.
Future accounting policies
A number of new standards, amendments to standards and
interpretations are effective for accounting periods ending after
31 December 2021 and therefore have not been applied in preparing
these financial statements. The Company has reviewed these new
standards to determine their effects on the Company's financial
reporting, and none are expected to have a material impact on the
Company's financial statements.
b. Interest income and expense
Interest income and expense represents interest arising out of
lending and borrowing activities. Interest income and expense is
recognised in the income statement 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 other group companies that are
readily convertible to cash and are subject to an insignificant
risk of changes in value.
e. Taxation
Tax payable on profits is recognised in the statement of
comprehensive income.
Deferred tax is provided in full, using the balance sheet
liability method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts.
Deferred tax is determined using tax rates and laws that are
expected to apply when a deferred tax asset is realised, or when a
deferred tax liability is settled.
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.
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 and are initially recorded at fair value with any subsequent
movement in fair value being recognised in the income
statement.
ii. Financial liabilities
Subordinated Guaranteed Notes in issue are recorded at fair
value with any changes in fair value recognised in the income
statement. All other financial liabilities are recognised at
amortised cost.
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.
Valuation of financial assets and liabilities
Fair value is the price that would be received on selling an
asset or paid to transfer a liability in an orderly transaction
between market participants. For financial instruments carried at
fair value, market prices or rates are used to determine fair value
where an active market exists (such as a recognised exchange), as
this is the best evidence of the fair value of a financial
instrument. Where no active market price or rate is available, fair
values are estimated using inputs based on market conditions at the
balance sheet date.
Deferred tax
The recoverability of deferred tax assets is based on
management's assessment of the availability of future taxable
profits against which the deferred tax assets will be utilised.
1. 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. Audit Fee
The amount receivable by the auditors and their associates in
respect of the audit of these financial statements is GBP14,000
(2020: GBP12,500). The audit fee is paid on a group basis by N M
Rothschild & Sons Limited.
3. Directors' Emoluments
None of the Directors received any remuneration in respect of
their services to the Company during the year (2020: GBPnil).
4. Taxation
2021 2020
GBP GBP
----------------------------------------------- -------- --------
Current tax (1,001) 5,270
----------------------------------------------- -------- --------
Deferred tax (2,573) 5,844
----------------------------------------------- -------- --------
Total tax (3,574) 11,114
----------------------------------------------- -------- --------
The tax charge can be explained as follows:
2021 2020
Note GBP GBP
--------------------------------------- ----- -------- -------
(Loss)/profit before tax (5,271) 27,735
--------------------------------------- ----- -------- -------
United Kingdom corporation
tax charge at 19% (1,001) 5,270
--------------------------------------- ----- -------- -------
Deferred tax (credit)/charge (2,573) 2,009
--------------------------------------- ----- -------- -------
Impact on deferred tax of corporation
tax change 9 - 3,835
--------------------------------------- ----- -------- -------
Total tax (3,574) 11,114
--------------------------------------- ----- -------- -------
5. Non-Current Assets: Loan to Parent Undertaking
2021 2020
GBP GBP
------------------------ ------------ ------------
At beginning of period 110,973,131 104,620,334
------------------------ ------------ ------------
Fair value movements 3,575,138 6,352,797
------------------------ ------------ ------------
At end of period 114,548,269 110,973,131
------------------------ ------------ ------------
Due
In 5 years or more 114,548,269 110,973,131
------------------------ ------------ ------------
In accordance with the business model assessment under IFRS 9,
the loan to parent undertaking is a non-equity financial asset that
doesn't meet SPPI requirements and has been classified at Fair
Value Through Profit or Loss (FVTPL). The fair value of the
EUR150,000,000 loan as at 31 December 2021 was GBP114,548,269
(2020: GBP110,973,131). On an amortised cost basis, the value of
the loan at 31 December 2021 would be GBP125,853,708 (2020:
GBP134,882,343). The fair values are based on the market value of
the external debt securities (level 2).
The interest rate charged on the EUR150 million loan is
EUR-TEC10-CNO plus 36 basis points, capped at 9.01 per cent, fixed
on 05 February, 05 May, 05 August and 05 November each year. The
maturity matches that of the subordinated guaranteed notes.
The interest rate on the above loan at 31 December 2021 was
0.51% (2020: 0.01%).
6. Current Assets: Other Financial Assets
2021 2020
GBP GBP
------------------------------------- --------- --------
Amounts owed by parent undertaking:
Interest receivable 96,278 2,023
------------------------------------- --------- --------
7. Cash and Cash Equivalents
At the year end the Company held cash of GBP250,897 (2020:
GBP245,750) at the parent undertaking. Of this balance, GBP208,282
was held in a sterling account (2020: GBP211,543). The equivalent
of GBP42,615 (2020: GBP34,207) was held in a euro account. The
effective interest rate at 31 December 2021 was 0.0% (2020:
0.0%).
8. Deferred Income Taxes
2021 2020
GBP GBP
--------------------------------------- --------- ---------
At beginning of period (38,442) (32,598)
--------------------------------------- --------- ---------
Recognised in income
Credit/(charge) 2,573 (2,009)
--------------------------------------- --------- ---------
Impact on deferred tax of corporation
tax change - (3,835)
--------------------------------------- --------- ---------
At end of period (35,869) (38,442)
--------------------------------------- --------- ---------
Deferred tax assets less liabilities are attributable to the
following items:
2021 2020
GBP GBP
--------------------------------------- ------------ ------------
Fair value of intra group loans 2,148,033 4,542,758
--------------------------------------- ------------ ------------
Fair value of subordinated guaranteed
notes in issue (2,183,902) (4,581,200)
--------------------------------------- ------------ ------------
(35,869) (38,442)
--------------------------------------- ------------ ------------
Both the intra-group loans and subordinated guaranteed notes in
issue are taxed on an amortised cost basis of accounting and
accordingly taxable/deductible temporary differences arise
following the adoption of IFRS 9. Deferred tax is provided using
rates that have been substantively enacted at the balance sheet
date and that are expected to apply when the temporary difference
is realised. The current UK corporation tax rate is 19 per
cent.
9. Current Liabilities: Other Financial Liabilities
2021 2020
GBP GBP
----------------- ------- -----
Interest payable 94,390 -
----------------- ------- -----
10. Subordinated Guaranteed Notes
2021 2020
GBP GBP
------------------------ -------------- --------------
At beginning of period 110,770,808 104,428,584
------------------------ -------------- --------------
Fair value movements 3,588,681 6,342,224
------------------------ -------------- --------------
At end of period 114,359,489 110,770,808
------------------------ -------------- --------------
Repayable
In 5 years or more 114,359,489 110,770,808
------------------------ -------------- --------------
The Company has elected to fair value through P&L the
subordinated guaranteed notes, which as at 31 December 2021 was
GBP114,359,489 (2020: GBP110,770,808), to significantly reduce the
accounting mismatch from the corresponding loan to group
undertaking which is classified as fair value through P&L. On
an amortised cost basis, the value of the subordinated guaranteed
notes in issue at 31 December 2021 would be GBP125,853,708 (2020:
GBP134,882,343). The fair value was derived from the quoted market
price at the balance sheet date (level 1).
The interest rate payable on the EUR150 million Perpetual
Subordinated Notes is EUR-TEC10-CNO plus 35 basis points, capped at
9 per cent, fixed on 05 February, 05 May, 05 August and 05 November
each year. From and including the interest payment date falling in
August 2016 and every interest payment date thereafter, the Company
may redeem all (but not some only) of the Perpetual Subordinated
Notes at their principal amount.
The interest rate on the above notes at 31 December 2021 was
0.50% (2020: 0%).
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
At 31(st) December GBP GBP GBP GBP GBP GBP
2021
----------------------- ------ --------- -------- --------- ----------- -----------
Perpetual subordinated
notes - 157,317 471,951 2,517,074 125,853,708 129,000,050
----------------------- ------ --------- -------- --------- ----------- -----------
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
At 31st December GBP GBP GBP GBP GBP GBP
2020
----------------------- ------ --------- -------- --------- ----------- -----------
Perpetual subordinated
notes - - - - 134,882,383 134,882,383
----------------------- ------ --------- -------- --------- ----------- -----------
12. Share Capital
2021 2020
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:
2021 2020
GBP GBP
------------------------------------------------- ------------ ------------
Cash and cash equivalents at parent undertaking 250,897 245,750
------------------------------------------------- ------------ ------------
Accrued interest receivable from parent
undertaking 96,278 2,023
------------------------------------------------- ------------ ------------
Loans to parent undertaking - at fair
value 114,548,269 110,973,131
------------------------------------------------- ------------ ------------
Amounts recognised in the statement of comprehensive income in
respect of related party transactions were as follows:
2021 2020
GBP GBP
----------------------------------------- -------- --------
Interest income from parent undertaking 355,247 250,033
----------------------------------------- -------- --------
There were no loans made to Directors during the year (2020:
none) and no balances outstanding at the year-end (2020: 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 (2020: 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 & 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 Rothschild & Co website at
www.rothschildandco.com.
The Company's immediate parent company is N. M. Rothschild &
Sons Limited, incorporated in England and Wales and whose
registered office is at New Court, St Swithin's Lane, London EC4N
8AL.
The Company's registered office is located at New Court, St
Swithin's Lane, London EC4N 8AL.
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