TIDMRCHA
RNS Number : 9534J
Rothschild & Co Contin Fin CI Ltd
29 April 2022
Rothschild & Co Continuation Finance CI Limited
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 CI Limited ("the
Company") is a wholly-owned subsidiary of Rothschild & Co
Continuation Limited ("R&CoCL"). The principal activity of the
Company is the raising of finance for the purpose of lending it to
other members of the Rothschild & Co Group.
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 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 subordinated guaranteed notes
in issue. On this basis, the loan asset and subordinated guaranteed
notes would be matched on the balance sheet at GBP125m which
reflects the real asset and liability position of the Company.
However, IFRS 9 has required the Company to report the loan
asset, and the Company has elected to report the subordinated
guaranteed notes in issue, at fair value of cGBP146m.
Both the loans and subordinated guaranteed notes will continue
to be taxed on an amortised cost basis so a net deferred tax
liability of GBP23,750 (2020: GBP23,750) has been recognised on the
difference between this and the carrying values.
The results for the year are set out in the statement of
comprehensive income on page 13 and show a profit before tax of
GBP18,828 (2020: GBP18,935). The reserves available for
distribution are GBP188,692 (2020: GBP173,441).
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").
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 other group
companies, as the notes issued by the Company have been on-lent to
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 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.
Report of the Directors
The Directors present their Directors' report and 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
Mark Crump
David Oxburgh
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
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.
By Order of the Board
Paul O'Leary
Director
27 April 2022
Statement of Directors' responsibilities in respect of the
Directors' report and the financial statements
The Directors are responsible for preparing the Directors'
Report and the financial statements in accordance with applicable
law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law they have
elected to prepare the financial statements in accordance with
International Financial Reporting Standards ("IFRS") 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 in accordance with International Financial Reporting
Standards ("IFRS");
-- 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 (Guernsey) Law
2008. 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 Directors' 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 Guernsey 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 Directors' 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 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 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 profit for
the year then ended;
-- have been properly prepared in accordance with International
Financial Reporting Standards (IFRS); and
-- 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 have fulfilled our ethical
responsibilities under, and are independent of the Group in
accordance with, UK ethical requirements including the FRC Ethical
Standard as required by the Crown Dependencies' Audit Rules and
Guidance. We believe that the audit evidence we have obtained is a
sufficient and appropriate basis for our opinion.
.
Materi al ity: GBP1.56 million (31
financial statements as a whole December 2020: GBP1.59
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 group undertakings
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 group undertakings
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 145.63 million; total assets.
31 December 2020:
GBP 148.96 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 (GBP145.5 million value of debt
; 31 December 2020: securities
GBP148.84 million) in issue is based Our results:
on available quotes
Refer to page 19 from brokers and * We found the valuation of loans to parent undertaking
(Note 6) and page third-party and debt securities in issue, and the relevant
21 (Note 11) (financial transactions where disclosures to be acceptable. (December 2020:
disclosure ) available. As a acceptable)
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 GBP1.56 million (2020: GBP1.59 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 GBP1.17 million (2020: GBP1.19 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 GBP0.08 million (2020: GBP0.08
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 (Guernsey) Law 2008.
7. 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, 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 5,
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 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.
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
Notes GBP GBP
--------------------------------------- ------ ------------- -------------
Interest income 11,269,478 11,300,407
--------------------------------------- ------ ------------- -------------
Interest expense (11,250,000) (11,280,822)
--------------------------------------- ------ ------------- -------------
Net interest income 19,478 19,585
--------------------------------------- ------ ------------- -------------
Revaluation of loans 6 (3,333,750) (4,412,500)
--------------------------------------- ------ ------------- -------------
Revaluation of subordinated guaranteed
notes 11 3,333,750 4,412,500
--------------------------------------- ------ ------------- -------------
Administrative expenses (650) (650)
--------------------------------------- ------ ------------- -------------
Profit before tax 18,828 18,935
--------------------------------------- ------ ------------- -------------
Income tax expense 5 (3,577) (6,098)
--------------------------------------- ------ ------------- -------------
Profit for the financial year 15,251 12,837
--------------------------------------- ------ ------------- -------------
Other comprehensive income - -
--------------------------------------- ------ ------------- -------------
Total comprehensive income for
the financial year 15,251 12,837
--------------------------------------- ------ ------------- -------------
All amounts are in respect of continuing activities.
The notes on pages 17 to 23 form an integral part of these
financial statements
Balance Sheet
At 31 December 2021
2021 2021 2020 2020
Notes GBP GBP GBP GBP
---------------------------- ------ ------------ -------------- ------------ --------------
Non-current assets
Loans to group undertakings 6 145,628,750 148,962,500
---------------------------- ------ ------------ -------------- ------------ --------------
Current assets
Other financial assets 7 6,496,190 6,527,066
---------------------------- ------ ------------ -------------- ------------ --------------
Cash and cash equivalents 8 3,527,021 3,511,737
---------------------------- ------ ------------ -------------- ------------ --------------
10,023,211 10,038,803
---------------------------- ------ ------------ -------------- ------------ --------------
Current liabilities
Current tax liability (3,577) (3,598)
---------------------------- ------ ------------ -------------- ------------ --------------
Deferred tax liability 9 (23,750) (23,750)
---------------------------- ------ ------------ -------------- ------------ --------------
Other financial liabilities 10 (9,832,192) (9,863,014)
---------------------------- ------ ------------ -------------- ------------ --------------
Net current assets 163,692 148,441
---------------------------- ------ ------------ -------------- ------------ --------------
Total assets less
current liabilities 145,792.442 149,110,941
---------------------------- ------ ------------ -------------- ------------ --------------
Non-current liabilities
Subordinated guaranteed
notes 11 (145,503.750) (148,837,500)
---------------------------- ------ ------------ -------------- ------------ --------------
Net assets 288,692 273,441
---------------------------- ------ ------------ -------------- ------------ --------------
Shareholders' equity
Share capital 12 100,000 100,000
---------------------------- ------ ------------ -------------- ------------ --------------
Retained earnings 188,692 173,441
---------------------------- ------ ------------ -------------- ------------ --------------
Total shareholders'
equity 288,692 273,441
---------------------------- ------ ------------ -------------- ------------ --------------
Approved by the Board of Directors and signed on its behalf on
27 April 2022 by:
Paul O'Leary
Director
The notes on pages 17 to 23 form an integral part of these
financial statements
Statement of Changes in Equity
For the Year ended 31 December 2021
Share Capital Retained Earnings Total Equity
GBP GBP GBP
--------------------------- ------------- ----------------- ------------
At 31 December 2020 100,000 173,441 273,441
--------------------------- ------------- ----------------- ------------
Total comprehensive income
for the year - 15,251 15,251
--------------------------- ------------- ----------------- ------------
At 31 December 2021 100,000 188,692 288,692
--------------------------- ------------- ----------------- ------------
At 31 December 2019 100,000 160,604 260,604
--------------------------- ------------- ----------------- ------------
Total comprehensive income
for the year - 12,837 12,837
--------------------------- ------------- ----------------- ------------
At 31 December 2020 100,000 173,441 273,441
--------------------------- ------------- ----------------- ------------
The notes on pages 17 to 23 form an integral part of these
financial statements
Cash Flow Statement
For the year ended 31 December 2021
2021 2020
Notes GBP GBP
------------------------------------------ ----- ----------- ------------
Cash flow from operating activities
Profit for the financial year 15,251 12,837
------------------------------------------ ----- ----------- ------------
Income tax expense 3,577 6,098
------------------------------------------ ----- ----------- ------------
Operating profit before changes in
working capital 18,828 18,935
------------------------------------------ ----- ----------- ------------
Fair value movements of loans 3,333,750 4,412,500
------------------------------------------ ----- ----------- ------------
Fair value movements of subordinated
guaranteed notes (3,333,750) (4,412,500)
------------------------------------------ ----- ----------- ------------
Net decrease/(increase) in debtors 30,876 (49,401)
------------------------------------------ ----- ----------- ------------
Net (decrease)/increase in financial
liabilities (30,822) 30,822
------------------------------------------ ----- ----------- ------------
Cash generated from operations 18,882 356
------------------------------------------ ----- ----------- ------------
Income taxes paid (3,598) (3,597)
------------------------------------------ ----- ----------- ------------
Net cash flow from operating activities 15,284 (3,241)
------------------------------------------ ----- ----------- ------------
Net increase in cash and cash equivalents 15,284 (3,241)
------------------------------------------ ----- ----------- ------------
Cash and cash equivalents at beginning
of year 3,511,737 3,514,978
------------------------------------------ ----- ----------- ------------
Cash and cash equivalents at end of
year 8 3,527,021 3,511,737
------------------------------------------ ----- ----------- ------------
Interest paid and received during the year were as follows :
2021 2020
GBP GBP
------------------ ---------- -----------
Interest paid 11,280,822 11,250,000
------------------ ---------- -----------
Interest received 11,300,354 11,251,006
------------------ ---------- -----------
The notes on pages 17 to 23 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 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 with those requirements of the Companies
(Guernsey) Law 2008 applicable to companies reporting under
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 Rothschild
& Co Continuation Limited ("R&CoCL") and their ability
to continue to pay the interest on the intercompany
loan provided by the Company. This included severe but
plausible downside scenarios for NMR and R&CoCL 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. 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
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.
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.
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 immediate parent, R&CoCL. 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 (2020: GBPnil).
4. 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.
5. Taxation
2021 2020
GBP GBP
-------------- ------ ------
Current tax 3,577 3,598
-------------- ------ ------
Deferred tax - 2,500
-------------- ------ ------
Total tax 3,577 6,098
-------------- ------ ------
The tax charge can be explained as follows:
2021 2020
Note GBP GBP
---------------------------------------- ---------------- ------- ---------
Profit/(loss) before tax 18,828 18,935
---------------------------------------- ---------------- ------- ---------
United Kingdom corporation
tax charge at 19% 3,577 3,598
---------------------------------------- ---------------- ------- ---------
Impact on deferred tax of corporation
tax change 9 - 2,500
---------------------------------------- ---------------- ------- ---------
Total tax 3,577 6,098
---------------------------------------- ---------------- ------- ---------
6. Non-Current Assets: Loans to Group Undertakings
2021 2020
GBP GBP
---------------------- ------------ ------------
At beginning of year 148,962,500 153,375,000
---------------------- ------------ ------------
Fair value movements (3,333,750) (4,412,500)
---------------------- ------------ ------------
At end of year 145,628,750 148,962,500
---------------------- ------------ ------------
Due
In 5 years or more 145,628,750 148,962,500
---------------------- ------------ ------------
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
GBP125,000,000 loans as at 31 December 2021 was GBP145,628,750
(2020: GBP148,962,500). On an amortised cost basis, the value of
the loan at 31 December 2021 would be GBP125,000,000 (2020:
GBP125,000,000). The fair values are based on the market value of
the external subordinated guaranteed notes (level 2).
The interest rate charged on the subordinated perpetual loans to
group undertakings is 9 1/64 per cent.
7. Other Financial Assets
2021 2020
GBP GBP
----------------------------------- --------- ----------
Amounts owed by parent undertaking 3,939,705 3,952,055
----------------------------------- --------- ----------
Amounts owed by fellow subsidiary
undertaking 2,556,485 2,575,011
----------------------------------- --------- ----------
6,496,190 6,527,066
----------------------------------- --------- ----------
8. Cash and Cash Equivalents
At the year end the Company held cash of GBP3,527,021 (2020:
GBP3,511,737) at a fellow subsidiary undertaking.
9. Deferred Income Taxes
2021 2020
GBP GBP
--------------------------------------- --------- ---------
At beginning of year (23,750) (21,250)
--------------------------------------- --------- ---------
Impact on deferred tax of corporation
tax change - (2,500)
--------------------------------------- --------- ---------
At end of year (23,750) (23,750)
--------------------------------------- --------- ---------
Deferred tax assets less liabilities are attributable to the
following items:
2021 2020
GBP GBP
--------------------------------------------- ------------ ------------
Fair value of intra group loans (3,919,463) (4,552,875)
--------------------------------------------- ------------ ------------
Fair value of subordinated guaranteed notes
in issue 3,895,713 4,529,125
--------------------------------------------- ------------ ------------
(23,750) (23,750)
--------------------------------------------- ------------ ------------
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 Company has a UK permanent establishment and is liable to UK
Corporation 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.
10. Other Financial Liabilities
2021 2020
GBP GBP
----------------- ------------------ ----------
Interest payable 9,832,192 9,863,014
----------------- ------------------ ----------
Interest payable on the subordinated guaranteed notes is fixed
at 9 per cent per annum.
11. Subordinated Guaranteed Notes
2021 2020
GBP GBP
---------------------- ------------ ------------
At beginning of year 148,837,500 153,250,000
---------------------- ------------ ------------
Fair value movements (3,333,750) (4,412,500)
---------------------- ------------ ------------
At end of year 145,503,750 148,837,500
---------------------- ------------ ------------
Repayable
In 5 years or more 145,503,750 148,837,500
---------------------- ------------ ------------
The Company has elected to fair value through P&L the
subordinated guaranteed notes, which as at 31 December 2021 was
GBP145,503,750 (2020: GBP148,837,500), 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 at 31 December 2021 would be GBP125,000,000 (2020:
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
2021
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
2020
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
2021 2020
GBP GBP
----------------------------------- ------- -------
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:
2021 2020
GBP GBP
---------------------------------------------- ---------- -----------
Subordinated perpetual loan to parent
undertaking
- at fair value 58,251,500 59,585,000
---------------------------------------------- ---------- -----------
Subordinated perpetual loan to fellow
subsidiary undertaking
- at fair value 87,377,250 89,377,500
---------------------------------------------- ---------- -----------
Amounts owed by parent undertaking 3,939,705 3,952,055
---------------------------------------------- ---------- -----------
Amounts owed by fellow subsidiary undertaking 2,556,485 2,575,010
---------------------------------------------- ---------- -----------
Cash at fellow subsidiary undertaking 3,527,021 3,511,737
---------------------------------------------- ---------- -----------
Amounts recognised in the statement of comprehensive income in
respect of related party transactions were as follows:
2021 2020
GBP GBP
-------------------------------- --------- ----------
Interest receivable from parent
undertaking 4,507,791 4,520,163
-------------------------------- --------- ----------
Interest receivable from fellow
subsidiary undertaking 6,761,687 6,780,244
-------------------------------- --------- ----------
There were no loans made to Directors during the year (2020:
none) and no balances outstanding at the year end (2020: GBPnil).
There were no employees of the Company during the year (2020:
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.
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END
FR SEUFMUEESEDL
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April 29, 2022 12:41 ET (16:41 GMT)
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