TIDM85QW
RNS Number : 3934H
Broadgate Financing PLC
14 November 2018
The Interim Report and Financial Statements for the year ended
30 September 2018, attached below in accordance with DTR 4.2.2R,
have 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 Interim Report and Financial Statements are also available
at:
http://www.britishland.com/investors/strategic-partnerships/broadgate-financing-plc
For a printer friendly version of the Annual Report and
Accounts, please follow link below:
http://www.rns-pdf.londonstockexchange.com/rns/3934H_1-2018-11-14.pdf
Broadgate Financing PLC
Registration number: 05316365
Interim Report and Financial Statements for the six months ended
30 September 2018
Directors' Report for the six months ended 30 September 2018
The directors present their report and unaudited interim
financial statements for the six months ended 30 September
2018.
Directors of the company
The directors, who held office during the period, and up to the
date of signing the interim financial statements, were as
follows:
D Lockyer
T Roberts
H Shah
Principal activity
The company's principal activity is to provide funding to fellow
subsidiaries of Broadgate Property Holdings Limited in the United
Kingdom (UK).
Results for the six months
As shown in the company's Profit and Loss Account, the company's
profit on ordinary activities before taxation has increased
compared with prior half period. Consistent with the prior period,
the company has continued to amortise bonds as well as incur
interest on those bonds outstanding, and on charge these costs to
fellow subsidiaries.
At 30 September 2018, taking into account the effect of
derivatives, interest payable on external bonds remains 100% fixed.
Derivatives are not used speculatively and accordingly valuation
movements are taken through the cash flow hedging reserve.
The Balance Sheet shows the company has net assets of GBP432,175
at 30 September 2018. Net assets have significantly increased since
31 March 2018, predominantly as a result of closing out all
derivative instruments during the period, and on charging these
costs to fellow subsidiaries.
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. The key risks of this group are the
performance of the properties and tenant defaults, as this ensures
necessary funds are available to repay securitisation interest and
principal, and the credit risk of counterparties upon which the
group is dependent for fixing its interest rate exposure and for
holding cash deposits. These risks are mitigated by the preference
for tenants with strong covenants on long leases and by using
highly rated counterparties and monitoring those ratings.
Significant political events and regulatory changes, including
the UK's decision to leave the EU, brings risk in terms of
uncertainty until the outcome is known, and the impact of policies
introduced.
Dividends
No dividends were paid by the company in the six month period
ended 30 September 2018 (30 September 2017:
GBPnil).
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 2 of the interim financial statements.
Responsibility Statement of the Directors in respect of the
Interim Financial Statements
Each of the directors confirms that to the best of their
knowledge:
The condensed set of interim financial statements has been
prepared in accordance with Financial Reporting Standard 104:
Interim Financial Reporting issued by the Financial Reporting
Council.
The Directors' Report above includes a fair review of the
information required by DTR 4.2.7R of the Disclosure and
Transparency Rules (DTR), being an indication of important events
that have occurred during the first six months of the financial
year and their impact on the condensed set of interim financial
statements; and a description of the principal risks and
uncertainties for the remaining six months of the year.
Approved by the Board on 13 November 2018 and signed on its
behalf by:
L. Agboola
British Land Company Secretarial Limited Company secretary
Independent Review Report to the Directors of Broadgate
Financing PLC
Report on the interim financial statements
Our conclusion
We have reviewed Broadgate Financing PLC's interim financial
statements (the "interim financial statements") in the Interim
Report and Financial Statements of Broadgate Financing PLC for the
6 month period ended 30 September 2018. Based on our review,
nothing has come to our attention that causes us to believe that
the interim financial statements are not prepared, in all material
respects, in accordance with FRS 104 "Interim Financial Reporting"
issued by the Financial Reporting Council and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
What we have reviewed
The interim financial statements comprise:
-- the Balance Sheet as at 30 September 2018;
-- the Profit and Loss Account and Statement of Comprehensive Income for the period then ended;
-- the Statement of Changes in Equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the Interim Report
and Financial Statements have been prepared in accordance with FRS
104 "Interim Financial Reporting" issued by the Financial Reporting
Council and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
As disclosed in note 2 to the interim financial statements, the
financial reporting framework that has been applied in the
preparation of the full annual financial statements of the Company
is applicable law and United Kingdom Accounting Standards (UK
Generally Accepted Accounting Practice), including FRS 101 "Reduced
Disclosure Framework".
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The Interim Report and Financial Statements, including the
interim financial statements, is the responsibility of, and has
been approved by, the directors. The directors are responsible for
preparing the Interim Report and Financial Statements in accordance
with the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority.
Our responsibility is to express a conclusion on the interim
financial statements in the Interim Report and Financial Statements
based on our review. This report, including the conclusion, has
been prepared for and only for the company for the purpose of
complying with the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority and
for no other purpose. We do not, in giving this conclusion, accept
or assume responsibility for any other purpose or to any other
person to whom this report is shown or into whose hands it may come
save where expressly agreed by our prior consent in writing.
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the Interim
Report and Financial Statements and considered whether it contains
any apparent misstatements or material inconsistencies with the
information in the interim financial statements.
PricewaterhouseCoopers LLP Chartered Accountants London
13 November 2018
Profit and Loss Account for the six months ended 30 September
2018
Six months Six
ended 30 months
September ended 30
September
2018 2017
Unaudited Unaudited
Note GBP GBP
Turnover - -
Administrative expenses (501) (501)
----------------------- ----------------------
Loss on ordinary activities before
interest and taxation (501) (501)
Interest receivable and similar income 3 76,644,972 40,955,887
Interest payable and similar expenses 4 (76,624,151) (40,951,841)
----------------------- ----------------------
Profit on ordinary activities before
taxation 20,320 3,545
Tax on profit on ordinary activities (3,861) -
----------------------- ----------------------
Profit for the period 16,459 3,545
Turnover and results were derived from continuing operations
within the United Kingdom. The company has only one significant
class of business: to provide funding to fellow subsidiaries of
Broadgate Property Holdings Limited in the United Kingdom (UK).
Statement of Comprehensive Income for the six months ended
30 September 2018
Six months Six months
ended 30 ended 30
September September
2018 2017
Unaudited Unaudited
GBP GBP
------------ ------------
Profit for the period 16,459 3,545
------------ ------------
Items that may be reclassified
to profit or loss
Gain on interest rate derivatives 4,530,473 7,788,299
Interest rate derivatives transferred
to income statement (cash flow
hedges) 30,686,000 -
------------ ------------
35,216,473 7,788,299
------------ ------------
35,216,473 7,788,299
------------ ------------
Total comprehensive income
for the period 35,232,932 7,791,844
============ ============
(Registration number: 05316365)
Balance Sheet as at 30 September 2018
Note 30 September 31 March
2018 2018
Unaudited Audited
GBP GBP
Current assets
Debtors due within one year 5 301,682,773 70,521,068
Debtors due after more than one
year 5 1,293,171,842 1,513,252,868
Cash at bank and in hand 200,130,867 200,130,844
----------------- ------------------
1,794,985,482 1,783,904,780
Creditors due within one year 6, 7 (357,342,465) (82,989,922)
----------------- ------------------
Total assets less current liabilities 1,437,643,017 1,700,914,858
Creditors due after one year 7 (1,437,210,842) (1,735,715,247)
------------------
Net assets/(liabilities) 432,175 (34,800,389)
------------------
Capital and reserves
Share capital 8 12,500 12,500
Cash flow hedging reserve - (35,216,473)
Retained Earnings 419,675 403,584
----------------- ------------------
Total equity 432,175 (34,800,389
----------------- ------------------
Approved by the Board on 13 November 2018 and signed on its
behalf by:
H. Shah
Director
Broadgate Financing PLC
Notes to the Interim Financial Statements for the six months
ended 30 September 2018 (continued)
Statement of Changes in Equity for the six months ended 30
September 2018
Cash flow
hedging Retained
Share capital reserve earnings Total
Balance at 1 April GBP GBP GBP GBP
2017 12,500 (48,569,396) 398,712 (48,158,184)
Profit for the period - - 3,545 3,545
Derivative valuation
movements on cash flow
hedges - 7,788,299 - 7,788,299
Total comprehensive
income for the period - 7,788,299 3,545 7,791,844
---------- --------------
Balance at 30 September
2017 12,500 (40,781,097) 402,257 (40,366,340)
============== ========== ==============
Balance at 1 April
2018 12,500 (35,216,473) 403,216 (34,800,757)
---------- --------------
Profit for the period - - 16,459 16,459
Derivative valuation
movements on cash flow
hedges - 4,530,473 - 4,530,473
--------------
Interest rate derivatives
transferred to income
statement (cash flow
hedges) - 30,686,000 - 30,686,000
-------------- -------------- ---------- --------------
Total comprehensive
income for the period - 35,216,473 16,459 35,232,932
-------------- -------------- ---------- --------------
Balance at 30 September
2018 12,500 - 419,675 432,175
============== ============== ========== ==============
Notes to the Interim Financial Statements for the six months
ended 30 September 2018
1 General information
The company is a public company limited by share capital,
incorporated and domiciled in England, United Kingdom.
The address of its registered office is: York House
45 Seymour Street London
W1H 7LX
2 Accounting policies
Summary of significant accounting policies and key accounting
estimates
The principal accounting policies applied in the preparation of
these interim financial statements are set out below. These
policies have been consistently applied to all the periods
presented, unless otherwise stated.
Accounting basis
The information for the period ended 30 September 2018 does not
constitute statutory financial statements as defined in section 434
of the Companies Act 2006.
A copy of the statutory financial statements for the year ended
31 March 2018 has been delivered to the Registrar of companies. The
auditors reported on those financial statements: their report was
unqualified, did not draw attention to any matters by way of
emphasis and did not contain a statement under section 498 (2) or
(3) of the Companies Act 2006.
Basis of preparation
These interim financial statements were prepared in accordance
with Financial Reporting Standard 104 Interim Financial Reporting
("FRS 104"). The same accounting policies, estimates, presentation
and methods of computation are followed in the interim financial
statements as applied in the latest annual audited financial
statements, which are prepared in accordance with Financial
Reporting Standard 101 Reduced Disclosure Framework ("FRS
101").
In preparing these interim 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 taken advantage of the FRS
101 disclosure exemption as appropriate.
Going concern
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 classifies all financial assets, with the exception
of derivative financial instruments into the category Loans and
Receivables. Loans and Receivables are initially measured at fair
value including any transaction costs. They are subsequently
measured at amortised cost using the effective interest rate
method.
Financial liabilities - borrowings
Debt instruments initially 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
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 and translation 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.
Taxation
Current tax is based on taxable profit for the period and is
calculated using tax rates that have been enacted or substantively
enacted. Taxable profit may differ 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).
Broadgate Financing PLC
Notes to the Interim Financial Statements for the six months
ended 30 September 2018 (continued)
3 Interest receivable and similar income
Six months Six months
ended 30 ended 30
September September
2018 2017
Unaudited Unaudited
GBP GBP
Interest income on bank deposits 596,580 197,660
Interest receivable on amounts owed by group
companies 39,347,782 40,758,227
Premium income on early repayment owed by
group companies 6,014,610 -
Hedging reserve recycling owed by group
companies 30,686,000 -
------------------------ ------------------------
76,644,972 40,955,887
------------------------ ------------------------
4 Interest payable and similar expenses
Six months Six months
ended 30 ended 30
September September
2018 2017
Unaudited Unaudited
GBP GBP
Interest on derivatives 4,299,936 5,520,066
Interest payable on bonds and borrowings 35,541,065 35,378,502
Premium costs on early repayment 6,014,610 -
Hedging reserve recycling* 30,686,000 -
Interest payable on amounts due to group
companies 82,540 53,273
------------------------ ------------------------
76,624,151 40,951,841
------------------------ ------------------------
*Represents a reclassification of cumulative losses within the
cash flow hedging reserve to the Profit and Loss Account, in
relation to hedging instruments that have been closed out on 30
August 2018, and effective on 5 October 2018.
5 Debtors
30 September 31 March
2018 2018
Unaudited Audited
GBP GBP
Amounts due from related parties 246,343,366 52,056,319
Accrued income 55,337,559 18,462,901
Corporation tax asset 1,848 1,848
----------------- ---------------
301,682,773 70,521,068
----------------- ---------------
Debtors due after more than one year
Amounts owed by group companies - Long term
loans 1,293,171,842 1,513,252,868
----------------- ---------------
1,293,171,842 1,513,252,868
----------------- ---------------
The company's interest on outstanding debt is discussed in note
7 and applied to amounts owing from related parties in the same
manner.
6 Creditors due within one year
30 September 31 March
2018 2018
Unaudited Audited
GBP GBP
Accrued expenses 16,589,734 16,215,169
Amounts due to related parties 14,738,167 14,705,434
Debenture loans 246,314,450 52,056,318
Term loan 40,961,000 -
Fair value of interest rate derivative liabilities 32,711,002 -
Premium costs on early repayment payable 6,014,610 -
Other creditors 13,502 13,001
----------------- ------------
357,342,465 82,989,922
----------------- ------------
Amounts due to related parties relate to amounts owed to group
companies and are repayable on demand. There is no interest charged
on these balances.
Broadgate Financing PLC
Notes to the Interim Financial Statements for the six months
ended 30 September 2018 (continued)
7 Creditors due after one year
30 September 31 March
2018 2018
Unaudited Audited
GBP GBP
Loans
Loans due 1 to 2 years 14,905,204 52,842,563
Loans due 2 to 5 years 49,036,612 105,067,795
Loans due after 5 years 1,373,269,026 1,540,342,510
Fair value of Interest rate derivative liabilities - 37,462,379
----------------- ---------------
1,437,210,842 1,735,715,247
----------------- ---------------
Amounts due after five years include the term loan of GBP144m
(31 March 2018: GBP185m) which represents a revolving liquidity
facility with The Royal Bank Of Scotland PLC. The cash received is
held on deposit. On 5 October 2018 the term loan was reduced to
GBP144m.
7 Creditors due after one year (continued)
Hedge accounting
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. At 30 September 2018, the market
value of these derivatives, which have been designated cash flow
hedges under IFRS 9, is a liability of GBP32.7m (31 March 2018:
GBP37.5m liability). The valuation movement reflects the increase
in sterling interest rates since the beginning of the period. The
derivatives were closed out on 30 August 2018, with an effective on
5 October 2018.
The ineffectiveness recognised in the Income Statement on cash
flow hedges in the period ended 30 September 2018 was GBPnil (30
September 2017: GBPnil). The derivatives were closed out on 30
August 2018, and repaid on 5 October 2018.
30 September 31 March
2018 2018
Unaudited Audited
GBP GBP
Borrowings repayment analysis
Loans due within one year 287,275,450 52,056,318
Loans due between one to two years 14,905,204 52,842,563
Loans due between two to five years 49,036,612 105,067,795
----------------- ---------------
351,217,266 209,966,676
Loans due after five years 1,373,269,026 1,540,342,510
----------------- ---------------
Total borrowings 1,724,486,292 1,750,309,186
----------------- ---------------
Fair value of interest rate derivatives 32,711,002 37,462,379
----------------- ---------------
Gross debt 1,757,197,294 1,787,771,565
================= ===============
7 Creditors due after one year (continued)
Secured bonds on the assets of the Broadgate Property Holdings
Limited Group
30 September 31 March
2018 2018
Unaudited Audited
GBP GBP
Borrowings repayment analysis
Class A1 Floating Bonds 2032 156,818,250 163,636,200
Class A2 4.949% Bonds 2031 194,297,040 200,680,830
Class A3 4.851% Bonds 2033 175,000,000 175,000,000
Class A4 4.821% Bonds 2036 400,000,000 400,000,000
Class B 4.999% Bonds 2033 365,429,192 365,325,647
Class C1 Floating Bonds 2022 29,375,000 39,166,510
Class C2 5.098% Bonds 2035 202,816,810 204,250,000
Class D Floating Bonds 2025 15,750,000 17,250,000
Total secured bond borrowings 1,539,486,292 1,565,309,187
Fair value of interest rate derivatives 32,711,002 37,462,379
Term Loan 185,000,000 185,000,000
--------------- ---------------
Total secured borrowings 1,757,197,294 1,787,771,566
=============== ===============
At 30 September 2018, taking into account the effect of
derivatives, 100% (31 March 2018: 100%) of the bonds were fixed.
The bonds amortise between 2005 to 2036, and are secured on
properties of the group valued at
GBP3,830m (31 March 2018: GBP3,667m) and cash of GBPnil (31
March 2018: GBPnil). Including derivatives, the weighted average
interest rate of the bonds is 5.00% (31 March 2018: 5.01%). The
weighted average maturity of the bonds is 9.8 years (31 March 2018:
10.8 years).
Except as detailed below, the carrying amounts of financial
assets and financial liabilities recorded at amortised cost in the
interim financial statements are approximately equal to their fair
values:
30 September 2018
2018 Audited
Unaudited GBP
GBP
Secured bonds at fair value 1,819,637,214 1,883,259,680
Fair value of bonds
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.
7 Creditors due after one year (continued)
Risk Management
Capital risk management:
The company finances its operations by a mixture of equity and
public debt issues to support the property strategy of the
group.
The approach adopted has been to engage in debt financing with
long term maturity dates and as such the bonds issued are due
between 2022 and 2036. Including debt amortisation 79% (31 March
2018: 86%) of the total borrowings is due for payment after 5
years.
The principal bond covenant is a requirement to meet interest
and amortisation payments as they fall due.
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 interim 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 30 September 2018 amounted to GBP200m (31
March 2018: GBP200m) and are placed with European Financial
institutions with BBB+ or better credit ratings. At 30 September
2018, 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 GBP100m (31
March 2018: GBP100m). This represents 5.57% (31 March 2018: 5.61%)
of company's gross assets.
The company's principal credit risk relates to an intra-group
loan to Broadgate (Funding) 2005 Limited. At 30 September 2018,
this loan stood at GBP1,539m (31 March 2018: GBP1,565m). The
purpose of this loan is to provide funding to fellow subsidiaries
of the Broadgate Property Holdings Limited group.
At 30 September 2018, the fair value of all interest rate
derivatives which had a positive value was GBPnil (31 March 2018:
GBPnil).
In order to manage this risk, management regularly reviews the
credit rating of counterparties and monitors all amounts that are
owed to the company.
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 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.
8 Share capital
Allotted, called up and
fully paid shares 30 September 31 March
2018 2018
Unaudited Audited
No. GBP No. GBP
Ordinary shares of GBP0.25
each 50,000 12,500 50,000 12,500
9 Capital commitments
The company had capital commitments contracted as at 30
September 2018 of GBPnil (31 March 2018: GBPnil).
10 Related party transactions
The company has taken advantage of the exemption granted to
wholly owned subsidiaries not to disclose transactions with group
companies under the provisions of FRS 101.
Broadgate Estates Limited acts as an agent to the company and
collects cash on the company's behalf. Broadgate Estates Limited is
a wholly owned subsidiary of The British Land Company PLC. The
British Land Company PLC is a joint venture partner in Broadgate
REIT Limited, the ultimate parent of the company.
11 Subsequent events
On 5 October 2018 the company repaid GBP223 million of external
secured debt in addition to its debt repayment obligations due on
the same day. In doing so, the security granted over the Group's
investment property, as mentioned in note 7, reduced by GBP395
million. In addition the Company's interest rate derivative
liabilities, also mentioned in note 7, were repaid in full, and the
term loan was reduced to GBP144m.
12 Parent and ultimate parent undertaking
The immediate parent company is Broadgate Property Holdings
Limited.
The ultimate parent company is Broadgate REIT Limited. Broadgate
REIT Limited operates as a joint venture between Euro Bluebell LLP,
an affiliate of GIC, Singapore's sovereign wealth fund, and BL
Bluebutton 2014 Limited, a wholly owned subsidiary of The British
Land Company PLC.
Broadgate REIT Limited is the smallest and largest group for
which group accounts are available and which include the company.
The ultimate holding company and controlling party is Broadgate
REIT Limited. Group accounts for this company are available on
request from British Land, York House, 45 Seymour Street, London,
W1H 7LX.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR QZLFFVFFEFBQ
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