TIDM68WN
RNS Number : 9737S
Rothschilds Continuation FinancePLC
29 November 2011
Rothschilds Continuation Finance PLC
Half-yearly Report for the six-month period ended 30 September
2011
Interim Management Report
Summary of Important Events
Rothschilds 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 Rothschild group of companies. 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 typically by the issue of
notes guaranteed by NMR, both under the terms of its
GBP2,000,000,000 Euro Medium Term Note Programme, which was
established on 20 February 2001, and separately as perpetual
subordinated notes. Note issues are made from time to time,
depending on the Group's funding requirements.
During the six months ended 30 September 2011, EUR345,480,000 of
Medium Term Notes matured.
Risks and Uncertainties
The Company's exposure to interest rate movements on the medium
term and perpetual subordinated note issues has been passed to NMR,
as the issue proceeds have been on-lent to NMR either at the same
rate of interest as the Company is paying on the notes or, in the
case of the perpetual subordinated notes, at a fixed margin of one
basis point above the rate being paid. Liquidity risk has similarly
been transferred to NMR as the funds on-lent have the same maturity
dates as the notes issued. The Company's principal credit risk is
with NMR.
Since notes issued by the Company have been guaranteed by, and
funds have been on-lent to, NMR, the Company's ability to meet its
obligations in respect of notes issued by it is affected by NMR's
ability to make payments to the Company.
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.
Responsibility Statement
The directors confirm that to the best of their knowledge:
- the condensed set of financial statements has been prepared in accordance with IAS 34 Interim
Financial Reporting; and
- the interim management report includes a fair review of (i) the important events that have
occurred during the first six months of the financial year, and their impact on the condensed
set of financial statements, and (ii) the principal risks and uncertainties for the remaining
six months of the financial year.
By Order of the Board
Jonathan Westcott, Secretary
New Court, St. Swithin's Lane, London EC4N 8AL
21 November 2011
Condensed Interim Statement of Comprehensive Income
For the six months ended 30 September 2011
6 months 6 months
to to
30 September 30 September
2011 2010
Note GBP GBP
------------------------------ ----- ------------- -------------
Interest receivable 5,405,669 3,959,169
------------------------------ ----- ------------- -------------
Interest payable (5,397,591) (3,952,007)
------------------------------ ----- ------------- -------------
Profit on repurchase
of loan notes - 62,616
------------------------------ ----- ------------- -------------
Foreign exchange translation
differences (4,132) 434
------------------------------ ----- ------------- -------------
Operating expenses (582) (95)
------------------------------ ----- ------------- -------------
Profit before tax 2 3,364 70,117
------------------------------ ----- ------------- -------------
Taxation 4 (875) (19,633)
------------------------------ ----- ------------- -------------
Profit for the financial
period 2,489 50,484
------------------------------ ----- ------------- -------------
Other comprehensive - -
income
------------------------------ ----- ------------- -------------
Total comprehensive
income for the financial
period 2,489 50,484
------------------------------ ----- ------------- -------------
Condensed Interim Statement of Changes in Equity
For the six months ended 30 September 2011
Retained
Share Earnings Total
Capital
GBP GBP GBP
------------------------ --------- ---------- --------
At 1 April 2011 100,000 138,530 238,530
------------------------ --------- ---------- --------
Total comprehensive
income for the period - 2,489 2,489
------------------------ --------- ---------- --------
At 30 September 2011 100,000 141,019 241,019
------------------------ --------- ---------- --------
At 1 April 2010 100,000 82,024 182,024
------------------------ --------- ---------- --------
Total comprehensive
income for the period - 50,484 50,484
------------------------ --------- ---------- --------
At 30 September 2010 100,000 132,508 232,508
------------------------ --------- ---------- --------
Condensed Interim Balance Sheet
At 30 September 2011
At 30 September At 31 March
2011 2011 2011 2011
Note GBP GBP GBP GBP
--------------------- ----- ------------- -------------- -------------- --------------
Non-current
assets
Other financial
assets 5 129,036,000 194,508,600
--------------------- ----- ------------- -------------- -------------- --------------
Current assets
Other financial
assets 6 61,220,381 306,564,972
--------------------- ----- ------------- -------------- -------------- --------------
Cash and cash
equivalents 7 261,642 258,558
--------------------- ----- ------------- -------------- -------------- --------------
61,482,023 306,823,530
--------------------- ----- ------------- -------------- -------------- --------------
Current liabilities
Current tax
payable (23,368) (22,493)
--------------------- ----- ------------- -------------- -------------- --------------
Other financial
liabilities 8 (61,217,636) (306,562,507)
--------------------- ----- ------------- -------------- -------------- --------------
Net current
assets 241,019 238,530
--------------------- ----- ------------- -------------- -------------- --------------
Total assets
less current
liabilities 129,277,019 194,747,130
--------------------- ----- ------------- -------------- -------------- --------------
Non-current
liabilities
Other financial
liabilities 9 (129,036,000) (194,508,600)
--------------------- ----- ------------- -------------- -------------- --------------
Net assets 241,019 238,530
--------------------- ----- ------------- -------------- -------------- --------------
Shareholders'
equity
Share capital 11 100,000 100,000
--------------------- ----- ------------- -------------- -------------- --------------
Retained earnings 141,019 138,530
--------------------- ----- ------------- -------------- -------------- --------------
Total shareholders'
equity 241,019 238,530
--------------------- ----- ------------- -------------- -------------- --------------
Condensed Interim Cash Flow Statement
For the six months ended 30 September 2011
6 months 6 months
to to
30 September 30 September
2011 2010
Note GBP GBP
--------------------------- ----- --------------- --------------
Cash flow from operating
activities
Net profit for the
financial period 2,489 50,484
--------------------------- ----- --------------- --------------
Taxation 875 19,633
--------------------------- ----- --------------- --------------
Operating profit before
changes in working
capital and provisions 3,364 70,117
--------------------------- ----- --------------- --------------
Net decrease / (increase)
in other financial
assets 310,817,191 (233,820,226)
--------------------------- ----- --------------- --------------
Net (decrease) / increase
in other financial
liabilities (310,817,471) 233,819,478
--------------------------- ----- --------------- --------------
Cash generated from
operations 3,084 69,369
--------------------------- ----- --------------- --------------
Net cash from operating
activities 3,084 69,369
--------------------------- ----- --------------- --------------
Net increase in cash
and cash equivalents 3,084 69,369
--------------------------- ----- --------------- --------------
Cash and cash equivalents
at 1 April 258,558 182,127
--------------------------- ----- --------------- --------------
Cash and cash equivalents
at 30 September 7 261,642 251,496
--------------------------- ----- --------------- --------------
Interest receipts and payments during the period were as
follows:
6 months 6 months
to to
30 September 30 September
2011 2010
GBP GBP
------------------------- ------------- -------------
From parent undertaking 5,517,828 3,972,248
------------------------- ------------- -------------
To noteholders 5,510,030 3,965,834
------------------------- ------------- -------------
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 September 2011
1. Accounting Policies
Rothschilds Continuation Finance PLC ("the Company") is a
company incorporated in the United Kingdom. The principal
accounting policies which have been consistently adopted in the
presentation of the condensed interim financial statements are as
follows:
a. 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. The condensed
interim financial statements should be
read in conjunction with the annual financial
statements for the year ended 31 March
2011, which have been prepared in accordance
with International Financial Reporting
Standards.
b. Interest receivable and payable
Interest receivable and payable is recognised
in the income statement using the effective
interest rate method.
c. Foreign currencies
Transactions in foreign currencies are
accounted for at the exchange rates prevailing
at the time of the transaction. Gains
and losses resulting from the settlement
of such transactions, and from the translation
at period end exchange rates of monetary
items that are denominated in foreign
currencies, are recognised in the income
statement. All material foreign currency
cash flows are matched.
d. Cash and cash equivalents
For the purposes of the cash flow statement,
cash and cash equivalents comprise cash
on hand and balances with banks.
e. Taxation
Tax payable on profits is recognised
in the income statement.
f. Capital management
The capital of the Company is managed
at the group level by the parent undertaking,
N M Rothschild & Sons Limited.
g. Financial risk management
The Company follows the financial risk
management policies of the parent undertaking,
N M Rothschild & Sons Limited. The key
risks arising from the Company's activities
involving financial instruments, which
are monitored at the group level, are
as follows: - Credit risk - the risk of loss
arising from client or counterparty
default is not considered a significant
risk to the Company as all asset
balances are with other group companies
as detailed in note 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 the
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 matched. The maturity of contractual
cash flows payable by the Company
is disclosed in note 10 Maturity
of Financial Liabilities.
2. Profit Before Tax
6 months 6 months
to to
30 September 30 September
2011 2010
GBP GBP
------------------------------- ------------- -------------
Is stated after
i. Income
Income from loans to
parent undertaking 5,405,669 3,959,169
------------------------------- ------------- -------------
ii. Charges
Interest payable on Medium
Term Notes 2,823,094 1,276,394
------------------------------- ------------- -------------
Interest payable on Perpetual
Subordinated Notes 2,574,497 2,675,613
------------------------------- ------------- -------------
3. Directors' Emoluments
None of the directors received any remuneration from the Company
during the period (2010: GBPnil).
4. Taxation
6 months 6 months
to to
30 September 30 September
2011 2010
GBP GBP
---------------------------- ------------- -------------
Profit before tax 3,364 70,117
---------------------------- ------------- -------------
United Kingdom corporation
tax at 26% (2010: 28%) 875 19,633
---------------------------- ------------- -------------
5. Non-current Assets: Other Financial Assets
At 30 September At 31 March
2011 2011
GBP GBP
----------------------------- ---------------- ------------
Amounts owed by parent
undertaking
EUR70,000,000 due 04
April 2012 - 61,889,100
----------------------------- ---------------- ------------
EUR150,000,000 Perpetual
floating rate subordinated
loan 129,036,000 132,619,500
----------------------------- ---------------- ------------
129,036,000 194,508,600
----------------------------- ---------------- ------------
Due
In less than 5 years - 61,889,100
----------------------------- ---------------- ------------
In 5 years or more 129,036,000 132,619,500
----------------------------- ---------------- ------------
The interest rate charged on the EUR150 million loan is
EUR-TEC10-CNO plus 36 basis points, capped at 9.01 per cent, fixed
on 05 February, 05 May, 05 August and 05 November each year.
The weighted average effective interest rate on the above loan
was 3.49% and the fair value was GBP58,135,879 as at 30 September
2011. The fair value was estimated using discounted cashflow
techniques and inputs based on market conditions existing at the
balance sheet date.
6. Current Assets: Other Financial Assets
At 30 September At 31 March
2011 2011
GBP GBP
------------------------ ---------------- ------------
Amounts owed by parent
undertaking
EUR345,980,000 due 19
September 2011 - 305,449,232
------------------------ ---------------- ------------
EUR70,000,000 due 04 60,216,800 -
April 2012
------------------------ ---------------- ------------
Interest receivable 1,003,581 1,115,740
------------------------ ---------------- ------------
61,220,381 306,564,972
------------------------ ---------------- ------------
The interest rate charged on the EUR70 million loan due 04 April
2012 is 3-month Euribor plus 40 basis points, fixed on 04 January,
04 April, 04 July and 04 October each year.
The weighted average effective interest rate on the above loan
was 1.947% and the fair value was GBP60,428,161 as at 30 September
2011. The fair value was estimated using discounted cashflow
techniques and inputs based on market conditions existing at the
balance sheet date.
7. Cash and Cash Equivalents
At 30 September 2011 the Company held cash of GBP261,642 (31
March 2011: GBP258,558) at the parent undertaking. Of this balance,
GBP111,965 was held in a sterling account on which the effective
interest rate at 30 September 2011 was 0.5%. The equivalent of
GBP149,677 was held in a euro account on which the effective
interest rate at 30 September 2011 was 1.5%. The sterling and euro
interest rates both re-price within one month.
8. Current Liabilities: Other Financial Liabilities
At 30 September At 31 March
2011 2011
GBP GBP
----------------------- ---------------- ------------
Medium Term Notes
EUR70,000,000 due 04 60,216,800 -
April 2012
----------------------- ---------------- ------------
EUR345,980,000 due 19
September 2011 - 305,449,232
----------------------- ---------------- ------------
Interest payable 1,000,836 1,113,275
----------------------- ---------------- ------------
61,217,636 306,562,507
----------------------- ---------------- ------------
The interest rate payable on the EUR70 million loan due 04 April
2012 is 3-month Euribor plus 40 basis points, fixed on 04 January,
04 April, 04 July and 04 October each year.
The weighted average effective interest rate on the above note
was 1.947% and the fair value was GBP60,428,161 as at 30 September
2011. The fair value was estimated using discounted cashflow
techniques and inputs based on market conditions existing at the
balance sheet dates.
9. Non-current Liabilities: Other Financial Liabilities
At 30 September At 31 March
2011 2011
GBP GBP
----------------------- ---------------- ------------
Medium Term Notes
EUR70,000,000 due 04
April 2012 - 61,889,100
----------------------- ---------------- ------------
Perpetual Subordinated
Notes
EUR150,000,000 129,036,000 132,619,500
----------------------- ---------------- ------------
129,036,000 194,508,600
----------------------- ---------------- ------------
Repayable
In less than 5 years - 61,889,100
----------------------- ---------------- ------------
In 5 years or more 129,036,000 132,619,500
----------------------- ---------------- ------------
The interest rate payable on the EUR150 million Perpetual
Subordinated Notes is EUR-TEC10-CNO plus 35 basis points, capped at
9 per cent, fixed on 05 February, 05 May, 05 August and 05 November
each year. From and including the interest payment date falling in
August 2014 and every interest payment date thereafter, the Company
may redeem all (but not some only) of the Perpetual Subordinated
Notes at their principal amount.
The weighted average effective interest rate on the above note
was 3.48% and the fair value was GBP57,942,325 as at 30 September
2011. The fair value was estimated using discounted cashflow
techniques and inputs based on market conditions existing at the
balance sheet dates.
10. Maturity of Financial Liabilities
The following table shows contractual cash flows payable by the
Company on the medium term notes and perpetual subordinated notes,
analysed 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.
3 months
or less 1 year 5 years
but or less or less
not
payable but but
on over over
Demand demand 3 months 1 year Perpetual Total
GBP GBP GBP GBP GBP GBP
--------------- -------- ----------- ----------- ------------ ------------- -------------
Medium
term notes - 296,362 60,526,189 - - 60,822,551
--------------- -------- ----------- ----------- ------------ ------------- -------------
Perpetual
subordinated
notes - 1,138,348 3,415,045 18,213,575 129,036,000 151,802,968
--------------- -------- ----------- ----------- ------------ ------------- -------------
- 1,434,710 63,941,234 18,213,575 129,036,000 212,625,519
------------------------ ----------- ----------- ------------ ------------- -------------
11. Share Capital
At 30 September At 31 March
2011 2011
GBP GBP
--------------------------- ---------------- ------------
Authorised, allotted,
called up and fully paid
100,000 Ordinary shares
of GBP1 each 100,000 100,000
--------------------------- ---------------- ------------
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 the parent company,
subsidiaries and fellow subsidiaries.
At 30 September At 31 March
2011 2011
GBP GBP
----------------------------- ---------------- ------------
Cash at parent undertaking 261,642 258,558
----------------------------- ---------------- ------------
Loans to parent undertaking 189,252,800 499,957,832
----------------------------- ---------------- ------------
Interest receivable from
parent undertaking 1,003,581 1,115,740
----------------------------- ---------------- ------------
Amounts receivable from related parties at the period end were
as follows:
The Company receives interest at base rate on the cash at parent
undertaking. Interest is received on the loans to parent
undertaking at rates specified in notes 5 and 6.
Amounts recognised in the income statement in respect of related
party transactions were as follows:
6 months 6 months
to to
30 September 30 September
2011 2010
GBP GBP
-------------------------- ------------- -------------
Interest receivable from
parent undertaking 5,405,669 3,959,169
-------------------------- ------------- -------------
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 Concordia SAS,
incorporated in France. The smallest group in which they are
consolidated is that headed by N M Rothschild & Sons Limited,
registered in England and Wales. The consolidated financial
statements of this group are available to the public and may be
obtained from Companies House.
The Company's immediate parent company is N M Rothschild &
Sons Limited.
The Company's registered office is located at New Court, St
Swithin's Lane, London, EC4N 8AL.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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