TIDMBC84
RNS Number : 6752D
Trafford Centre Finance Ld
28 April 2017
THE TRAFFORD CENTRE FINANCE LIMITED
LEI: 213800J9WWQVUK5FE223
28 April 2017
ANNUAL FINANCIAL REPORT
In compliance with Disclosure and Transparency Rule 4.1, the
Trafford Centre Finance Limited (the "Company") announces the
publication of its Annual Financial Report for the year ended 31
December 2016. Pursuant to Listing Rule 9.6.1, a copy of this
document has been submitted to the National Storage Mechanism and
will shortly be available for inspection at
morningstar.co.uk/uk/NSM
The Annual Report will also shortly be available for download at
intugroup.co.uk
In accordance with Disclosure and Transparency Rule 6.3.5, the
following information is extracted from the company's Annual Report
and in unedited full text.
DIRECTORS' REPORT
FOR THE YEARED 31 DECEMBER 2016
The directors present their report and the audited financial
statements for the year ended 31 December 2016.
The Trafford Centre Finance Limited is incorporated and
registered in the Cayman Islands. The company's registered office
is 89 Nexus Way, Camana Bay, Grand Cayman, Cayman Islands
KY1-9007.
PRINCIPAL ACTIVITY
The principal activity of the company is the provision of
financing to The Trafford Centre Limited, which owns intu Trafford
Centre. This is funded by the issue of loan notes.
BUSINESS REVIEW
The company's results and financial position for the year ended
31 December 2016 are set out in full in the income statement,
balance sheet, statement of changes in equity, statement of cash
flows and the notes to the financial statements.
The company receives interest on the provision of financing to
The Trafford Centre Limited at rates equal to those paid on its
external debt plus additional interest of 0.01% per annum on the
average principal loan amount outstanding. Any financing related
fees incurred by the company are also charged on to The Trafford
Centre Limited.
The company's profit before taxation was GBP20,000 (2015
GBP10,000) with net assets increasing to GBP855,000 (2015
GBP835,000).
Given the straightforward nature of the business, the company's
directors are of the opinion that analysis using KPIs is not
necessary for an understanding of the development, performance or
position of the business. The directors expect that the present
level of activity will continue for the foreseeable future.
The company's financial risk management objectives and policies
are set out in note 12 as is the company's exposure to price and
liquidity risk.
CAPITAL MANAGEMENT
The directors consider the capital of the company to be the
ordinary share capital of GBP2. The company's ultimate parent
company is intu properties plc. Management of this capital is
performed at a group level.
GOING CONCERN
The directors have assessed the risk that the company is not a
going concern and concluded that the going concern assumption is
appropriate and prepared the annual report and financial statements
on that basis. Further information regarding the adoption of the
going concern can be found in note 1 to the financial
statements.
DIRECTORS
The directors of the company who were in office during the year
and up to the date of signing the financial statements were:
Raulin Amy
David Fischel
Matthew Roberts
STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE
FINANCIAL STATEMENTS
The directors are responsible for preparing the company
financial statements in accordance with International Financial
Reporting Standards ("IFRSs") as adopted by the European Union to
assist the directors to discharge their obligations under section 4
of the Disclosure and Transparency rules (the 'DTR') issued by the
United Kingdom's Financial Conduct Authority and to enable the
company to comply with its obligations under various agreements
known as 'The Trafford Centre Securitisation Agreements'.
The directors must not approve the financial statements unless
they are satisfied that the financial statements 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 responsible for:
-- selecting suitable accounting policies and then applying them consistently;
-- stating whether applicable IFRSs as adopted by the European
Union have been followed, subject to any material departures
disclosed and explained in the financial statements;
-- making judgements and accounting estimates that are reasonable and prudent; and
-- preparing 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.
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.
DISCLOSURE OF INFORMATION TO AUDITORS
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.
KEY RISKS AND UNCERTAINTIES
As the company's principal activity is to provide financing to
The Trafford Centre Limited, the company's key risks and
uncertainties are those faced by The Trafford Centre Limited to the
extent that they impact The Trafford Centre Limited's ability to
meet its obligations to the company including those related to the
terms of the company's borrowings which are secured on the assets
of The Trafford Centre Limited. The key risks and uncertainties
facing The Trafford Centre Limited and the company are set out
below:
Risk & Impact Mitigation Change 2016 commentary
--------------- -------------------------------------------------------------- ------- -----------------------------------------------------------
Property
-----------------------------------------------------------------------------------------------------------------------------------------------------
Macro-economic Likelihood of macro-economic
Weakness in * Prime asset + weakness has increased with
the the UK's vote to leave the
macro-economic European Union. There is
environment * Covenant headroom monitored and stress-tested increased uncertainty in
could relation to many factors
undermine rental that impact the property
income levels * Make representation on key policies, for example investment and occupier markets
and property business rates which has increased investor
values, reducing caution
return on * Valuation increase continues to support LTV headroom
investment
and covenant
headroom * Tenant administrations at relatively low levels
----------------- ------------------------------------------------------------ ------- -----------------------------------------------------------
Retail - Likelihood and severity of
environment * Active management of tenant mix potential impact are unchanged
Failure to react in 2016 with intu's strategy
to changes in continuing to deliver strong
the retail * Regular monitoring of tenant strength and diversity footfall numbers and occupancy
environment * Digital investment to improve relevance as shopping
could undermine habits change
intu Trafford * 'Tell intu' customer feedback programme helps
Centre's ability identify changes in customer preferences
to attract
customers
and tenants * Work closely with retailers
* Digital strategy that embraces technology and digital
customer engagement. This enables intu to engage in
and support multichannel retailing, and to take the
opportunities offered by ecommerce
----------------- ------------------------------------------------------------ ------- -----------------------------------------------------------
Risk & Impact Mitigation Change 2016 commentary
--------------- ------------------------------------------------------------ ------- ----------------------------------------------------------------
Operations
--------------------------------------------------------------------------------------------------------------------------------------------------------
Health and Likelihood of potential impact
safety * Strong business process and procedures, including - has not changed significantly
Accidents compliance with OHSAS 18001, supported by regular during 2016 however severity
or system training and exercises impacted by new enforcement
failure structure
leading * Maintenance of OHSAS 18001 certification,
to financial * Annual audits of operational standards carried out demonstrating consistent health and safety management
and/or internally and by external consultants process and procedures across the portfolio
reputational
loss
* Culture of visitor, staff and contractor safety * Work continuing towards achieving ISO 9001, 14001,
and 55001 accreditation
* Crisis management and business continuity plans in
place and tested
* Retailer liaison and briefings
* Appropriate levels of insurance
* Staff succession-planning and development in place to
ensure continued delivery of world class service
* Health and safety managers or coordinators in all
centres
--------------- ------------------------------------------------------------ ------- ----------------------------------------------------------------
Cyber-security - Likelihood slightly increased
Loss of data * Data and cyber security strategies with a number of recent high
and profile hacks, but severity
information of potential impact has been
or failure * Regular testing programme and cyber scenario exercise reduced by significant development
of key systems and benchmarking of tools and controls in
resulting 2016
in financial * Ongoing intu-wide cyber security project with focus
and/or * Appropriate levels of insurance on proactive monitoring of technical infrastructure
reputational to mitigate cyber threats
loss
* Crisis management and business continuity plans in
place and tested * External benchmarking of cybersecurity landscape
* Data committee
* Monitoring of regulatory environment and best
practice
--------------- ------------------------------------------------------------ ------- ----------------------------------------------------------------
Risk & Mitigation Change 2016 commentary
Impact
----------- ------------------------------------------------------------- ------- ------------------------------------------------------------
Terrorism - Overall likelihood and severity
Terrorist * Strong business process and procedures, supported by of potential impact unchanged
incident regular training and exercises, designed to adapt and * National threat level remains at Severe
at respond to changes in risk levels
intu
Trafford * Major scenario exercise held at intu Trafford Centre
Centre or * Annual audits of operational standards carried out with involvement of multiple external agencies
another internally and by external consultants
major
shopping * Operating procedures in place for the introduction of
centre * Culture of visitor and staff safety further security measures if required
resulting
in loss of
consumer * Crisis management and business continuity plans in
confidence place and tested
with
consequent
impact on * Retailer liaison and briefings
lettings
and
rental * Appropriate levels of insurance
growth
* Strong relationships and frequent liaison with police,
NaCTSO and other agencies
* NaCTSO approved to train staff in counter-terrorism
awareness programme
----------- ------------------------------------------------------------- ------- ------------------------------------------------------------
On behalf of the Board
Matthew Roberts
Director
27 April 2017
INDEPENT AUDITORS' REPORT TO THE DIRECTORS OF
THE TRAFFORD CENTRE FINANCE LIMITED
Report on the financial statements
Our opinion
In our opinion, The Trafford Centre Finance Limited's financial
statements (the "financial statements"):
-- give a true and fair view of the state of the company's
affairs as at 31 December 2016 and of its profit and cash flows for
the year then ended; and
-- have been properly prepared in accordance with International
Financial Reporting Standards ("IFRSs") as adopted by the European
Union.
What we have audited
The financial statements, included within the Report and
Financial Statements (the "Annual Report"), comprise:
-- the balance sheet as at 31 December 2016;
-- the income statement for the year then ended;
-- the statement of cash flows 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 IFRSs as adopted by the
European Union, and applicable law.
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.
Responsibilities for the financial statements and the audit
Our responsibilities and those of the directors
As explained more fully in the Statement of Directors'
Responsibilities 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 opinion, has been prepared for and
only for the company's directors as a body to assist the directors
to discharge their obligations under section 4 of the Disclosure
and Transparency rules (the 'DTR') issued by the United Kingdom's
Financial Conduct Authority and to enable the company to comply
with its obligations under various agreements known as 'The
Trafford Centre Securitisation Agreements' in accordance with our
engagement letter dated 25 April 2017 and for no other purpose. We
do not, in giving this opinion, 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, including without limitation
under any contractual obligations of the company, 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 Report and Financial Statements 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.
PricewaterhouseCoopers LLP
Chartered Accountants
London
27 April 2017
INCOME STATEMENT
FOR THE YEARED 31 DECEMBER 2016
2016 2015
Notes GBP000 GBP000
Administration expenses (29) (11)
--------- ---------
Operating loss 3 (29) (11)
Finance income 4 48,743 49,252
Finance costs 4 (48,694) (49,231)
Change in fair value of financial instruments 4 - -
--------- ---------
Net finance income 49 21
--------- ---------
Profit before tax 20 10
Taxation 5 - -
--------- ---------
Profit for the year 20 10
========= =========
Other than the items in the income statement above, there are no
other items of comprehensive income and accordingly a separate
statement of comprehensive income has not been prepared.
BALANCE SHEET
AS AT 31 DECEMBER 2016
2016 2015
Notes GBP000 GBP000
Non-current assets
Trade and other receivables 6 755,936 769,958
Derivative financial instruments 9 108,396 88,057
---------- ----------
864,332 858,015
---------- ----------
Current assets
Trade and other receivables 6 23,833 22,584
Derivative financial instruments 9 1,594 1,496
Cash and cash equivalents 386 306
---------- ----------
25,813 24,386
---------- ----------
Total assets 890,145 882,401
---------- ----------
Current liabilities
Borrowings 8 (14,007) (13,213)
Trade and other payables 7 (9,357) (8,842)
Derivative financial instruments 9 (1,594) (1,496)
---------- ----------
(24,958) (23,551)
---------- ----------
Non-current liabilities
Borrowings 8 (755,936) (769,958)
Derivative financial instruments 9 (108,396) (88,057)
---------- ----------
(864,332) (858,015)
---------- ----------
Total liabilities (889,290) (881,566)
---------- ----------
Net assets 855 835
========== ==========
Equity
Share capital 10 - -
Retained earnings 855 835
---------- ----------
Total equity 855 835
========== ==========
The notes on pages 12 to 25 form part of these financial
statements.
The financial statements on pages 8 to 25 have been approved by
the Board of Directors on 27 April 2017 and signed on its behalf
by:
David Fischel
Director
Matthew Roberts
Director
STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 DECEMBER 2016
Share Retained Total
capital earnings equity
GBP000 GBP000 GBP000
At 1 January 2015 - 825 825
---------- --------- -------
Profit for the year - 10 10
---------- --------- -------
Total comprehensive income for
the year - 10 10
---------- --------- -------
At 31 December 2015 - 835 835
========== ========= =======
At 1 January 2016 - 835 835
---------- --------- -------
Profit for the year - 20 20
---------- --------- -------
Total comprehensive income for
the year - 20 20
---------- --------- -------
At 31 December 2016 - 855 855
========== ========= =======
STATEMENT OF CASH FLOWS
FOR THE YEARED 31 DECEMBER 2016
2016 2015
Notes GBP000 GBP000
Cash generated from/(used in) operations 13 1,722 (11)
Interest received 46,383 48,374
Interest paid (48,025) (48,279)
--------- ---------
Cash flows from operating activities 80 84
--------- ---------
Amounts owed by group undertaking received 14,129 16,496
--------- ---------
Cash flows from investing activities 14,129 16,496
Borrowings repaid (14,129) (16,496)
Cash flows from financing activities (14,129) (16,496)
--------- ---------
Net increase in cash and cash
equivalents 80 84
Cash and cash equivalents at 1 January 306 222
--------- ---------
Cash and cash equivalents at 31 December 386 306
========= =========
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2016
1. Principal accounting policies
Purpose of financial statements
The financial statements have been prepared to assist the
directors to discharge their obligations under section 4 of the
Disclosure and Transparency rules (the 'DTR') issued by the United
Kingdom's Financial Conduct Authority and to enable the company to
comply with its obligations under various agreements relating to
the issue, management, and amortisation of bond issues of various
notes issued in February 2000, June 2005, January 2006 and March
2014 where collectively such agreements are known as "The Trafford
Centre Securitisation Agreements". They have not been prepared for
the purpose of compliance with the requirements of the Companies
Act 2006 and are therefore not statutory financial statements.
Basis of preparation
These financial statements have been prepared in accordance with
International Financial Reporting Standards as adopted by the
European Union (IFRS) and interpretations issued by the
International Financial Reporting Standards Interpretations
Committee.
The financial statements have been prepared under the historical
cost convention as modified by the revaluation of certain other
financial assets and liabilities. A summary of the accounting
policies is set out below.
In assessing whether the going concern basis of preparation is
appropriate to adopt, the directors considered a number of factors
including financial projections of the company and the level of
financial support that may be available to the company by its
ultimate parent, intu properties plc. In addition investment
property held by The Trafford Centre Limited, a fellow subsidiary
of intu properties plc, acts as security for the financial
instruments which are held in The Trafford Centre Finance Limited.
The ability of the company to meet the obligations of these
financial instruments is dependent upon the performance of The
Trafford Centre Limited and its ability to meet its obligations to
the company. In concluding that the going concern basis of
preparation is appropriate the directors have considered the net
rental income forecasts of The Trafford Centre Limited. Based on
this review the directors have concluded that there is reasonable
expectation that the company will have sufficient resources to
continue in operational existence for the foreseeable future and
therefore prepare the financial statements on a going concern
basis.
The accounting policies used are consistent with those applied
in the last annual financial statements, as amended where relevant
to reflect the adoption of new standards, amendments and
interpretations which became effective in the year. These
amendments have not had an impact on the financial statements.
A number of standards and amendments to standards have been
issued but are not yet effective for the current year. The most
significant of these are IFRS 9 Financial Instruments (effective
from 1 January 2018). Based on the company's current circumstances,
this standard is not expected to have a material impact on the
financial statements.
Estimates and assumptions
The preparation of financial statements in conformity with
generally accepted accounting principles requires the use of
estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting
period. Although these estimates are based on management's best
knowledge of the amount, event or actions, actual results
ultimately may differ from those estimates. Where such judgements
are made they are included within the accounting policies given
below.
Taxation
Current tax is the amount payable on the taxable income for the
year and any adjustment in respect of prior years. It is calculated
using rates that have been enacted or substantively enacted by the
balance sheet date.
Deferred tax is provided using the balance sheet liability
method in respect of temporary differences between the carrying
amounts of assets and liabilities in the balance sheet and their
tax bases.
Temporary differences are not provided on the initial
recognition of assets or liabilities that affect neither accounting
nor taxable profit to the extent that they will not reverse in the
foreseeable future.
Deferred tax is determined using tax rates that have been
enacted or substantively enacted by the balance sheet date and are
expected to apply when the related deferred tax asset is realised
or the deferred tax liability is settled.
Deferred tax assets are recognised only to the extent that
management believe it is probable that future taxable profit will
be available against which the temporary differences can be
utilised. Deferred tax assets and liabilities are offset only when
they relate to taxes levied by the same authority and the group
intends to settle them on a net basis.
Tax is included in the income statement except when it relates
to items recognised directly in other comprehensive income or
equity, in which case the related tax is also recognised directly
in other comprehensive income or equity.
Derivative financial instruments
The company uses derivative financial instruments to manage
exposure to interest rate risk. They are initially recognised on
the trade date at fair value and subsequently re-measured at fair
value. In assessing fair value the company uses its judgement to
select suitable valuation techniques and make assumptions which are
mainly based on market conditions existing at the balance sheet
date. The fair value of interest rate swaps is calculated by
discounting estimated future cash flows based on the terms and
maturity of each contract and using market interest rates for
similar instruments at the measurement date. These values are
tested for reasonableness based upon broker or counterparty
quotes.
Amounts paid under derivative financial instruments (currently
for the company this relates to interest rate swaps), both on
obligations as they fall due and on early settlement are recognised
in the income statement as finance costs. Fair value movements on
revaluation of derivative financial instruments are shown in the
income statement through changes in fair value of financial
instruments.
The company does not currently apply hedge accounting to its
interest rate swaps.
Trade receivables
Trade receivables are recognised initially at fair value and
subsequently measured at amortised cost.
The directors exercise judgement as to the collectability of the
trade receivables and determine if it is appropriate to impair
these assets. Factors such as days past due, credit status of the
counterparty and historical evidence of collection are
considered.
Loans and receivables
The amounts owed by the group undertaking is on terms in line
with that under which the company borrows. The amounts owed by
group undertaking qualifies as a financial asset under IAS39 and as
such was initially recorded at fair value plus transaction costs.
Under IAS39, the subsequent measurement of loans and receivables is
at amortised cost using the effective interest method, with
interest being recognised in the income statement.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, deposits with
banks, whether restricted or unrestricted and other short-term
liquid investments with original maturities of three months or
less.
Trade payables
Trade payables are recognised initially at fair value and
subsequently measured at amortised cost.
Current/non-current classification
Current assets include assets held primarily for trading
purposes, cash and cash equivalents, and assets expected to be
realised in, or intended for sale or consumption in, the course of
the company's operating cycle. All other assets are classified as
non-current assets.
Current liabilities include liabilities held primarily for
trading purposes, liabilities expected to be settled in the course
of the company's operating cycle and those liabilities due within
one year from the reporting date. All other liabilities are
classified as non-current liabilities.
Borrowings
Borrowings are recognised initially at their net proceeds on
issue and subsequently carried at amortised cost. Any transaction
costs and premiums or discounts are recognised over the contractual
life using the effective interest rate method.
In the event of early repayment, all unamortised transaction
costs are recognised immediately in the income statement.
Finance income
Finance income is accrued on a time basis, by reference to the
principal outstanding and the effective interest rate.
Share Capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new ordinary shares are shown
in equity as a deduction, net of tax, from the proceeds.
2. Operating segments
Management have not identified separate operating segments and
rely on information presented in the primary statements for
decision making purposes.
3. Operating loss
The operating loss of GBP29,000 (2015 GBP11,000) did not include
any fees in respect of directors' remuneration (2015 GBPnil). The
operating loss is arrived at after charging auditors' remuneration
relating to audit services of GBP4,774 (2015 GBP4,635) and
non-audit services of GBP4,326 (2015 GBP4,200).
There were no employees during the year (2015 nil). The
directors did not receive or waive any emoluments (2015 nil) in
respect of their services to the company or from any other
source.
4. Net finance income
2016 2015
GBP000 GBP000
Finance income
On amounts due from group undertaking 48,743 49,252
======== ========
Finance costs
On borrowings (48,664) (49,198)
Other interest (30) (33)
-------- --------
(48,694) (49,231)
======== ========
Change in fair value of financial instruments
On external derivative financial instruments (20,338) 2,997
On derivative financial instruments with The
Trafford Centre Limited 20,338 (2,997)
-------- --------
- -
======== ========
5. Taxation
The company is subject to UK corporation tax on its profits. The
tax expense for the year is lower (2015 lower) than the standard
rate of corporation tax in the UK. The differences are explained
below.
2016 2015
GBP000 GBP000
Profit before tax 20 10
------ ------
Profit before tax multiplied by the standard
rate of tax in the UK
of 20% (2015 20.25%) 4 2
Group relief (4) -
Transfer pricing adjustment - (67)
Losses unutilised - 65
Tax expense - -
====== ======
Deferred tax
The company has tax losses arising in the UK of GBP2,602,000
(2015 GBP2,851,000) that are available for offset against future
taxable profits. No deferred tax asset is recognised in respect of
these losses due to uncertainty over the level of taxable profits
against which these losses can be used in future periods.
6. Trade and other receivables
2016 2015
GBP000 GBP000
Current
Amounts owed by group undertaking 14,927 14,129
Less: finance costs (920) (916)
------- -------
Net loan amount 14,007 13,213
Accrued income and other amounts due from
group
undertaking 9,381 8,962
Prepayments 445 409
23,833 22,584
======= =======
2016 2015
GBP000 GBP000
Non-current
Amounts owed by group undertaking 767,684 782,612
Less: finance costs (11,748) (12,654)
--------- ---------
Net loan amount 755,936 769,958
========= =========
6. Trade and other receivables (continued)
The amounts owed by group undertaking relate to an intercompany
loan with The Trafford Centre Limited where the company's
borrowings with external parties are passed to The Trafford Centre
Limited. The amounts owed are unsecured and the repayment
profile
matches the maturity profile of the company's borrowings as The
Trafford Centre Limited is required to provide funds to the company
in order for it to meet its external funds obligations. The
recoverability of these balances has been reviewed and as a result
no allowance for doubtful debts is considered to be required. There
have been no impairments on receivables or amounts written off in
the year.
Interest is due on the intercompany loans at rates equal to
those paid on the external debt plus additional interest of 0.01%
per annum on the average principal loan amount outstanding.
Interest is also due to cover any fees and costs incurred by the
company.
7. Trade and other payables
2016 2015
GBP000 GBP000
Amounts owed to group undertakings 797 75
Accruals 8,560 8,767
------ ------
9,357 8,842
====== ======
Amounts owed to group undertakings are unsecured and repayable
on demand. No interest is charged on these amounts.
8. Borrowings
Interest Final Carrying Fair Carrying Fair
rate maturity value value value value
2016 2016 2015 2015
GBP000 GBP000 GBP000 GBP000
Current
Secured notes:
Class
B 7.03% 2029 4,016 4,701 3,884 4,359
A2 6.5% 2033 10,911 13,615 10,245 12,083
--------- -------- --------- --------
Debt falling
due
within one year 14,927 18,316 14,129 16,442
Less: finance
costs (920) - (916) -
--------- -------- --------- --------
Net loan
amount 14,007 18,316 13,213 16,442
========= ======== ========= ========
Non-current
Secured notes:
Class
A2 6.5% 2033 298,158 406,396 309,069 400,100
A3 Floating 2035 188,500 158,321 188,500 159,999
A4 2.875% 2019 20,000 20,800 20,000 20,286
B 7.03% 2029 71,972 92,325 75,989 94,159
B2 Floating 2035 20,000 17,571 20,000 15,730
B3 4.250% 2024 20,000 21,815 20,000 20,312
D1(N) Floating 2035 29,054 28,952 29,054 26,663
D2 8.28% 2022 50,000 60,646 50,000 60,640
D3 4.750% 2024 70,000 76,809 70,000 71,099
Debt falling
due
after one year 767,684 883,635 782,612 868,988
Less: finance
Costs (11,748) - (12,654) -
--------- -------- --------- --------
Net loan
amount 755,936 883,635 769,958 868,988
========= ======== ========= ========
Total
borrowings 769,943 901,951 783,171 885,430
========= ======== ========= ========
The maturity profile of gross debt is as follows:
2016 2015
GBP000 GBP000
Repayable within one year 14,927 14,129
Repayable in more than one year but not more
than two years 23,179 15,069
Repayable in more than two years but not more
than five years 106,235 98,398
Repayable in more than five years 638,270 669,145
------- -------
782,611 796,741
======= =======
The secured notes have the benefit of a floating charge over all
of the assets and undertakings of the company and in addition are
secured against The Trafford Centre Securitisation Agreements
together with the benefit of a fixed legal charge over the land and
buildings comprising The Trafford Centre granted by The Trafford
Centre Limited, a fellow subsidiary undertaking of Intu Trafford
Centre Group (UK) Limited and owner of intu Trafford Centre.
Interest on the Class A3, Class B2 and Class D1(N) secured notes
whose rates are based on LIBOR plus an applicable margin has been
hedged under interest rate swap contracts totalling GBP230,045,026
(2015 GBP223,227,026) with rates of 4.20%, 4.34% and 4.66% and an
interest rate cap of GBP7,509,000 (2015 GBP14,327,000) with a
capped rate of 6.66% plus an applicable margin on each bond. The
fair value of these interest rate swaps at 2016 was a liability of
GBP109,990,000 (2015 GBP89,553,000).
9. Derivative financial instruments
All derivative financial instrument liabilities relate to
interest rate swaps with a counterparty which are classified as
held for trading. All derivative financial instrument assets relate
to interest rate swap arrangements with The Trafford Centre Limited
under the same terms as the interest rate swaps with the
counterparty.
10. Share capital
2016 2015
GBP GBP
Issued, called up and fully paid
2 ordinary shares (2015 2) of GBP1 each 2 2
==== ====
11. Ultimate parent company
The ultimate parent company is intu properties plc, a company
incorporated and registered in England and Wales, copies of whose
financial statements may be obtained from the Company Secretary, 40
Broadway, London SW1H 0BT.
The immediate parent company is The Trafford Centre Holdings
Limited, a company incorporated and registered in England and
Wales, copies of whose financial statements may be obtained as
above. The registered office of The Trafford Centre Holdings
Limited is 40 Broadway, London, England and Wales, United Kingdom,
SW1H 0BT.
12. Financial risk management
The company is exposed to a variety of risks arising from the
company's operations being principally market risk (including
interest rate risk) and liquidity risk.
The majority of the company's financial risk management is
carried out by intu properties plc's treasury department and the
group's policies for managing each of these risks as they apply to
the company and the principal effects of these policies on the
results for the year are summarised below. Further details of the
intu properties plc's financial risk management are disclosed in
the group's publicly available financial statements.
Market risk
Interest rate risk
Interest rate risk comprises of both cash flow and fair value
risks. Cash flow interest rate risk is the risk that the future
cash flows of a financial instrument will fluctuate due to changes
in market interest rates. Fair value interest rate risk is the risk
that the fair value of financial instruments will fluctuate as a
result of changes in market interest rates.
The company's interest rate risk arises from borrowings issued
at variable rates that expose the company to cash flow interest
rate risk, whereas borrowings issued at fixed interest rates expose
the company to fair value interest rate risk.
Bank debt is typically issued at floating rates linked to LIBOR.
Bond debt and other capital market debt are generally issued at
fixed rates.
It is the intu properties plc group's policy, and often a
requirement of the group's lenders, to eliminate substantially all
exposure to interest rate fluctuations by using floating to fixed
interest rate swaps in order to establish certainty over cash
flows. Such swaps have the economic effect of converting borrowings
from floating to fixed rates.
As a consequence, the company is exposed to market price risk in
respect of the fair value of its fixed rate interest rate
swaps.
The below table shows the effects of interest rate swaps on the
borrowings profile of the company:
Fixed Floating Fixed Floating
2016 2016 2015 2015
GBP000 GBP000 GBP000 GBP000
Borrowings 545,056 237,555 559,186 237,555
Interest rate swap impact 237,555 (237,555) 237,555 (237,555)
-------- ---------- -------- ----------
Net borrowings profile 782,611 - 796,741 -
-------- ---------- -------- ----------
Interest rate protection
on
floating debt 100% 100%
========== ==========
The weighted average rate of interest rates contracted through
interest rates swaps is 4.4 per cent (2015 4.6 per cent).
The approximate impact of a 50 basis point increase in the level
of interest rates would be to reduce the liability by GBP24.2
million (2015 GBP21.5 million) in the fair value of derivatives.
The approximate impact of a 50 basis point decrease in the level of
interest rates would be to increase the liability by GBP24.2
million (2015 GBP23.4 million) in the fair value of derivatives. In
practice, a parallel shift in the yield curve is highly unlikely.
However, the above sensitivity analysis is a reasonable
illustration of the possible effect from the changes in slope and
shifts in the yield curve that may occur. Due to offsetting loans
and derivative contracts with The Trafford Centre Limited the
impact of interest rate movements on the company is minimal as the
cash flows from the assets and liabilities will be symmetrical.
Liquidity risk
Liquidity risk is managed to ensure that the company is able to
meet future payment obligations when financial liabilities fall
due. Liquidity analysis is conducted to ensure that sufficient
headroom is available to meet the operational requirements and
committed investments. The group treasury policy aims to meet this
objective through maintaining adequate cash, marketable securities
and committed facilities to meet these requirements. The group's
policy is to seek to optimise its exposure to liquidity risk by
balancing its exposure to interest rate risk and to refinancing
risk. In effect the group seeks to borrow for as long as possible
at the lowest acceptable cost.
The tables below set out the maturity analysis of the company's
financial liabilities based on the undiscounted contractual
obligations to make payments of interest and to repay principal.
Where interest payment obligations are based on a floating rate,
the rates used are those implied by the par yield curve.
2016
Within
1
year or
on 1-2 3-5 Over 5
demand years years years Total
GBP000 GBP000 GBP000 GBP000 GBP000
Borrowings
(including interest) (52,083) (59,246) (204,313) (845,955) (1,161,597)
Amounts owed
to
group undertaking (797) - - - (797)
Derivative payments (10,350) (10,486) (31,515) (134,693) (187,044)
Derivative receipts 952 1,207 6,399 50,626 59,184
--------- --------- ---------- ---------- ------------
(62,278) (68,525) (229,429) (930,022) (1,290,254)
========= ========= ========== ========== ============
2015
Within
1
year or
on 1-2 3-5 Over 5
demand years years years Total
GBP000 GBP000 GBP000 GBP000 GBP000
Borrowings
(including interest) (52,716) (53,755) (208,595) (931,280) (1,246,346)
Amounts owed
to
group undertaking (75) - - - (75)
Derivative payments (9,963) (10,350) (31,487) (145,208) (197,008)
Derivative receipts 1,484 2,561 12,038 76,554 92,637
--------- --------- ---------- ---------- ------------
(61,270) (61,544) (228,044) (999,934) (1,350,792)
========= ========= ========== ========== ============
Classification of financial assets and liabilities
The tables below set out the company's accounting classification
of each class of financial assets and liabilities, and their fair
values at 31 December 2016 and 31 December 2015.
The fair values of quoted borrowings are based on the asking
price.
The fair values of derivative financial instruments are
determined from observable market prices or estimated using
appropriate yield curves at 31 December each year by discounting
the future contractual cash flows to the net present values.
Gain/(loss)
Carrying Fair to income
value value statement
2016 GBP000 GBP000 GBP000
Derivative financial instrument assets 109,990 109,990 20,338
---------- ---------- ------------
Total held for trading assets 109,990 109,990 20,338
---------- ---------- ------------
Trade and other receivables 779,324 911,332 -
Cash and cash equivalents 386 386 -
---------- ---------- ------------
Total cash and receivables 779,710 911,718 -
---------- ---------- ------------
Derivative financial instrument liabilities (109,990) (109,990) (20,338)
---------- ---------- ------------
Total held for trading liabilities (109,990) (109,990) (20,338)
---------- ---------- ------------
Trade and other payables (797) (797) -
Borrowings (769,943) (901,951) -
---------- ---------- ------------
Total loans and payables (770,740) (902,748) -
========== ========== ============
Gain/(loss)
Carrying Fair to income
value value statement
2015 GBP000 GBP000 GBP000
Derivative financial instrument assets 89,553 89,553 (2,997)
---------- ---------- ------------
Total held for trading assets 89,553 89,553 (2,997)
---------- ---------- ------------
Trade and other receivables 792,133 894,392 -
Cash and cash equivalents 306 306 -
---------- ---------- ------------
Total cash and receivables 792,439 894,698 -
---------- ---------- ------------
Derivative financial instrument liabilities (89,553) (89,553) 2,997
---------- ---------- ------------
Total held for trading liabilities (89,553) (89,553) 2,997
---------- ---------- ------------
Trade and other payables (75) (75) -
Borrowings (783,171) (885,430) -
---------- ---------- ------------
Total loans and payables (783,246) (885,505) -
========== ========== ============
The only financial assets and liabilities of the company
recognised at fair value are derivative financial instruments.
These are all held at fair value through profit or loss and are
categorised as level 2 in the fair value hierarchy as explained
below.
Fair value hierarchy
Level 1: Valuation based on quoted market prices traded in active markets.
Level 2: Valuation techniques are used, maximising the use of
observable market data, either directly from market prices or
derived from market prices.
Level 3: Where one or more inputs to valuation are unobservable.
Valuations at this level are more subjective and therefore more
closely managed, including sensitivity analysis of inputs to
valuation models. Such testing has not indicated that any material
difference would arise due to a change in input variables.
Transfers into and transfers out of the fair value hierarchy
levels are recognised on the date of the event or change in
circumstances that caused the transfer. There were no transfers in
or out for the above financial assets and liabilities during the
year.
Valuation techniques for level 2 hierarchy financial assets and
liabilities are presented in the accounting policies.
There were no gains or losses arising on financial assets or
liabilities recognised direct to equity (2015 GBPnil).
13. Cash generated from/(used in) operations
2016 2015
GBP000 GBP000
Profit before tax 20 10
Remove:
Finance income (48,743) (49,252)
Finance costs 48,694 49,231
Changes in working capital:
Change in trade and other receivables 1,004 (21)
Change in trade and other payables 747 21
-------- --------
1,722 (11)
======== ========
14. Related party transactions
During the year the company entered into the following
transactions with other related companies:
2016 2015
Nature of transaction GBP000 GBP000
The Trafford Centre Limited(1) Interest receivable 48,743 49,252
======= =======
Significant balances outstanding between the company and related
companies are shown below:
Amounts owed from
2016 2015
GBP000 GBP000
The Trafford Centre Limited 779,324 792,133
========= ========
Amounts owed to
2016 2015
GBP000 GBP000
Intu Trafford Centre Group (UK) Limited(1) 797 75
========= ========
(1) The company's registered office is 40 Broadway, London,
England and Wales, United Kingdom, SW1H 0BT.
Regulated Information Classification: information disclosed
under article 4 of the Transparency Directive
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR PGUPUCUPMURR
(END) Dow Jones Newswires
April 28, 2017 05:00 ET (09:00 GMT)
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