TIDMRCHA
RNS Number : 3892L
Rothschild & Co Contin Fin CI Ltd
29 April 2020
Rothschild & Co Continuation Finance CI Limited
Report of the Directors and Financial Statements
for the year ended 31 December 2019
Report of the Directors
The Directors present their Directors' report and financial
statements for the year ended 31 December 2019.
Principal Activities and Business Review
The principal activity of Rothschild & Co Continuation
Finance CI Limited ("the Company") is the raising of finance for
the purpose of lending it to other members of the Rothschild &
Co group.
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 group companies, the Directors
consider that accrual accounting, as per prior years, best reflects
the purpose of the Company as a pass through financing vehicle and
to match the GBP125m loan asset and debt securities in issue. On
this basis, the loan asset and debt securities would be matched on
the balance sheet at GBP125m which reflects the real asset and
liability position of the Company.
However, as mentioned in the 2018 Report of the Directors, IFRS
9 has required the Company to report the loan asset, and the
Company has elected to report the debt securities in issue, at fair
value of cGBP153m.
Both the loans and debt securities will continue to be taxed on
an amortised cost basis so a net deferred tax liability of
GBP21,250 has been recognised on the difference between this and
the carrying value.
The results for the year are set out in the statement of
comprehensive income on page 11 and show a profit before tax of
GBP18,932 (2018: GBP18,828). The reserves available for
distribution are GBP160,604 (2018: GBP145,269).
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 fellow subsidiary undertaking, N.M.
Rothschild & Sons Limited ("NMR").
Since the start of January 2020, COVID-19 has created
significant disruption to the global markets and economies.
Management has concluded that the impact of COVID-19 is a
non-adjusting post balance sheet event in respect of the financial
statements for the year ended 31 December 2019. 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 other group
companies, as the notes issued by the Company have been on-lent to
Rothschild & Co Continuation Limited ("R&CoCL") and NMR.
R&CoCL has also guaranteed, on a subordinated basis, the notes
issued. The Company's ability to meet its obligations in respect of
notes issued by it is therefore reliant on NMR and R&CoCL to
make payments to the Company. Both R&CoCL and NMR are exposed
to the aforementioned market disruption but, nevertheless, have
sufficient liquidity to continue to operate for the next 12 months
even in the scenario where revenue is significantly reduced.
Management has considered the going concern basis of preparation as
outlined in note 1 to the financial statements.
The Company's processes are undertaken by another group
undertaking. As a result of recent events the activities of this
group undertaking are now being conducted remotely with all
employees supported by enhanced existing technology and IT
infrastructure. The business has accordingly invoked the relevant
sections of Business Continuity plans. These plans have now been
operational for a period of time and all critical systems continue
to operate effectively and they have encountered minimal disruption
in activity. The Company continues to carefully monitor and
mitigate the risk on an ongoing basis in order to minimise
exposure.
The Company's market risk exposure is limited to interest rate
movements. Exposure to interest rate movements on the perpetual
subordinated note issues has been passed to NMR and R&CoCL, as
the issue proceeds have been lent onwards at a fixed margin of 1/64
per cent above the rate being paid.
Liquidity risk has similarly been transferred to NMR and
R&CoCL 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.
Directors
The Directors who held office during the year were as
follows:
Peter Barbour
Anthony Coghlan (resigned 26 March 2020)
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 year
and remain in force at the date of this report.
Dividends
During the year, the Company did not pay any dividends (2018:
GBPnil).
Auditor
Pursuant to the Companies (Guernsey) Law 2008, 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.
Directors' Responsibilities Statement
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 as adopted by the
European Union (IFRSs 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 year.
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;
-- 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
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.
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.
By Order of the Board
Peter Barbour
Director
28 April 2020
Independent Auditor's Report to the Members of Rothschild &
Co Continuation Finance CI Limited
1. Our opinion is unmodified
We have audited the financial statements of Rothschild & Co
Continuation Finance CI Limited ("the Company") for the year ended
31 December 2019 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 the Company's
affairs as at 31 December 2019 and of the Company's
profit for the year then ended;
-- have been properly prepared in accordance with International
Financial Reporting Standards as adopted by the European
Union (IFRSs as adopted by the EU);
-- have been prepared in accordance with the requirements
of the Companies (Guernsey) Law 2008.
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
those charged with governance.
We were appointed as auditor by the Directors on 31 March 1994.
The period of total uninterrupted engagement is the 25 years ended
31 December 2019. 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.
Overvi ew
=========================================================================================
Materi al ity: GBP1.63m (31 December 2018 :GBP1.60m
financial statements )
as a whole 1% (31 December 2018: 1%) of
Total Assets
======================== ===============================================================
Risks of material vs December 2018
misstatement
======================== ===============================================================
Recurring risks Valuation of loans The loans to the group
to group undertakings undertakings and debt
and Debt securities securities in issue
in issue are classified at fair
value upon adoption
of IFRS 9 on 1 January
2018. A risk in relation
to the fair value of
loans and debt securities
in issue has been identified
in the current year
due to the associated
estimation uncertainty
of the valuations.
====================== ============================ ===================================
2. Key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional
judgment, 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 matters, in decreasing order of audit significance,
in arriving at our audit opinion above, together with our key audit
procedures to address those matters and, as required for public
interest entities, our results from those procedures. These matters
were 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 these matters.
The risk Our response
=================== ================================== =============================================================
Going Concern Going Concern - Disclosure Our procedures included:
- Disclosure quality * Our Covid-19 knowledge: We considered the directors '
Quality The financial statements assessment of Covid-19 related sources of risk for
explain how the Board the Company ' s business and financial resources
Refer to Director has formed a judgment compared with our own understanding of the risks. We
' s report and that it is appropriate considered the directors ' plans to take action to
accounting policy to adopt the going concern mitigate the risks.
basis of preparation
for the Company.
That judgment is based * Sensitivity analysis: We considered sensitivities
on an evaluation of over the level of available financial resources
the inherent risks to indicated by the Company ' s financial forecasts,
the Company's business taking account of reasonably possible (but not
model and how those unrealistic) adverse effects that could arise from
risks might affect the these risks individually and collectively.
Company ' s financial
resources or ability
to continue operations * Assessing transparency: We assessed the completeness
over a period of at and accuracy of the matters covered in the going
least a year from the concern disclosure by comparing the overall picture
date of approval of against our understanding of the risks.
the financial statements.
The risk most likely
to adversely affect Our results:
the Company ' s available We found the going concern
financial resources disclosure without any material
over this period is uncertainty to be acceptable
the impact of Covid-19. in (2018: acceptable).
The risk for our audit
was whether or not the
risk of Covid-19 is
such that it amounted
to a material uncertainty
that may have cast significant
doubt about the ability
to continue as a going
concern. Had this been
such, then that fact
would have been required
to have been disclosed.
=================== ================================== =============================================================
The risk Our response
===================== ================================= ============================================================
Valuation of Low Risk, high value: Our procedures included:
Loans to group The amount of the intercompany * Test of details: We involved our valuation
undertakings loans receivable represent specialists to independently determine the fair value
and debt securities 99% (December 2018: 99%) of the loans to the group undertakings and the debt
in issue of the Company ' s total securities in issue at 31 December 2019.
Loans to group assets.
undertakings The terms of the loans to
(GBP153 million; group undertakings are similar * We assessed whether the Company ' s disclosures in
31 December to the debt securities in relation to fair value were in compliance with the
2018: GBP154 issue. The fair value of relevant standards.
million) debt securities in issue
Debt securities is based on available quotes
in issue (GBP153 from brokers and third party Our results:
million; 31 transactions where available. * We found the valuation of loans to group undertakings
December 2018: As a result, valuation is and debt securities in issue, and the relevant
GBP154 million) not at a high risk of material disclosures to be acceptable. (December 2018:
misstatement or subject to Corrected audit misstatement identified.)
Refer to Note significant judgement.
6 and Note 11 However, due to its
materiality
in the context of the
financial
statements, valuation of
loans to group undertakings
and debt securities in issue
is considered to be an area
that has the greatest effect
on our audit.
===================== ================================= ============================================================
3. Our application of materiality and an overview of the scope of our audit
Materiality for the Company as a whole was set at GBP1.63m (31
December 2018: GBP1.64m), determined with reference to a benchmark
of total assets (of which it represents 1% (31 December 2018: 1%).
The threshold for reporting misstatements to those charged with
governance was GBP0.08m (31 December 2018: GBP0.08m).
4. We have nothing to report on 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").
Our responsibility is to conclude on the appropriateness of the
Directors' conclusions and, had there been a material uncertainty
related to going concern, to make reference to that in this audit
report. 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 absence of reference to a material uncertainty in
this auditor's report is not a guarantee that the Company will
continue in operation.
We identified going concern as a key audit matter (see section 2
of this report). Based on the work described in our response to
that key audit matter, we are required to report to you if we have
concluded that the use of the going concern basis of accounting is
inappropriate or there is an undisclosed material uncertainty that
may cast significant doubt over the use of that basis for a period
of at least a year from the date of approval of the financial
statements. We have nothing to report in these respects, and we did
not identify going concern as a key audit matter.
We have nothing to report in these respects.
5. We have nothing to report the other information in the financial statements
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.
Directors' report
Based solely on our work on the other information:
-- we have not identified material misstatements in the
Directors' report;
-- in our opinion the information given in the report for
the financial year is consistent with the financial
statements; and
-- in our opinion the report has been prepared in accordance
with the Companies (Guernsey) Law 2008.
6. We have nothing to report on the other matters on which we
are required to report by exception
Under the Companies (Guernsey) Law 2008, we are required to
report to you if, in our opinion:
-- adequate accounting records have not been kept by the
Company, or returns adequate for our audit have not
been received from branches not visited by us; or
-- the Company 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.
7. Respective responsibilities
Directors' responsibilities
As explained more fully in their statement set out on page 4,
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 other irregularities (see
below), 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, other irregularities 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 .
Irregularities - ability to detect
We identified areas of laws and regulations that could
reasonably be expected to have a material effect on the annual
accounts from our general commercial and sector experience, through
discussion with the Directors (as required by auditing standards),
and from inspection of the Group's regulatory correspondence and
discussed with the Directors the policies and procedures regarding
compliance with laws and regulations. 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.
Whilst the Company is subject to many other laws and
regulations, we did not identify any others where the consequences
of non-compliance alone could have a material effect on amounts or
disclosures in the financial statements.
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 (irregularities) 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 irregularities, as these may
involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal controls. We are
not responsible for preventing non-compliance and cannot be
expected to detect non-compliance with all laws and
regulations.
8. 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 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.
Pamela McIntyre (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
15 Canada Square
London E14 5GL
28 April 2020
Statement of Comprehensive Income
For the year ended 31 December 2019
2019 2018
Notes GBP GBP
------------------------------- ------ ------------- ------------------------
Interest income 11,269,582 11,269,478
------------------------------- ------ ------------- ------------------------
Interest expense (11,250,000) (11,250,000)
------------------------------- ------ ------------- ------------------------
Operating profit 19,582 19,478
------------------------------- ------ ------------- ------------------------
Revaluation of loans 6 (812,500) (5,937,500)
------------------------------- ------ ------------- ------------------------
Revaluation of debt securities 11 812,500 5,937,500
------------------------------- ------ ------------- ------------------------
Administrative expenses (650) (650)
------------------------------- ------ ------------- ------------------------
Profit before tax 18,932 18,828
------------------------------- ------ ------------- ------------------------
Income tax expense 5 (3,597) (3,577)
------------------------------- ------ ------------- ------------------------
Profit for the financial year 15,335 15,251
------------------------------- ------ ------------- ------------------------
Other comprehensive income - -
------------------------------- ------ ------------- ------------------------
Total comprehensive income for
the financial year 15,335 15,251
------------------------------- ------ ------------- ------------------------
All amounts are in respect of continuing activities.
Balance Sheet
At 31 December 2019
2019 2019 2018 2018
Notes GBP GBP GBP GBP
---------------------------- ------ ------------ -------------- ------------ --------------
Non-current assets
Loans to group undertakings 6 153,375,000 154,187,500
---------------------------- ------ ------------ -------------- ------------ --------------
Current assets
Other financial assets 7 6,477,665 6,496,137
---------------------------- ------ ------------ -------------- ------------ --------------
Cash and cash equivalents 8 3,514,978 3,481,151
---------------------------- ------ ------------ -------------- ------------ --------------
9,992,643 9,977,288
---------------------------- ------ ------------ -------------- ------------ --------------
Current liabilities
Current tax liability 5 (3,597) (3,577)
---------------------------- ------ ------------ -------------- ------------ --------------
Deferred tax liability 9 (21,250) (21,250)
---------------------------- ------ ------------ -------------- ------------ --------------
Other financial liabilities 10 (9,832,192) (9,832,192)
---------------------------- ------ ------------ -------------- ------------ --------------
Net current assets 135,604 120,269
---------------------------- ------ ------------ -------------- ------------ --------------
Total assets less
current liabilities 153,510,604 154,307,769
---------------------------- ------ ------------ -------------- ------------ --------------
Non-current liabilities
Subordinated guaranteed
notes 11 (153,250,000) (154,062,500)
---------------------------- ------ ------------ -------------- ------------ --------------
Net assets 260,604 245,269
---------------------------- ------ ------------ -------------- ------------ --------------
Shareholders' equity
Share capital 12 100,000 100,000
---------------------------- ------ ------------ -------------- ------------ --------------
Retained earnings 160,604 145,269
---------------------------- ------ ------------ -------------- ------------ --------------
Total shareholders'
equity 260,604 245,269
---------------------------- ------ ------------ -------------- ------------ --------------
Approved by the Board of Directors and signed on its behalf on
28 April 2020 by:
Peter Barbour
Director
Statement of Changes in Equity
For the Year ended 31 December 2019
Share Capital Retained Earnings Total Equity
GBP GBP GBP
--------------------------- ------------- ----------------- ------------
At 31 December 2018 100,000 145,269 245,269
--------------------------- ------------- ----------------- ------------
Total comprehensive income
for the year - 15,335 15,335
--------------------------- ------------- ----------------- ------------
At 31 December 2019 100,000 160,604 260,604
--------------------------- ------------- ----------------- ------------
At 31 December 2017 100,000 26,268 126,268
--------------------------- ------------- ----------------- ------------
Transition to IFRS 9 - 103,750 103,750
--------------------------- ------------- ----------------- ------------
At 1 January 2018 100,000 130,018 230,018
--------------------------- ------------- ----------------- ------------
Total comprehensive income
for the year - 15,251 15,251
--------------------------- ------------- ----------------- ------------
At 31 December 2018 100,000 145,269 245,269
--------------------------- ------------- ----------------- ------------
Cash Flow Statement
For the year ended 31 December 2019
2019 2018
Notes GBP GBP
------------------------------------------ ----- --------- ------------
Cash flow from operating activities
Profit for the financial year 15,335 15,251
------------------------------------------ ----- --------- ------------
Income tax expense 3,597 3,577
------------------------------------------ ----- --------- ------------
Operating profit before changes in
working capital 18,932 18,828
------------------------------------------ ----- --------- ------------
Fair value movements of loans 812,500 5,937,500
------------------------------------------ ----- --------- ------------
Fair value movements of debt securities (812,500) (5,937,500)
------------------------------------------ ----- --------- ------------
Net decrease in debtors 18,472 55
------------------------------------------ ----- --------- ------------
Cash generated from operations 37,404 18,883
------------------------------------------ ----- --------- ------------
Income taxes paid (3,577) (2,796)
------------------------------------------ ----- --------- ------------
Net cash flow from operating activities 33,827 16,087
------------------------------------------ ----- --------- ------------
Net increase in cash and cash equivalents 33,827 16,087
------------------------------------------ ----- --------- ------------
Cash and cash equivalents at beginning
of year 3,481,151 3,465,064
------------------------------------------ ----- --------- ------------
Cash and cash equivalents at end of
year 8 3,514,978 3,481,151
------------------------------------------ ----- --------- ------------
Interest paid and received during the year were as follows :
2019 2018
GBP GBP
------------------ ---------- -----------
Interest paid 11,250,000 11,250,000
------------------ ---------- -----------
Interest received 11,288,054 11,269,533
------------------ ---------- -----------
Notes to the Financial Statements
(forming part of the Financial Statements)
For the year ended 31 December 2019
1. Accounting Policies
Rothschild & Co Continuation Finance CI 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 presented in sterling,
unless otherwise stated.
Going Concern
Management has performed an assessment to determine whether
there are any material uncertainties that could cast significant
doubt on the ability of the Company to continue as a going concern,
including the impact of COVID-19. No significant issues have been
noted. In reaching this conclusion, management considered:
-- The financial impact of the uncertainty on the Company's
balance sheet;
-- The Company's liquidity position based on current and
projected cash resources. The liquidity position has
been assessed taking into account the forecast liquidity
of NMR and R&CoCL and their ability to continue to pay
the interest on the intercompany loan provided by the
Company. Considerations included a stressed scenario
where both NMR's and R&CoCL's revenues could be reduced
by more than 50% as compared to the prior year; 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.
The financial statements are presented in sterling, unless
otherwise stated.
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 2019.
Future accounting policies
A number of new standards, amendments to standards and
interpretations are effective for accounting periods ending after
31 December 2019 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 receivable and payable
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. 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.
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 Rothschild & Co 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.
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
Debt securities 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.
g. 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.
h. 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.
2. Financial Risk Management
The Company follows the financial risk management policies of
the parent undertaking, Rothschild & Co 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 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 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 (2018: GBPnil).
4. Audit Fee
The amount receivable by the auditors and their associates in
respect of the audit of these financial statements is GBP7,500
(2018: GBP5,000). The audit fee is paid on a group basis by N M
Rothschild & Sons Limited.
5. Taxation
2019 2018
GBP GBP
-------------- ------ ------
Current tax 3,597 3,577
-------------- ------ ------
Deferred tax - -
-------------- ------ ------
Total tax 3,597 3,577
-------------- ------ ------
The tax charge can be explained as follows:
2019 2018
GBP GBP
------------------------------------------ ------- -------
Profit before tax 18,932 18,828
------------------------------------------ ------- -------
United Kingdom corporation tax charge at
19% 3,597 3,577
------------------------------------------ ------- -------
Total current tax 3,597 3,577
------------------------------------------ ------- -------
6. Non-Current Assets: Loans to Group Undertakings
2019 2018
GBP GBP
----------------------------------------- ------------ --------------
At beginning of year 154,187,500 125,000,000
----------------------------------------- ------------ --------------
Revaluation due to transition to IFRS 9 - 35,125,000
----------------------------------------- ------------ --------------
154,187,500 160,125,000
----------------------------------------- ------------ --------------
Fair value movements (812,500) (5,937,500)
----------------------------------------- ------------ --------------
At end of year 153,375,000 154,187,500
----------------------------------------- ------------ --------------
Due
In 5 years or more 153,375,000 154,187,500
----------------------------------------- ------------ --------------
IFRS 9 requires the GBP125,000,000 loans to be carried at fair
value which as at 31 December 2019 was GBP153,375,000 (2018:
GBP154,187,500). On an amortised cost basis, the value of the loan
at 31 December 2019 would be GBP125,000,000 (2018: GBP125,000,000).
The fair values are based on the market value of the external debt
securities (level 2).
The interest rate charged on the subordinated perpetual loans to
group undertakings is 9 1/64 per cent.
7. Other Financial Assets
2019 2018
GBP GBP
----------------------------------- --------- ----------
Amounts owed by parent undertaking 3,939,705 3,939,705
----------------------------------- --------- ----------
Amounts owed by fellow subsidiary
undertaking 2,537,960 2,556,432
----------------------------------- --------- ----------
6,477,665 6,496,137
----------------------------------- --------- ----------
8. Cash and Cash Equivalents
At the year end the Company held cash of GBP3,514,978 (2018:
GBP3,481,151) at a fellow subsidiary undertaking.
9. Deferred Income Taxes
2019 2018
GBP GBP
------------------------- --------- ---------
At beginning of year (21,250) -
------------------------- --------- ---------
Transition to IFRS 9 - (21,250)
------------------------- --------- ---------
Recognised in income
Income statement credit - -
------------------------- --------- ---------
At end of year (21,250) (21,250)
------------------------- --------- ---------
Deferred tax assets less liabilities are attributable to the
following items:
2019 2018
GBP GBP
---------------------------------------- ------------ ------------
Fair value of intra group loans (4,823,750) (4,961,875)
---------------------------------------- ------------ ------------
Fair value of debt securities in issue 4,802,500 4,940,625
---------------------------------------- ------------ ------------
(21,250) (21,250)
---------------------------------------- ------------ ------------
Both the intra-group loans and debt securities in issue are
taxed on an amortised cost basis of accounting and accordingly
taxable/deductible temporary differences arise following the
adoption of IFRS 9. 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 although a reduction
in the rate to 17 per cent from April 2020 had been substantively
enacted at the balance sheet date and is reflected in the carrying
value of deferred tax.
In the 11 March 2020 Budget, it was announced that the UK tax
rate will remain at the current 19% and not reduce to 17% from 1
April 2020. This will have a consequential effect on the Company's
future tax charge. If this rate change had been substantively
enacted at the current balance sheet date the deferred tax
liability would have increased by GBP2,500.
10. Other Financial Liabilities
2019 2018
GBP GBP
----------------- ------------------ ----------
Interest payable 9,832,192 9,832,192
----------------- ------------------ ----------
Interest payable on the subordinated guaranteed notes is fixed
at 9 per cent per annum.
11. Subordinated Guaranteed Notes
2019 2018
GBP GBP
----------------------------------------- ------------ --------------
At beginning of year 154,062,500 125,000,000
----------------------------------------- ------------ --------------
Revaluation due to transition to IFRS 9 - 35,000,000
----------------------------------------- ------------ --------------
154,062,500 160,000,000
----------------------------------------- ------------ --------------
Fair value movements (812,500) (5,937,500)
----------------------------------------- ------------ --------------
At end of year 153,250,000 154,062,500
----------------------------------------- ------------ --------------
Repayable
In 5 years or more 153,250,000 154,062,500
----------------------------------------- ------------ --------------
Given the IFRS 9 requirement to fair value the related loans,
the Company has elected to fair value the subordinated guaranteed
notes, which as at 31 December 2019 was GBP153,250,000 (2018:
GBP154,062,500). On an amortised cost basis, the value of the
subordinated guaranteed notes at 31 December 2019 would be
GBP125,000,000 (2018: GBP125,000,000). The fair value was derived
from the quoted 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 principal
balance being shown in the > 5yr column.
At 31 December Demand Demand-3m 3m - 1yr 1yr - 5yr > 5yr Total
2019
GBP GBP GBP GBP GBP GBP
--------------- ------ ---------- -------- ---------- ----------- -----------
Loan notes in
issue - 11,250,000 - 45,000,000 125,000,000 181,250,000
--------------- ------ ---------- -------- ---------- ----------- -----------
At 31 December Demand Demand-3m 3m - 1yr 1yr - 5yr > 5yr Total
2018
GBP GBP GBP GBP GBP GBP
--------------- ------ ---------- -------- ---------- ----------- -----------
Loan notes in
issue - 11,250,000 - 45,000,000 125,000,000 181,250,000
--------------- ------ ---------- -------- ---------- ----------- -----------
12. Share Capital
2019 2018
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
----------------------------------- ------- -------
13. 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:
2019 2018
GBP GBP
---------------------------------------------- ---------- -------------
Subordinated perpetual loan to parent
undertaking
- at fair value 61,350,000 61,675,000
---------------------------------------------- ---------- -------------
Subordinated perpetual loan to fellow
subsidiary undertaking
- at fair value 92,025,000 92,512,500
---------------------------------------------- ---------- -------------
Amounts owed by parent undertaking 3,939,705 3,939,705
---------------------------------------------- ---------- -------------
Amounts owed by fellow subsidiary undertaking 2,537,960 2,556,432
---------------------------------------------- ---------- -------------
Cash at fellow subsidiary undertaking 3,514,978 3,481,151
---------------------------------------------- ---------- -------------
Amounts recognised in the statement of comprehensive income in
respect of related party transactions were as follows:
2019 2018
GBP GBP
-------------------------------------------- --------- -------------------------
Interest receivable from parent undertaking 4,507,833 4,507,813
-------------------------------------------- --------- -------------------------
Interest receivable from fellow subsidiary
undertaking 6,761,749 6,761,665
-------------------------------------------- --------- -------------------------
There were no loans made to Directors during the year (2018:
none) and no balances outstanding at the year end (2018: GBPnil).
There were no employees of the Company during the year (2018:
none).
14. Parent Undertaking and Ultimate Holding Company
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 Rothschild & Co
Continuation Limited, incorporated in England and Wales and whose
registered office is at New Court, St Swithins Lane, London EC4N
8AL.
The Company's registered office is located at St Julian's Court,
St Peter Port, Guernsey,GY1 3BP.
15. Post balance sheet event
In early 2020, the existence of a new coronavirus (COVID-19) was
confirmed and since this time COVID-19 has spread across China and
to a significant number of other countries. COVID-19 has caused
disruption to businesses and economic activity which has been
reflected in recent fluctuations in global stock markets. The
Company considers the emergence and spread of COVID-19 to be a
non-adjusting post balance sheet event. Given the inherent
uncertainties, it is not practicable at this time to determine the
impact of COVID-19 on the Company or to provide a quantitative
estimate of its impact.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR SEMFMUESSEDL
(END) Dow Jones Newswires
April 29, 2020 12:47 ET (16:47 GMT)
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