Rothschild & Co Continuation Finance PLC

Half-yearly Report for the six-month period ended 30 June 2024

Interim Management Report

Summary of Important Events

Rothschild & Co Continuation Finance PLC (the "Company") is a wholly-owned subsidiary of N. M. Rothschild & Sons Limited ("NMR") and was incorporated on 30 August 2000 to operate as a finance vehicle for the benefit of NMR and its subsidiaries. 

The principal activity of the Company is the raising of finance for the purpose of lending it to NMR and other companies in NMR's group (the "Group"). The Company raises finance by the issue of perpetual subordinated notes guaranteed by NMR. 

Risks and Uncertainties

The principal risks of the Company are credit risk, liquidity risk and market risk. The Company follows the risk management policies of the parent undertaking, NMR.  

The Company's principal risk is credit exposure to NMR, as the notes issued by the Company have been guaranteed by, and funds have been on-lent to NMR. The Company is therefore reliant on the ability of NMR to meet its obligations under these lending arrangements. NMR is exposed to current market and geopolitical headwinds but, nevertheless, has sufficient liquidity to continue to operate for the next 12 months even in the scenario where revenue is significantly reduced. Management has considered the going concern basis of preparation as outlined in note 1 to the financial statements.

This half-yearly financial report has not been audited or reviewed by the Company's auditors pursuant to the Auditing Practices Board guidance on Review of Interim Financial Information. 

Responsibilities Statement

The Directors confirm that to the best of their knowledge:

By Order of the Board

Peter Barbour

Director

18/07/2024

Condensed Interim Statement of Comprehensive Income

For the six months ended 30 June 2024

Condensed Interim Statement of Changes in Equity

For the six months ended 30 June 2024

Condensed Interim Balance Sheet

At 30 June 2024

Condensed Interim Cash Flow Statement

For the six months ended 30 June 2024

Interest receipts and payments during the period were as follows:

The Notes to the Condensed Interim Financial Statements form an integral part of the Condensed Interim Financial Statements.

Notes to the Condensed Interim Financial Statements

(forming part of the Condensed Interim Financial Statements)

For the six months ended 30 June 2024

1.   Basis of Preparation

The Condensed Interim Financial Statements are prepared and approved by the Directors in accordance with IAS 34 Interim Financial Reporting. The Condensed Interim Financial Statements are prepared under the historical cost accounting rules and should be read in conjunction with the annual financial statements for the year ended 31 December 2023, which have been prepared in accordance with International Financial Reporting Standards. 

The accounting policies and methods of valuation are identical to those applied in the financial statements for the year ended 31 December 2023.

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. No significant issues have been noted. In reaching this conclusion, management considered:

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.

Financial Risk Management

The Company follows the financial risk management policies of the parent undertaking, NMR.  The key risks arising from the Company's activities involving financial instruments, which are monitored at the Group level, are as follows:

2.   Directors' Emoluments

None of the directors received any remuneration in respect of their services to the Company during the period (2023: £nil). 

3.   Taxation

The tax charge can be explained as follows:

4.   Non-Current Assets: Loan to Parent Undertaking

IFRS 9 requires the €150,000,000 loan to be carried at fair value which as at 30 June 2024 was £97,284,560 (at 31 December 2023: £89,277,200). On an amortised cost basis, the value of the loan at 30 June 2024 would be £127,028,217 (at 31 December 2023: £130,046,904). The fair values are based on the market value of the external debt securities (level 2).

The interest rate charged on the €150 million loan is EUR-TEC10-CNO plus 36 basis points, capped at 9.01% fixed on 05 February, 05 May, 05 August and 05 November each year. The interest rate on the above loan at 30 June 2024 was 3.41% (31 December 2023: 3.66%).

5.   Current Assets: Other Financial Assets

6.   Cash and Cash Equivalents

At 30 June 2024 the Company held cash of £267,050 (31 December 2023: £268,360) at the parent undertaking.

7.   Deferred Income Taxes

Deferred tax assets less liabilities are attributable to the following items:

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.

8.   Current Liabilities: Other Financial Liabilities

9.   Non-Current Liabilities: Debt Securities in Issue

Given the IFRS 9 requirement to fair value the related loans, the Company has elected to fair value the debt securities in issue, which as at 30 June 2024 was £97,094,018 (at 31 December 2023: £89,082,129). On an amortised cost basis, the value of the debt securities in issue at 30 June 2024 would be £127,028,217 (at 31 December 2023: £130,046,904). Consistent with the prior period, the fair value was derived from quoted market prices at the balance sheet date. In accordance with IFRS 13 and due to a reduction in the frequency and volume of transactions observed in the immediate run up to the period end, the fair value is considered to be level 2 as at 30 June 2024 (2023: level 2).

The interest rate payable on the €150 million Perpetual Subordinated Notes is EUR-TEC10-CNO plus 35 basis points, capped at 9 per cent, fixed on 05 February, 05 May, 05 August and 05 November each year. From and including the interest payment date falling in August 2016 and every interest payment date thereafter, the Company may redeem all (i.e. not in part) of the Perpetual Subordinated Notes at their principal amount. 

The interest rate on the above notes at 30 June 2024 was 3.40% (31 December 2023: 3.65%).

10. Maturity of Financial Liabilities

The following table shows contractual cash flows payable by the Company on the perpetual subordinated notes classified by remaining contractual maturity at the balance sheet date. Interest cash flows on perpetual subordinated notes are shown up to five years only, with the principal balance being shown in the perpetual column.

At 30 June 2024

At 31 December 2023

11.   Share Capital

12.   Related Party Transactions

Parties are considered to be related if one party controls, is controlled by or has the ability to exercise significant influence over the other party. This includes key management personnel, the parent company, subsidiaries and fellow subsidiaries. 

Amounts receivable from related parties at the period end were as follows:

Amounts recognised in the condensed statement of comprehensive income in respect of related party transactions were as follows:

There were no loans made to Directors during the period (6 months to 30 June 2023: none) and no balances outstanding at the period end (at 31 December 2023: £nil). There were no employees of the Company during the period (6 months to 30 June 2023: none).

13.    Parent Undertaking and Ultimate Holding Company and Registered Office

The largest group in which the results of the Company are consolidated is that headed by Rothschild & Co Concordia SAS, incorporated in France, and whose registered office is at 23bis, Avenue de Messine, 75008 Paris.  The smallest group in which they are consolidated is that headed by Rothschild & Co SCA, a French public limited partnership whose registered office is also at 23bis, Avenue de Messine, 75008 Paris. The accounts are available on the Rothschild & Co website at www.rothschildandco.com.

The Company's immediate parent company is N. M. Rothschild and Sons Limited, incorporated in England and Wales and whose registered office is at New Court, St Swithins Lane, London, EC7N 8AL. 

The Company's registered office is located at New Court, St Swithin's Lane, London, EC4N 8AL.