TIDM85QW
RNS Number : 0578G
Broadgate Financing PLC
20 November 2020
The Interim Report and Financial Statements for the six months
ended 30 September 2020 , attached below in accordance with DTR
6.3.5, have been submitted to the Financial Conduct Authority
through the National Storage Mechanism and will shortly be
available for inspection at
https://www.fca.org.uk/markets/primary-markets/regulatory-disclosures/national-storage-mechanism
The Interim Report and Financial Statements are also
available
at
https://www.britishland.com/investors/strategic-partnerships/broadgate-financing-plc
Broadgate Financing PLC
Interim Report and Financial Statements
for the six months ended 30 September 2020
Directors' Report for the six months ended 30 September 2020
The directors present their report and unaudited interim
financial statements for the six months ended 30 September
2020.
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
H Shah
D Richards
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 on page 5, 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 charge these
costs to fellow subsidiaries.
At 30 September 2020, interest payable on external bonds remains
100% fixed.
The Balance Sheet on page 7 shows the company has net assets of
GBP456,136 at 30 September 2020. Net assets have increased since 31
March 2020 due to the profit recognised in the period.
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, tenant default and credit risk of
counterparties for holding cash deposits. These risks are mitigated
by the preference for tenants with strong covenants on long leases
and by using highly rated financial institutions for placing cash
deposits.
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.
The outbreak of COVID-19 has created a unprecedented degree of
uncertainty over both the severity of the above risks and the
effectiveness of the above mitigating actions. The decline in
economic activity resulting from the pandemic has heightened the
risk of tenants becoming financially distressed.
Dividends
No dividends were paid by the company in the six month period
ended 30 September 2020 (30 September 2019: GBPnil).
Going concern
The directors have reviewed the company's forecast working
capital and cash flow requirements in light of the COVID-19
pandemic, in addition to making enquiries and examining areas which
could give risk to financial exposure. The company has access to
the drawn term loan of GBP92m to meet certain shortfalls on bond
service, if there was a shortfall from the rent received. Broadgate
Financing PLC expects to have sufficient resources to meet the debt
requirements of the company despite the current economic climate.
Therefore, the directors have a reasonable expectation that the
company has adequate resources to continue its operations for at
least twelve months after the signing of the these interim
financial statements and as a result they continue to adopt the
going concern basis in preparing the accounts.
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 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 17 November and signed on its behalf
by:
H Shah
Director
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 for the six months ended 30
September 2020 of Broadgate Financing PLC for the 6 month period
ended 30 September 2020. 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 2020;
-- 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 for the six months ended 30 September 2020
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 for the six months
ended 30 September 2020, 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 for the six months ended 30
September 2020 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
for the six months ended 30 September 2020 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 for the six months ended 30
September 2020 and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
London
17 November 2020
Profit and Loss Account for the six months ended 30 September
2020
Six months Six months
ended ended
30 September 30 September
2020 2019
Unaudited Unaudited
Note GBP GBP
Turnover - -
Administrative expenses (501) (500)
------------- -------------
Loss on ordinary activities before
interest and taxation (501) (500)
Interest receivable and similar income 3 30,658,559 33,124,758
Interest payable and similar expenses 4 (30,621,542) (33,094,223)
------------- -------------
Profit on ordinary activities before
taxation 36,516 30,035
Tax on profit on ordinary activities (6,938) (5,707)
------------- -------------
Profit for the period 29,578 24,328
============= =============
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 Period from 1 April
2020 to 30 September 2020
Six months Six months
ended 30 September ended 30 September
2020 2019
Unaudited Unaudited
GBP GBP
Profit for the period 29,578 24,328
------------------- -------------------
Total comprehensive income for the period 29,578 24,328
=================== ===================
Balance Sheet as at 30 September 2020
30 September 31 March
2020 2020
Unaudited Audited
Note GBP GBP
Current assets
Debtors due within one year 5 34,609,079 33,498,270
Cash at bank and in hand 97,578,030 150,574,079
Debtors due after more than one year 5 1,210,359,708 1,215,496,740
--------------- ---------------
1,342,546,817 1,399,569,089
--------------- ---------------
Creditors due within one year 6 (39,543,973) (91,458,791)
--------------- ---------------
(39,543,973) (91,458,791)
=============== ===============
Net current assets 1,303,002,844 1,308,110,298
Creditors due after more than one year 7 (1,302,546,708) (1,307,683,740)
--------------- ---------------
Net assets 456,136 426,558
=============== ===============
Capital and reserves
Share capital 8 12,500 12,500
Profit and loss account 443,636 414,058
--------------- ---------------
Total shareholders' funds 456,136 426,558
=============== ===============
Approved by the Board on 17 November and signed on its behalf
by:
H Shah
Director
Statement of Changes in Equity for the six months ended 30
September 2020
Share capital Retained earnings Total
GBP GBP GBP
Balance at 1 April 2019 12,500 408,974 421,474
Profit for the period - 24,328 24,328
------------- ----------------- -------
Total comprehensive income for
the period - 24,328 24,328
------------- ----------------- -------
Balance at 30 September 2019 12,500 433,302 445,802
============= ================= =======
Balance at 1 April 2020 12,500 414,058 426,558
Profit for the period - 29,578 29,578
------ ------- -------
Total comprehensive income for
the period - 29,578 29,578
------ ------- -------
Balance at 30 September 2020 12,500 443,636 456,136
====== ======= =======
Notes to the Interim Financial Statements for the six months
ended 30 September 2020
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 2020 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 2020 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.
Summary of disclosure exemptions
The company has taken advantage of the following disclosure
exemptions under FRS 101:
(a) The requirements of IAS 1 to provide a Statement of Cash
flows for the year;
(b) The requirements of IAS 1 to provide a statement of
compliance with IFRS;
(c) 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;
(d) 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;
2 Accounting policies (continued)
(e) The requirements of IFRS 7 to disclose financial
instruments; and
(f) The requirements of paragraphs 91-99 of IFRS 13 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 financial statements of Broadgate REIT Limited.
The group financial statements of Broadgate REIT Limited are
available to the public and can be obtained as set out in note
11.
Going concern
The directors have reviewed the company's forecast working
capital and cash flow requirements in light of the COVID-19
pandemic, in addition to making enquiries and examining areas which
could give risk to financial exposure. The company has access to
the drawn term loan of GBP92m to meet certain shortfalls on bond
service, if there was a shortfall from the rent received. Broadgate
Financing PLC expects to have sufficient resources to meet the debt
requirements of the company despite the current economic climate.
Therefore, the directors have a reasonable expectation that the
company has adequate resources to continue its operations for at
least twelve months after the signing of the these interim
financial statements and as a result they continue to adopt the
going concern basis in preparing the accounts.
Financial assets
The company classifies all financial assets into the category
financial assets less amortised costs. Financial assets less
amortised costs 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.
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.
Premiums payable and receivable on early redemption are
recognised as finance charges and income when incurred.
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).
2 Accounting policies (continued)
Debtors
Trade and other debtors are initially recognised at fair value
and subsequently measured at amortised cost and discounted as
appropriate. The Company calculates the expected credit loss for
debtors based on lifetime expected credit losses under the IFRS 9
simplified approach.
Creditors
Trade and other creditors are initially recognised at fair value
and subsequently measured at amortised cost and discounted as
appropriate.
3 Interest receivable and similar income
Six months Six months
ended 30 September ended 30 September
2020 2019
Unaudited Unaudited
GBP GBP
Interest income on bank deposits 197,723 571,758
Interest receivable on amounts owed by
related parties 30,460,836 32,553,000
------------------- -------------------
30,658,559 33,124,758
=================== ===================
4 Interest payable and similar expenses
Six months Six months
ended ended
30 September 30 September
2020 2019
Unaudited Unaudited
GBP GBP
Interest payable on bonds and borrowings 30,613,597 33,094,223
Interest payable on amounts due to group
companies 7,945 -
------------------- -------------------
30,621,542 33,094,223
=================== ===================
5 Debtors
30 September 31 March
2020 2020
Unaudited Audited
GBP GBP
Debtors due within one year
Amounts due from related parties 20,243,985 18,992,996
Accrued income 14,363,246 14,503,426
Corporation tax asset 1,848 1,848
------------------- -------------------
34,609,079 33,498,270
=================== ===================
30 September 31 March
2020 2020
Unaudited Audited
GBP GBP
Debtors due after more than one year
Amounts due from related parties - Long
term loans 1,210,359,708 1,215,496,740
------------- -------------
1,210,359,708 1,215,496,740
============= =============
The intercompany loans to Broadgate (Funding) 2005 Ltd are being
repaid from April 2005 to July 2033, with the average interest rate
of these intercompany loans being 4.93% per annum (31 March 2020:
4.93%). There is no interest charged on the remainder of amounts
owed by related parties.
6 Creditors due within one year
30 September 31 March
2020 2020
Unaudited Audited
GBP GBP
Accrued expenses 14,408,977 14,564,911
Amounts due to related parties 14,746,920 14,797,618
Borrowings 10,383,520 10,238,475
Other creditors 4,556 5,787
Term loan - 51,852,000
---------------- -------------
39,543,973 91,458,791
================ =============
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.
7 Creditors due after more than one year
30 September 31 March
2020 2020
Unaudited Audited
GBP GBP
Borrowings
Borrowings due 1 to 2 years 10,838,416 10,606,771
Borrowings due 2 to 5 years 90,365,383 67,673,970
Borrowings due after 5 years 1,201,342,909 1,229,402,999
------------------- -------------------
1,302,546,708 1,307,683,740
=================== ===================
Amounts due after five years include the term loan of GBP92m (31
March 2020: GBP144m) which represents a liquidity facility with
NatWest Markets PLC. The cash received is held on deposit with bank
counterparties that meet the securitisation's legal requisite
credit rating criteria.
30 September 31 March
2020 2020
Unaudited Audited
GBP GBP
Borrowings repayment analysis
Borrowings due within one year 10,383,520 62,090,475
Borrowings due between one to two years 10,838,416 10,606,771
Borrowings due between two to five years 90,365,383 67,673,970
------------------------- -------------------------
111,587,319 140,371,216
Borrowings due after five years 1,201,342,909 1,229,402,999
------------------------- -------------------------
Total borrowings 1,312,930,228 1,369,774,215
------------------------- -------------------------
Gross debt 1,312,930,228 1,369,774,215
========================= =========================
7 Creditors due after more than one year (continued)
Secured bonds on the assets of the Broadgate Property Holdings
Limited Group
30 September 31 March
2020 2020
Unaudited Audited
GBP GBP
Class A2 4.949% Bonds 2031 83,329,470 86,916,690
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 365,330,568 365,301,715
Class C2 5.098% Bonds 2035 197,083,190 198,516,810
------------- -------------
Total secured bond borrowings 1,220,743,228 1,225,735,215
Term Loan 92,187,000 144,039,000
------------- -------------
Total secured borrowings 1,312,930,228 1,369,774,215
============= =============
At 30 September 2020, 100% (31 March 2020: 100%) of the bonds
were fixed. The bonds amortise from 2005 and are expected to be
repaid by 2033. Legal repayment is required by 2036. The term loan
matures on the date when all the bonds have been redeemed in full.
The bonds are secured on properties of the group valued at
GBP4,066m (31 March 2020: GBP4,105m). The weighted average interest
rate of the bonds is 4.93% (31 March 2020: 4.93%). The weighted
average maturity of the bonds is 9.9 years (31 March 2020: 10.4
years).
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.
30 September 31 March
2020 2020
Unaudited Audited
GBP GBP
Secured bonds at fair value 1,530,764,753 1,582,511,892
============= =============
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 from
2005 and are expected to be repaid by 2033. Legal repayment is
required by 2036. Including debt amortisation, 92% (31 March 2020:
90%) 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.
Details of bond covenants are outlined in the bonds publicly
available Offering Circular.
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 2020 amounted to GBP98m (31
March 2020: GBP151m) and are placed with Financial institutions
with A or better credit ratings. Management regularly reviews the
credit rating of all bank counterparties. At 30 September 2020,
prior to taking account of any offset arrangements, the largest
combined credit exposure to a single counterparty arising from
money market deposits was GBP49m (31 March 2020: GBP75m).
The company's principal credit risk relates to an intra-group
loan to Broadgate (Funding) 2005 Limited. At 30 September 2020,
this loan stood at GBP1,221m (31 March 2020: GBP1,225m). The
purpose of this loan is to provide funding to fellow subsidiaries
of the Broadgate Property Holdings Limited group.
In order to manage this risk, management regularly 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.
8 Share capital
Allotted, called up and fully paid shares
30 September 31 March
2020 2020
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 2020 of GBPnil (31 March 2020: 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.
11 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.
11 Parent and ultimate parent undertaking (continued)
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.
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END
IR XBLFLBFLLFBX
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