TIDM85QT
RNS Number : 3637M
Broadgate Financing PLC
27 July 2017
The Annual Report and Accounts for the year ended 31 March 2017,
attached below in accordance with DTR 6.3.5R, has been submitted to
the Financial Conduct Authority through the National Storage
Mechanism and will shortly be available for inspection at:
http://www.morningstar.co.uk/uk/NSM
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Accounts, please follow link below:
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Broadgate Financing PLC
Annual Report and Accounts
Year ended 31 March 2017
Company number: 05316365
STRATEGIC REPORT
for the year ended 31 March 2017
The directors present their Strategic Report for the year ended
31 March 2017.
Business review and principal activities
Broadgate Financing PLC ("the company") is a wholly owned
subsidiary of Broadgate Property Holdings Limited and operates as a
constituent of the Broadgate REIT Limited group of companies ("the
group"). Broadgate REIT Limited operates as a joint venture between
Euro Bluebell LLP, an affiliate of GIC, Singapore's sovereign
wealth fund, and BL Bluebutton 2014 Limited, a wholly owned
subsidiary of The British Land Company PLC. The company's principal
activity is to provide funding to fellow subsidiaries of Broadgate
REIT Limited.
As shown in the company's Profit and Loss Account on page 6, the
company's profit on ordinary activities before taxation in the
current year is consistent with the prior year result.
No dividends (2016: GBPnil) were paid in the year.
The balance sheet on page 8 shows the company's financial
position at the year end is, in net liability terms, a decrease
from the prior year.
The expected future developments of the company are determined
by the strategy of the group. There are no future developments
outside of the company's current operations planned.
Key performance indicators
The directors measure how the group is delivering its strategy
through the key performance indicators.
The directors consider the primary measure of performance of the
group to be turnover and net asset value.
Principal risks and uncertainties
This company is part of a large property investment group. As
such, the fundamental underlying risks for this company are those
of the property group. The key risks of this group are the
performance of the properties and tenant default, as this ensures
necessary funds are available to repay securitisation interest and
principal, and the credit risk of counterparties upon which the
group is dependent for fixing its interest rate exposure and for
holding cash deposits. These risks are mitigated by preference for
tenants with strong covenants on long leases and by using highly
rated counterparties and monitoring those ratings.
These risks have high visibility to senior executives and is
considered and managed on a continuous basis. Executives use their
knowledge and experience to knowingly accept a measured degree of
market risk.
The group's preference for prime assets and their secure long
term contracted rental income, primarily with upward only rent
review clauses, presents lower risks than many other property
portfolios.
Credit risk is the risk that one party to a financial instrument
will fail to discharge an obligation and cause the other party to
incur a financial loss. In order to manage this risk, management
regularly monitors the credit rating of credit counterparties and
monitors all amounts that are owed to the company.
Liquidity risk is the risk that the entity will encounter
difficulty in raising funds to meet commitments associated with
financial liabilities. This risk is managed through day to day
monitoring of future cash flow requirements to ensure that the
company has enough resources to repay all future liabilities as
they fall due.
The company's activities expose it primarily to interest rate
risk. The company uses interest rate swap contracts to hedge these
exposures. The company does not use derivative financial
instruments for speculative purposes.
The company finances its operations by a mixture of equity and
public debt issues. The company borrows in Sterling at both fixed
and floating rates of interest, using interest rate derivatives to
hedge the interest rate risk on variable rate debt.
The company holds three derivatives as at 31 March 2017 (2016:
three) to fix the LIBOR rate on external debt at approximately
4.85% (2016: 4.86%). The fair value of interest rate derivatives at
the year end is a liability of GBP51.3m (2016: GBP58.2m
liability).
This report was approved by the Board on 27 July 2017 and signed
by the order of the board by:
H. Shah
Director
DIRECTORS' REPORT
for the year ended 31 March 2017
The directors present their Annual Report on the affairs of the
company, together with the audited financial statements and
Auditors' Report for the year ended 31 March 2017.
Going concern
The directors consider the company to be a going concern and the
accounts are prepared on this basis. Details of this are shown in
note 1 of the financial statements.
Subsequent events
Details of significant events since the balance sheet date, if
any, are contained in note 13.
Environment
The company recognises the importance of its environmental
responsibilities, monitors its impact on the environment; and
designs and implements policies to reduce any damage that might be
caused by the company's activities. The company operates in
accordance with best practice policies and initiatives designed to
minimise the company's impact on the environment including safe
disposal of manufacturing waste, recycling and reducing energy
consumption.
Directors
The directors who were in office during the year and up to the
date of signing the financial statements were:
L Bell
C Forshaw (resigned 5 April 2017)
H Shah
S Barzycki (resigned 24 February 2017)
T Roberts
D Lockyer (appointed 24 February 2017)
Directors' responsibilities statement
The directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the directors
have elected to prepare financial statements in accordance with
Financial Reporting Standard 101 Reduced Disclosure Framework.
Under company law the directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the company and of the profit or
loss of the company for that period.
In preparing these financial statements, the directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether Financial Reporting Standard 101 Reduced
Disclosure Framework has been followed, subject to any material
departures disclosed and explained in the financial statements;
and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the company will
continue in business.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the company's
transactions and disclose with reasonable accuracy at any time the
financial position of the company and enable them to ensure that
the financial statements comply with Companies Act 2006.
The directors are also responsible for safeguarding the assets
of the company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The directors of the ultimate parent company are responsible for
the maintenance and integrity of the of the ultimate parent
company's website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Disclosure of information to auditors
Each of the persons who is a director at the date of approval of
this report confirms that:
(a) so far as the director is aware, there is no relevant audit
information of which the company's auditors are unaware; and
(b) the director has taken all the steps that he/she ought to
have taken as a director in order to make himself/herself aware of
any relevant audit information and to establish that the company's
auditors are aware of that information.
This confirmation is given and should be interpreted in
accordance with the provisions of s418 of the Company's Act
2006.
Independent auditors
The auditors, PricewaterhouseCoopers LLP, have indicated their
willingness to continue in office and a resolution concerning their
re-appointment will be proposed at the next Board Meeting.
This report was approved by the Board on 27 July 2017 and signed by the order of the board by:
H. Shah
Director
INDEPENT AUDITORS' REPORT TO THE MEMBERS OF
Broadgate Financing PLC
for the year ended 31 March 2017
Report on the financial statements
Our opinion
In our opinion, Broadgate Financing PLCs financial statements
(the "financial statements"):
-- give a true and fair view of the state of the company's
affairs as at 31 March 2017 and of its profit for the year then
ended;
-- have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and
-- have been prepared in accordance with the requirements of the Companies Act 2006.
What we have audited
The financial statements, included within the Annual Report and
Accounts (the "Annual Report"), comprise:
-- the Balance Sheet as at 31 March 2017;
-- the Profit and Loss Account and Statement of Comprehensive Income for the year then ended;
-- the Statement of Changes in Equity for the year then ended; and
-- the notes to the financial statements, which include a
summary of significant accounting policies and other explanatory
information.
The financial reporting framework that has been applied in the
preparation of the financial statements is United Kingdom
Accounting Standards, comprising FRS 101 "Reduced Disclosure
Framework", and applicable law (United Kingdom Generally Accepted
Accounting Practice).
In applying the financial reporting framework, the directors
have made a number of subjective judgements, for example in respect
of significant accounting estimates. In making such estimates, they
have made assumptions and considered future events.
Opinions on other matters prescribed by the Companies Act
2006
In our opinion, based on the work undertaken in the course of
the audit:
-- the information given in the Strategic Report and the
Directors' Report for the financial year for which the financial
statements are prepared is consistent with the financial
statements; and
-- the Strategic Report and the Directors' Report have been
prepared in accordance with applicable legal requirements.
In addition, in light of the knowledge and understanding of the
company and its environment obtained in the course of the audit, we
are required to report if we have identified any material
misstatements in the Strategic Report and the Directors' Report. We
have nothing to report in this respect.
Other matters on which we are required to report by
exception
Adequacy of accounting records and information and explanations
received
Under the Companies Act 2006 we are required to report to you
if, in our opinion:
-- we have not received all the information and explanations we require for our audit; or
-- adequate accounting records have not been kept, or returns
adequate for our audit have not been received from branches not
visited by us; or
-- the financial statements are not in agreement with the accounting records and returns.
We have no exceptions to report arising from this
responsibility.
Directors' remuneration
Under the Companies Act 2006 we are required to report to you
if, in our opinion, certain disclosures of directors' remuneration
specified by law are not made. We have no exceptions to report
arising from this responsibility.
Responsibilities for the financial statements and the audit
Our responsibilities and those of the directors
As explained more fully in the Directors' Responsibilities
Statement set out on page 2, the directors are responsible for the
preparation of the financial statements and for being satisfied
that they give a true and fair view.
Our responsibility is to audit and express an opinion on the
financial statements in accordance with applicable law and
International Standards on Auditing (UK and Ireland) ("ISAs (UK
& Ireland)"). Those standards require us to comply with the
Auditing Practices Board's Ethical Standards for Auditors.
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.
What an audit of financial statements involves
We conducted our audit in accordance with ISAs (UK &
Ireland). An audit involves obtaining evidence about the amounts
and disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from
material misstatement, whether caused by fraud or error. This
includes an assessment of:
-- whether the accounting policies are appropriate to the
company's circumstances and have been consistently applied and
adequately disclosed;
-- the reasonableness of significant accounting estimates made by the directors; and
-- the overall presentation of the financial statements.
We primarily focus our work in these areas by assessing the
directors' judgements against available evidence, forming our own
judgements, and evaluating the disclosures in the financial
statements.
We test and examine information, using sampling and other
auditing techniques, to the extent we consider necessary to provide
a reasonable basis for us to draw conclusions. We obtain audit
evidence through testing the effectiveness of controls, substantive
procedures or a combination of both.
In addition, we read all the financial and non-financial
information in the Annual Report and Accounts to identify material
inconsistencies with the audited financial statements and to
identify any information that is apparently materially incorrect
based on, or materially inconsistent with, the knowledge acquired
by us in the course of performing the audit. If we become aware of
any apparent material misstatements or inconsistencies we consider
the implications for our report. With respect to the Strategic
Report and Directors' Report, we consider whether those reports
include the disclosures required by applicable legal
requirements.
John Waters (Senior Statutory Auditor)
For and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
27 July 2017
PROFIT AND LOSS ACCOUNT
for the year ended 31 March 2017
Note 2017 2016
GBP GBP
Administrative expenses (1,000) (1,001)
-------------------- --------------------
Operating loss (1,000) (1,001)
Interest receivable and similar
income 4 83,092,579 86,596,358
Interest payable and similar expenses 4 (83,084,559) (86,587,816)
-------------------- --------------------
Profit on ordinary activities before
taxation 3 7,020 7,541
Tax on profit on ordinary activities 6 (1,404) (1,508)
-------------------- --------------------
Profit for the financial year 5,616 6,033
Results are derived from continuing operations within the United
Kingdom. The company has only one significant class of business,
that of to provide funding to fellow subsidiaries of Broadgate
Property Holdings Limited in the United Kingdom.
STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2017
2017 2016
GBP GBP
Profit for the financial year 5,616 6,033
Other comprehensive income:
Derivative valuation movements on cash
flow hedges 6,696,193 5,296,739
-------------------- --------------------
Total comprehensive income for the year 6,701,809 5,302,772
BALANCE SHEET
as at 31 March 2017
Restated
Note 2017 2016
GBP GBP
Current assets
Debtors - due within one year 7 70,370,822 70,716,779
Debtors - due after more than
one year 7 1,565,309,187 1,616,625,160
Cash and cash equivalents 200,130,884 200,130,808
-------------------- --------------------
1,835,810,893 1,887,472,747
Creditors due within one year 8 (82,382,840) (82,466,934)
-------------------- --------------------
Net current assets (including
long term debtors) 1,753,428,053 1,805,005,813
-------------------- --------------------
Total assets less current liabilities 1,753,428,053 1,805,005,813
Creditors due after one year 9 (1,801,586,237) (1,859,865,806)
-------------------- --------------------
Net liabilities (48,158,184) (54,859,993)
Capital and reserves
Called up share capital 10 12,500 12,500
Hedging and translation reserve (48,569,396) (55,265,589)
Profit and loss account 398,712 393,096
-------------------- --------------------
Total equity (48,158,184) (54,859,993)
The financial statements of Broadgate Financing PLC, company
number 05316365, on pages 6 to 18, were approved by the Board of
Directors and authorised for issued on 27 July 2017 and signed on
its behalf by:
H. Shah
Director
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2017
Called Hedging Profit Total
up shares and translation and loss equity
capital reserve account
GBP GBP GBP GBP
Balance as at 1 April 2015 12,500 (60,562,328) 387,063 (60,162,765)
Profit for the financial year - - 6,033 6,033
Derivative valuation movements
on cash flow hedges - 5,296,739 - 5,296,739
-------------------- -------------------- -------------------- --------------------
Balance as at 31 March 2016 12,500 (55,265,589) 393,096 (54,859,993)
Profit for the financial year - - 5,616 5,616
Derivative valuation movements
on cash flow hedges - 6,696,193 - 6,696,193
-------------------- -------------------- -------------------- --------------------
Balance as at 31 March 2017 12,500 (48,569,396) 398,712 (48,158,184)
NOTES TO THE ACCOUNTS
for the year ended 31 March 2017
1. Accounting policies
This company is incorporated and domiciled in the United Kingdom
under the Companies Act 2006. The address of the registered office
is York House, 45 Seymour Street, London, W1H 7LX.
The principal accounting policies adopted by the directors are
summarised below. They have been applied consistently throughout
the current and previous year.
Basis of preparation
These financial statements were prepared in accordance with
Financial Reporting Standard 101 "Reduced Disclosure Framework"
("FRS 101").
In preparing these financial statements, the company applies the
recognition, measurement and disclosure requirements of
International Financial Reporting Standards as adopted by the EU
("Adopted IFRSs"), but makes amendments where necessary in order to
comply with Companies Act 2006 and has set out below where
advantage of the FRS 101 disclosure exemptions has been taken.
The financial statements have been prepared on a going concern
basis under the historical cost convention, modified to include the
revaluation of derivative financial instruments. Historical cost is
generally based on the fair value of the consideration given in
exchange for the assets.
These financial statements are separate financial statements.
The company is exempt from the preparation of consolidated
financial statements, because it is included in the group accounts
of Broadgate REIT Limited.
The company has taken advantage of the following disclosure
exemptions under FRS 101:
(a) The requirements of IAS 1 to provide a Balance Sheet at the
beginning of the year in the event of a prior year adjustment;
(b) The requirements of IAS 1 to provide a Statement of Cash
flows for the year;
(c) The requirements of IAS 1 to provide a statement of
compliance with IFRS;
(d) The requirements of IAS 1 to disclose information on the
management of capital;
(e) The requirements of paragraphs 30 and 31 of IAS 8 Accounting
Policies, Changes in Accounting Estimates and Errors to disclose
new IFRS's that have been issued but are not yet effective;
(f) The requirements in IAS 24 Related Party Disclosures to
disclose related party transactions entered into between two or
more members of a group, provided that any subsidiary which is a
party to the transaction is wholly owned by such a member;
(g) The requirements of paragraph 17 of IAS 24 Related Party
Disclosures to disclose key management personnel compensation;
(h) The requirements of IFRS 7 to disclose financial
instruments; and
(i) The requirements of paragraphs 91-99 of IFRS13 Fair Value
Measurement to disclose information of fair value valuation
techniques and inputs.
Disclosure exemptions for subsidiaries are permitted where the
relevant disclosure requirements are met in the consolidated
financial statements. Where required, equivalent disclosures are
given in the group accounts of Broadgate REIT Limited. The group
accounts of Broadgate REIT Limited are available to the public and
can be obtained as set out in note 14.
Going concern
The net liability position of the balance sheet at the year end
is as a result of market swap rates being below the fixed rate
payable on the company's interest rate swaps. This has had a
detrimental effect on the fair value of the company's interest rate
derivatives at the year end. The interest rate swaps fix the rate
payable on the company's liabilities at a rate slightly below the
interest on loans receivable. The change in mark to market is not
envisaged to have an impact on the company's cash flow for the
foreseeable future.
Having reviewed the company's forecast working capital and cash
flow requirements, in addition to making enquiries and examining
areas which could give risk to financial exposure, the directors
have a reasonable expectation that the company has adequate
resources to continue its operations for the foreseeable future. As
a result they continue to adopt the going concern basis in
preparing the accounts.
1. Accounting policies (continued)
Restatement
The Group's borrowings under the GBP185m term facility have been
reclassified as a non-current liability and repayable after more
than five years from 31 March 2017 following a review of the terms
associated to the loan when preparing the 30 September 2016 Interim
Financial Statements. The 31 March 2016 comparatives have therefore
been restated to reflect this.
Cash and cash equivalents
Cash and cash equivalents are limited to instruments to maturity
of less than three months.
Financial assets
The company classifies all financial assets, with the exception
of derivative financial instruments into the category Loans and
Debtors. Loans and Debtors are initially measured at fair value
including any transaction costs. They are subsequently measured at
amortised cost using the effective interest rate method.
Foreign currencies
The company's financial statements are presented in pounds
sterling, which is the functional currency of the company.
Financial liabilities - borrowings
Debt instruments are initially stated at their net proceeds on
issue and subsequently at amortised cost. Finance charges including
premiums payable on settlement or redemption and direct issue costs
are spread over the period to redemption, using the effective
interest method.
Derivative financial instruments
As defined by IAS39, cash flow hedges are carried at fair value
in the balance sheet. Changes in the fair value of derivatives that
are designated and qualify as effective cash flow hedges are
recognised directly in the hedging reserve. Any ineffective portion
is recognised in the profit and loss account.
Interest payable and receivable
Interest payable and receivable is recognised as incurred under
the accruals concept. Interest payable includes financing charges
which are spread over the period to redemption, using the effective
interest method. Commitment fees on non-utilised facilities are
also included within interest payable.
Taxation
Current tax
Current tax is the expected tax payable or receivable on the
taxable income or loss for the year, using tax rates enacted or
substantively enacted at the balance sheet date, and any adjustment
to tax payable in respect of previous years.
Current tax is based on taxable profit for the year and is
calculated using tax rates that have been enacted or substantively
enacted at the balance sheet date. Taxable profit differs from net
profit as reported in the income statement because it excludes
items of income or expense that are not taxable (or tax
deductible).
2. Critical accounting judgements and estimation uncertainty
Determining the carrying amount of some assets requires
estimation of the effect of uncertain future events. The major
sources of estimation uncertainty that have a significant risk of
resulting in a material adjustment to the carrying amounts of
assets are noted below.
Trade and other debtors
The company makes an estimate of the recoverable value of trade
and other debtors. When assessing impairment of trade and other
debtors, the Directors consider factors including the current
credit rating of the debtor, the ageing profile of debtors and
historical experience.
Fair value of interest rate derivatives
Interest rate derivatives have been valued by calculating the
present value of expected future cash flows, using appropriate
market discount rates, by an independent treasury advisor.
3. Profit on ordinary activities before taxation
2017 2016
GBP GBP
Profit on ordinary activities before taxation
is stated after charging:
Fees payable to company's auditors
- audit of company's financial statements 3,800 3,796
Audit fees relating to the year ended 31 March 2017 and 2016 are
paid to PricewaterhouseCoopers LLP.
A notional charge of GBP3,800 (2016: GBP3,796) per company is
deemed payable to PricewaterhouseCoopers LLP in respect of the
audit of the financial statements. Actual amounts payable to
PricewaterhouseCoopers LLP are paid by Bluebutton Properties UK
Limited.
No non-audit fees were incurred in the year ended 31 March 2017
(2016: GBPnil).
4. Interest receivable and payable and similar expenses/income
2017 2016
GBP GBP
Interest receivable on
Cash and deposits 721,470 929,629
Group loans and receivables 82,371,109 85,666,729
-------------------- --------------------
Total interest receivable 83,092,579 86,596,358
Interest payable on
Bonds (71,070,402) (73,219,362)
Derivatives (11,849,755) (13,154,972)
-------------------- --------------------
(82,920,157) (86,374,334)
Group loans (164,402) (213,482)
-------------------- --------------------
Total interest payable (83,084,559) (86,587,816)
5. Staff costs
No director received any remuneration for services to the
company in either year.
Average number of employees, excluding directors, of the company
during the year was nil (2016: nil).
Director's remuneration is borne by the joint venture partners
for which no apportionment or recharge is made.
6. Tax on profit on ordinary activities
2017 2016
GBP GBP
Current tax
UK corporation tax 1,404 1,508
-------------------- --------------------
Total current taxation charge 1,404 1,508
Deferred tax
Origination and reversal of timing differences - -
-------------------- --------------------
Total deferred tax charge - -
-------------------- --------------------
Total tax charge 1,404 1,508
The tax assessed for the year is the same (2016: the same) as
the standard rate of corporation tax in the UK of 20% (2016:
20%).
2017 2016
GBP GBP
Tax reconciliation
Profit on ordinary activities before taxation 7,020 7,541
-------------------- --------------------
Tax on profit on ordinary activities at
UK corporation tax rate of 20% (2016:
20%) 1,404 1,508
-------------------- --------------------
Total tax charge 1,404 1,508
The following corporation tax rates have been substantively
enacted: 20% effective from 1 April 2015, reducing to 19% effective
from 1 April 2017 and 18% effective 1 April 2020. In the Budget on
16 March 2016, the Chancellor announced additional planned
reductions to 17% effective from 1 April 2020. This will reduce the
Company's future current tax charge accordingly.
7. Debtors
2017 2016
GBP GBP
Current debtors (receivable within one
year)
Amounts owed by group companies - current
account with Broadgate (Funding) 2005
Limited 51,315,973 50,689,237
Corporation tax 1,848 -
Prepayments and accrued income 19,053,001 20,027,542
-------------------- --------------------
70,370,822 70,716,779
Long-term debtors (receivable after more
than one year)
Amounts owed by group companies - Long
term loans 1,565,309,187 1,616,625,160
-------------------- --------------------
1,565,309,187 1,616,625,160
8. Creditors due within one year
Restated
2017 2016
GBP GBP
Debentures loans (see note 9) 51,315,973 50,689,237
Amounts owed to group companies - current
accounts 14,663,039 14,729,453
Amounts owed to associated companies -
current accounts 57,452 2,998
Other creditors 12,001 11,001
Accruals and deferred income 16,334,375 17,034,245
-------------------- --------------------
82,382,840 82,466,934
Amounts owed to fellow group companies are repayable on demand.
There is no interest charged on these balances.
9. Creditors due after one year (including borrowings)
Restated
2017 2016
GBP GBP
Loans due 1 to 2 years 52,056,319 51,315,973
due 2 to 5 years 121,991,680 139,067,847
due after 5 years 1,576,261,188 1,611,241,339
Interest rate derivative liabilities * 51,277,050 58,240,647
-------------------- --------------------
1,801,586,237 1,859,865,806
*Includes contracted cash flow with a maturity within one year
at fair value.
Amounts due after five years include the term loan of GBP185m
which represents a revolving liquidity facility with The Royal Bank
Of Scotland PLC. The cash received is held on deposit.
Hedge accounting
The company uses interest rate swaps to hedge exposure to the
variability in cash flows on floating rate debt. At 31 March 2017
the market value of these derivatives, which have been designated
cash flow hedges under IAS39, is a liability of GBP51.3m (2016:
GBP58.2m liability). The valuation movement reflects the reduction
in Sterling interest rates since the beginning of the year, as well
as the interest payments on derivatives that were made during the
year.
The Treasury Function
The company borrows in Sterling at both fixed and floating rates
of interest, using interest rate derivatives to hedge the interest
rate risk on variable rate debt.
The ineffectiveness recognised in the income statement on cash
flow hedges in the year ended 31 March 2017 was GBPnil (2016:
GBPnil). The table below summarises variable rate debt hedged at 31
March 2017.
Restated
2017 2016
GBP GBP
Outstanding: after one year 220,052,710 256,272,550
after two years 183,833,340 220,052,710
after five years 114,340,800 130,977,150
9. Creditors due after one year (including borrowings)
continued
Borrowings repayment analysis
Repayments due:
Within one year 51,315,973 50,689,237
1-2 years 52,056,319 51,315,973
2-5 years 121,991,680 139,067,847
-------------------- --------------------
225,363,972 241,073,057
After 5 years 1,576,261,188 1,611,241,339
-------------------- --------------------
Total borrowings 1,801,625,160 1,852,314,396
Fair value of interest rate derivatives 51,277,050 58,240,647
-------------------- --------------------
Total borrowings including fair value
of interest rate derivatives 1,852,902,210 1,910,555,043
Secured bonds on the assets of the Broadgate Property Holdings
Limited Group
Restated
2017 2016
GBP GBP
Class A1 Floating Rate Bonds due 2032 177,272,550 190,908,900
Class A2 4.949% Bonds due 2031 212,899,050 224,419,230
Class A3 4.851% Bonds due 2033 175,000,000 175,000,000
Class A4 4.821% Bonds due 2036 400,000,000 400,000,000
Class B 4.999% Bonds due 2033 365,336,750 365,419,586
Class C1 Floating Rate Bonds due 2022 58,750,000 78,333,490
Class C2 5.098% Bonds due 2035 207,116,810 209,983,190
Class D Floating Rate Bonds due 2025 20,250,000 23,250,000
-------------------- --------------------
Total secured bond borrowings 1,616,625,160 1,667,314,396
Other borrowings
Fair value of interest rate derivative
liabilities 51,277,050 58,240,647
Term loan 185,000,000 185,000,000
-------------------- --------------------
Total secured borrowings 1,852,902,210 1,910,555,043
At 31 March 2017, taking into account the effect of derivatives,
100% (2016: 100%) of the bonds were fixed. The bonds amortise
between 2005 to 2036, and are secured on properties of the group
valued at GBP3,481m (2016: GBP3,693m) and cash of GBPnil (2016:
GBPnil). Including derivatives, the weighted average interest rate
of the bonds is 5.02% (2016: 5.03%). The weighted average maturity
of the bonds is 11.4 years (2016: 12.1 years).
At 31 March 2017 the company was financed by GBP1,617m bonds
(2016: GBP1,667m).
The fair values of the bonds have been established by obtaining
quoted market prices from brokers. The derivatives have been valued
by calculating the present value of future cash flows, using
appropriate market discount rates, by an independent treasury
advisor.
Except as detailed below, the carrying amounts of financial
assets and financial liabilities recorded at amortised cost in the
financial statements are approximately equal to their fair
values:
2017 2016
GBP GBP
Secured bonds at fair value 1,970,850,805 1,900,877,799
9. Creditors due after one year (including borrowings) (continued)
Risk Management
Capital risk management:
The company finances its operations by a mixture of equity and
public debt issues to support the property strategy of the
group.
The approach adopted has been to engage in debt financing with
long term maturity dates and as such the bonds issued are due
between 2022 and 2036. Including debt amortisation 85.0% (2016:
77.0%) of the total borrowings is due for payment after 5
years.
The company aims to ensure that potential debt providers
understand the business and a transparent approach is adopted with
lenders so they can understand the level of their exposure within
the overall context of the group.
Details of bond covenants are outlined in the bonds Offering
Circular, accessible via
http://www.britishland.com/investors/strategic-partnerships/broadgate-financing-plc.aspx.
Credit risk:
Credit risk is the risk that one party to a financial instrument
will fail to discharge an obligation and cause the other party to
incur a financial loss. The carrying amount of financial assets
recorded in the financial statements represents the company's
maximum exposure to credit risk without taking account of the value
of any collateral obtained.
Cash and cash equivalents at 31 March 2017 amounted to GBP200m
(2016: GBP200m) and are placed with European Financial institutions
with BBB+ or better credit ratings. At 31 March 2017, prior to
taking account of any offset arrangements, the largest combined
credit exposure to a single counterparty arising from money market
deposits and interest rate swaps was GBP200m (2016: GBP200m). This
represents 10.89% (2016: 10.40%) of gross assets.
The company's principal credit risk relates to an intra-group
loan to Broadgate (Funding) 2005 Limited. At 31 March 2017 this
loan stood at GBP1,617m (2016: GBP1,667m). The purpose of this loan
is to provide funding to fellow subsidiaries of the Broadgate REIT
Limited group.
At 31 March 2017, the fair value of all interest rate
derivatives which had a positive value was GBPnil (2016:
GBPnil).
In order to manage this risk, management regularly reviews the
credit rating of counterparties and monitors all amounts that are
owed to the company.
Liquidity risk:
Liquidity risk is the risk that the entity will encounter
difficulty in raising funds to meet commitments associated with
financial liabilities. This risk is managed through day to day
monitoring of future cash flow requirements to ensure that the
company has enough resources to repay all future amounts
outstanding.
Interest rate risk:
The company's activities expose it to interest rate risk. The
company uses interest rate swap contracts to hedge these exposures.
The company does not use derivative financial instruments for
speculative purposes.
10. Called up share capital
2017 2016
Issued share capital - allotted, called
up and fully paid GBP GBP
Ordinary shares of GBP1.00 each called
up to the extent of GBP0.25 each
Balance as at 1 April and 31 March: 50,000
shares 12,500 12,500
11. Capital commitments
The company had capital commitments contracted as at 31 March
2017 of GBPnil (2016: GBPnil).
12. Contingent liabilities
The company had no contingent liabilities as at 31 March 2017
(2016: GBPnil).
13. Subsequent events
There have been no significant events since the year end.
14. Immediate parent and ultimate holding company
The immediate parent company is Broadgate Property Holdings
Limited.
The ultimate parent company is Broadgate REIT Limited. Broadgate
REIT Limited operates as a joint venture between Euro Bluebell LLP,
an affiliate of GIC, Singapore's sovereign wealth fund, and BL
Bluebutton 2014 Limited, a wholly owned subsidiary of The British
Land Company PLC.
Broadgate REIT Limited is the smallest and largest group for
which group accounts are available and which include the company.
The accounts of Broadgate REIT Limited can be obtained from The
British Land Company PLC, York House, 45 Seymour Street, London,
W1H 7LX.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR OKODPABKDBOB
(END) Dow Jones Newswires
July 27, 2017 13:00 ET (17:00 GMT)
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