TIDM15GY
RNS Number : 6755C
Kenrick No.3 PLC
12 October 2022
Kenrick No. 3 Plc
Annual report and financial statements
for the year ended 31 March 2022
Registered number: 11001450
Kenrick No. 3 Plc
Contents Page
Directors and advisors 1
Strategic report 2
Directors' report 4
Statement of Directors' responsibilities in respect of the
strategic report, Directors' report and the 5
financial statements
Independent auditor's report to the members of Kenrick No. 3
Plc
6
Statement of Comprehensive Income 10
Statement of changes in equity 10
Statement of Financial Position 11
Statement of Cash Flows 12
Notes to the financial statements 13
Directors and advisors Directors
Charles Michael Leahy
MaplesFS UK Corporate Director No.1 Limited MaplesFS UK
Corporate Director No.2 Limited
Company secretary
Maples Fiduciary Services (UK) Limited
Independent auditors
PricewaterhouseCoopers LLP Chartered Accountants
One Chamberlain Square Birmingham
B3 3AX
Solicitors
Clifford Chance LLP 10 Upper Bank Street London
E14 5JJ
Bankers
Citibank Canada Square Canary Wharf London
E14 5LB
Registered office
11th Floor
200 Aldersgate Street London
EC1A 4HD
Registered number
11001450
Strategic report
The Directors present their strategic report for Kenrick No. 3
Plc (the Company) for the year ended 31 March 2022.
Business model, objectives and future developments
The principal activity of the Company is the holding of secured
residential mortgage portfolios.
On 25 January 2018, the Company acquired a 99% beneficial
interest in a mortgage portfolio secured on residential properties
located in England and Wales. The assets were acquired from West
Bromwich Building Society (the Seller), the originator of the
mortgages. The acquisition of these loans was financed by the issue
of mortgage backed floating rate loan notes (GBP350,000,000 Class A
and GBP33,100,000 Class B floating rate notes with a final maturity
date of October 2054). The notes are listed on the London Stock
Exchange.
The securitisation structure has been established as a means of
raising finance for West Bromwich Building Society and its
subsidiaries. Under the terms of the securitisation transaction the
activities of the Company are managed through a series of
agreements whereby the Company retains the rights to a profit of
GBP1,000 per annum, subject to there being sufficient available
revenue receipts. Deferred consideration is payable to West
Bromwich Building Society to the extent to which surplus income is
generated by the residential mortgage assets to which the Company
holds the beneficial title.
The Company's tax charge is based on the tax treatment of the
Securitisation Companies Regime.
The principal asset of the Company is a beneficial interest in a
mortgage portfolio, which is classified as a deemed loan in the
Company's statement of financial position, as described in note 1.
The deemed loan is subject to economic factors affecting the
residential loan market and reviewed annually for impairment.
The Directors are not, at the date of this report, aware of any
likely major changes in the Company's activities in the next
year.
Results and review of the business
The Company's profit before tax for the year of GBP1,254,000
(2021: profit GBP514,000) has been transferred to reserves.
The Statement of Financial Position on page 11 of the financial
statements shows the Company's financial position at the period end
date.
Key performance indicators
The key performance indicators used by management in assessing
the performance of the Company are monitoring of actual cash flows
against planned cash flows within the scheduled waterfall of
payments and the level of arrears in the underlying mortgage
portfolio.
During the period, the Company made all required payments on the
loan notes and paid all normal operating expenses.
At 31 March 2022, there were no loans with arrears of three
months or more in the underlying mortgage portfolio (2021:
nil).
Principal risks and uncertainties
The Company's financial instruments comprise a deemed loan to
West Bromwich Building Society (equivalent to the value of its
investment in the mortgages held in trust), cash and liquid
resources, derivatives and a subordinated loan between the Company
and West Bromwich Building Society. The Company is a securitisation
company and has been structured so as to avoid, as far as possible,
all forms of financial risk.
As explained above, during the period, the Company has made all
required payments on the loan notes and paid all normal operating
expenses.
Whilst we've recently experienced a return to some form of
normality as levels of COVID-19 restrictions were lifted by the end
our financial year, the period was dominated by the implications of
the pandemic. The economic impacts have still to become clear as
the various government support schemes unwind and, despite some
initial positive signs, such as the strength of the employment
market, a level of uncertainty remains. Recent events such as the
Russian invasion of Ukraine, with its significant humanitarian and
geopolitical consequences, have added to this uncertainty. With
inflation at its highest level for three decades, and set to stay
relatively high for some time, we are also faced with a 'cost of
living' challenge, which will undoubtedly affect the household
budgets of many.
It is, and has been throughout the period under review, the
Company's policy that no trading in financial instruments be
undertaken.
The principal risks arising from the Company's financial
instruments are credit risk and interest rate risk. These, and
other risks which may affect the Company's performance, are
detailed below and in note 2 to the financial statements.
Credit risk
Credit risk can be described as the risk of customers or
counterparties being unable to meet their financial obligations to
the Company as they become due.
The ability of the Company to pay loan interest and principal
will depend on the amount and timing of payment of interest on the
mortgage loans and the repayment of principal by the borrowers.
Credit risk arises on the individual loans within the mortgage loan
portfolio which are in turn secured on the underlying UK
residential properties. The performance of these loans is therefore
influenced by the economic background and the UK residential
property market. Under International Financial Reporting Standards
(IFRSs) the beneficial interest in the mortgage portfolio is
classified as a deemed loan in the Company's Statement of Financial
Position.
In terms of administrator/cash management, the Company has
engaged the West Bromwich Building Society to monitor repayments on
the mortgage loans in accordance with its credit policies. West
Bromwich Building Society is also responsible for ensuring
residential loans in the Trust loan pool meet the eligibility
criteria at loan and pool level.
As the Company is only required to make repayments of interest
and principal to the extent that repayments are received from the
mortgage administrator in respect of the mortgage loans, impairment
losses on the deemed loan are not borne by the Company but by the
Seller (in terms of impacting the Company's ability to pay deferred
consideration and repay principal and interest on the subordinated
loan provided to the Company by the Seller).
Interest rate risk
Interest rate risk exists where assets and liabilities have
interest rates set under a different basis or which reset at
different times. The Company minimises its exposure to interest
rate risk by ensuring that the interest rate characteristics of
assets and liabilities are similar. Where this is not possible the
Company uses derivative financial instruments to mitigate interest
rate risk. Interest rate swaps have therefore been entered into to
manage the Company's exposure to interest rate risk.
LIBOR ceased after 31st December 2021. In order to ensure no
negative effect on the Company's interest rate risk exposure after
LIBOR cessation, the company has, with the consent of its
noteholders, amended the margins on all of its LIBOR liabilities
and fixed rate swap.
Strategic report (continued)
Liquidity risk
Liquidity risk is the risk that the Company either does not have
sufficient financial resources to enable it to meet its obligations
as they fall due or can secure such resources only at excessive
cost. The Company's policy to mitigate liquidity risk is through
the use of a subordinated loan from West Bromwich Building
Society.
The loan notes are obligations solely of the Company and will
not be the responsibility of, or guaranteed by, any other entity.
In particular, the loan notes will not be obligations or
responsibilities of, or guaranteed by, the Seller or any of its
affiliates. However due to the limited recourse nature of the Notes
the Company is only obliged to make repayments of interest and
principal in respect of the Notes to the extent that repayments are
received from the mortgage administrator in respect of the mortgage
loans. Further details of the loan notes are given in note 12.
Operational risk
Operational risk is the risk of loss and/or the negative impact
on the Company resulting from inadequate or failed internal
processes or systems, inability to attract, retain and motivate
people, or from external events.
The activities of the Company are strictly governed by the
transaction documents and Prospectus which are designed to
facilitate effective and efficient operations whilst managing the
risk of failure to achieve business objectives. The Company does
not have any employees and has entered into contracts with a number
of third parties whose responsibilities are determined by the
transaction agreements.
The Company's operations are managed by West Bromwich Building
Society, which has established a thorough operational risk
framework which
involves a Group Operational and Conduct Risk team, which
co-ordinates regular reviews with the function managers and
collates the output for review by Executive management, the
Operational, Conduct and Information Risk Group and the Group Risk
Committee.
The Company's operations are also subject to periodic review by
the Internal Audit function of West Bromwich Building Society.
Capital risk management
The Company is not subject to any external capital requirements
except for the minimum requirement under the Companies Act 2006.
The Company has not breached the minimum requirement.
Section 172 Statement
The Company has included a Section 172 statement to explain how
the Directors have considered the views of stakeholders as part of
long-term decision making.
Obligations included within the new statement require directors
to act in the way they consider, in good faith, would be most
likely to promote the success of the organisation and in doing so
have regard to a number of key areas:
- The likely consequences of any decision in the long term;
- How constructive relationships with wider stakeholder groups
are fostered;
- How any community and environmental impacts of our operations
are considered;
- How a reputation for high standards of business conduct is
maintained; and
- The need to act fairly and balance the interests of
stakeholders.
The entity's key stakeholders are its parent undertaking and
noteholders, its customers as well as the regulator. The entity
does not have any employees and
does not occupy stand-alone premises thereby minimising the
community and environmental impacts.
A summary of the entity's engagement with its key stakeholders
is presented below. Additionally, the WBBS Group makes use of
feedback from
engagement with its wider stakeholder group including investors,
intermediaries and suppliers to ensure it is achieving high
standards of business conduct.
Our Stakeholders How the Board has considered How else we engage
views within decision making to ensure views are
considered
Parent The West Bromwich Building Decisions taken at
and noteholder Society (WBBS) manages its WBBS Group level are
undertakings operations on a Group basis aligned to the long
as discussed in its annual term strategic objectives
report. of the Group and factor
in the views of the
A number of Group Committees Group's Employee and
support the Company Board Member Councils as
in the effective measurement well as the wider
and management of risk as stakeholders of the
described in the principal Group as described
risks and uncertainties below.
section.
The Company's actions
are aligned to that
of the Group due to
the use of Group operations.
--------------------------------- -----------------------------
Our Customers The Group has a Member Council - Management information
which acts as a formal body supplied to the Group
that helps Board monthly covering
to inform the Group Board's key customer metrics.
long-term strategic decision - An active programme
making. of Members' ViewPoint
Events providing an
opportunity for members
to ask questions of
Group Executive Directors
and senior management.
The Company's actions
are aligned to that
of the Group due to
the use of Group operations.
--------------------------------- -----------------------------
Our Regulators The West Bromwich Building - Monthly updates
Society's Board maintains provided on key regulatory
an open and transparent items covered within
relationship with both the the material supplied
FCA and the PRA. Key engagement to the Group Board.
includes: - The Group engages
- The management of any in regular dialogue
actions raised by regulatory with regulatory supervisors
reviews at Board level with covering principal
key updates provided at risks and other matters.
regular intervals; and - Regular regulatory
- Attendance of Board members 'horizon scanning'
both Executive and non-Executive completed by the Group
at key regulatory update Legal and Regulatory
meetings so the Society's Team to remain well
position is considered in informed regarding
light of emerging developments. latest updates and
actions required.
The Company's actions
are aligned to that
of the Group due to
the use of Group operations.
--------------------------------- -----------------------------
On behalf of the Board
Charles Leahy
Representing MaplesFS UK Corporate Director No.1 Limited,
Director 22 August 2022
Directors' report
The Directors present their annual report and the audited
financial statements of Kenrick No. 3 Plc (the Company) for the
year ended 31 March 2022.
Going concern
After considering the principal risks and uncertainties within
the strategic report, the Directors have a reasonable expectation
that the Company will have adequate resources to continue in
operational existence for the foreseeable future. This is further
discussed in note 1.
Share capital
The issued share capital consists of 1 fully paid ordinary share
of GBP1 and 49,999 quarter paid ordinary shares of GBP1 each. The
shares are beneficially owned by the Company's parent, Kenrick No.
3 Holdings Limited.
Directors and Directors' interests
The Directors of the company who were in office during the year
and up to the date of signing the financial statements were as
follows:
Charles Michael Leahy
MaplesFS UK Corporate Director No.1 Limited MaplesFS UK
Corporate Director No.2 Limited
None of the Directors has any beneficial interest in the
ordinary share capital of the Company. None of the Directors had
any interest either during or at the end of the period in any
material contract or arrangement with the Company.
Company secretary
Maples Fiduciary Services (UK) Limited served as the Company
Secretary during the period.
Dividend
The Directors did not recommended a payment of a dividend (2021:
GBPnil).
Third party indemnity
Qualifying third party indemnity provisions for the benefit of
the Directors were in force during the period under review and
remain in force as at the date of approval of the annual report and
financial statements.
Information included in the strategic report
In accordance with Section 414(c) of the Companies Act 2006
(Strategic Report and Directors Report) Regulations 2013, the
Company has prepared a strategic report that contains information
that would have previously been included in the Directors' report,
which includes the principal activities of the company and review
of the business and the principal risks and uncertainties faced by
the company.
Disclosure of information to the auditors
The Directors who held office at the date of approval of this
Directors' report confirm that, so far as they are each aware,
there is no relevant audit information of which the Company's
auditors are unaware, and each Director has taken all the steps
that they ought to have taken as a Director to make themselves
aware of any relevant audit information and to establish that the
Company's auditors are aware of that information.
This confirmation is given and should be interpreted in
accordance with the provisions of section 418 of the Companies Act
2006.
Independent auditors
PricewaterhouseCoopers have expressed their willingness to
continue in office as auditors. Pursuant to section 489 of the
Companies Act 2006, a resolution to re-appoint
PricewaterhouseCoopers as auditors of the Company will be proposed
at the Company's forthcoming Annual General Meeting.
Directors' report (continued)
Statement of Directors' responsibilities in respect of the
strategic report, Directors' report and the financial
statements
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
regulation.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have prepared the financial statements in accordance with
UK-adopted international accounting standards and international
financial reporting standards adopted pursuant to Regulation (EC)
No 1606/2002 as it applies in the European Union.
Under company law, 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 the financial
statements, the Directors are required to:
-- select suitable accounting policies and then apply them
consistently;
-- state whether applicable UK-adopted international accounting
standards have been followed, subject to any material departures
disclosed and explained
in the financial statements;
-- make judgements and accounting estimates that are reasonable
and prudent; 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 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 also 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 the Companies Act
2006.
Directors' confirmations
In the case of each director in office at the date the
Directors' report is approved:
-- so far as the Director is aware, there is no relevant audit
information of which the Company's auditors are unaware; and
-- they have taken all the steps that they ought to have taken
as a Director in order to make themselves aware of any relevant
audit information and to establish that the company's auditors are
aware of that information.
The Company is out of the scope of the Streamlined Energy and
Carbon Reporting (SECR), as it does not meet the numerical
thresholds in relation to turnover and number of employees.
On behalf of the Board
Charles Leahy
Representing MaplesFS UK Corporate Director No.1 Limited,
Director
22 August 2022
Independent auditor's report to the members of Kenrick No. 3 Plc
Report on the audit of the financial statements
Opinion
In our opinion, Kenrick No. 3 Plc's financial statements:
-- give a true and fair view of the state of the company's
affairs as at 31 March 2022 and of its profit and cash flows for
the year then ended;
-- have been properly prepared in accordance with UK-adopted
international accounting standards; and
-- have been prepared in accordance with the requirements of the
Companies Act 2006.
We have audited the financial statements, included within the
annual report and financial statements (the "Annual Report"), which
comprise: statement of financial position as at 31 March 2022;
statement of comprehensive income, statement of changes in equity
and statement of cash flows for the year then ended; and the notes
to the financial statements, which include a description of the
significant accounting policies.
Our opinion is consistent with our reporting to the
directors.
Separate opinion in relation to international financial
reporting standards adopted pursuant to Regulation (EC) No
1606/2002 as it applies in the European Union
As explained in note 1 to the financial statements, the company,
in addition to applying UK-adopted international accounting
standards, has also applied international financial reporting
standards adopted pursuant to Regulation (EC) No 1606/2002 as it
applies in the European Union.
In our opinion, the company financial statements have been
properly prepared in accordance with international financial
reporting standards adopted pursuant to Regulation (EC) No
1606/2002 as it applies in the European Union.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our
responsibilities under ISAs (UK) are further described in the
Auditors' responsibilities for the audit of the financial
statements section of our report. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Independence
We remained independent of the company in accordance with the
ethical requirements that are relevant to our audit of the
financial statements in the UK, which includes the FRC's Ethical
Standard, as applicable to listed public interest entities, and we
have fulfilled our other ethical responsibilities in accordance
with these requirements.
To the best of our knowledge and belief, we declare that
non-audit services prohibited by the FRC's Ethical Standard were
not provided.
We have provided no non-audit services to the company in the
period under audit.
Our audit approach
Overview
Audit scope
-- The scope of our audit and the nature, timing and extent of
audit procedures performed were determined by our risk assessment
and other qualitative
factors (including evaluation of history of misstatement through
fraud or error).
-- We tailored the scope of our audit to ensure that we
performed sufficient work to enable us to opine on the financial
statements.
-- We identified all material financial statement line items and
disclosures, including those that were considered qualitatively
material, and conducted our
work over these accordingly.
Key audit matters
-- Incentive for the Servicer to mis-represent performance of
the underlying asset pool
-- Errors in the priority of payments (the "Waterfalls")
Materiality
-- Overall materiality: GBP2,049,584 (2021: GBP2,517,000) based
on 1% of total assets.
-- Performance materiality: GBP1,537,188 (2021:
GBP1,887,000).
The scope of our audit
As part of designing our audit, we determined materiality and
assessed the risks of material misstatement in the financial
statements.
Key audit matters
Key audit matters are those matters that, in the auditors'
professional judgement, were of most significance in the audit of
the financial statements of the current period and include the most
significant assessed risks of material misstatement (whether or not
due to fraud) identified by the auditors, including those which had
the greatest effect on: the overall audit strategy; the allocation
of resources in the audit; and directing the efforts of the
engagement team. These matters, and any comments we make on the
results of our procedures thereon, were addressed in the context of
our audit of the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on
these matters.
This is not a complete list of all risks identified by our
audit.
Impact of Covid-19 and Errors in the accounting due to lack of
understanding of the underlying transaction, which were key audit
matters last year, are no longer included because of our
consideration of the pandemic in the current year is adequately
captured by other key audit matters, and the risk in accounting of
securitisation remains consistent year on year, respectively. These
do not represent areas of increased audit focus in their own
rights.
Otherwise, the key audit matters below are consistent with last
year.
Key audit matter How our audit addressed the
key audit matter
Incentive for the Servicer We undertook the following
to mis-represent performance procedures to test the measurement
of the underlying asset of balances reported by the
pool Servicer during the year.
West Bromwich Building -- Tested a sample of Mortgages
Society is acting as a owned by the Company and agreed
Servicer and the Originator these are correctly flagged
of the underlying assets in the Servicer's system to
and as such could have ensure the completeness of
an incentive to mis-represent balances recorded as being
the performance of the owned to the Company.
underlying asset pool in -- Tested a sample of collections
order to hide the breach and matched the amounts recorded
of triggers which would in the Servicer's system to
result in the default of cash recorded by the Company
the securitisation structure. to evidence the closing value
and to provide evidence over
This would have a significant the accuracy of revenue recorded
impact on the going concern within the Company.
assumption with related
disclosures in the financial We found no material exceptions
statements: Note 1 - Accounting in performing these tests.
policies - Going concern.
----------------------------------------------------------
Errors in the priority We undertook the following
of payments (the "Waterfalls") procedures to test the Waterfall:
As a special purpose entity, * Agreed the priority of payments to the transaction
the Company is required documents for each quarterly
on each Interest Payment
Date to make payments in
accordance with the priority payment made;
of payments, which are -- For each Interest Payment
set out in the underlying Date occurring during the period,
transaction documents and we compared the available amounts
referred to as the 'Waterfall'. for distribution to the amounts
received in respect of the
The priority of payments Receivables, and verified the
in the Waterfall is key split of interest and principal
to ensuring that expenses, received by recalculating the
principal repayments and interest for a sample of payment
interest payments are being and dates.
paid in the contractual -- Recalculated the interest
order of seniority. expense for each Note class
and the Subordinated Loan for
Related disclosures in the period using independently
the financial statements: obtained interest rates, and
Note 4 - Interest Expense. agreed this to interest paid
on the Interest Payment Dates.
We found no material exceptions
in performing these tests.
----------------------------------------------------------
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed
enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the
company, the accounting processes and controls, and the industry in
which it operates.
At the planning stage we obtained an understanding of the entity
and its environment, considering the company's operations,
ownership and governance structures, accounting framework,
selection of accounting policies and the company's objectives and
strategies. We obtained an understanding of the internal control
environment, including in relation to IT. Industry level factors
were also considered, including applicable laws and regulations.
Based on these initial planning procedures, we performed our risk
assessment at the account balance and assertion level, considering
the risks of material misstatement through fraud or error. The
scope of our audit and the nature, timing and extent of our audit
procedures were designed, planned and executed with consideration
of our risk assessment, the financial significance of account
balances, and other qualitative factors (e.g. history of error or
misstatements). We performed audit procedures over all account
balances and disclosures which we considered to be material and/or
represent a risk of material misstatement to the financial
statements.
Materiality
The scope of our audit was influenced by our application of
materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations,
helped us to determine the scope of our audit and the nature,
timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in evaluating
the effect of misstatements, both individually and in aggregate on
the financial statements as a whole.
Based on our professional judgement, we determined materiality
for the financial statements as a whole as follows:
Overall company materiality GBP2,049,584 (2021:
GBP2,517,000).
How we determined it 1% of total assets
---------------------------
Rationale for benchmark As SPE is established
applied as a not for profit
entity, funded almost
entirely by debt, it
follows that users may
focus their attention
on the SPE's total assets
as suggested by ISA
(UK) 320 paragraph A3.
It is therefore considered
appropriate that overall
materiality can, in
the context of an SPE
audit, be calculated
as 1% of total assets.
---------------------------
We use performance materiality to reduce to an appropriately low
level the probability that the aggregate of uncorrected and
undetected misstatements exceeds overall materiality. Specifically,
we use performance materiality in determining the scope of our
audit and the nature and extent of our testing of account balances,
classes of transactions and disclosures, for example in determining
sample sizes. Our performance materiality was 75% (2021: 75%) of
overall materiality, amounting to GBP1,537,188 (2021: GBP1,887,000)
for the company financial statements.
In determining the performance materiality, we considered a
number of factors - the history of misstatements, risk assessment
and aggregation risk and the effectiveness of controls - and
concluded that an amount at the upper end of our normal range was
appropriate.
We agreed with the directors that we would report to them
misstatements identified during our audit above GBP102,479 (2021:
GBP125,850) as well as misstatements below that amount that, in our
view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the directors' assessment of the company's
ability to continue to adopt the going concern basis of accounting
included:
-- Inspection of transaction documents to verify that Notes are
limited recourse in all circumstances and that certain expenses can
be deferred if there are
insufficient funds;
-- Inspection of post year-end investor reports for pertinent
changes in cash flows, such as deterioration in the performance of
the mortgage loans or
uncleared write offs on the principal deficiency ledgers;
-- Review of the events of default set out in the transaction
documents and verification that no trigger breaches had occurred;
and
-- Enquiries of the Servicer to understand the current impact of
COVID-19 on the mortgage loans and its ability to continue to
service the mortgage loans.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
company's ability to continue as a going concern for a period of at
least twelve months from when the financial statements are
authorised for issue.
In auditing the financial statements, we have concluded that the
directors' use of the going concern basis of accounting in the
preparation of the financial
statements is appropriate.
However, because not all future events or conditions can be
predicted, this conclusion is not a guarantee as to the company's
ability to continue as a going concern.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
Reporting on other information
The other information comprises all of the information in the
Annual Report other than the financial statements and our auditors'
report thereon. The directors are responsible for the other
information. Our opinion on the financial statements does not cover
the other information and, accordingly, we do not express an audit
opinion or, except to the extent otherwise explicitly stated in
this report, any form of assurance thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit, or otherwise appears to be materially misstated. If we
identify an apparent material inconsistency or material
misstatement, we are required to perform procedures to conclude
whether there is a material misstatement of the financial
statements or a material misstatement of the other information. If,
based on the work we have performed, we conclude that there is a
material misstatement of this other information, we are required to
report that fact. We have nothing to report based on these
responsibilities.
With respect to the Strategic report and Directors' report, we
also considered whether the disclosures required by the UK
Companies Act 2006 have been included.
Based on our work undertaken in the course of the audit, the
Companies Act 2006 requires us also to report certain opinions and
matters as described below.
Strategic report and Directors' report
In our opinion, based on the work undertaken in the course of
the audit, the information given in the Strategic report and
Directors' report for the year ended 31 March 2022 is consistent
with the financial statements and has been prepared in accordance
with applicable legal requirements.
In light of the knowledge and understanding of the company and
its environment obtained in the course of the audit, we did not
identify any material misstatements in the Strategic report and
Directors' report.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial
statements
As explained more fully in the Statement of Directors'
responsibilities in respect of the strategic report, Directors'
report and the financial statements, the directors are responsible
for the preparation of the financial statements in accordance with
the applicable framework and for being satisfied that they give a
true and fair view. The directors are also responsible for such
internal control as they determine is necessary to enable the
preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Auditors' responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditors' report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including
fraud, is detailed below.
Based on our understanding of the company and industry, we
identified that the principal risks of non-compliance with laws and
regulations related to a breach of the listing requirements of the
London Stock Exchange under which the offering circular dated 23
January 2018 was issued or of the underlying transaction documents,
and we considered the extent to which non-compliance might have a
material effect on the financial statements. We also considered
those laws and regulations that have a direct impact on the
financial statements such as the Companies Act 2006. We evaluated
management's incentives and opportunities for fraudulent
manipulation of the financial statements (including the risk of
override of controls), and determined that the principal risks were
related to inappropriate adjustments in preparing the financial
statements. Audit procedures performed by the engagement team
included:
-- Making inquiries of those charged with governance in relation
to known or suspected instances of non-compliance with laws and
regulation and fraud.
-- Testing of the reconciliation and consistency of the year end
servicer's reports to the financial statements and underlying bank
statements of the
Company.
-- Testing, on a sample basis, that the priority of payments has
been applied in accordance with the transaction documents.
-- Testing journals using a risk-based approach and evaluating
whether there was evidence of bias.
There are inherent limitations in the audit procedures described
above. We are less likely to become aware of instances of
non-compliance with laws and regulations that are not closely
related to events and transactions reflected in the financial
statements. Also, the risk of not detecting a material misstatement
due to fraud is higher than the risk of not detecting one resulting
from error, as fraud may involve deliberate concealment by, for
example, forgery or intentional misrepresentations, or through
collusion.
Our audit testing might include testing complete populations of
certain transactions and balances, possibly using data auditing
techniques. However, it typically involves selecting a limited
number of items for testing, rather than testing complete
populations. We will often seek to target particular items for
testing based on their size or risk characteristics. In other
cases, we will use audit sampling to enable us to draw a conclusion
about the population from which the sample is selected.
A further description of our responsibilities for the audit of
the financial statements is located on the FRC's website at:
www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditors' report.
Use of this report
This report, including the opinions, has been prepared for and
only for the company's members as a body in accordance with Chapter
3 of Part 16 of the Companies Act 2006 and for no other purpose. We
do not, in giving these opinions, 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.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you
if, in our opinion:
-- we have not obtained all the information and explanations we
require for our audit; or
-- adequate accounting records have not been kept by the
company, or returns adequate for our audit have not been received
from branches not visited by
us; or
-- certain disclosures of directors' remuneration specified by
law are not made; or
-- the financial statements are not in agreement with the
accounting records and returns.
We have no exceptions to report arising from this
responsibility.
Appointment
Following the recommendation of the directors, we were appointed
by the directors on 1 April 2022 to audit the financial statements
for the year ended 31 March 2022 and subsequent financial periods.
The period of total uninterrupted engagement is 2 years, covering
the years ended 31 March 2021 to 31 March 2022.
Daniel Brydon (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP Chartered
Accountants and Statutory Auditors Birmingham
22 August 2022
Statement of comprehensive
income
for the year ended 31
March 2022 Note 2022 2021
GBP'000 GBP'000
Interest receivable and
similar income 3 1,727 2,543
Interest expense and
similar charges 4 (1,286) (2,027)
------- -------
Net interest receivable 441 516
Net fair value gains
on derivatives 1,255 527
Administrative expenses (442) (529)
------- -------
Profit before tax 5 1,254 514
Taxation 7 - -
Profit for the year 1,254 514
The profit for the year was derived wholly from continuing
operations.
There has been no comprehensive income or expense other than the
profit for the year (2021: GBPnil).
Statement of changes in equity
for the year ended 31 March 2022
(Accumulated
losses)/Retained
Share earnings Total
capital GBP'000 GBP'000
GBP'000
Balance at 1 April 2021 13 (696) (683)
Profit for the year - 1,254 1,254
-------- ------------------ ---------------
Balance at 31 March 2022 13 558 571
======== ================== ===============
Accumulated
Share losses Total
capital GBP'000 GBP'000
GBP'000
Balance at 1 April 2020 13 (1,210) (1,197)
Profit for the year - 514 514
-------- ------------------ ---------------
Balance at 31 March 2021 13 (696) (683)
======== ================== ===============
The notes on pages 13 to 28 form
part of these financial statements.
Statement of financial
position
at 31 March 2022 GBP'000 GBP'000
Assets
Cash and cash equivalents 8 17,092 15,695
Deemed loan due from Group
undertaking 9 187,833 235,578
Derivative financial instruments 10 212 -
Trade and other receivables 11 26 442
Total assets 205,163 251,715
Liabilities
Debt securities in issue 12 204,348 250,757
Derivative financial
instruments 10 131 1,352
Trade and other payables 13 113 289
Current tax - -
Total liabilities 204,592 252,398
Equity
Share capital 15 13 13
Retained earnings/(accumulated
losses) 16 558 (696)
Total equity attributable to equity holders
of parent 571 (683)
------------------
Total liabilities and equity 205,163 251,715
The notes on pages 13 to 28 form part
of these financial statements.
These financial statements were approved by the Board of
Directors on 22 August 2022 and were signed on its behalf by:
Charles Leahy
Representing MaplesFS UK Corporate Director No.1 Limited,
Director
Registered number: 11001450
Statement of cash flows
for the period ended 31 March
2022 Note 2022 2021
GBP'000 GBP'000
Cash flows from operating activities
Profit before tax 1,254 514
Amortisation of Note issue costs 243 286
Accrued interest on debt securities
in issue 206 192
Movement in fair value of derivative
financial instruments (1,433) (177)
------- -------
Net cash inflow from operating
activities before changes in
operating assets and liabilities 270 815
Repayment of deemed loan due
from Group undertaking 47,745 48,167
Movement in trade and other receivables 416 (99)
Movement in trade and other payables (176) 148
Net cash inflow from operating activities 48,255 49,031
Cash flows from financing activities
Repayment of debt securities in issue (46,858) (48,144)
Net cash outflow from financing activities (46,858) (48,144)
Net increase in cash and cash
equivalents 1,397 887
Cash and cash equivalents at
beginning of period 15,695 14,808
Cash and cash equivalents at end of period 8 17,092 15,695
The notes on pages 13 to 28 form part of these financial
statements.
1 Accounting policies
Kenrick No. 3 Plc (the Company) is a public limited company
incorporated in the United Kingdom and registered in England and
Wales under the Companies Act 2006. The Company's registered office
and principal activities are set out on pages 1 and 2
respectively.
The principal accounting policies applied consistently in the
preparation of these financial statements are set out below.
Basis of preparation
The financial statements have been prepared in accordance with
UK-adopted international accounting standards and with the
requirements of the Companies Act 2006 as applicable to companies
reporting under those standards. The Company has also applied
international financial reporting standards adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European
Union.
The financial statements have been prepared under the historical
cost convention as modified by the revaluation of derivatives at
fair value through profit or loss.
The financial statements are presented in pounds Sterling and,
except where otherwise indicated, have been rounded to the nearest
thousand.
Going concern
The financial statements have been prepared on the going concern
basis, as defined in 'IAS 1 - Presentation of Financial
Statements'. In order to prepare financial statements on this
basis, the directors must conclude that management does not intend
to liquidate the Company or cease trading, and that the Company has
the ability to continue to trade and will be able to satisfy its
liabilities as they fall due.
As a result of the transaction documents governing the Company's
mortgage backed floating rate note borrowings described in note 12,
the Company will
continue to trade in the same way as it did in the year ended 31
March 2022 until either:
-- All of the class A and B notes are repaid from principal cash
flows arising from the Company's mortgage portfolio;
-- The call option, exercisable for the first time on the
earlier of: 11th January 2023, when the aggregate principal amount
outstanding of the notes is equal to or less than 10% of the issued
notes principal amount, or when there is a change in tax law which
has certain impacts on the Company as specified in the
securitisation prospectus, is exercised; or
-- The final repayment date for the notes in October 2054 is
reached.
The directors have reviewed the balance sheet performance of the
company and consider that it is unlikely that any of these events
will occur during the next 12 months.
Before this point, repayments of the principal liabilities of
the Company, the mortgage backed floating rate notes described in
note 12, are limited to available principal cash received on the
Company's loan portfolio until the final repayment date. Therefore,
the directors have a reasonable expectation that the Company has
adequate resources to continue in operational existence until this
point, satisfying all liabilities as they fall due.
On that basis, the directors have concluded that it is
appropriate to continue to adopt the going concern basis in the
preparation of these financial statements.
New or amended accounting standards
The International Accounting Standards Board (IASB) have issued
a number of new amended accounting standards and interpretations
but are not effective for the twelve months ended 31 March 2022.
Other than the change noted below, which is undergoing assessment,
all other changes are not expected to have a significant impact on
the Companys's financial statements.
-- Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39
and IFRS 7)
In August 2020, the IASB issued Phase 2 of Interest Rate
Benchmark Reform - Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and
IFRS 16. The amendments provide practical expedients in respect of
accounting for changes to financial assets and liabilities where
the modification is as a direct result of the IBOR reforms. The
amendments allow firms to account for the modification to the asset
or liability by applying the updated effective interest rate
following a transition to a new benchmark interest rate to value
the financial asset or liability, rather than continuing to
discount the asset or liability at the original discount rate and
recognising a gain or loss in the Income Statement as per the usual
requirements under IFRS 9 for modifications of financial assets and
liabilities. The Company has applied the amendments for the current
financial year which has no material impact.
1 Accounting policies (continued) Interest receivable and expense
Interest receivable and expense are recognised in the income
statement for all instruments measured at amortised cost using the
effective interest method. Interest income on defaulted loans
categorised as 'stage 3' under IFRS 9 is recognised by applying the
effective interest rate to the balances net of provisions for
expected credit losses.
Deferred consideration
Under the terms of the securitisation agreements, the Company
retains the rights to a profit of GBP1,000 p.a. subject to there
being sufficient available revenue receipts. Amounts in excess of
this accrue to West Bromwich Building Society as deferred
consideration.
Effective interest rate
The effective interest rate method is the method used to
calculate the amortised cost of financial instruments and to
recognise interest receivable or payable over the relevant period.
The effective interest rate is the rate that exactly discounts
estimated future cash flows or receipts through the expected life
of the instrument, or where appropriate, a shorter period, to its
carrying amount. The main impact for the Company relates to
estimating the expected lives for mortgage advances, in particular
the average length of the reversion period subsequent to a fixed or
discounted rate period coming to an end, as the effective interest
rate is a blend of the interest rates in both the initial fixed
period and the expected reversion period. In addition, where
mortgage advances have upfront fees, such as application and
arrangement fees, and costs, these are incorporated into the
calculation. This has the effect of spreading these fees and costs
over the expected life of the mortgage.
Financial instruments
a) Financial assets
Under IFRS 9, financial assets are classified based on the
business model under which they are held and the characteristics of
their contractual cash flows.
Amortised cost
Financial assets are measured at amortised cost if they are held
for the purpose of collecting contractual cash flows and have
contractual terms which give rise on specified dates to cash flows
which are solely payments of principal and interest (SPPI) on the
outstanding amount.
Assets measured at amortised cost are initially recognised at
fair value, being the cash consideration to originate or purchase
the asset including any directly attributable transaction costs,
and measured subsequently using the effective interest method.
This category includes cash and cash equivalents and the deemed
loan asset.
Deemed loan
The loans and advances to customers legally sold to the Company
fail the derecognition criteria of IFRS 9 (and its predecessor IAS
39) as West Bromwich Building Society (the Seller) has retained
significant risk and rewards of ownership and therefore these loans
remain on the Statement of Financial Position of the Seller. IFRS 9
(and its predecessor IAS 39) therefore requires the Seller to
recognise a deemed loan financial liability on its Statement of
Financial Position and the resulting deemed loan asset is held on
the Company's Statement of Financial Position. This deemed loan
initially represents the consideration paid by the Company in
respect of the acquisition and the beneficial ownership of the
securitised loans and advances to customers and is subsequently
adjusted due to repayments made by the Seller to the Company.
The deemed loan balance is shown net of any deferred
consideration, start up loan and subordinated loan payable to West
Bromwich Building Society. Similarly, interest receivable on the
deemed loan is presented net of deferred consideration, start up
loan and subordinated loan interest payable.
Fair value through profit or loss (FVTPL)
Financial assets which do not meet the classification criteria
to be held at amortised cost are measured at FVTPL.
This category includes derivative assets. The fair values of
derivatives are based on level 2 valuation techniques, as described
in note 2. Changes in the fair value of derivative assets are
presented as net fair value gains/(losses) on derivatives in the
Statement of Comprehensive Income. Interest arising on derivative
financial instruments is recognised within net interest on an
accruals basis.
b) Financial liabilities
In accordance with IFRS 9, all of the Company's financial
liabilities are classified as subsequently measured at amortised
cost except for financial
liabilities at fair value through profit or loss.
Amortised cost
This category includes debt securities in issue.
Liabilities subsequently measured at amortised cost are
recognised initially at fair value, being the issue proceeds, net
of premia, discounts and directly attributable transaction costs
incurred. They are subsequently measured at amortised cost using
the effective interest method.
Fair value through profit or loss (FVTPL)
This category includes derivative liabilities. The fair values
of derivatives are based on level 2 valuation techniques, as
described in note 2. Changes in the fair value of derivative
liabilities are presented as net fair value gains/(losses) on
derivatives in the statement of comprehensive income. Interest
arising on derivative financial instruments is recognised within
net interest on an accruals basis.
c) Impairment of financial assets
Impairment of financial assets
Expected credit losses (ECLs) are recognised for all financial
assets carried at amortised cost under IFRS 9.
The year end modelled ECL has been updated where necessary. The
macroeconomic scenarios have been updated to reflect the latest
economic position in the UK at the reporting date, including
assumptions of the economy's recovery following COVID-19 lockdowns,
the cost of living squeeze and rising interest rates.
Staging
At each reporting date, financial assets subject to the
impairment requirements of IFRS 9 are categorised into one of three
stages:
Stage 1
On initial recognition, financial assets which are not credit
impaired are categorised as stage 1 and provision is made for
12-month ECLs, being the losses from default events expected to
occur within the next 12 months. Assets remain in stage 1 until
such time as they meet the criteria for another stage or are
derecognised.
Stage 2 (significant increase in credit risk)
Financial assets which are not in default, but have experienced
a significant increase in credit risk since initial recognition,
are categorised as stage 2. The loss allowance recognised is
equivalent to lifetime ECL, being the loss arising from default
events expected to occur over the lifetime of the financial
asset.
Determining whether a significant increase in credit risk has
occurred is a critical aspect of the IFRS 9 methodology and one
which involves judgement, based on a combination of quantitative
and qualitative measures. As described in the ECL calculation
sections which follow, the criteria applied vary across portfolios
depending on the nature of the portfolio and availability of
relevant credit risk information but all include the IFRS 9
'backstop' of 30 days past due as a stage 2 trigger.
Stage 3 (default)
Defaulted or credit-impaired financial assets are categorised
stage 3, requiring recognition of lifetime ECLs.
Transfers to lower stages (curing)
Financial assets in stages 2 or 3 can transfer back to stages 1
or 2, respectively, once the criteria for significant increase in
credit risk or default cease to be met for a period of time defined
within the ECL methodology for that portfolio, sometimes known as
the 'cure' period. In practice, this means that a stage 2 or 3 loan
which ceases to breach the threshold(s)/criteria for that stage
will remain in the higher stage for a pre-determined number of
months. The use of cure periods gives assurance that accounts have
rehabilitated before re-entering lower stages and reduces the level
of volatility that might otherwise arise from accounts regularly
migrating between stages.
Forward-looking ECL approach
ECL is measured as the present value of the difference between
the cash flows contractually due on a financial asset and the cash
flows expected to be received. In the Statement of Financial
Position, the loss allowance is presented as a reduction in the
carrying value of the financial asset.
For the Company's mortgage portfolio, the estimate of ECL is
unbiased and probability-weighted, taking into account a range of
possible outcomes. In accordance with IFRS 9, forecasts of future
economic conditions are integral to the ECL calculations for each
portfolio. The Company currently models four forward-looking
macroeconomic scenarios: a central forecast with economic
assumptions aligned to the West Bromwich Building Society Group
(the Group) Medium Term Plan (and therefore assigned the highest
probability), together with upside, downside and stress scenarios.
The scenarios have been updated with due regard to the latest
market data available following developments associated with the
pandemic.
ECL calculation - deemed loan
The loss allowance held against the deemed loan is determined
based on the IFRS 9 provision requirements for the underlying
mortgage portfolio. The residential impairment model employs
industry-accepted statistical techniques to address the complex
requirements of IFRS 9, with model assumptions and parameters
initially determined by regression analysis of the West Bromwich
Building Society Group's (the Group's) historical default data. The
assumptions are validated using 'out of time' samples, across a
range of economic scenarios, enabling the predictive capabilities
of the models to be confirmed.
The model incorporates quantitative factors for identifying a
significant increase in credit risk by comparing reporting date
lifetime probability of default (PD) with residual origination
lifetime PD. Residual origination PD curves and (relative and
absolute) threshold levels are established via an iterative process
involving statistical analysis of the Group's default data. In
addition, a range of internally monitored potential impairment
indicators have been selected as qualitative criteria for
classifying an individual loan as stage 2. Examples of qualitative
indicators include cancelled direct debit instructions, certain
forbearance measures and evidence of impaired credit history
obtained from external agencies.
Loans in the underlying portfolio are considered to be in
default or credit-impaired if they are in arrears by three or more
months, in litigation, possession
or LPA receivership or meet one of a range of internal 'unlikely
to pay' indicators.
Within the residential impairment model, ECL is calculated by
multiplying forward-looking probability of default (PD), exposure
at default (EAD) and loss given default (LGD). The model outputs
monthly ECLs, which are aggregated over the first 12 months to
obtain 12-month ECL and over the life of the loan to calculate
lifetime ECL. The model combines a number of account-specific
variables and forecasts of future economic conditions within the
calculation of PD. Macroeconomic variable inputs to the model are
reviewed quarterly and include house price index (HPI), interest
rates, unemployment and GDP. The variables were selected based on
statistical tests and other analysis which evidenced their
correlation with credit risk.
As the Company is only required to make repayments of interest
and principal to the extent that repayments are received from the
mortgage administrator in respect of the mortgage loans, impairment
losses on the deemed loan are not borne by the Company but by the
Seller (in terms of impacting the Company's ability to pay deferred
consideration and repay principal and interest on the subordinated
loan provided to the Company by the Seller).
Where a loan is not recoverable, it is written off against the
related provision for loan impairment once all the necessary
procedures have been completed and the amount of the loss has been
determined.
d) Derecognition of financial assets and liabilities
The Company's policy is to derecognise financial assets when the
contractual right to the cash flows from the financial asset
expires. The Company also derecognises financial assets that it
transfers to another party provided the transfer of the asset also
transfers the right to receive the cash flows of the financial
asset and substantially all the risks and rewards of ownership.
The Company derecognises financial liabilities only when the
obligation specified in the contract is discharged, cancelled or
has expired.
Cash and cash equivalents
For the purposes of the statement of cash flows, cash comprises
cash and bank balances repayable on demand. Cash equivalents
comprise highly liquid investments that are convertible into cash
with an insignificant risk of changes in value, with maturities of
90 days or less on acquisition.
Taxation
The Company has elected to be taxed as a securitisation company
under the Taxation of Securitisation Companies Regulations 2006
("the permanent regime"). Under the permanent regime the Company
will be taxed on an amount which broadly represents its net
cashflows as determined by the transaction documents. This is
different to the basis on which the accounting profit or loss is
reported in these financial statements.
All differences between the Company's accounting profits or
losses and taxable net cashflows are therefore treated as permanent
differences and as no timing difference with future tax
consequences arise, no deferred tax is required to be
recognised.
Critical accounting estimates and judgements in applying
accounting policies
In the process of applying accounting policies, the Company
makes various judgements, estimates and assumptions which affect
the amounts recognised in the financial statements. Estimates and
judgements are continually evaluated and are based on historical
experience and other factors, including expectations of future
events that are believed to be reasonable under the
circumstances.
Significant judgements in applying accounting policies
Impairment
For IFRS 9 impairment, judgement is required to define the
staging criteria, i.e. what constitutes a significant increase in
credit risk (stage 2) and what circumstances give rise to a default
(stage 3). Where assets meet the stage 2 or 3 criteria, lifetime
ECL must be recognised.
In accordance with IFRS 9, forecasts of future macroeconomic
conditions are integral to the impairment modelling processes. The
selection of economic variables which are genuine drivers of credit
risk and adequately capture the impact of changes in the economic
outlook involves a degree of judgement.
The staging methodologies and macroeconomic scenario selection
processes for each portfolio are detailed within the financial
assets (impairment) accounting policy above. Model monitoring and
model validation procedures are used to continually evaluate the
appropriateness of the staging criteria and macroeconomic variable
inputs.
Limited sensitivities have been performed for the Company, with
the total ECLs equating to GBP3k, from a GBP0.2bn loan book (2021:
GBP14k from a GBP0.3bn loan book).
Sources of estimation uncertainty
Impairment on loans and advances - forward-looking ECL
approach
The estimation of ECLs is inherently uncertain and the IFRS 9
impairment model incorporates a number of assumptions and
estimates, changes in which could materially affect the carrying
amounts of assets and liabilities within the next financial year.
The IFRS 9 requirements to incorporate forward-looking information
within the ECL calculation, including forecasts of future
macroeconomic conditions, necessitate judgement thereby increasing
the potential for volatility in future periods.
The impairment model incorporates four macroeconomic forecasts
(central, upside, downside and stress), each comprising a number of
economic variables considered to be credit risk drivers. As
explained, economic scenarios and weightings have been updated to
reflect the changing economic conditions to which the Company is
exposed.
Impairment on deemed loan - residential mortgages
The impairment on the deemed loan is equivalent to the
impairment on loans and advances. This is further explained in note
1 on page 16. The scenarios have been updated with due regard to
the latest market data available following the emergence of the
COVID-19 pandemic.
The following table indicates the main economic variables
included within the IFRS 9 macroeconomic scenarios at 31 March and
the associated probability weightings.
At 31 March 2022
Probability weighting Current scenario
(%)
5 yr
2022/23 2023/24 average
-------------------------------- --------- --------- --------
Bank Rate 1.3 2.0 1.6
Central 60% HPI 1.5 1.5 2.1
scenario Unemployment 4.1 4.3 4.3
GDP 4.0 1.6 2.0
-------------------------------- --------- --------- --------
Bank Rate 2.0 2.5 2.6
Upside 5% HPI 6.3 4.1 4.5
scenario Unemployment 3.9 3.6 3.1
GDP 5.7 2.9 3.0
-------------------------------- --------- --------- --------
Bank Rate 3.0 4.0 3.2
Downside 25% HPI (10.8) (8.5) (3.4)
scenario Unemployment 5.9 5.5 5.2
GDP (2.0) 1.2 0.5
-------------------------------- --------- --------- --------
Bank Rate - (0.1) (0.1)
Stress scenario 10%
HPI (20.0) (10.0) (5.6)
Unemployment 12.0 10.0 8.8
GDP (10.0) - -
-------------------------------- --------- --------- --------
Key assumptions for the residential portfolios are the
probability weightings of the macroeconomic forecasts, which each
incorporate a different outlook for the economic variables shown in
the table above, the forecast of future house price inflation and
the relative threshold used to identify a significant increase in
credit risk. Any increase in provision requirements would not
result in a loss to the Company but an adjustment to the carrying
value of its assets/liabilities. Under the terms of the
securitisation, impairment losses on the deemed loan are borne by
the Seller (in relation to receipt of deferred consideration and
capital and interest on the subordinated loan).
2 Financial instruments
A financial instrument is a contract that gives rise to a
financial asset of one entity and a financial liability or equity
of another entity. The Company's activities expose it to a variety
of financial risks including interest rate risk and liquidity
risk.
The activities of the Company are conducted primarily by
reference to a series of securitisation documents (the programme
documentation). The securitisation structure has been set up as a
means of raising finance for West Bromwich Building Society and no
business activities will be undertaken by the Company beyond those
set out in the programme documentation.
The Company's exposure to risk on its financial instruments and
the management of such risk is largely set out at the inception of
the securitisation transaction. The Company's activities and the
role of each party to the transaction are clearly defined and
documented.
Interest rate risk
The Company has a policy of maintaining floating rate
liabilities and matching these with the floating rate assets to
mitigate against interest rate risk.
Interest rate swaps are undertaken as part of the securitisation
to hedge interest rate exposure arising from the underlying
financial instruments. The derivative counterparty is selected as a
highly rated, regulated financial institution to reduce the risk of
default and loss for the Company.
As previously noted, the Company has been set up in such a way
as to eliminate, as far as possible, any impact on the Company's
cash flows from changes in market conditions. The Company is
subject to a number of contractual agreements including the use of
derivatives to eliminate market risk from interest rate
changes.
Liquidity risk
The Company's policy to mitigate liquidity risk is through the
use of a subordinated loan from West Bromwich Building Society. As
the length of the funding is designed to match the length of the
mortgages, there is deemed to be no further liquidity risk facing
the Company.
The mortgage assets are principally funded by mortgage backed
loan notes. The maturity profile of the loan notes is matched to
that of the assets being funded. The loan notes are subject to
mandatory redemption in part on each repayment date in accordance
with the redemption of the assets.
The table below analyses the Company's financial assets and
liabilities across maturity periods that reflect the residual
duration from the period end date to the contractual maturity date.
In the case of the deemed loan, the analysis is based on the
contractual maturity of the underlying mortgage assets. The actual
repayment profiles of financial assets and liabilities are likely
to be significantly different to that shown in the analysis
dependant on customer repayment behaviour.
Less 1 to Over No specific Total
than 5 5 maturity
12 months years years
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 31st March 2022
Financial assets
Cash and cash equivalents 17,092 - - - 17,092
Derivative financial instruments - 212 - - 212
Deemed loan due from Group
undertaking - 1,061 186,775 (3) 187,833
----------- ---------- ----------- ------------- -------
17,092 1,273 186,775 (3) 205,137
=========== ========== =========== ============= =======
Financial liabilities
Derivative financial instruments - 131 - - 131
Debt securities in issue 206 1,061 203,217 (136) 204,348
----------- ---------- ----------- ------------- -------
206 1,192 203,217 (136) 204,479
=========== ========== =========== ============= =======
Less 1 to Over No specific Total
than 5 5
12 months years years maturity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 31st March 2021
Financial assets
Cash and cash equivalents 15,695 - - - 15,695
Deemed loan due from Group
undertaking - 1,038 234,554 (14) 235,578
----------- ---------- ----------- ------------- -------
15,695 1,038 234,554 (14) 251,273
=========== ========== =========== ============= =======
Financial liabilities
Derivative financial instruments - 1,352 - - 1,352
Debt securities in issue 192 1,038 249,906 (379) 250,757
----------- ---------- ----------- ------------- -------
192 2,390 249,906 (379) 252,109
=========== ========== =========== ============= =======
Gross contractual cash
flows
The timing and amount of any payments to be made in respect of
financial liabilities is determined by the waterfall of payments as
laid out in the initial prospectus. In practical terms, the
waterfall of payments only allows for (and expects) payments to be
made to the extent that funds have been generated from the
underlying mortgage assets. If insufficient funds have been
generated to meet the full payments expected, then these amounts
continue to be accrued until such time as funds are available. The
current expected cash flows to be generated from the underlying
mortgage loans are included in the maturity table above.
Cash and cash equivalents are held with an A+ rated bank.
Credit risk
Credit risk arises on the individual loans within the mortgage
portfolio which are secured on the underlying properties. Under
IFRS the portfolio is recognised as a deemed loan.
To the extent that the income on the deemed loan does not
provide sufficient funds to recover the Company's investment in the
mortgage portfolio, the Company has no claim on the assets of West
Bromwich Building Society. The Company's maximum gross exposure to
credit loss is therefore equal to the fair value of its involvement
in the portfolio (subject to mitigation which may result in the
elimination of any obligation to pay deferred consideration to West
Bromwich Building Society).
Deemed loan
The deemed loan is a single financial instrument under IFRS 9
and is allocated within IFRS 9 stage 1.
The following analysis of credit quality relates to the
underlying mortgage assets which support the valuation of the
deemed loan. While the deemed loan is considered to be a stage 1
asset, the underlying assets are subject to individual impairment
modelling and the disclosures below relate to this modelling.
The table below shows an analysis of the deemed loan:
2022 2021
GBP'000 GBP'000
Prime owner occupied residential
mortgages 191,261 239,960
Gross balances 191,261 239,960
Subordinated loan - -
Expected credit loss provisions (3) (14)
Deferred consideration (3,425) (4,368)
187,833 235,578
Credit quality
The West Bromwich Building Society Group assess credit risk on
owner occupied mortgages using behavioural scorecard and other
analysis to determine probabilities of default across a number of
rating grades. The IFRS 9 impairment models make use of this data,
incorporating forecasts of future economic conditions and
account-specific factors to produce forward-looking probabilities
of default by account and allocating loans to one of three stages
(as explained in note 1).
The table below analyses the underlying residential mortgages
(gross exposures) by 12-month probability of default and IFRS 9
stage at the reporting date.
At 31st March 2022 Stage Stage Stage Total
1 2 3 GBP'000
Probability of default range GBP'000 GBP'000 GBP'000
0.00 to < 0.25 173,203 10,816 - 184,019
0.25 to < 0.50 5,288 463 - 5,751
0.50 to < 0.75 - - - -
0.75 to < 1.00 - - - -
1.00 to < 5.00 405 2,347 - 2,752
5.00 to < 10.00 - - - -
10.00 to < 100.00 - 163 - 163
100.00 (default) - - 213 213
Other (1,637) - - (1,637)
-------------- ------------ ------------ --------------
177,259 13,789 213 191,261
============== ============ ============ ==============
At 31st March 2021 Stage Stage Stage Total
1 2 3
GBP'000 GBP'000 GBP'000 GBP'000
Probability of default range
0.00 to < 0.25 223,463 5,784 - 229,247
0.25 to < 0.50 5,973 1,406 - 7,379
0.50 to < 0.75 - - - -
0.75 to < 1.00 - - - -
1.00 to < 5.00 468 4,404 - 4,872
5.00 to < 10.00 - - - -
10.00 to < 100.00 - 425 - 425
100.00 (default) - - 221 221
Other (2,184) - - (2,184)
-------------- ------------ ------------ --------------
227,720 12,019 221 239,960
============== ============ ============ ==============
Included within 'Other' above, is GBP1.6m (2021: GBP2.2m)
representing intercompany balances due to West Bromwich Building
Society.
The table below provides further information on the underlying
residential loan portfolio by payment due status at 31 March
2022:
2022 2021
GBP'000 GBP'000
Not past due 191,134 239,702
Past due 1 to 3 months 127 258
191,261 239,960
Expected credit losses
The table below illustrates the IFRS 9 staging distribution of
the underlying residential mortgages and related expected credit
loss provisions at the period end. Stage 2 loans have been further
analysed to show those which are more than 30 days past due, the
IFRS 9 backstop for identifying a significant increase in credit
risk (SICR), and those which meet other SICR criteria as detailed
in note 1.
Gross Expected
At 31st March 2022 exposure credit Provision
loss coverage
provision
GBP'000 GBP'000 %
Residential loans at amortised
cost
Stage 1 177,259 1 0.00%
Stage 2
> 30 days past due 291 - 0.00%
Other SICR indicators 13,498 2 0.01%
Stage 3 213 - 0.00%
--------- -------------- -----------
191,261 3 0.00%
========= ============== ===========
Gross Expected
credit
At 31st March 2021 exposure loss provision Provision
coverage
GBP'000 GBP'000 %
Residential loans at amortised cost
Stage 1 227,720 3 0.00%
Stage 2
> 30 days past due 592 4 0.68%
Other SICR indicators 11,427 6 0.06%
Stage 3 221 1 0.45%
--------- -------------- -----------
239,960 14 0.01%
========= ============== ===========
The tables below analyse the movement in gross balances and the
related expected credit loss allowances on the underlying mortgage
portfolio for the period ended 31 March:
Stage Stage Stage Total
1 2 3 GBP'000
Gross balances GBP'000 GBP'000 GBP'000
At 1 April 2021 227,720 12,019 221 239,960
Transfers due to increased
credit risk:
From stage 1 to stage 2 (7,564) 7,564 - -
Transfers due to decreased
credit risk:
From stage 2 to stage 1 3,033 (3,033) - -
Net redemptions and repayments (45,930) (2,761) (8) (48,699)
-------------- ------------ ------------ --------------
At 31st March 2022 177,259 13,789 213 191,261
============== ============ ============ ==============
Stage Stage Stage Total
1 2 3
GBP'000 GBP'000 GBP'000 GBP'000
Gross balances
At 1 April 2020 275,140 13,716 438 289,294
Transfers due to increased
credit risk:
From stage 1 to stage 2 (4,776) 4,776 - -
Transfers due to decreased
credit risk:
From stage 2 to stage 1 4,259 (4,259) - -
Net redemptions and repayments (46,903) (2,214) (217) (49,334)
-------------- ------------ ------------ --------------
At 31st March 2021 227,720 12,019 221 239,960
============== ============ ============ ==============
Stage Stage Stage Total
1 2 3
GBP'000 GBP'000 GBP'000 GBP'000
Expected credit loss provision
At 1 April 2021 3 10 1 14
Transfers due to increased
credit risk:
From stage 1 to stage 2 - 1 - 1
Remeasurement of expected credit
losses with no stage transfer (2) (9) (1) (12)
-------------- ------------ ------------ --------------
At 31st March 2022 1 2 - 3
============== ============ ============ ==============
Stage Stage Stage 3 Total
1 2 GBP'000 GBP'000
Expected credit loss provision GBP'000 GBP'000
At 1 April 2020 4 6 2 12
Transfers due to increased
credit risk:
From stage 1 to stage 2 - 5 - 5
Remeasurement of expected credit
losses with no stage transfer (1) (1) (1) (3)
-------------- ------------ ------------ --------------
At 31st March 2021 3 10 1 14
============== ============ ============ ==============
Geographical analysis
The table below shows the geographic spread
of the underlying residential mortgage
portfolio at the year end date:
2022 2021
GBP'000 GBP'000
East Anglia 7,300 9,706
East Midlands 24,532 31,999
Greater London 9,272 11,997
North 11,690 13,966
North West 30,152 36,749
South East 24,130 32,768
South West 18,165 23,325
Wales 10,381 12,532
West Midlands 27,061 32,664
Yorkshire 28,578 34,254
191,261 239,960
Collateral
The table below shows the indexed loan to
value distribution of the underlying residential
loan portfolio at the year end date:
2022 2021
GBP'000 GBP'000
>95% - -
91% - 95% - -
86% - 90% 146 -
76% - 85% 1,126 12,236
51% - 75% 102,330 151,203
<51% 87,659 76,521
191,261 239,960
The following table indicates collateral held against the
underlying residential loan portfolio by IFRS 9 stage at the
year-end date:
2022 2021
GBP'000 GBP'000
Fair value of collateral
held
Stage 1 425,516 473,782
Stage 2 27,899 21,957
Stage 3 423 390
453,838 496,129
The average indexed loan to value is 45.01%, calculated as a
simple average across all loans (2021: 51.68%).
Classification of financial
assets and financial liabilities
The following tables show the Amortised Fair value
classification of the Company's cost through Total
assets and liabilities: profit or
loss
GBP'000 GBP'000 GBP'000
At 31st March 2022
Assets
Cash and cash equivalents 17,092 - 17,092
Derivative financial instruments - 212 212
Deemed loan due from Group
undertaking 187,833 - 187,833
----------- ------------ --------
Total financial assets 204,925 212 205,137
Non-financial assets 26
Total assets 205,163
Amortised Fair value
cost through Total
profit or
loss
GBP'000 GBP'000 GBP'000
Liabilities
Derivative financial instruments - 131 131
Debt securities in issue 204,348 - 204,348
----------- ------------ --------
Total financial liabilities 204,348 131 204,479
Non-financial liabilities 113
--------
Total liabilities 204,592
Amortised Fair value
through
cost profit or Total
loss
GBP'000 GBP'000 GBP'000
At 31st March 2021
Assets
Cash and cash equivalents 15,695 - 15,695
Deemed loan due from Group
undertaking 235,578 - 235,578
----------- ------------ --------
Total financial assets 251,273 - 251,273
Non-financial assets 442
Total assets 251,715
Amortised Fair value
cost through Total
profit or
loss
GBP'000 GBP'000 GBP'000
Liabilities
Derivative financial instruments - 1,352 1,352
Debt securities in issue 250,757 - 250,757
----------- ------------ --------
Total financial liabilities 250,757 1,352 252,109
Non-financial liabilities 289
--------
Total liabilities 252,398
Fair values of financial assets and liabilities
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. The Company determines
fair value by the following three tier valuation hierarchy:
Level 1: Quoted prices (unadjusted) in active markets for
identical assets or liabilities.
Level 2: Valuation techniques where all inputs are taken from
observable market data, either directly (i.e. as prices) or
indirectly (i.e. derived from prices). Level 3: Valuation
techniques where significant inputs are not based on observable
market data.
Valuation techniques include net present value and discounted
cash flow models, comparison to similar instruments for which
market observable prices exist and other valuation models.
Assumptions and market observable inputs used in valuation
techniques include risk-free and benchmark interest rates, equity
index prices and expected price volatilities. The objective of
valuation techniques is to arrive at a fair value determination
that reflects the price of the financial instrument at the
reporting date that would have been determined by market
participants acting at arm's length. Observable prices are those
that have been seen either from counterparties or from market
pricing sources including Bloomberg. The use of these depends upon
the liquidity of the relevant market.
The carrying value of cash and cash equivalents are assumed to
approximate their fair value.
Notes to the financial statements (continued)
2 Financial instruments (continued)
Fair values of financial assets and liabilities held at
amortised cost
The tables below show the fair values of the Company's financial
assets and liabilities held at amortised cost in the statement of
financial position, analysed according to the fair value hierarchy
described previously.
Carrying Fair Fair Fair Fair
value value value value
value Level Level Level Total
1 2 3
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 31st March 2022
Financial assets
Deemed loan due from
Group undertaking 187,833 - - 193,366 193,366
Financial liabilities
Debt securities in issue 204,348 171,075 - - 171,075
========== ========= ======= ============ =========
Carrying Fair Fair Fair value Fair
value value value
value Level Level Level Total
1 2 3
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 31st March 2021
Financial assets
Deemed loan due from
Group undertaking 235,578 - - 236,283 236,283
Financial liabilities
Debt securities in issue 250,757 218,084 - - 218,084
========== ========= ======= ============ =========
a) Deemed loan
The deemed loan is net of provisions for impairment. The
estimated fair value represents the discounted amount of estimated
future cash flows expected to be received. Expected cash flows are
discounted at current market rates to determine fair value.
b) Debt securities in issue
The aggregate fair values are calculated based on quoted market
prices. For those notes where quoted market prices are not
available, a discounted cash flow model is used based on a current
yield curve appropriate for the remaining term to maturity.
Financial assets and financial liabilities held at fair value
through profit or loss
The following table summarises the fair value measurement basis
used for assets and liabilities held on the statement of financial
position at fair value:
Level 2 Total
2022 2022
GBP'000 GBP'000
Financial assets
Derivative financial instruments 212 212
Financial liabilities
Derivative financial instruments 131 131
Level 2 Total
2021 2021
GBP'000 GBP'000
Financial liabilities
Derivative financial instruments 1,352 1,352
Notes to the financial statements (continued)
3 Interest receivable and similar income 2022 2021
GBP'000 GBP'000
On deemed loan 4,155 5,163
Bank interest - -
Net expense on derivative financial instruments (2,428)
(2,620)
1,727 2,543
Included within interest receivable and similar income is
interest accrued on impaired residential mortgage assets of
GBP5,330 (2021: GBP5,534). For the purposes of this disclosure,
impaired mortgage assets are those which have been categorised as
stage 3 under IFRS 9.
4 Interest expense and similar charges
2022 2021
GBP'000 GBP'000
On debt securities in issue 1,247 1,987
Other interest payable 39 40
1,286 2,027
5 Profit before tax
2022 2021
GBP'000 GBP'000
Profit before tax is stated after charging/(crediting):
Inter-group charges (note 18) 340 411
Fair value gains on financial instruments 1,255 527
Auditors' remuneration: audit services 27 27
6 Information regarding Directors and employees
Directors
None of the Directors received any emoluments for their
qualifying services to Kenrick No. 3 Plc during the year ended 31
March 2022 or the preceding period.
Employees
The Company has no employees (2021: nil) and services required
are contracted from third parties.
7 Taxation
The Company's tax charge is based on the tax regime for
securitisation companies.
2022 2021
GBP'000 GBP'000
Tax charge - -
The tax charge for the period is reconciled to the profit/(loss)
before tax in the statement of comprehensive income as follows:
Profit before tax 1,254 514
Profit before tax multiplied by the UK standard rate of tax of
19% (2021: 19%) 238 98
Permanent differences as a result of securitisation regime (238)
(98)
Tax charge - -
8 Cash and cash equivalents
2022 2021
GBP'000 GBP'000
Bank deposits 17,092 15,695
9 Deemed loan due from Group undertaking
2022 2021
GBP'000 GBP'000
Repayable in:
1 to 5 years 1,061 1,038
Over 5 years 190,200 238,922
191,261 239,960
Subordinated loan - -
Impairment provisions (3) (14)
Deferred consideration (3,425) (4,368)
(note 14)
187,833 235,578
The deemed loan balance is shown net of the subordinated loan
and deferred consideration due back to West Bromwich Building
Society.
Allowance for losses on deemed loan
2022 2021
GBP'000 GBP'000
At beginning of period 14 12
Amounts written off net of recoveries - -
Charge for the year comprising:
Provisions for loan impairment (11) 2
Adjustments to provisions resulting - -
from recoveries
------- -------
Charge for the year (11) 2
------- -------
At end of year 3 14
10 Derivative financial instruments 2022 2021
GBP'000 GBP'000
Assets
Interest rate swaps 212 -
Liabilities
Interest rate swaps (131) (1,352)
11 Trade and other receivables
2022 2021
GBP'000 GBP'000
Other debtors 26 442
Debt securities in issue
12
2022 2021
GBP'000 GBP'000
Due after more than 1 year:
Class A Notes 171,178 217,844
Class B Notes 33,100 33,100
Unamortised issue costs (136) (379)
Accrued interest 206 192
204,348 250,757
Interest on the Notes will accrue on a day to day basis and be
payable quarterly in arrears (subject to a longer first period) at
the following rates above Compounded Daily Sonia.
Amounts outstanding Margin over Compounded
2022 Daily Sonia
%
GBP'000
Class A 171,178 0.442
Class B 33,100 0.072
12 Debt securities in issue (continued)
For the purposes of the statement of cash flows, debt securities
in issue are classified as liabilities arising from financing
activities. The following table analyses movements in debt
securities in issue.
2022 2021
GBP'000 GBP'000
At beginning of period 250,757 298,423
Repayments of debt securities
in issue (46,858) (48,144)
Non-cash flows:
Accrued interest 206 192
Amortisation of issue costs 243 286
At end of period 204,348 250,757
13 Trade and other payables
2022 2021
GBP'000 GBP'000
Other amounts due to related parties 77 94
Other payables 36 195
113 289
14 Deferred consideration
Deferred consideration payable to West Bromwich Building Society
is dependent on the extent to which surplus income after relevant
expenses and allocations are made under the transaction documents
is generated by the mortgage assets, to which the Company holds the
beneficial title.
Movements in deferred consideration due to West Bromwich
Building Society during the period were as follows:
2022 2021
GBP'000 GBP'000
At beginning of period 4,368 3,997
Deferred consideration arising during the year 1,336 1,555
Deferred consideration paid (2,290) (1,182)
Movement in carrying value adjustment 11 (2)
At end of period 3,425 4,368
Under the terms of the securitisation agreements, impairment
losses on the deemed loan are borne by the Seller (in relation to
receipt of deferred consideration and capital and interest on the
subordinated loan) and the holders of the mortgage backed floating
rate notes. The carrying value of the deferred consideration has
been decreased to reflect cumulative actual and expected impairment
losses.
The deferred consideration remains a liability of the Company as
the associated contractual obligation has not been extinguished.
The deferred consideration amount is presented net against the
deemed loan. The carrying value adjustment will be reviewed on a
regular basis to reflect the cash flows expected to be achieved by
the underlying assets and adjusted accordingly.
15 Share capital
Allotted
2022 2021
GBP GBP
1 (2021: 1) ordinary share of GBP1 each, fully paid 1 1
49,999 (2021: 49,999) ordinary shares of GBP1 each, 25p paid
12,500 12,500
12,501 12,501
A dividend shall be declared and paid according to the amounts
paid up on the shares.
Capital disclosures
The Company is not subject to any external capital requirements
except for the minimum requirement under the Companies Act 2006.
The Company has not breached the minimum requirement.
Kenrick No. 3 Plc
Notes to the financial statements (continued)
16 Retained earnings/(accumulated
losses)
2022 2021
GBP'000 GBP'000
At beginning of period (696) (1,210)
Profit for the period 1,254 514
At end of period 558 (696)
Parent undertakings and ultimate
17 controlling party
The entire ordinary share capital of the Company is owned by
Kenrick No. 3 Holdings Limited, a company registered in England and
Wales. MaplesFS UK Group Services Limited holds the entire share
capital of Kenrick No. 3 Holdings Limited, on a discretionary trust
basis for the benefit of certain charities. The Company regards
West Bromwich Building Society as its ultimate controlling party.
The results of the Company are consolidated into the results of the
West Bromwich Building Society Group (the Group) under the rules
and guidance of IFRS 10 'Consolidated Financial Statements'. A copy
of the Group financial statements may be obtained from 2 Providence
Place, West Bromwich B70 8AF, the address of the ultimate
controlling party's registered office.
18 Related party transactions
Transactions with West Bromwich Building Society
2022 2021
GBP'000 GBP'000
Interest receivable on deemed loan 4,155 5,163
Interest payable on debt securities in issue (52) (76)
Administration and cash management
fees (340) (411)
Transactions with Maples Fiduciary
Services (UK) Limited
2022 2021
GBP'000 GBP'000
Corporate services and back-up
service facilitator fees 10 10
At the period end the following
balances were outstanding with
related parties:
Outstanding balances with West
Bromwich Building Society
2022 2021
GBP'000 GBP'000
Deemed loan asset 187,833 235,578
Debt securities in issue (33,119) (33,102)
Other balances due to Group undertaking (77) (94)
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END
FR FLLFFLBLZFBX
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October 12, 2022 10:26 ET (14:26 GMT)
Kenrick 3 A 54 (LSE:15GY)
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Kenrick 3 A 54 (LSE:15GY)
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