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| Name | Symbol | Market | Type |
|---|---|---|---|
| Citi Fun 24 | LSE:BN22 | London | Medium Term Loan |
| Price Change | % Change | Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0 | - |
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Melrose Financing No.1 plc
COMPANY NUMBER 4102054
MELROSE FINANCING No. 1 PLC
REPORT AND ACCOUNTS
FOR THE YEAR ENDED
31 DECEMBER 2003
MELROSE FINANCING No.1 PLC
REPORT OF THEDIRECTORS
Directors
I W G McDonald
SFM Directors Limited
SFM Directors (No.2) Limited
The Directors submit their report and the audited accounts of the company for
the year ended 31 December 2003
Principal Activities
The principal activity of the company has been to issue asset backed floating
rate notes and to make loan advances to a fellow subsidiary.
Results and review of operations for the year
The profit for the year after taxation amounted to £6,314 (2002: £6,684). The
Directors do not recommend the payment of a dividend.
Directors and their interests
The Directors at the date of this report are stated above. All the Directors
served throughout the year.
No Director held any beneficial interest in the shares of the company or any
other associatedcompany or corporate body.
The services of SFM Directors Limited and SFM Directors (No 2) Limited as
directors of the company are provided by SFM Corporate Services Limited. SFM
Corporate Services holds 12,506 ordinary shares of £1 each in Melrose Holdings
Limited, the parent company of Melrose Financing No.1 plc. These shares comprise
the entire issued share capital of Melrose Holdings Limited and are held on a
discretionary trust basis for charitable purposes.
Directors' emoluments in the year are disclosed in the notes to the accounts.
Company Secretary
The Company Secretary throughout the year was SFM Corporate Services Limited.
Auditors
KPMG Audit Plc have signified their willingness to continue in office and a
resolution for their re-appointment will be proposed at the Annual General
Meeting.
By Order of the Board,
I W G McDonald
Director
Registered Office
17 February 2004
Blackwell House
Guildhall Yard
LONDON
EC2V 5AE
PROFIT AND LOSS ACCOUNT
For the year ended 31 December 2003
Notes
2003 2002
---------- --------------- ---------------
£ £
--------------- ---------------
Interest receivable 2 68,340,077 73,104,376
Interest payable 3 (68,333,350) (73,097,165)
--------------- ---------------
Profit on ordinary activities before taxation 4 6,727 7,211
Taxation 5 (413) (527)
--------------- ---------------
Retained profit for the year 11 6,314 6,684
=============== ===============
All gains and losses arising during the year have been recognised in the profit
and loss account and derive from continuing activities.
The notes on pages 5 to 11 form part of these accounts.
BALANCE SHEET
As at 31 December 2003
Notes 2003 2002
-------- ---------------- -----------------
£ £
---------------- -----------------
Current assets:
Amounts falling due within one year
-------------------------------------------------
Amounts due from group undertakings 6 11,771,528 11,139,446
Cash at bank 375,525 382,238
Corporation tax 563 -
---------------- -----------------
12,147,616 11,521,684
Current assets:
Amounts falling due after more than one year
-------------------------------------------------
Loan Notes 7 1,510,950,687 1,510,950,687
Creditors: amounts falling due within one year
-------------------------------------------------
Interest payable (8,799,797) (9,250,530)
Amounts due to group undertakings (880) (880)
Accruals (62,438) (69,628)
Corporation tax - (639)
---------------- -----------------
(8,863,115) (9,321,677)
Net current assets 3,284,501 2,200,007
-------------------------------------------------
Total assets less current liabilities 1,514,235,188 1,513,150,694
-------------------------------------------------
Creditors:
Amounts falling due after more than one year
-------------------------------------------------
Asset backed floating rate notes 8 (1,496,509,212) (1,495,452,515)
Subordinated Debt 9 (17,695,263) (17,673,780)
================ =================
Net assets 30,713 24,399
------------------------------------------------- ================ =================
Share capital & reserves
-------------------------------------------------
Called up sharecapital 10 12,500 12,500
Profit and loss account 18,213 11,899
---------------- -----------------
Equity shareholders' funds 11 30,713 24,399
------------------------------------------------- ================ =================
Approved by the board on 17 February 2004 and signed on its behalf by:
......................................................Director
The notes on pages 5 to 11 form part of these accounts.
NOTES TO THE ACCOUNTS
For the year ended 31 December 2003
1. Accounting policies
1.1 The accounts have been prepared under the historical cost convention. The
accounts have been prepared in accordance with applicable accounting standards
and pronouncements of the Urgent Issues Task Force ("UITF"). Accounting policies
are reviewed regularly to ensure they are the most appropriate to the
circumstances of the company for the purposes of giving a true and fair view.
1.2 Interest receivable and payable is recognised in the profit and loss account
on an accruals basis.
1.3 Deferred tax is recognised at the standard rate of corporation tax, without
discounting, in respect of all timing differences between the treatment of
certain items for taxation and accounting purposes which have arisen but not
been reversed out by the balance sheet date, (except as otherwise required by
FRS 19) based on the corporation tax rate expected when the timing differences
reverse.
1.4 Derivative financial instruments used for trading and non-trading purposes
include interest rate swaps, cross currency swaps, futures, options, forward
rate agreements and caps, floors and collars.
Non-trading derivatives, which are used primarily as a risk management tool for
hedging interest rate and foreign exchange rate risk arising on on-balance sheet
assets and liabilities, are accounted for on the same basis as the underlying
items being hedged.
In order to qualify as a hedge, a derivative must effectively reduce any risk
inherent in the hedged item from potential movements in interest rates, exchange
rates and market values. Changes in the fair value of the derivative must be
highly correlated with changes in the fair value of the underlying hedged item
over the life of the hedge contract. Gains and losses on instruments used for
hedging purposes are not recognised until the exposure that is being hedged is
itself recognised. Where a hedge transaction is terminated early, any profit or
loss is spread over the remainder of the original life of the hedge contract. In
other circumstances, where the underlying item subject to the hedge is
extinguished, the hedge transaction is measured at fair value and any profit or
loss is recognised immediately.
1.5 The company is a 99.996% owned subsidiary of Melrose Holdings Limited and
the cash flows of the company are included in the consolidated group cash flow
statement of Melrose Holdings Limited. Consequently the company is exempt under
the terms of Financial Reporting Standard No.1 (Revised 1996) from publishing a
cash flow statement.
1.6 Issue costs in respect of the asset backed floating rate notes have been
deferred and are being charged to the profit and loss account over a six year
period, being the estimated average life of the asset backed floating rate
notes.
1.7 Interest accrued but not paid in the year on the Expenses Loans is
capitalised.
NOTES TO THE ACCOUNTS
For the year ended 31 December 2003
2. Interest receivable
2003 2002
----------------- -----------------
£ £
----------------- -----------------
Interestreceivable in the year
arose from the following sources:
Interest on Loan Notes 68,340,077 73,104,368
Interest on cash deposits - 8
----------------- -----------------
68,340,077 73,104,376
================= =================
3. Interest payable
2003 2002
----------------- -----------------
£ £
----------------- -----------------
On Asset Backed Floating Rate Notes:
Series 2001-1 Class A1 8,515,051 11,554,563
Class A2 3,951,385 4,263,828
Class B1 239,180 301,343
Class B2 624,511 785,342
Class C1 303,225 358,233
Class C2 529,665 636,579
Class D1 350,260 380,321
Class D2 705,713 785,053
Class D3 1,001,336 1,035,123
Class E 2,549,238 2,627,118
Series 2001-2 Class A 10,404,831 14,001,808
Class B 672,658 839,495
Class C 720,661 845,098
Class D1 236,393 255,133
Class D2 708,256 782,709
Class D3 1,310,594 1,352,263
Class E 2,549,238 2,627,118
----------------- -----------------
35,372,195 43,431,127
Amortisation of issue costs1,056,697 1,063,035
On cross currency swaps 31,212,440 27,819,607
On Expenses Loans 692,018 783,396
----------------- -----------------
68,333,350 73,097,165
================= =================
NOTES TO THE ACCOUNTS (continued)
For the year ended 31 December 2003
4. Profit on ordinary activities before taxation
The profit on ordinary activities before taxation is stated after charging:
2003 2002
----------------- -----------------
£ £
----------------- -----------------
Auditors' Remuneration for non audit services 12,500 12,500
================= =================
The fee of £2,000 (December 2002 - £2,000) for audit services will be borne by
Melrose Investor Limited, a fellow subsidiary.
The company has no employees. SFM Corporate Services Limited has a contract to
provide the services of SFM Directors Limited and SFM Directors (No 2) Limited
as directors to the company. In addition SFM Corporate Services Limited provides
company secretarial and certain corporate administrative services to the
company. During the year the company's fellow subsidiary, Melrose Investor
Limited, paid for these services. The directors do not receive any emoluments
from the company.
5. Taxation
2003 2002
---------------- -----------------
£ £
---------------- -----------------
Tax on profit on ordinary activities
----------------------------------------------------------
Current Tax:
----------------------------------------------------------
Corporation tax charge for the year at a rate of 19% (2002
19%/20%) 410 639
Corporation tax charge/ (credit) in respect of earlier
years 3 (112)
---------------- -----------------
413 527
================ =================
Factors affecting the current tax charge for the year:
----------------------------------------------------------
The tax assessed for the period is lower than the standard
rate of corporation tax in the UK of 19%
The differences are explained below:
Profit on ordinary activities before taxation 6,727 7,211
================ =================
Profit on ordinary activities multiplied by the standard
rate of corporation tax in the UK 1,278 1,386
---------------- -----------------
Effects of:
Adjustments to tax inrespect of previous years 3 (112)
Smaller companies marginal relief (868) (747)
---------------- -----------------
Current corporation tax charge for the year 413 527
================ =================
NOTES TO THE ACCOUNTS (continued)
For the year ended 31 December 2003
6. Amounts due from group company
2003 2002
---------------- -----------------
£ £
---------------- -----------------
Due from fellow subsidiary:
Interest receivable on Loan Notes 11,788,709 11,145,041
Reimbursement of expenses (17,181) (5,595)
---------------- -----------------
11,771,528 11,139,446
================ =================
7. Loan Notes
Details of each Loan Note are as follows:
Scheduled Legal
Value Maturity Date Maturity Date
--------------- ------------------ -------------------
£
---------------
Series 2001-1 Loan Note 755,451,093 15 February 2006 15 February 2011
Series 2001-2 Loan Note 755,499,594 15 February 2008 15 February 2011
---------------
1,510,950,687
===============
The Loan Notes bear interest at a margin above three month LIBOR.
NOTES TO THE ACCOUNTS (continued)
For the year ended 31 December 2003
8. Asset backed floating rate notes
Details of the asset backed floating rate notes ("Notes") are as follows:
Value Maturity date
------------------ --------------------
£
------------------
Series 2001-1
----------------------------------------------------
Class A1 Notes ( $790,000,000 ) 544,827,586 February 2006
Class A2 Notes 100,000,000 February 2006
Class B1 Notes ( $16,200,000) 11,172,414 February 2006
Class B2 Notes ( 30,000,000) 18,838,305 February 2006
Class C1 Notes ( $14,400,000) 9,931,034 February 2006
Class C2 Notes ( 20,000,000) 12,558,870 February 2006
Class D1 Notes ( $8,000,000) 5,517,241 February 2006
Class D2 Notes ( 15,000,000) 9,419,152 February 2006
Class D3 Notes 11,300,000 February 2006
Class E Notes 26,250,000 February 2006
------------------
749,814,602
Series 2001-2
----------------------------------------------------
Class A Notes ( $935,000,000) 644,827,586 February 2008
Class B Notes ( $43,500,000 ) 30,000,000 February 2008
Class C Notes ( $32,600,000 ) 22,482,759 February 2008
Class D1 Notes ( $5,000,000 ) 3,448,276 February 2008
Class D2 Notes ( 14,100,000) 8,854,003 February 2008
Class D3 Notes 14,000,000 February 2008
Class E Notes 26,250,000 February 2008
------------------
749,862,624
Less incidental costs of issuing the Notes (3,168,014)
------------------
1,496,509,212
==================
Notes denominated in US Dollars bear interest at a margin above three month USD
LIBOR. Notes denominated in Euros bear interest at a margin above three month
Euribor. Notes denominated in Sterling bear interest at a margin above three
month sterling LIBOR.
Repayment of principal for the Notes denominated in foreign currencies are
hedged by means of cross currency swap agreements, which result in fixed
exchange rates at maturity.
Incidental costs of issuing the Notes represent legal and professional costs
incurred to date less amounts charged to the profit and loss account.
The Notes are secured under the terms and conditions defined within the Issuer
Deed of Charge. (Note 13).
NOTES TO THE ACCOUNTS (continued)
For the year ended 31 December 2003
9. SubordinatedDebt
2003 2002
---------------- -----------------
£ £
---------------- -----------------
Series 2001-1 Expenses Loan 8,860,469 8,849,710
Series 2001-2 Expenses Loan 8,834,794 8,824,070
---------------- -----------------
17,695,263 17,673,780
================ =================
The Expenses Loans bear interest at a rate of 0.25% above three-month LIBOR and
are subordinate to inter alia payments of principal and interest on the asset
backed floating rate notes. The liability of Melrose Financing No 1 plc is
limited to the extent it has sufficient assets to meet its obligations under the
Expenses Loans. The Expenses Loans have no specified maturity date but will
become due and payable when the asset backed floating rate notes have been
repaid in full.
10. Share capital
2003 2002
----------------- ----------------
£ £
----------------- ----------------
Authorised
---------------------------------------------------------
100,000 ordinary shares of £1 each 100,000 100,000
================= ================
Allotted
---------------------------------------------------------
50,000 ordinary shares of £1 each 50,000 50,000
================= ================
Called up and partly paid
---------------------------------------------------------
50,000 ordinary shares of £1 (25p paid) 12,500 12,500
================= ================
11.Reconciliation of movement in equity shareholders' funds
2003 2002
----------------- ----------------
£ £
----------------- ----------------
Profit for the year 6,314 6,684
Equity shareholders' funds at 1 January 24,399 17,715
----------------- ----------------
Equity shareholders' funds at 31 December 30,713 24,399
================= ================
NOTES TO THE ACCOUNTS (continued)
For the year ended 31 December 2003
12. Derivatives and off balance sheet transactions
Notional Carrying Value Fair
Principal in Value/
Value Accounts Replacement
Cost
---------------------------------------------------------------
£ £ £
Series 2001-1
Cross currency swap - US Dollars 544,827,586 (1,848,110) (104,655,624)
Cross currency swap - US Dollars 11,172,414 (37,886) (2,168,663)
Cross currency swap - Euros 18,838,305 (42,075) 2,344,825
Cross currency swap - US Dollars 9,931,034 (34,139) (1,967,466)
Cross currency swap - Euros 12,558,870 (28,885) 1,585,244
Cross currency swap - US Dollars 5,517,241 (19,339) (1,163,308)
Cross currency swap - Euros 9,419,152 (23,109) 1,262,173
Series 2001-2
Cross currency swap - US Dollars 644,827,586 (2,186,901) (124,124,840)
Cross currency swap - US Dollars 30,000,000 (101,679) (5,884,196)
Cross currency swap - US Dollars 22,482,759 (77,093) (4,564,414)
Cross currency swap - US Dollars 3,448,276 (12,142) (783,899)
Cross currency swap - Euros 8,854,003 (22,633) 1,293,040
The cross currency swaps are used to hedge the liability to make payments of
interest and principal in foreign currency on the asset backed floating rate
notes from a sterling income stream. The notional principal value represents the
sterling equivalent of the principal values converted at the rates of exchange
defined in the cross currency swap agreements.
13. Deed of charge
All assets of the company are subject to fixed or floating charges under the
terms of deeds of charge (the Series 2001-1 Deed of Charge and the Series 2001-2
Deed of Charge) held by Citibank, N.A. London Branch, the Note Trustee. Secured
amounts and the security interest are defined within the Series 2001-1 and the
Series 2001-2 Deed of Charge.
14. Related Party Transaction
The company has taken advantage of the exemption under Financial Reporting
Standard 8 not to disclose details of transactions with related parties that are
part of the Melrose Holdings Limited group.
15. Parent Undertaking
The company's parent undertaking is Melrose Holdings Limited. The results of the
company are incorporated in the consolidated accounts of Melrose Holdings
Limited. Copies of the annual accounts of Melrose Holdings Limited may be
obtained from its registered office at Blackwell House, Guildhall Yard, London,
EC2V 5AE.
Melrose Holdings Limited is wholly owned by SFM Corporate Services Limited. SFM
Corporate Services Limited holds the shares on a discretionary trust basis for
charitable purposes.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
Company law requires the directors to prepare accounts for each financial year
which give a true and fair view of the state of affairs of the company and of
the profit or loss for that period. In preparing those accounts, the directors
are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and estimates that are reasonable and prudent;
-- state whether applicable accounting standards have been followed, subject to
any material departures disclosed and explained in the accounts; and
-- prepare the accounts on the going concern basis unless it is inappropriate
to presume that the company will continue in business.
The directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
company and to enable them to ensure that the accounts comply with the Companies
Act 1985. They have general responsibility for taking such steps as are
reasonably open to them to safeguard the assets of the company and to prevent
and detect fraud and other irregularities.
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF
MELROSE FINANCING No.1 PLC
We have audited the accounts on pages 3 to 11.
This report is made solely to the company's members, as a body, in accordance
with section 235 of the Companies Act 1985. Our audit work has been undertaken
so that we might state to the company's members those matters we are required to
state to them in an auditor's report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone
other than the company and the company's members as a body, for our audit work,
for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
The directors are responsible for preparing the directors' report and, as
described on page 12, the accounts in accordance with applicable United Kingdom
law and accounting standards. Our responsibilities, as independent auditors, are
established in the United Kingdom by statute, the Auditing Practices Board, and
by our profession's ethical guidance.
We report to you our opinion as to whether the accounts give a true and fair
view and are properly prepared in accordance with the Companies Act 1985. We
also report to you if, in our opinion, the directors' report is not consistent
with the accounts, if the companyhas not kept proper accounting records, if we
have not received all the information and explanations we require for our audit,
or if information specified by law regarding directors' remuneration and
transactions with the group is not disclosed.
Basisof audit opinion
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board. An audit includes examination, on a test basis, of
evidence relevant to the amounts and disclosures in the accounts. It also
includesan assessment of the significant estimates and judgements made by the
directors in the preparation of the accounts, and of whether the accounting
policies are appropriate to the company's circumstances, consistently applied
and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the accounts are free from
material misstatement, whether caused by fraud or other irregularity or error.
In forming our opinion we also evaluated the overall adequacy of the
presentation of information in the accounts.
Opinion
In our opinion the accounts give a true and fair view of the state of the
company's affairs as at 31 December 2003 and of its profit for the year then
ended and have been properly prepared in accordance with the Companies Act 1985.
KPMG Audit Plc
Chartered Accountants
Registered Auditor
Saltire Court
20 Castle Terrace
EdinburghEH1 2EG
23 February 2004
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