Annual Financial Report

Rothschilds Continuation Finance (C.I.) Limited

Report of the Directors and Financial Statements for the year ended

31 March 2017

Report of the Directors

The Directors present their Directors' report and financial statements for the year ended 31 March 2017.

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 on page 7.

As at 31 March 2017, £125,000,000 perpetual subordinated notes were in issue by the Company.

Rothschild & Co SCA announced on 21 March 2017 that it will change its financial year end from 31 March to 31 December. There will therefore be a 9 month accounting period until 31 December 2017. Rothschilds Continuation Finance (C.I.) Limited will also change its year end in line with its ultimate parent.

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 N M 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.

Directors

The Directors who held office during the year were as follows:

Directors' Indemnity

The Company has provided qualifying third-party indemnities for the benefit of its Directors. These were provided during the period and remain in force at the date of this report

Dividends

The Directors do not recommend the payment of a dividend (2016: £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 auditors are aware of that information.

By Order of the Board

23 June 2017

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.

The financial statements are required by law to 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:

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the company and to 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.

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.) Limited (the "Company") for the year ended 31 March 2017 which comprise the Statement of Comprehensive Income, the Balance Sheet, 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 European Union.

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 set out on page 4 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 amounts 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 and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. 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:

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies (Guernsey) Law 2008 requires us to report to you if, in our opinion:

Pamela McIntyre (Senior Statutory Auditor)

for and on behalf of KPMG LLP, Statutory Auditor

Chartered Accountants

15 Canada Square

London E14 5GL

23 June 2017

Statement of Comprehensive Income

For the year ended 31 March 2017

All amounts are in respect of continuing activities.

Balance Sheet

At 31 March 2017

Approved by the Board of Directors and signed on its behalf on 23 June 2017 by:

Statement of Changes in Equity

For the year ended 31 March 2017

Cash Flow Statement

For the year ended 31 March 2017

Interest paid and received during the year were as follows :

Notes to the Financial Statements

(forming part of the Financial Statements)

For the year ended 31 March 2017

1. Accounting Policies

Rothschilds Continuation Finance (C.I.) Limited ("the Company") is a private limited company incorporated in Guernsey. The principal accounting policies which have been consistently adopted in the presentation of the financial statements are as follows:

a. Basis of preparation

The financial statements are prepared and approved by the Directors in accordance with International Financial Reporting Standards ("IFRS") and International Financial Reporting Interpretations Committee ("IFRIC") interpretations, endorsed by the European Union ("EU") and with those requirements of the Companies (Guernsey) Law 2008 applicable to companies reporting under IFRS. The financial statements are 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 2017 and therefore have not been applied in preparing these financial statements. None of these are expected to have a significant effect 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 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 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. 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.

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 (2016: £nil).

4. Profit Before Tax

The amount receivable by the auditors and their associates in respect of the audit of these financial statements is £3,511 (2016: £3,902). The audit fee is paid on a group basis by N M Rothschild & Sons Limited.

5. Taxation

6. Loans to Group Undertakings

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 £157,312,500 as at 31 March 2017 (2016: £148,668,750). The fair value was estimated using market price at the balance sheet date for similar instruments (level 2) .

7. Other Financial Assets

8. Cash and Cash Equivalents

At the year end the Company held cash of £265,660 (2016: £252,024) at a fellow subsidiary undertaking. The Company receives interest at 0%.

9. Other Financial Liabilities

Interest payable on the subordinated guaranteed notes is fixed at 9 per cent.

10. Subordinated Guaranteed Notes

The fair value of the subordinated guaranteed notes was £157,187,500 as at 31 March 2017 (2016: £148,543,750). The fair value was estimated using 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 prinicipal balance being shown in the > 5yr column.

11. Share Capital

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:

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

There were no loans made to Directors during the year (2016: none) and no balances outstanding at year-end (2016: £nil). There were no employees of the Company during the year (2016: 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, 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 Rothschilds 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.