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Name | Symbol | Market | Type |
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Trafford 'a2' | LSE:BC84 | London | Bond |
Price Change | % Change | Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Traded | Last Trade | |
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0.00 | 0.00% | 136.65 | 0 | 01:00:00 |
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
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(END) Dow Jones Newswires
April 28, 2017 05:00 ET (09:00 GMT)
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