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| Name | Symbol | Market | Type |
|---|---|---|---|
| Sg Issuer 31 | LSE:85QT | 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 | - |
From Jun 2019 to Jun 2024
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
The Annual Report and Accounts are also available at: http://www.britishland.com/investors/strategic-partnerships/broadgate-financing-plc
For a printer friendly version of the Annual Report and Accounts, please follow link below:
http://www.rns-pdf.londonstockexchange.com/rns/3637M_-2017-7-27.pdf
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
Hot Features
Premium
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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