TIDM37QC
RNS Number : 2129M
Meadowhall Finance PLC
26 July 2017
The Annual Report and Accounts for the year ended 31 March 2017,
attached below in accordance with DTR 6.3.5R, has been submitted to
the Financial Conduct Authority through the National Storage
Mechanism and will shortly be available for inspection at:
http://www.morningstar.co.uk/uk/NSM
The Annual Report and Accounts are also available at:
http://www.britishland.com/investors/strategic-partnerships/disclaimer/meadowhall-finance-plc
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Accounts, please follow link below:
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Meadowhall Finance PLC
Annual Financial Reports
Year ended 31 March 2017
Company number: 05987141
STRATEGIC REPORT
for the year ended 31 March 2017
The directors present their Strategic Report for the year ended
31 March 2017.
Business review and principal activities
Meadowhall Finance PLC ("the company") is a subsidiary of
Meadowhall Limited Partnership, which itself is wholly owned by MSC
Property Intermediate Holdings Limited. MSC Property Intermediate
Holdings Limited and its subsidiaries ("the group") operate as a
joint venture between The British Land Company PLC and NBIM
Victoria Partners LP. The company's principal activity is to
provide funding to fellow subsidiaries of MSC Property Intermediate
Holdings Limited.
As shown in the company's Profit and Loss Account on page 7 the
company made a profit of GBP2,336 (2016: profit of GBP2,854), which
has remained consistent with prior year.
No dividends (2016: GBPnil) were paid in the year.
The Balance Sheet on page 9 shows the company's financial
position at the year end is, in net liability terms, an increase
from the prior year, primarily due to movement in the fair value of
the interest rate derivative.
Details of significant events since the balance sheet date, if
any, are contained in note 13.
The expected future developments of the company are determined
by the strategy of the group. There are no future developments
outside of the company's current operations planned.
The "Mortgaged Property", Meadowhall Shopping Centre, as
referred to in note 9, has been undergoing a refurbishment during
the year.
Key performance indicators
The directors measure how the group is delivering its strategy
through the key performance indicators.
The directors consider the primary measure of performance of the
group to be turnover and net asset value. These are discussed
above.
The expected future developments of the company are determined
by the strategy of the group. There are no future developments
outside of the company's current operations planned.
Principal risks and uncertainties
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 group 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; 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 directors and is considered and managed on a
continuous basis. Directors use their knowledge and experience to
knowingly accept a measured degree of market risk.
The group'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 through 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 2017 (2016: one)
to fix the interest rates on external debt at approximately 4.65%
(2016: 4.65%). The fair value of interest rate derivatives at the
year end is a liability of GBP18.0m (2016: GBP17.8m liability) and
has been accounted for using hedge accounting through the Statement
of Comprehensive Income, with the ineffective portion recognised in
the profit and loss account.
This report was approved by the Board on 26 July 2017 and signed
by the order of the board by:
Hursh Shah
Director
DIRECTORS' REPORT
For the year ended 31 March 2017
The directors present their Annual Report on the affairs of the
company, together with the audited financial statements and
independent Auditor's Report for the year ended 31 March 2017.
Going concern
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 including safe
disposal of manufacturing waste, recycling and reducing energy
consumption.
Directors
The directors who were in office during the year and up to the
date of signing the financial statements, unless otherwise stated,
were:
C A Barber (alternate H Shah)
R J Ford (resigned 17 July 2017)
J Patel
R J Wise (alternate C M J Forshaw resigned 10 April
2017)
E Strysse (appointed 17 July 2017)
Company secretary
N Ekpo (Resigned 6 December 2016)
British Land Company Secretarial
Limited (appointed 6 December 2016)
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) including FRS 101
"Reduced Disclosure Framework". 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 accounting estimates that are reasonable and prudent;
-- state whether applicable UK Accounting Standards have been
followed, subject to any material departures disclosed and
explained in the financial statements; 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.
The directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
company's website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Disclosure of information to auditors
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.
Independent 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 26 July 2017 and signed
by the order of the board by:
Hursh Shah
Director
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF
MEADOWHALL FINANCE PLC
For the year ended 31 March 2017
We have audited the financial statements of Meadowhall Finance
PLC for the year ended 31 March 2017 which comprise the Profit and
Loss Account, the Statement of Comprehensive Income, the Balance
Sheet, the Statement of Changes in Equity and the related notes 1
to 14. 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),
including FRS 101 "Reduced Disclosure Framework".
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 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:
-- give a true and fair view of the state of the company's
affairs as at 31 March 2017 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 matters prescribed by the Companies Act
2006
In our opinion, based on the work undertaken in the course of
the audit:
-- the information given in the Strategic Report and the
Directors' Report for the financial year for which the financial
statements are prepared is consistent with the financial
statements; and
-- the Strategic Report and the Directors' Report have been
prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the company
and its environment obtained in the course of the audit, we have
not identified any material misstatements in the Strategic Report
and the Directors' Report.
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.
PROFIT AND LOSS ACCOUNT
For the year ended 31 March 2017
Note 2017 2016
GBP GBP
Interest receivable and similar
income 3 34,639,249 36,074,024
Interest payable and similar charges 3 (34,636,329) (36,070,457)
-------------------- --------------------
Profit on ordinary activities before
taxation 4 2,920 3,567
Tax on profit on ordinary activities 6 (584) (713)
-------------------- --------------------
Profit for the financial year 2,336 2,854
Results are derived from continuing operations within the United
Kingdom.
STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2017
2017 2016
GBP GBP
Profit for the financial year 2,336 2,854
(Losses)/gains on cash flow hedge (256,044) 66,814
Tax relating to components of other comprehensive
expense (134,246) (271,363)
-------------------- --------------------
Total comprehensive expense for the year (387,954) (201,695)
BALANCE SHEET
As at 31 March 2017
Note 2017 2016
GBP GBP GBP GBP
Current assets
Debtors - due within
one year 7 34,721,524 34,128,021
Debtors - due after
more than one year 7 645,606,982 673,066,708
Cash and deposits 31,437 28,533
-------------------- --------------------
680,359,943 707,223,262
Creditors due within
one year 8 (52,233,077) (51,382,962)
-------------------- --------------------
Net current assets
(including long term
debtors) 628,126,866 655,840,300
-------------------- --------------------
Total assets less
current liabilities 628,126,866 655,840,300
Creditors due after
one year 9 (642,545,810) (669,871,290)
-------------------- --------------------
Net liabilities (14,418,944) (14,030,990)
Capital and reserves
Called up share capital 11 12,502 12,502
Hedging and translation
reserve (13,929,746) (13,539,456)
Profit and loss account (501,700) (504,036)
-------------------- --------------------
Total equity (14,418,944) (14,030,990)
The financial statements of Meadowhall Finance PLC, company
number 05987141, on pages 7 to 19, were approved by the Board of
Directors and authorised for issued on 26 July 2017 and signed on
its behalf by:
Hursh Shah
Director
STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2017
Called Hedging Profit Total
up shares and translation and loss equity
capital reserve account
GBP GBP GBP GBP
Balance as at 1 April 2015 12,502 (13,334,907) (506,890) (13,829,295)
Profit for the year - - 2,854 2,854
Gain on cash flow hedge - 66,814 - 66,814
Tax relating to components of
other comprehensive expense - (271,363) - (271,363)
-------------------- -------------------- -------------------- --------------------
Balance as at 31 March 2016 12,502 (13,539,456) (504,036) (14,030,990)
Profit for the year - - 2,336 2,336
Loss on cash flow hedge - (256,044) - (256,044)
Tax relating to components of
other comprehensive expense - (134,246) - (134,246)
-------------------- -------------------- -------------------- --------------------
Balance as at 31 March 2017 12,502 (13,929,746) (501,700) (14,418,944)
NOTES TO THE ACCOUNTS
for the year ended 31 March 2017
1. Accounting policies
This company is incorporated and domiciled in the United Kingdom
under the Companies Act 2006. The address of the registered office
is York House, 45 Seymour Street, London, W1H 7LX.
The principal accounting policies adopted by the directors are
summarised below. They have been applied consistently throughout
the current and previous year.
Basis of preparation
These financial statements were prepared in accordance with
Financial Reporting Standard 101 Reduced Disclosure Framework ("FRS
101").
In preparing these financial statements, the company applies the
recognition, measurement and disclosure requirements of
International Financial Reporting Standards as adopted by the EU
("Adopted IFRSs"), but makes amendments where necessary in order to
comply with Companies Act 2006 and has set out below where
advantage of the FRS 101 disclosure exemptions has been taken.
The financial statements have been prepared under the historical
cost convention. Historical cost is generally based on the fair
value of the consideration given in exchange for the assets.
These financial statements are separate financial statements.
The company is exempt from the preparation of consolidated
financial statements, because it is included in the group accounts
of MSC Property Intermediate Holdings Limited.
The company has taken advantage of the following disclosure
exemptions under FRS 101:
(a) The requirements of IAS 1 to provide a Balance Sheet at the
beginning of the year in the event of a prior year adjustment;
(b) The requirements of IAS 1 to provide a Statement of Cash
flows for the year;
(c) The requirements of IAS 1 to provide a statement of
compliance with IFRS;
(d) The requirements of IAS 1 to disclose information on the
management of capital;
(e) The requirements of paragraphs 30 and 31 of IAS 8 Accounting
Policies, Changes in Accounting Estimates and Errors to disclose
new IFRS's that have been issued but are not yet effective;
(f) The requirements in IAS 24 Related Party Disclosures to
disclose related party transactions entered into between two or
more members of a group, provided that any subsidiary which is a
party to the transaction is wholly owned by such a member;
(g) The requirements of paragraph 17 of IAS 24 Related Party
Disclosures to disclose key management personnel compensation;
(h) The requirements of IFRS 7 to disclose financial
instruments; and
(i) The requirements of paragraphs 91-99 of IFRS13 Fair Value
Measurement to disclose information of fair value valuation
techniques and inputs.
Disclosure exemptions for subsidiaries are permitted where the
relevant disclosure requirements are met in the consolidated
financial statements. Where required, equivalent disclosures are
given in the group accounts of MSC Property Intermediate Holdings
Limited. The group accounts of MSC Property Intermediate Holdings
Limited are available to the public and can be obtained as set out
in note 14.
The company's financial statements are presented in pounds
sterling, which is the functional currency of the company.
Going concern
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.
All financing covenant requirements in place have been met and
are forecast to continue to be met in the future.
Financial assets and liabilities
Trade debtors and creditors are initially recognised at fair
value and subsequently measured at amortised cost and discounted as
appropriate.
Debt instruments and borrowings are stated at their net proceeds
on issue. Finance charges including premiums payable on settlement
or redemption of bonds and associated direct issue costs are spread
over the period to redemption, using the effective interest
method.
As defined by IAS39, cash flow hedges are carried 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.
Interest payable and receivable
Interest payable and receivable is recognised as incurred under
the accruals concept. Interest payable includes financing charges
which are spread over the period to redemption, using the effective
interest method. Commitment fees on non-utilised facilities are
also included within interest payable.
Investments
Fixed asset investments are stated at the lower of cost and the
underlying net asset value of the investments.
Taxation
Current tax
Current tax is the expected tax payable or receivable on the
taxable income or loss for the year, using tax rates enacted or
substantively enacted at the balance sheet date, and any adjustment
to tax payable in respect of previous years.
Current tax is based on taxable profit for the year and is
calculated using tax rates that have been enacted or substantively
enacted at the balance sheet date. 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).
Deferred tax
Deferred tax is provided on items that may become taxable at a
later date, on the difference between the balance sheet value and
tax base value, on an undiscounted basis. The company recognises
deferred tax assets on derivative revaluations to the extent that
future matching taxable profits are expected to arise.
2. Critical accounting judgements and estimation uncertainty
Determining the carrying amount of some assets requires
estimation of the effect of uncertain future events. The major
sources of estimation uncertainty that have a significant risk of
resulting in a material adjustment to the carrying amounts of
assets are noted below.
Hedge accounting
The key source of estimation uncertainty relates to the
valuation of derivatives. The potential for management to make
judgements or estimates relating to those items which would have a
significant impact on the financial statements is considered, by
the nature of the group's business to be limited. The derivatives
have been valued by calculating the net present value of future
cashflows, using appropriate market discount rates, by an
independent treasury advisor.
3. Interest payable and receivable
2017 2016
GBP GBP
Interest payable on
Bonds and related facilities (32,419,184) (33,803,530)
Derivatives (2,217,145) (2,266,927)
-------------------- --------------------
Total interest payable (34,636,329) (36,070,457)
Interest receivable on
Group loans and receivables 34,639,249 36,074,024
-------------------- --------------------
Total interest receivable 34,639,249 36,074,024
4. Profit on ordinary activities before taxation
Auditor's remuneration
A notional charge of GBP5,706 (2016: GBP5,518) 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 MSC Property Intermediate Holdings Limited.
No non-audit fees (2016: GBPnil) were paid to Deloitte LLP.
5. Staff costs
No director received any remuneration for services to the
company in either year. The remuneration of the directors were
borne by another company within the group, for which no
apportionment recharges were made.
Average number of employees, excluding directors, of the company
during the year was none (2016: none).
6. Taxation
2017 2016
GBP GBP
Current tax
UK corporation tax 584 713
-------------------- --------------------
Total current taxation charge 584 713
Deferred tax
Deferred tax on cash flow hedge - -
-------------------- --------------------
Total deferred tax charge - -
-------------------- --------------------
Total taxation charge 584 713
Tax reconciliation
Profit on ordinary activities before taxation 2,920 3,567
-------------------- --------------------
Tax on profit on ordinary activities at
UK corporation tax rate of 20% (2016:
20%) 584 713
-------------------- --------------------
Total tax charge 584 713
Reductions to the UK corporation tax rate from 20% to 19%
(effective from 1 April 2017) were substantively enacted on 26
October 2015. A further reduction to 17% (effective 1 April 2020)
was substantively enacted on 6 September 2016. These rate
reductions have been reflected in the calculation of deferred tax
at the Balance Sheet date, where relevant.
7. Debtors
2017 2016
GBP GBP
Current debtors (receivable within one
year)
Amounts owed by group companies - current
accounts - 14,717
Prepayments and accrued income 7,382,052 7,687,824
Amounts owed by group companies - loan
due for repayment 27,339,472 26,425,480
-------------------- --------------------
34,721,524 34,128,021
Long-term debtors (receivable after more
than one year)
Deferred tax asset (see note 10) 3,061,172 3,195,418
Amounts owed by group companies - Long
term loans 642,545,810 669,871,290
-------------------- --------------------
645,606,982 673,066,708
8. Creditors due within one year
2017 2016
GBP GBP
Amounts owed to group companies - current
accounts 1,825 1,825
Secured bonds (see note 9) 27,325,480 26,425,480
Interest rate derivative liability* 18,006,892 17,752,322
Corporation tax 166 713
Other taxation and social security 1,144 784
Accruals and deferred income 6,897,570 7,201,838
-------------------- --------------------
52,233,077 51,382,962
*Includes contracted cash flow with a maturity greater than one
year at fair value.
9. Creditors due after one year (including borrowings)
2017 2016
GBP GBP
Secured bonds due 1 to 2 years 29,414,600 27,325,480
due 2 to 5 years 93,861,560 90,632,680
due after 5 years 519,269,650 551,913,130
-------------------- --------------------
642,545,810 669,871,290
Borrowings repayment analysis
Repayments due:
Within one year 27,325,480 26,425,480
1-2 years 29,414,600 27,325,480
2-5 years 93,861,560 90,632,680
-------------------- --------------------
150,601,640 144,383,640
After 5 years 519,269,650 551,913,130
-------------------- --------------------
Total borrowings 669,871,290 696,296,770
Fair value of interest rate derivatives 18,006,892 17,752,322
-------------------- --------------------
Net debt 687,878,182 714,049,092
Secured bonds on the assets of the Meadowhall Limited
Partnership
2017 2016
GBP GBP
Class A1 4.986% Bonds due 2037 484,004,840 503,253,520
Class A2 Floating Rate Bonds due 2037 52,080,000 54,480,000
Class B 4.988% Bonds due 2037 133,786,450 138,563,250
-------------------- --------------------
Total borrowings 669,871,290 696,296,770
Fair value of interest rate derivative
liabilities 18,006,892 17,752,322
-------------------- --------------------
Total secured borrowings 687,878,182 714,049,092
The GBP52m (2016: GBP54m) floating rate loan is fully hedged by
a swap to 2032. At 31 March 2017, taking into account the effect of
derivatives, 100% of the bonds were fixed (2016: 100%) until
expected maturity. The bonds amortise between 2007 to 2032, and are
secured on the properties of group valued at GBP1,797m (2016:
GBP1,741m). The weighted average interest rate of the bonds is
5.00% (2016: 5.00%). The weighted average maturity of the bonds is
9.7 years (2016: 10.4 years).
The secured bonds as detailed in this note are issued by
Meadowhall Finance PLC ('Issuer') and the proceeds are 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
selected other interests and assets.
At 31 March 2017, the company was financed by GBP669.9m bonds
(2016: GBP696.3m).
Except as detailed below, the carrying amounts of financial
assets and financial liabilities recorded at amortised cost in the
financial statements are approximately equal to their fair
values
2017 2016
GBPm GBPm
Bonds fair value 824 823
Comparison of fair values and book values and fair value
hierarchy
The table below provides a comparison of fair value and book
value along with the classification per the fair value hierarchy.
The different levels are defined
Level Quoted prices (unadjusted) in active markets for
1: identical assets or liabilities.
Level Inputs other than quoted prices included within
2: Level 1 that are observable for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e.
derived from prices).
Level Inputs for the asset or liability that are not based
3: on observable market data (unobservable inputs).
Level Fair Book Fair Book
value value value value
2017 2017 2016 2016
GBPm GBPm GBPm GBPm
Secured bonds 2 824 670 823 696
Interest rate
derivative
liability 2 18 18 18 18
-------------------- -------------------- -------------------- --------------------
842 688 841 714
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.
The ineffectiveness recognised in the income statement on cash
flow hedges in the year ended 31 March 2017 was GBPnil (2016:
GBPnil). The table below summarises variable rate debt hedged at 31
March 2017.
2017 2016
GBP GBP
Outstanding: after one year 48,780,000 52,080,000
after two years 46,140,000 48,780,000
after five years 41,220,000 42,780,000
Hedge accounting
The company uses interest rate swaps to hedge exposure to the
variability in cash flows on floating rate debt. At 31 March 2017,
the fair value of these derivatives, which have been designated
cash flow hedges under IAS 39, is a liability of GBP18.0m (2016:
GBP17.8m liability). The valuation movement reflects the reduction
in Sterling interest rates since the beginning of the year.
The derivatives have been valued by calculating the net present
value of future cashflows, using appropriate market discount rates,
by an independent treasury advisor. The effective portion of
changes in fair value of the designated hedging instrument is
recognised in other comprehensive income. The gain or loss relating
to the ineffective portion is recognised immediately in the profit
and loss. Amounts previously recognised in other comprehensive
income and accumulated in equity are reclassified to the profit and
loss in the periods in which the hedged item affects profit or loss
or when the hedging relationship ends.
The Treasury Function
The company finances its operations through 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
Capital risk management:
The company finances its operations through public debt issues
to ensure that sufficient competitively priced finance is available
to support the property strategy of the MSC Property Intermediate
Holdings Limited group.
The approach adopted has been to engage in debt financing with
long term maturity dates and as such the bonds issued are due in
2037, but are expected to be repaid in 2032. Including debt
amortisation 77.5% (2016: 79.3%) of the total borrowings are due
for payment after 5 years. There are no immediate debt refinancing
requirements.
The company maintains undrawn revolving liquidity facilities
which provide financial liquidity. These facilities are only
available for the requirements of the Meadowhall securitisation. At
31 March 2017 this facility was GBP75.0m (2016: GBP75.0m).
The company aims to ensure that potential debt providers
understand the business and a transparent approach is adopted with
lenders so they can understand the level of their exposure within
the overall context of the MSC Property Intermediate Holdings
Limited group.
Details of bond covenants are authorised in the bonds Offering
Circular, accessible via
http://www.britishland.com/investors/strategic-partnerships/meadowhall-finance-plc.aspx.
Credit risk:
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. The carrying amount of financial assets
recorded in the financial statements represents the company's
maximum exposure to credit risk without taking account of the value
of any collateral obtained.
Cash and deposits at 31 March 2017 amounted to GBP31,437 (2016:
GBP28,533) and are placed with European Financial institutions with
BBB+ or better credit ratings. At 31 March 2017, prior to taking
account of any offset arrangements, the largest combined credit
exposure to a single counterparty arising from money market
deposits and interest rate swaps was GBPnil (2016: GBPnil). This
represents 0% (2016: 0%) of gross assets.
The company's principal credit risk relates to an intra-group
loan to Meadowhall Limited Partnership. At 31 March 2017 this loan
stood at GBP669.9m (2016: GBP696.3m). The purpose of this loan is
to provide funding to fellow subsidiaries of the MSC Property
Intermediate Holdings Limited group.
At 31 March 2017, the fair value of all interest rate
derivatives which had a positive value was GBPnil (2016:
GBPnil).
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:
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.
Interest rate risk:
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.
10. Deferred tax asset
2017 2016
GBP GBP
1 April 3,195,418 3,466,781
Debited to hedging and translation reserve (134,246) (271,363)
------------------ ------------------
31 March 3,061,172 3,195,418
11. Called up share capital
Issued share capital - allotted, called
up and fully paid 2017 2016
GBP GBP
Ordinary shares of GBP1 each
Balance as at 1 April and 31 March: 1
shares 2 2
Ordinary Shares of GBP1 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
-------------------- --------------------
Total issued share capital 12,502 12,502
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. Subsequent events
There have been no significant events since the year end.
14. Immediate parent and ultimate holding company
The immediate controlling party is Meadowhall Limited
Partnership.
The ultimate holding company is MSC Property Intermediate
Holdings Limited, a joint venture between The British Land Company
PLC and NBIM Victoria Partners LP.
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
FR UNSNRBWABUAR
(END) Dow Jones Newswires
July 26, 2017 13:09 ET (17:09 GMT)
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