TIDM37QC
RNS Number : 5180L
Meadowhall Finance PLC
01 August 2011
The Annual Report and Accounts for the year ended 31 March 2011,
attached below in accordance with DTR 6.3.5(2), has been submitted
to the Financial Service Authority through the National Storage
Mechanism and will shortly be available for inspection at:
http://www.Hemscott.com/nsm.do
The Annual Report and Accounts are also available at:
http://www.britishland.com/index.asp?pageid=169
MEADOWHALL FINANCE PLC
COMPANY NO: 5987141
ANNUAL REPORT AND ACCOUNTS
YEAR ENDED 31 MARCH 2011
REPORT OF THE DIRECTORS
for the year ended 31 March 2011
The directors submit their report and financial statements for
the year ended 31 March 2011.
Principal activities
The company is a wholly owned subsidiary of Meadowhall Limited
Partnership, which itself is wholly owned by MSC Property
Intermediate Holdings Limited (the 'Group'). MSC Property
Intermediate Holdings Limited operates as a joint venture between
The British Land Company PLC and LSP Green Park Property Trust. The
company's principal activity is to provide funding to fellow
subsidiaries of MSC Property Intermediate Holdings Limited.
Business review
As shown in the company's profit and loss account, the profit
before tax remains consistent with prior year. Interest payable and
receivable also remain consistent with prior year.
Dividends of GBPnil (2010: GBPnil) were paid in the year.
Dividends paid are shown in note 10.
The balance sheet shows that the company's financial position at
the year end is, in net liability terms, consistent with the prior
year.
The performance of the group, which includes the company, is
discussed in the group's annual report which does not form part of
this report.
Details of significant events since the balance sheet date, if
any, are contained in note 14.
Risk management
This company is part of a large property investment group. As
such, the fundamental underlying risks for this company are those
of the property group as discussed below.
The company generates returns to shareholders through long-term
investment decisions requiring the evaluation of opportunities
arising in the following areas:
- demand for space from occupiers against available supply;
- identification and execution of investment and development
strategies which are value enhancing;
- availability of financing or refinancing at an acceptable
cost;
- economic cycles, including their impact on tenant covenant
quality, interest rates, inflation and property values;
- legislative changes, including planning consents and
taxation;
- engagement of development contractors with strong
covenants;
- key staff changes; and
- environmental and health and safety policies.
These opportunities also represent risks, the most significant
being change to the value of the property portfolio. This risk has
high visibility to senior executives and is considered and managed
on a continuous basis. Executives use their knowledge and
experience to knowingly accept a measured degree of market
risk.
The company's preference for prime assets and their secure long
term contracted rental income, primarily with upward only rent
review clauses, presents lower risks than many other property
portfolios.
Credit risk is the risk that one party to a financial instrument
will fail to discharge an obligation and cause the other party to
incur a financial loss. In order to manage this risk, management
regularly monitors all amounts that are owed to the company to
ensure that amounts are paid in full and on time.
Liquidity risk is the risk that the entity will encounter
difficulty in raising funds to meet commitments associated with
financial liabilities. This risk is managed through day to day
monitoring of future cash flow requirements to ensure that the
company has enough resources to repay all future amounts
outstanding.
The company's activities expose it primarily to interest rate
risk. The company uses interest rate swap contracts to hedge these
exposures. The company does not use derivative financial
instruments for speculative purposes.
The company finances its operations by a mixture of equity and
public debt issues. The company borrows in Sterling at both fixed
and floating rates of interest, using interest rate derivatives to
hedge the interest rate risk on variable rate debt.
The company holds one derivative as at 31 March 2011 (2010: one)
to fix interest rates on external debt at approximately 4.87%
(2010: 4.87%). The fair value of interest rate derivatives at the
year end is a liability of GBP5.6m (2010: GBP6.0m).
The directors consider the company to be a going concern and the
accounts are prepared on this basis. Details of this are shown in
note 1 of the financial statements.
Environment
The company recognises the importance of its environmental
responsibilities, monitors its impact on the environment, and
designs and implements policies to reduce any damage that might be
caused by the company's activities. The company operates in
accordance with best practice policies and initiatives designed to
minimise the company's impact on the environment include safe
disposal of manufacturing waste, recycling and reducing energy
consumption.
Directors
The directors who served during the year were:
J Bishop
S G Carter (appointed 08 September 2010)
C M J Forshaw
M J Dillon (resigned 08 September 2010)
J Duzniak
B T Grose (resigned 08 September 2010)
S M Little
M McGann
H R Mould
T A Roberts
A D Smith
S P Smith (appointed 08 September 2010)
P L Vaughan
N M Webb
Directors' responsibilities statement
The directors are responsible for preparing the Annual 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 the directors
have elected to prepare financial statements in accordance with
United Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards 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 judgments and accounting estimates that are reasonable
and prudent;
- state whether applicable UK Accounting Standards have been
followed; 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 Companies Act 2006. They are
also responsible for safeguarding the assets of the company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
Payments policy
In the absence of dispute, amounts due to trade and other
suppliers are settled as expeditiously as possible within their
terms of payment.
Disclosure of information to Auditor
Each of the persons who is a director at the date of approval of
this report confirms that:
(a) so far as the director is aware, there is no relevant audit
information of which the company's auditor is unaware; and
(b) the director has taken all the steps that he/she ought to
have taken as a director in order to make himself/herself aware of
any relevant audit information and to establish that the company's
auditor is aware of that information.
This confirmation is given and should be interpreted in
accordance with the provisions of s418 of the Companies Act
2006.
Auditor
A resolution to reappoint Deloitte LLP as the company's auditor
will be proposed at the Annual General Meeting.
This report was approved by the Board on 28 July 2011.
A Braine
Secretary
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF
Meadowhall Finance PLC
for the year ended 31 March 2011
We have audited the financial statements of Meadowhall Finance
PLC for the year ended 31 March 2011 which comprise the Profit and
Loss Account, the Statement of Total Recognised Gains and Losses,
the Balance Sheet and the related notes 1 to15. The financial
reporting framework that has been applied in their preparation is
applicable law and United Kingdom Accounting Standards (United
Kingdom Generally Accepted Accounting Practice).
This report is made solely to the company's members, as a body,
in accordance with Chapter 3 of part 16 of the Companies Act 2006.
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 Directors' Responsibilities
Statement, 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 directors; and the
overall presentation of the financial statements. In addition, we
read all the financial and non-financial information in the annual
report to identify material inconsistencies with the audited
financial statements. If we become aware of any apparent
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 2011 and of its profit for the year then
ended;
- have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and
- have been prepared in accordance with the requirements of the
Companies Act 2006.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Directors' Report
for the financial year for which the financial statements are
prepared is consistent with 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 Act 2006 requires us 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.
Andrew Swarbrick BA FCA (Senior Statutory Auditor)
For and on behalf of Deloitte LLP
Chartered Accountants and Statutory Auditor
Cambridge, UK
PROFIT AND LOSS ACCOUNT
for the year ended 31 March 2011
Note 2011 2010
GBP GBP
Operating Profit - -
Interest receivable
Group - loans and receivables 41,064,181 41,625,902
Associated companies - -
External - other - -
Interest payable
Group - -
Associated companies
- bank overdrafts and loans
External (including derivatives) (41,059,184) (41,621,673)
- other
loans
Profit on ordinary activities before
taxation 2 4,997 4,229
Taxation 4 (1,399) (1,184)
Profit for the financial year 10 3,598 3,045
------------- -------------
Turnover and results are derived from continuing operations
within the United Kingdom. The company has only one significant
class of business, that of to provide funding to fellow
subsidiaries of MSC Property Intermediate Holdings Limited.
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the year ended 31 March 2011
2011 2010
GBP GBP
Profit on ordinary activities after taxation 3,598 3,045
Derivative valuation movements
on net investments 10 326,817 1,620,517
Deferred tax movements on interest
rate derivatives 8, 10 (193,764) (530,956)
Total recognised gains and losses relating to
the financial year 136,651 1,092,606
========== ==========
BALANCE SHEET
as at 31 March 2011
Note 2011 2010
GBP GBP GBP GBP
Current assets
Debtors - due
within one
year 5 30,075,559 30,184,960
Debtors - due
after more
than one year 5 791,000,643 812,470,767
Cash and
deposits - -
821,076,202 842,655,727
Creditors due
within one
year 6 (35,162,084) (35,601,900)
Net current
assets 785,914,118 807,053,827
Total assets less current liabilities 785,914,118 807,053,827
Creditors due
after one
year 7 (789,671,330) (810,947,690)
Net liabilities (3,757,212) (3,893,863)
============== ==============
Capital and
reserves
Called up share
capital 9 12,502 12,502
Share premium 10 - -
Revaluation
reserve 10 - -
Hedging and
translation
reserve 10 (3,783,430) (3,916,483)
Profit and loss
account 10 13,716 10,118
Shareholders'
deficit 10 (3,757,212) (3,893,863)
============== ==============
The financial statements of Meadowhall Finance PLC, company
number 5987141, were approved by the Board of Directors on 28 July
2011 and signed on its behalf.
Notes to the accounts
for the year ended 31 March 2011
1. Accounting policies
The principal accounting policies adopted by the directors are
summarised below. They have been applied consistently throughout
the current and previous year.
Accounting basis
The financial statements are prepared in accordance with
applicable United Kingdom law and Accounting Standards and under
the historical cost convention as modified by the revaluation of
investment properties and other fixed asset investments.
Basis of Preparation
The net liability position of the balance sheet at the year end
is as a result of market swap rates being below the fixed rate
payable on the company's interest rate swaps. This has had a
detrimental effect on the fair value of the company's interest rate
derivatives at the year end. The interest rate swaps fix the rate
payable on the company's liabilities at a rate slightly below the
interest on loans receivable. The change in mark to market is not
envisaged to have an impact on the company's cash flow for the
foreseeable future.
Having reviewed the company's forecast working capital and cash
flow requirements, in addition to making enquiries and examining
areas which could give risk to financial exposure, the directors
have a reasonable expectation that the company has adequate
resources to continue its operations for the foreseeable future. As
a result they continue to adopt the going concern basis in
preparing the accounts.
Financial assets
The company classified all financial assets, with the exception
of derivative financial instruments into the category Loans and
Debtors. Loans and Debtors are initially measured at fair value
including any transaction costs. They are subsequently measured at
amortised cost using the effective interest rate method.
Cash flow statement
The company is exempt under FRS 1 (Revised) from preparing a
cash flow statement.
Financial liabilities - borrowings
Debt instruments are stated at their net proceeds on issue.
Finance charges including premiums payable on settlement or
redemption and direct issue costs are spread over the period to
redemption, using the effective interest method.
Derivative financial instruments
As defined by FRS 26, derivative financial instruments are
measured at fair value in the balance sheet. Changes in the fair
value of derivatives that are designated and qualify as effective
cash flow hedges are recognised directly in the hedging reserve.
Any ineffective portion is recognised in the profit and loss
account.
Taxation
Current tax is based on taxable profit for the year and is
calculated using tax rates that have been enacted or substantively
enacted. Taxable profit differs from net profit as reported in the
profit and loss account because it excludes items of income or
expense that are not taxable (or tax deductible). In particular the
group (including this company) became a REIT on 1 January 2007 and
income and gains on qualifying assets are now exempt from
taxation.
Deferred tax is recognised in respect of all timing differences
that have originated but not reversed at the balance sheet date
where transactions or events that result in an obligation to pay
more tax in the future or a right to pay less tax in the future
have occurred at the balance sheet date. Timing differences are
differences between the company's taxable profits and its results
as stated in the financial statements that arise from the inclusion
of gains and losses in tax assessments in periods different from
those in which they are recognised in the financial statements. In
addition, a deferred tax asset is recognised when the interest rate
derivatives held by the company represent a liability at the
balance sheet date. A corresponding deferred tax asset on the
liability is recognised on the basis that relief will be available
as the derivative reverses over time. The movement on such a
deferred tax balance is taken through the hedging reserve in order
to ensure it matches the movement in respect of the underlying
derivative liability.
2. Profit on ordinary activities before taxation
Auditor's remuneration
A notional charge of GBP1,200 (2010: GBP1,200) per company is
deemed payable to Deloitte LLP in respect of the audit of the
financial statements. Actual amounts payable to Deloitte LLP are
paid by Meadowhall Limited Partnership.
No non-audit fees (2010 : GBPnil) were paid to Deloitte LLP.
3. Staff costs
No director received any remuneration for services to the
company in either year.
Average number of employees, excluding directors, of the company
during the year was nil (2010 - nil).
4. Taxation
2011 2010
GBP GBP
Current tax
UK corporation tax 1,399 1,184
Total current taxation charge
(credit) 1,399 1,184
====== ======
Deferred tax
Origination and reversal of
timing differences
Prior year items
Total deferred tax charge
(credit) - -
Total taxation
charge (credit) 1,399 1,184
====== ======
Tax reconciliation
Profit on ordinary activities
before taxation 4,997 4,229
------ ------
Tax on profit on ordinary activities at UK corporation
tax rate of 28% (2010: 28%) 1,399 1,184
Effects
of:
Current tax charge (credit) 1,399 1,184
====== ======
On 23 March 2011 the Government announced that the main rate of
corporation tax would reduce to 26% with effect from 1 April 2011.
This tax rate reduction was substantively enacted at the balance
sheet date and therefore deferred tax balances have been calculated
using a rate of 26%. The Government also announced subsequent 1%
reductions per annum to reach 23% with effect from 1 April 2014.
These tax rate reductions had not been substantively enacted at the
balance sheet date and therefore have not been reflected in the
financial statements. The effect of these tax rate reductions on
the deferred tax balance will be accounted for in the period in
which the tax rate reductions are substantively enacted.
5. Debtors
2011 2010
GBP GBP
Current debtors (receivable within one
year)
Amounts owed by associated companies - current
accounts 21,276,360 21,276,360
Prepayments and accrued income 8,798,918 8,904,606
Other debtors 281 3,994
30,075,559 30,184,960
------------ ------------
Long-term debtors (receivable after more
than one year)
Deferred tax asset (note 8) 1,329,313 1,523,077
Amounts owed by group companies - Long
term loans 789,671,330 810,947,690
------------ ------------
791,000,643 812,470,767
============ ============
6. Creditors due within one
year 2011 2010
GBP GBP
Debenture loans (see note 7) 21,276,360 21,276,360
Trade creditors - -
Amounts owed to group companies - current
accounts - -
Amounts owed to associated companies -
current accounts - -
Corporation tax 3,745 1,162
Other taxation and social security - -
Other creditors - -
Accruals and deferred income 8,270,801 8,366,748
Interest rate derivative liability* 5,611,178 5,957,630
35,162,084 35,601,900
============ ============
* Includes contract cash flow with a maturity greater than one
year at fair value.
7. Creditors due after one year (including borrowings)
2011 2010
GBP GBP
Debentures and
loans due 1 to 2 years 21,276,360 21,276,360
due 2 to 5 years 72,098,200 66,709,080
due after 5 years 696,296,770 722,962,250
789,671,330 810,947,690
============ ============
Hedge accounting
The company uses interest rates swaps to hedge exposure to the
variability in cash flows on floating rate debt. At 31 March 2011
the market value of these derivatives, which have been designated
cash flow hedges under FRS 26, is a liability of GBP5.6m (2010:
GBP6.0m liability).
The Treasury Function
The company finances its operations by a mixture of equity and
public debt issues. The company borrows in Sterling at both fixed
and floating rates of interest, using interest rate derivatives
where appropriate to generate a suitably prudent mixture of fixed
and variable rate debt.
Risk Management
Credit risk is the risk that one party to a financial instrument
will fail to discharge an obligation and cause the other party to
incur a financial loss. In order to manage this risk, management
regularly monitors all amounts that are owed to the company to
ensure that amounts are paid in full and on time.
Liquidity risk is the risk that the entity will encounter
difficulty in raising funds to meet commitments associated with
financial liabilities. This risk is managed through day to day
monitoring of future cash flow requirements to ensure that the
company has enough resources to repay all future amounts
outstanding.
The Company's activities expose it primarily to interest rate
risk. The group uses interest rate swap contracts to hedge these
exposures. The group does not use derivative financial instruments
for speculative purposes.
The ineffectiveness recognised in the income statement on cash
flow hedges in the year ended 31 March 2011 was GBPnil (2010
:GBPnil). The table below summarises variable rate debt hedged at
31 March 2011.
2011 2010
GBP GBP
Outstanding: after one year 60,000,000 60,000,000
after two years 60,000,000 60,000,000
after five years 54,480,000 57,120,000
Borrowings repayment analysis
Repayments due:
Within one year 21,276,360 21,276,360
1-2 years 21,276,360 21,276,360
2-5 years 72,098,200 66,709,080
------------ ------------
114,650,920 109,261,800
After 5
years 696,296,770 722,962,250
------------ ------------
Total borrowings 810,947,690 832,224,050
Fair value of interest rate derivatives 5,611,178 5,957,630
------------ ------------
Net debt 816,558,868 838,181,680
============ ============
Secured bonds on the assets of the Meadowhall
Limited Partnership
Class A1 4.986% Bonds due
2037 588,500,440 605,000,000
Class A2 Floating Rate Bonds due 2037 60,000,000 60,000,000
Class B 4.988% Bonds due
2037 162,447,250 167,224,050
------------ ------------
810,947,690 832,224,050
Fair value of interest rate derivative
liabilities 5,611,178 5,957,630
------------ ------------
Net debt 816,558,868 838,181,680
============ ============
The GBP60 million floating rate loan is fully hedged by a swap
to 2032. At 31 March 2011, taking into account the effect of the
derivative, 100% of the bonds were fixed (2010: 100%) until
maturity. The bonds amortise between 2007 to 2032, and are secured
on the properties of group valued at GBP1,410.0m (2010:
GBP1,257.0m). The weighted average interest rate of the bonds is
4.98% (2010: 4.98%). The weighted average maturity of the bonds is
13.6 years (2010: 14.1 years).
On 19 December 2006, Bonds with a nominal value GBP840m were
issued by Meadowhall Finance PLC ('Issuer') and the proceeds, equal
to the nominal value, were on-lent to Meadowhall Limited
Partnership ('Borrower') under the Issuer/Borrower Loan Agreement.
Under this agreement Meadowhall Limited Partnership will grant
security over its beneficial interest in Meadowhall Shopping Centre
('Mortgaged Property') and all related interests and assets.
At 31 March 2011 the company was financed by GBP810.9m bonds
(2010: GBP832.2m).
The market value of the bonds at 31 March 2011 was GBP781.3m
(2010: GBP789.6m).
There is an undrawn 364 day revolving liquidity facility
totalling GBP75m which is only available for the requirements of
the Meadowhall securitisation.
The fair values of the bonds have been established by obtaining
quoted market prices from brokers. The derivatives have been valued
by calculating the present value of future cash flows, using
appropriate market discount rates, by an independent treasury
advisor.
The Class A1 and B Loan notes expose the entity to fair value
interest rate risk while the Class A2 Loan notes expose the company
to cash flow interest rate risk.
8. Deferred tax asset
2011 2010
GBP GBP
1 April 2010 1,523,077 2,054,033
Credited to hedging and translation
reserve (193,764) (530,956)
31 March 2011 1,329,313 1,523,077
========== ==========
The Directors consider that a deferred tax asset, that relates
primarily to timing differences arising with respect to the
revaluation of interest rate derivatives, is required to be
provided for in the current and prior year.
9. Share capital
2011 2010
GBP GBP
Allotted, called up and
fully paid
Ordinary shares of GBP1.00
each
Balance as at 1 April and as at 31
March: 2 shares 2 2
Allotted, called up and
partly paid
Ordinary shares of GBP1.00 each partly
paid up to GBP0.25 per share
Balance as at 1 April and as at 31
March: 49,998 shares 12,500 12,500
12,502 12,502
======= =======
10. Reconciliation of movements in shareholders' funds and
reserves
Profit
Hedging & and
Share Share Revaluation translation loss
capital premium reserve reserve account Total
GBP GBP GBP GBP GBP GBP
Opening
shareholders'
funds
(deficit)
12,502 - - (3,916,483) 10,118 (3,893,863)
Profit for
the financial
year - - - - 3,598 3,598
Dividends - - - - - -
Share issues
in the year -
- - - - - -
Unrealised
surplus
(deficit) on
revaluation of
investment
properties
- - - - - -
Realisation
of prior year
revaluations
- - - - - -
Derivative
valuation
movements on
net
investment
- - - 326,817 - 326,817
Taxation on
hedging and
translation
movements
- - - (193,764) - (193,764)
Closing
shareholders'
funds
(deficit)
12,502 - - (3,783,430) 13,716 (3,757,212)
-------- -------- ------------ ------------ -------- ------------
11. Capital commitments
The company had capital commitments contracted as at 31 March
2011 of GBPnil (2010 : GBPnil).
12. Contingent liabilities
The company is jointly and severally liable with MSC (Cash
Management) Limited and fellow subsidiaries for all monies falling
due under the group VAT registration.
13. Related parties
The company has taken advantage of the exemption granted to
wholly owned subsidiaries not to disclose transactions with group
companies under the provisions of Financial Reporting Standard
8.
14. Subsequent events
There have been no significant events since the year end.
15. Immediate parent and ultimate holding company
The immediate parent company is Meadowhall Limited
Partnership.
The ultimate holding company is MSC Property Intermediate
Holdings Limited, a joint venture between The British Land Company
PLC and LSP Green Park Property Trust.
MSC Property Intermediate Holdings Limited is the smallest and
largest group for which group accounts are available and which
include the company. The accounts of MSC Property Intermediate
Holdings Limited can be obtained from The British Land Company PLC,
York House, 45 Seymour Street, London W1H 7LX.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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