21 Jul 2015 16:02
Rothschilds Continuation Finance (C.I.) Limited
Report of the Directors and Financial Statementsfor the year ended 31 March 2015
Report of the Directors
The Directors present their Directors' report and financial statements for the year ended 31 March 2015.
Directors
The Directors who held office during the year were as follows:
Anthony Chapman |
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Anthony Coghlan |
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Mark Crump |
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Andrew Didham |
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David Oxburgh |
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Principal Activities and Business Review
The principal activity of Rothschilds Continuation Finance (C.I.) Limited ("the Company") is the raising of finance for the purpose of lending it to other companies, including members of the Rothschild Concordia SAS group. The results for the year are set out in the Statement of Comprehensive Income.
As at 31 March 2015, £125,000,000 perpetual subordinated notes were in issue by the Company.
Principal Risks and Uncertainties
The principal risks of the Company are credit risk, liquidity risk, market risk and operational risk. The Company follows the risk management policies of a fellow Group company NM Rothschild & Sons limited.
The Company's market risk exposure is limited to interest rate. Exposure to interest rate movements on the perpetual subordinated note issues has been passed to a fellow subsidiary N M Rothschild & Sons Limited ("NMR") and parent undertaking Rothschilds Continuation Limited ("RCL"), as the issue proceeds have been on-lent to NMR and RCL at a fixed margin of 1/64 per cent above the rate being paid.
Liquidity risk has similarly been transferred to NMR and RCL as the funds on-lent have the same maturity dates as the notes issued. The Company's principal credit risk is with NMR and RCL.
Since notes issued by the Company have been guaranteed by, and funds have been on-lent to, NMR and RCL, the Company's ability to meet its obligations in respect of notes issued by it is affected by NMR's and RCL's ability to make payments to the Company.
Currency risk is not considered significant as all material foreign currency balances and cash flows are matched.
Dividends
The Directors do not recommend the payment of a dividend (2014: £nil).
Auditor
Pursuant to Section 487 of the Companies Act 2006, the auditor will be deemed to be reappointed and KPMG LLP will therefore continue in office.
Audit Information
The Directors who held office at the date of approval of this Report of the Directors confirm that, so far as they are each aware, there is no relevant audit information of which the Company's auditor is unaware, and each Director has taken all the steps that he or she ought to have taken as a Director to make himself or herself aware of any relevant audit information and to establish that the Company's auditor are aware of that information.
By Order of the Board |
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Anthony Coghlan Director | Mark Crump Director |
21 July 2015 |
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Statement of Directors' Responsibilitiesin Respect of the Directors' Report and the Financial Statements
The Directors are responsible for preparing the Directors' Report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law they have elected to prepare the financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU and applicable law.
Under Company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these financial statements, the Directors are required to:
- | select suitable accounting policies and then apply them consistently; |
- | make judgements and estimates that are reasonable and prudent; |
- | state whether they have been prepared in accordance with IFRS as adopted by the EU; and |
- | prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. |
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies (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 confirm that to the best of their knowledge:
- | the financial statements, prepared in accordance with IFRS as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit and loss of the Company; and |
- | the Report of the Directors includes a fair view of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties it faces. |
By Order of the Board |
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Anthony Coghlan Director | Mark Crump Director |
21 July 2015 |
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Independent Auditor's Report to the Members of Rothschilds Continuation Finance (C.I.) Limited
We have audited the financial statements (the "financial statements") of Rothschilds Continuation Finance (C.I.) Ltd (the "Company") for the year ended 31st March 2015 which comprise the Statement of Comprehensive Income, the Balance Sheet, the Statement of Changes in Equity, the Cash Flow Statement and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards as adopted by the EU.
This report is made solely to the Company's members, as a body, in accordance with section 262 of The Companies (Guernsey) Law, 2008. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective Responsibilities of Directors and Auditor
As explained more fully in the Statement of Directors' Responsibilities, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amount and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Board of Directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Report of the Directors to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.
Opinion on financial statements
In our opinion the financial statements:
- | give a true and fair view of the state of the Company's affairs as at 31 March 2015 and of its profit for the year then ended; |
- | are in accordance with International Financial Reporting Standards as adopted by the EU; and |
- | comply with The Companies (Guernsey) Law 2008. |
Ravinder Lamba (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
15 Canada Square
London E14 5GL
21 July 2015
Statement of Comprehensive Income
For the year ended 31 March 2015
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| 2015 | 2014 |
| Notes | £ | £ |
Interest income |
| 11,274,306 | 11,274,390 |
Interest expense | (11,250,000) | (11,250,000) | |
Operating profit | 24,306 | 24,390 | |
Administrative expenses | - | (650) | |
Profit before tax | 4 | 24,306 | 23,740 |
Income tax expense | 5 | (5,104) | (5,460) |
Profit for the financial year | 19,202 | 18,280 | |
Other comprehensive income | - | - | |
Total comprehensive income for the financial year | 19,202 | 18,280 |
Balance Sheet
At 31 March 2015
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| 2015 | 2015 | 2014 | 2014 |
| Notes | £ | £ | £ | £ |
Non-current assets | |||||
Loans to group undertakings | 6 |
| 125,000,000 |
| 125,000,000 |
Current assets |
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Debtors | 7 | 1,339,994 |
| 1,321,469 |
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Cash and cash equivalents | 8 | 251,935 | 251,614 | ||
1,591,929 | 1,573,083 | ||||
Current liabilities |
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Current tax payable |
| (5,104) |
| (5,460) |
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Other financial liabilities | 9 | (1,356,165) |
| (1,356,165) |
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Net current assets |
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| 230,660 |
| 211,458 |
Total assets less current liabilities | 125,230,660 | 125,211,458 | |||
Non-current liabilities |
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Subordinated guaranteed notes | 10 |
| (125,000,000) |
| (125,000,000) |
Net assets |
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| 230,660 |
| 211,458 |
Shareholders' equity | |||||
Share capital | 11 |
| 100,000 |
| 100,000 |
Retained earnings | 130,660 | 111,458 | |||
Total shareholders' equity |
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| 230,660 |
| 211,458 |
Approved by the Board of Directors on 21 July 2015 and signed on its behalf by:
Anthony Coghlan
Director
Mark Crump
Director
Statement of Changes in Equity
For the year ended 31 March 2015
| Share Capital | Retained Earnings | Total Equity |
| £ | £ | £ |
At 1 April 2014 | 100,000 | 111,458 | 211,458 |
Total comprehensive income for the financial year | - | 19,202 | 19,202 |
At 31 March 2015 | 100,000 | 130,660 | 230,660 |
At 1 April 2013 | 100,000 | 93,178 | 193,178 |
Total comprehensive income for the financial year | - | 18,280 | 18,280 |
At 31 March 2014 | 100,000 | 111,458 | 211,458 |
Cash Flow Statement
For the year ended 31 March 2015
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| 2015 | 2014 |
| Notes | £ | £ |
Cash flow from operating activities | |||
Profit for the financial year |
| 19,202 | 18,280 |
Income tax expense |
| 5,104 | 5,460 |
Operating profit before changes in working capital and provisions | 24,306 | 23,740 | |
Net (increase)/decrease in debtors |
| (18,525) | 37,051 |
Net (decrease) in other financial liabilities | - | - | |
Cash generated from operations | 5,781 | 60,791 | |
Income taxes paid |
| (5,460) | (11,206) |
Net cash flow from operating activities | 321 | 49,585 | |
Net increase in cash and cash equivalents | 321 | 49,585 | |
Cash and cash equivalents at 1 April |
| 251,614 | 202,029 |
Cash and cash equivalents at 31 March | 8 | 251,935 | 251,614 |
Interest paid and received during the year were as follows :
| 2015 | 2014 |
| £ | £ |
Interest paid | 11,250,000 | 11,250,000 |
Interest received | 11,255,781 | 11,311,441 |
The notes to the financial statements form an integral part of these financial statements
Notes to the Financial Statements
(forming part of the Financial Statements)
For the year ended 31 March 2015
1. Accounting Policies
Rothschilds Continuation Finance (C.I.) Limited ("the Company") is a company incorporated in Guernsey. The principal accounting policies which have been consistently adopted in the presentation of the financial statements are as follows:
a. | Basis of preparation |
The financial statements are prepared and approved by the Directors in accordance with International Financial Reporting Standards ("IFRS") and International Financial Reporting Interpretations Committee ("IFRIC") interpretations, endorsed by the European Union ("EU") and with those requirements of the Companies (Guernsey) Law 2008 applicable to companies reporting under IFRS. The financial statements are prepared under the historical cost accounting rules and presented in its sterling, unless otherwise stated. The maturities of the company's liabilities are matched with the maturities of its assets, there is, therefore a strong expectation that the Company has adequate resources to continue in operational existence for the foreseeable future and accordingly, the financial statements have been prepared on a going concern basis. The financial statements are presented in sterling, unless otherwise stated. | |
Standards affecting the financial statements | |
In the current year, there have been no new or revised Standards and Interpretations that have been adopted that have materially affected the amounts reported in these financial statements. | |
Future accounting developments | |
A number of new standards, amendments to standards and interpretations are effective for accounting periods ending after 31 March 2015 and therefore have not been applied in preparing these financial statements. None of these are expected to have a significantly affect on future financial statements. | |
b. | Interest receivable and payable |
Interest is recognised in the statement of comprehensive income using the effective interest rate method. | |
c. | Taxation |
| Tax payable on profits is recognised in the statement of comprehensive income. |
d. | Cash and cash equivalents |
| For the purposes of the cash flow statement, cash and cash equivalents comprise balances with banks with original maturities of three months or less. |
e. | Capital management |
| The Company is not subject to any externally imposed capital requirements. It is dependent on Rothschilds Continuation Limited (the parent undertaking) to provide capital resources which are therefore managed on a group basis. |
f. | Financial assets and liabilities |
| Financial assets and liabilities are recognised on trade date and derecognised on either trade date, if applicable, or on maturity or repayment. On initial recognition, IAS 39 requires that financial assets be classified into the following categories; at fair value through profit or loss, loans and receivables, held-to-maturity investments, or available for sale investments. The company does not hold any assets that are classified as held-to-maturity or available for sale. |
g. | Loans and advances |
Loans and advances are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and advances are intitially recorded at fair value, including any transaction costs and are subsequently measured at amortised cost using the effective interest rate method. Gains and losses arising on derecognition of loans and advances are recognised in other operating income. | |
h. | Financial liabilities |
| All financial liabilities are carried at amortised cost using the effective interest rate method. |
i. | 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 to sell 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 it 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 present value or other valuation techniques, using inputs based on market conditions existing at the balance sheet date.
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2. Financial Risk Management
The Company follows the financial risk management policies of the parent undertaking, Rothschilds Continuation Limited. The key risks arising from the Company's activities involving financial instruments, which are monitored at the group level, are as follows: | |
- | Credit risk - the risk of loss arising from client or counterparty default is not considered a significant risk to the Company as all asset balances are with other group companies as detailed in note 12 Related Party Transactions. |
- | Market risk - exposure to changes in market variables such as interest rates, currency exchange rates, equity and debt prices is not considered significant as the terms of financial assets substantially match those of financial liabilities. |
- | Liquidity risk - the risk that the Company is unable to meet its obligations as they fall due or that it is unable to fund its commitments is not considered significant as material cash inflows and outflows from financial assets and liabilities are substantially matched. |
3. Directors' Emoluments
None of the Directors received any remuneration in respect of their services to the Company during the year (2014: £nil).
4. Profit Before Tax
| 2015 | 2014 |
| £ | £ |
Is stated after | ||
i. Income |
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Interest from loans to Group undertakings |
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Parent undertaking | 4,507,813 | 4,507,813 |
Fellow subsidiary undertaking | 6,761,718 | 6,761,718 |
11,269,531 | 11,269,531 | |
Other interest receivable from fellow subsidiary undertaking | 4,775 | 4,859 |
| 11,274,306 | 11,274,390 |
ii. Charges |
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Interest payable on subordinated guaranteed notes | 11,250,000 | 11,250,000 |
The amount receivable by the auditors and their associates in respect of the audit of these financial statements is £3,825 (2014: £3,750). The audit fee is paid on a group basis by N M Rothschild & Sons Limited.
5. Taxation
| 2015 | 2014 |
| £ | £ |
Profit before tax | 24,306 | 23,740 |
United Kingdom corporation tax at 21% (2014: 23%) | 5,104 | 5,460 |
6. Loans to Group Undertakings
Subordinated | |
| Perpetual Loans |
| to Group Undertakings |
| £ |
At the beginning and end of the year | 125,000,000 |
The interest rate charged on the subordinated perpetual loans to group undertakings is 9 1/64 per cent. The fair value of the loans was £154,968,750 as at 31 March 2015 (2014: £142,937,500). The fair value was estimated using market price at the balance sheet date.
7. Debtors
| 2015 | 2014 |
| £ | £ |
Amounts owed by parent undertaking | 543,408 | 543,408 |
Amounts owed by fellow subsidiary undertaking | 796,586 | 778,061 |
| 1,339,994 | 1,321,469 |
8. Cash and Cash Equivalents
At the year end the Company held cash of £251,935 (2014: £251,614) at a fellow subsidiary undertaking. The Company receives interest at base rate.
9. Other Financial Liabilities
| 2015 | 2014 |
| £ | £ |
Interest payable | 1,356,165 | 1,356,165 |
Interest is payable on the subordinated guaranteed notes at 9 per cent.
10. Subordinated Guaranteed Notes
| 2015 | 2014 |
| £ | £ |
£125,000,000 9% Perpetual | ||
Subordinated Guaranteed Notes | 125,000,000 | 125,000,000 |
The fair value of the subordinated guaranteed notes was £154,843,750 as at 31 March 2015 (2014: £142,812,500). The fair value was estimated using market price at the balance sheet date.
The following table shows contractual cash flows payable by the Company on the subordinated guaranteed notes, analysed by remaining contractual maturity at the balance sheet date. Interest cash flows on the loan are shown up to five years only, with the prinicipal balance being shown in the > 5yr column.
| Demand | Demand-3m | 3m - 1yr | 1yr - 5yr | > 5yr | Total |
| £ | £ | £ | £ | £ | £ |
Loan notes in issue | - | - | 11,250,000 | 45,000,000 | 125,000,000 | 181,250,000 |
11. Share Capital
| 2015 | 2014 |
| £ | £ |
Authorised |
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Ordinary shares of £1 each | 100,000 | 100,000 |
Allotted, called up and fully paid |
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Ordinary shares of £1 each | 100,000 | 100,000 |
12. Related Party Transactions
Parties are considered related if one party controls, is controlled by or has the ability to exercise significant influence over the other party. This includes key management personnel, the parent company, subsidiaries and fellow subsidiaries.
Amounts receivable from related parties at the year end were as follows:
2015 | 2014 | |
| £ | £ |
Subordinated perpetual loan to parent undertaking | 50,000,000 | 50,000,000 |
Subordinated perpetual loan to fellow subsidiary undertaking | 75,000,000 | 75,000,000 |
Amounts owed by parent undertaking | 543,408 | 543,408 |
Amounts owed by fellow subsidiary undertaking | 796,586 | 778,061 |
Cash at fellow subsidiary undertaking | 251,935 | 251,614 |
Amounts recognised in the statement of comprehensive income in respect of related party transactions were as follows:
2015 | 2014 | |
| £ | £ |
Interest receivable from parent undertaking | 4,507,813 | 4,507,813 |
Interest receivable from fellow subsidiary undertaking | 6,766,493 | 6,766,577 |
There were no loans made to Directors during the year (2014: none) and no balances outstanding at year-end (2014: £nil). There were no employees of the Company during the year (2014: none).
13. Parent Undertaking and Ultimate Holding Company
The largest group in which the results of the Company are consolidated is that headed by Rothschild Concordia SAS, incorporated in France. The smallest group in which they are consolidated is that headed by Paris Orléans SCA, a French public limited partnership.
The Company's immediate parent company is Rothschilds Continuation Limited.
The Company's registered office is located at St Julian's Court, St Peter Port, Guernsey, GY1 3BP.