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| Name | Symbol | Market | Type |
|---|---|---|---|
| Wellcome 4.625% | LSE:57MC | London | Bond |
| Price Change | % Change | Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 96.70 | 95.00 | 98.40 | 0 | 00:00:00 |
From Dec 2019 to Dec 2024
TIDM57MC
RNS Number : 0494X
Wellcome Trust Finance plc
17 December 2019
Wellcome Trust Finance plc
Annual Report and Financial Statements
Wellcome Trust and Wellcome Trust Finance plc (a wholly owned subsidiary of The Wellcome Trust Limited as trustee of the Wellcome Trust) announce that they have each published their Annual Report and Financial Statements for the year to 30 September 2019 today. A copy of each document is available on the Wellcome Trust website.
Wellcome Trust has today issued the following press release in connection with the publication of its Annual Report and Financial Statements:
Wellcome Trust is pleased to report that our investment portfolio recorded a total return of 6.9% per cent, or 4.9% after inflation, for the year to 30 September 2019. Charitable expenditure in support of our mission was GBP1,130 million and the investment base rose to approximately GBP26.8 billion.
We have returned 209% per cent cumulative (12.0% per cent annualised) in the decade since September 2009, recording positive returns in each of these years. Returns have been 414% per cent cumulative (8.5% per cent annualised) over 20 years. Since the inception of our investment portfolio in 1985, it has provided a total return averaging 13.7% per cent a year.
We maintain a AAA/aaa (stable) credit rating. Leverage stood at 7.8% at 30(th) September. There were no new bond issues during the financial year.
On the back of this performance, we aim to maintain the real level of charitable spending for our core activities at current record levels at least until 2022. We have committed an extra GBP100 million for large scale, high impact activities, to be drawn down over five years to fund current and future activities including priority areas such as Snakebite and Mental Health. We will continue to review future allocations in the light of the performance of the endowment and the pipeline of projects suitable for funding.
We saw positive returns in each of the asset classes in which we invest (public equity, private equity, venture capital, hedge funds and property). All have maintained their strong long-term track records. Sterling weakness was a significant tailwind to returns this year. Our Sterling exposure remained close to our minimum 15% level throughout the period given political uncertainties.
Baroness Manningham-Buller, Chair of the Wellcome Trust, said: "It is pleasing to report another year of gains, albeit modest, over a period that has seen significant political, economic and market turmoil. The strong long-term performance of the investment portfolio has provided Wellcome with the means to double our annual charitable spending over the past decade. We are grateful to the Investment Team for making this possible."
Nick Moakes, Chief Investment Officer and Managing Partner of the Investment Division at Wellcome, added: "The portfolio has performed well in challenging macro circumstances. Interest rate cuts by the Federal Reserve Bank may have helped prolong the economic cycle, but this has not changed our view that we need to prepare for lower returns than we have enjoyed over the past decade. We are more focused on the assets in the portfolio than the broad market backdrop. We have taken action to weed out low conviction positions to ensure that there will be ample liquidity to fund the mission, even in a more difficult environment."
Wellcome Trust Finance plc further announces that a copy of its Annual Report and Financial Statements for the year ended 30 September 2019 has been submitted to the National Storage Mechanism, and will shortly be available for inspection at http://www.morningstar.co.uk/uk/NSM.
In accordance with the Disclosure and Transparency Rules, the following information is taken from the Annual Report and Financial Statements for Wellcome Trust Finance plc for the year ended 30 September 2019:
Wellcome Trust Finance plc
Annual Report and Financial Statements
Year ended 30 September 2019
Strategic Report
The directors of Wellcome Trust Finance plc (the "Company" and the "Directors") present their strategic report for the year ended 30 September 2019 (the "Strategic Report").
Strategy and objectives
The principal activity of the Company is to meet its obligations relating to the bonds that it has previously issued and admitted to trading on the London Stock Exchange and to continue to lend the proceeds to other group entities.
Review of the business and future developments
The Company issued two tranches of bonds: GBP550 million on 25 July 2006 of 4.625% Guaranteed Bonds due July 2036 and GBP275 million on 28 May 2009 of 4.750% Guaranteed Bonds due May 2021 (the "Bonds"). The Bonds are admitted to trading on the London Stock Exchange. The obligations of the Company in relation to the Bonds are governed by Trust Deeds between the Company, The Wellcome Trust Limited, as trustee of the Wellcome Trust, and Citicorp Trustee Company Limited, as the trustee for the holders of the Bonds. The payment of all amounts due in respect of the Bonds is unconditionally and irrevocably guaranteed pursuant to the terms of a guarantee given by The Wellcome Trust Limited, as corporate trustee of the Wellcome Trust; the guarantee is part of the Trust Deeds.
The Company loaned the proceeds from the Bonds to Wellcome Trust group (the "Group") undertakings and receives interest on these loans.
The Company will continue to receive interest on the loans to Group undertakings and pay interest on the Bond liabilities for the foreseeable future. The Company has not issued any bonds during the year and does not expect to issue any bonds in the near future.
Results for the year
The Company made a profit of GBP3,404,231 (2018: GBP3,439,386) during the year ended 30 September 2019. As at 30 September 2019 the Company had net assets of GBP137,500,000 (2018: GBP137,500,000).
Key performance indicators
Due to the nature of the Company's operations, the key performance measures are that the Company meets all its legal obligations to the Bond holders and that the Company achieves sufficient return on its assets to be profitable before any donations to the Wellcome Trust under Gift Aid. During the year the Company met all its legal obligations to the Bond holders and made a net profit before donations to Wellcome Trust under Gift Aid.
Financial risk management objectives and policies
The Directors of the Company implement policies to manage the inherent risks relating to the financial assets and liabilities of the Company.
The Directors have assessed for each financial asset and liability: the market risk, currency risk, interest rate risk, liquidity risk, and credit risk exposure. The Company is not exposed to significant market risk or interest rate risk because the Company's main financial assets have fixed redemption values, fixed interest rates and fixed maturity dates, which match those of its financial liabilities. The currency risk exposure is limited to the payment of one administrative expense amount per annum. The liquidity risk of the Company is mitigated by the matching of the cash flows from the Company's financial assets and liabilities. Credit risk exposure of the Company's loans is reduced by the Company only advancing loans to entities within the Group. Credit risk exposure of the Company's remaining financial assets is reduced by stringent selection procedures for any external counterparties with which the Company transacts.
The risks associated with Brexit are considered at a group level and documented within the Risk Management section of the Wellcome Trust Annual Report and Financial Statements 2019 which are available from Wellcome's website (www.wellcome.ac.uk/about-us)
Financial risk management objectives and policies (continued)
The Company's internal control and risk management is undertaken as part of the Wellcome Trust's processes, which are detailed in the Wellcome Trust Annual Report and Financial Statements, available at www.wellcome.ac.uk. The key elements of this specifically applicable to the Company are:
-- delegation: there is a clear organisational structure with documented lines of authority and responsibility for control and documented procedures for reporting decisions, actions and issues; and
-- review: the Group Audit and Risk Committee reviews the effectiveness of the Company's internal control, its financial reporting process, the independence of its statutory auditors and its compliance with relevant statutory and finance regulations and advises the Directors of the Company of any relevant matters.
Corporate and social responsibility
Due to the nature of its activities the Company has a minimal environmental impact. The Group's approach to social responsibility is detailed in the Wellcome Trust Annual Report and Financial Statements, which are available at www.wellcome.ac.uk.
This report was approved by the Board of Directors and signed on 16 December 2019 on its behalf by:
Karen Chadwick
Director
16 December 2019
Directors' Report
The Directors of Wellcome Trust Finance plc present their report and the audited Financial Statements for the year ended 30 September 2019.
Future developments
These are discussed in the Strategic Report.
Going Concern and Viability
The Directors have assessed the viability of the Company and have a reasonable expectation that the Company has adequate resources to continue in operational existence and to meet any commitments as they fall due for the foreseeable future. Thus, they continue to adopt the going concern basis in preparing the annual financial statements. This assessment has considered the significant risks laid out in the Risk Management section in the Strategic Report, as well as the significant accounting estimates and judgements in note 2.
The Board of Governors of Wellcome Trust assess the viability of the group as a whole and this is laid out in the Going Concern and Viability statement in the Financial Review section of the Wellcome Trust Annual Report and Financial Statements 2019 which are available from Wellcome's website (www.wellcome.ac.uk/about-us)
Employees
There are no employees of the Company (2018: nil).
The administration of the Company is undertaken by staff from the Wellcome Trust. The Wellcome Trust has not incurred any incremental staff costs due to the administration of this Company.
Dividends
The Directors do not propose the payment of a dividend (2018: GBPnil). The Company has a policy to donate its taxable profits as Gift Aid to the Wellcome Trust.
Financial risk management objectives and policies
These are discussed in the Strategic Report.
Corporate Governance
The Company is limited by shares. Its governing documents are its articles of association. The shareholder of the company is The Wellcome Trust Limited, as trustee of the Wellcome Trust.
The Company is a wholly owned subsidiary of the Wellcome Trust through its corporate trustee, The Wellcome Trust Limited. The Company is not subject to the requirements of the UK Corporate Governance Code. The governance policies of the Group and of the Wellcome Trust are included in the Wellcome Trust's Annual Report and Financial Statements for the year ended 30 September 2019.
The Group Audit and Risk Committee, the Investment Committee and the internal audit function of the Wellcome Trust oversee all group entities.
The Company complies with all applicable filing and information requirements of the Financial Conduct Authority.
Directors and their interests
The Directors of the Company who were in office during the year and up to the date of signing the Financial Statements were:
Karen Chadwick (appointed 21 June 2019)
Nicholas Moakes
Peter Pereira Gray
Fabian Thehos
None of the Directors held any beneficial interest in the shares of the Company or any interest in its parent undertaking the Wellcome Trust through its corporate trustee, The Wellcome Trust Limited.
Each of the Directors is an employee of the Group and receives remuneration from the Group as an employee. No remuneration is paid to any Director for their services as a Director.
Directors' indemnity policy
The Company is party to a Group-wide directors' and officers' liability insurance policy which provides cover to all of the current Directors. There are no qualifying indemnity provisions (as defined in the Companies Act 2006) that benefit the Directors of the Company.
Statement of Directors' responsibilities
The Directors are responsible for preparing the Strategic Report, Directors' 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 prepared the Financial Statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), including FRS 102 the Financial Reporting Standards applicable in U.K. and Republic of Ireland. 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 applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the Financial Statements;
-- 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 the Companies Act 2006. They 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 are responsible for the maintenance and integrity of the company's information on its parent undertaking's (the Wellcome Trust's) website. Legislation in the United Kingdom governing the preparation and dissemination of Financial Statements may differ from legislation in other jurisdictions.
The Directors consider that the Annual Report and Financial Statements, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's performance, business model and strategy.
Each of the Directors, whose names are listed in the Directors' Report confirm that, to the best of their knowledge:
-- the Financial Statements, which have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), including FRS 102 the Financial Reporting Standards applicable in U.K. and Republic of Ireland, give a true and fair view of the assets, liabilities, financial position and result of the Company; and
-- the Directors' Report contained in this section of the Annual Report includes a fair review of the development and performance of the business and the position of the company, together with a description of the principal risks and uncertainties that it faces.
Statement of disclosure of information to auditor
Each Director in office at the date of approving this report confirms that so far as the Director is aware, there is no relevant audit information of which the Company's auditor is unaware and each Director has taken all the steps that ought to have been taken as a Director in order to make themselves aware of any relevant audit information and to establish that the Company's auditors is aware of that information.
Independent auditors
In accordance with Section 485 of the Companies Act 2006, a resolution dated 16 December 2019 was passed by the members re-appointing Deloitte LLP as auditors of the Company.
Events after the end of the reporting period
There have been no subsequent events requiring disclosure.
This report was approved by the Board of Directors and signed on its behalf on 16 December 2019 by:
Karen Chadwick
Director
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF WELLCOME TRUST FINANCE PLC
Report on the audit of the financial statements
Hot Features
Premium
Opinion
============================================================================
In our opinion the financial statements of Wellcome Trust
Finance plc (the 'company'):
* give a true and fair view of the state of the
company's affairs as at 30 September 2019 and of its
result for the year then ended;
* have been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice,
including Financial Reporting Standard 102 "The
Financial Reporting Standard applicable in the UK and
Republic of Ireland"; and
* have been prepared in accordance with the
requirements of the Companies Act 2006.
We have audited the financial statements which comprise:
* the statement of income and retained earnings;
* the balance sheet; and
* the related notes 1 to 16.
The financial reporting framework that has been applied in
their preparation is applicable law and United Kingdom Accounting
Standards, including Financial Reporting Standard 102 "The
Financial Reporting Standard applicable in the UK and Republic
of Ireland" (United Kingdom Generally Accepted Accounting
Practice).
Basis for opinion
=======================================================================
We conducted our audit in accordance with International Standards
on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the auditor's
responsibilities for the audit of the financial statements
section of our report.
We are independent of the company in accordance with the ethical
requirements that are relevant to our audit of the financial
statements in the UK, including the Financial Reporting Council's
(the 'FRC's) Ethical Standard as applied to listed public interest
entities, and we have fulfilled our other ethical responsibilities
in accordance with these requirements. We confirm that the
non-audit services prohibited by the FRC's Ethical Standard
were not provided to the company.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
Summary of our audit approach
===========================================================================
Key audit matters The key audit matter that we identified in the
current year was the amortisation of bond liabilities
and collectability of intercompany loans which
is consistent with the prior year.
------------------ =======================================================
Materiality The materiality that we used in the current
year was GBP19.3m which was determined on the
basis of 2% of total assets.
------------------ =======================================================
Scoping Audit work to respond to the risks of material
misstatement was performed directly by the audit
engagement team.
------------------ =======================================================
Significant There are no significant changes in our approach.
changes in our
approach
------------------ =======================================================
Conclusions relating to going concern
We are required by ISAs (UK) to report in We have nothing to
respect of the following matters where: report in respect
-- the directors' use of the going concern of these matters.
basis of accounting in preparation of the
financial statements is not appropriate;
or
-- The directors have not disclosed in the
financial statements any identified material
uncertainties that may cast significant
doubt about the company's ability to continue
to adopt the going concern basis of accounting
for a period of at least twelve months from
the date when the financial statements are
authorised for issue.
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due
to fraud) that we identified. These matters included those
which had the greatest effect on: the overall audit strategy,
the allocation of resources in the audit; and directing the
efforts of the engagement team.
These matters were addressed in the context of our audit of
the financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these
matters.
=======================================================================================
Amortisation of bond liabilities and collectability of intercompany
loans
Key audit matter The company has external debt (bonds listed on
description the London Stock Exchange) of GBP825m as at 30
September 2019. This comprises two bond issues
with the following terms:
* GBP550m which is repayable on 24 July 2036 at an
interest rate of 4.625% per annum; and
* GBP275m which is repayable on 28 May 2021 at an
interest of 4.75% per annum.
The company also has receivables due from group
undertakings totalling GBP245.5m and GBP704.7m
due from its parent.
These bonds and intercompany loans are highly
material to the company as they account for 99.8%
of total liabilities and 98.6% of total assets
of the company respectively.
The bond liabilities are stated at amortised
cost using the effective interest method and
requires the calculation of the effective interest
rate for their measurement on the balance sheet
as at 30 September 2019.
In addition, the ability of the company to repay
the external debt when it matures and pay the
interest to the bond holders is dependent on
the future financial performance of the parent
and its group undertakings and their ability
to repay the intercompany loans to the company.
================= ==================================================================
How the scope With regards to the bond liabilities, we:
of our audit * reviewed the amortisation schedule prepared by
responded to management in regards to amortisation of the bonds;
the key audit
matter
* obtained the original bond prospectuses to assess
whether the terms of the bonds agree to the inputs
used by management to calculate the effective
interest rate;
* recalculated the period to period effective interest
and the carried forward balance of the bond
liabilities until maturity;
* verified interest payments made to bond holders by
tracing back to bank statements;
* reviewed the disclosures in the financial statements
relating to bond liabilities as at 30 September 2019.
With regards to the collectability of the loans
given to the group undertakings and the parent,
we:
* performed a credit risk analysis by assessing the
current net asset and liquidity position of the
parent and the group undertakings;
* obtained the cash flow forecast of the parent and
group undertaking and challenged whether the
assumptions in the forecast were reasonable;
* assessed whether the cash flow forecast and the
liquidity position of the parent and group
undertakings suggested any indicators of impairment.
================= ==================================================================
Key observations As a result of our procedures, we concluded that
the amortisation of bond liabilities is appropriately
stated and intercompany loans are not impaired.
================= ==================================================================
Our application of materiality
===============================
We define materiality as the magnitude of misstatement in the
financial statements that makes it probable that the economic
decisions of a reasonably knowledgeable person would be changed
or influenced. We use materiality both in planning the scope
of our audit work and in evaluating the results of our work.
Based on our professional judgement, we determined materiality
for the financial statements as a whole as follows:
Materiality GBP19.3m (2018: GBP19.3m)
----------------------
Basis for determining 2% of total assets (2018: 2% of total assets)
materiality
---------------------- ===============================================
Rationale for Total assets is considered as an appropriate
the benchmark benchmark as the principal activity of the
applied entity is to issue bonds on the London Stock
Exchange to provide financing to the Wellcome
Trust Group and therefore it is the key area
of interest for the users of the financial
statements.
---------------------- ===============================================
We agreed with the Audit and Risk Committee of the Wellcome
Trust, which oversees the group entities that we would report
to the Committee all audit differences in excess of GBP964k
(2018: GBP963k), as well as differences below that threshold
that, in our view, warranted reporting on qualitative grounds.
We also report to the Audit and Risk Committee on disclosure
matters that we identified when assessing the overall presentation
of the financial statements.
An overview of the scope of our audit
========================================================================
Our audit was scoped by obtaining an understanding of the entity
and its environment, including internal control, and assessing
the risks of material misstatement. Audit work to respond to
the risks of material misstatement was performed directly by
the audit engagement team.
Other information
========================================================================
The directors are responsible for the other We have nothing to
information. The other information comprises report in respect
the information included in the annual report, of these matters.
other than the financial statements and
our auditor's report thereon.
Our opinion on the financial statements
does not cover the other information and,
except to the extent otherwise explicitly
stated in our report, we do not express
any form of assurance conclusion thereon.
In connection with our audit of the financial
statements, our responsibility is to read
the other information and, in doing so,
consider whether the other information is
materially inconsistent with the financial
statements or our knowledge obtained in
the audit or otherwise appears to be materially
misstated.
If we identify such material inconsistencies
or apparent material misstatements, we are
required to determine whether there is a
material misstatement in the financial statements
or a material misstatement of the other
information. If, based on the work we have
performed, we conclude that there is a material
misstatement of this other information,
we are required to report that fact.
Responsibilities of directors
========================================================================
As explained more fully in the directors' responsibilities
statement, the directors are responsible for the preparation
of the financial statements and for being satisfied that they
give a true and fair view, and for such internal control as
the directors determine is necessary to enable the preparation
of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are responsible
for assessing the company's ability to continue as a going
concern, disclosing as applicable, matters related to going
concern and using the going concern basis of accounting unless
the directors either intend to liquidate the company or to
cease operations, or have no realistic alternative but to do
so.
Auditor's responsibilities for the audit of the financial statements
========================================================================
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with ISAs (UK) will always detect
a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these
financial statements.
Details of the extent to which the audit was considered capable
of detecting irregularities, including fraud are set out below.
A further description of our responsibilities for the audit
of the financial statements is located on the FRC's website
at: www.frc.org.uk/auditorsresponsibilities. This description
forms part of our auditor's report.
Extent to which the audit was considered capable of detecting
irregularities, including fraud
==========================================================================
We identify and assess the risks of material misstatement of
the financial statements, whether due to fraud or error, and
then design and perform audit procedures responsive to those
risks, including obtaining audit evidence that is sufficient
and appropriate to provide a basis for our opinion.
Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement
in respect of irregularities, including fraud and non-compliance
with laws and regulations, our procedures included the following:
* enquiring of management and the audit and risk
committee, including obtaining and reviewing
supporting documentation, concerning the company's
policies and procedures relating to:
o identifying, evaluating and complying with laws and regulations
and whether they were aware of any instances of non-compliance;
o detecting and responding to the risks of fraud and whether
they have knowledge of any actual, suspected or alleged fraud;
o the internal controls established to mitigate risks related
to fraud or non-compliance with laws and regulations;
* discussing among the engagement team and involving
relevant internal specialists, including IT
specialists regarding how and where fraud might occur
in the financial statements and any potential
indicators of fraud. As part of this discussion, we
identified potential for fraud as management are in a
unique position to perpetrate fraud given their
ability to manipulate accounting records and prepare
fraudulent financial statements by overriding
controls that otherwise might appear to be operating
effectively. In particular there are significant
transactions relating to intercompany loans and
transactions with associated interests; and
* obtaining an understanding of the legal and
regulatory framework that the company operates in,
focusing on those laws and regulations that had a
direct effect on the financial statements or that had
a fundamental effect on the operations of the
company. The key laws and regulations we considered
in this context included the UK Companies Act,
listing rules and tax legislation.
Audit response to risks identified
As a result of performing the above, we did not identify any
key audit matters related to the potential risk of fraud or
non-compliance with laws and regulations.
Our procedures to respond to risks identified included the
following:
* reviewing the financial statement disclosures and
testing to supporting documentation to assess
compliance with relevant laws and regulations
discussed above;
* enquiring of management, the audit and risk committee
and in-house legal counsel concerning actual and
potential litigation and claims;
* performing analytical procedures to identify any
unusual or unexpected relationships that may indicate
risks of material misstatement due to fraud;
* reading minutes of meetings of those charged with
governance, reviewing internal audit reports and
reviewing correspondence with HMRC; and
* in addressing the risk of fraud through management
override of controls, testing the appropriateness of
journal entries and other adjustments; assessing
whether the judgements made in making accounting
estimates are indicative of a potential bias; and
evaluating the business rationale of any significant
transactions that are unusual or outside the normal
course of business.
We also communicated relevant identified laws and regulations
and potential fraud risks to all engagement team members including
internal specialists, and remained alert to any indications
of fraud or non-compliance with laws and regulations throughout
the audit.
Report on other legal and regulatory requirements
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 the light of the knowledge and understanding of the company
and its environment obtained in the course of the audit,
we have not identified any material misstatements in the
strategic report or the directors' report.
Matters on which we are required to report by exception
=========================================================================================
Adequacy of explanations received and accounting
records We have nothing to
Under the Companies Act 2006 we are required report in respect
to report to you if, in our opinion: of these matters.
* we have not received all the information and
explanations we require for our audit; or
* adequate accounting records have not been kept by the
company; or
* the financial statements are not in agreement with
the accounting records and returns.
Directors' remuneration
Under the Companies Act 2006 we are also We have nothing to
required to report if in our opinion certain report in respect
disclosures of directors' remuneration have of this matter.
not been made.
Other matters
=========================================================================================
Auditor tenure
Following the recommendation of the audit and risk committee
we were appointed by the Company at its annual general meeting
on 14 December 2015 to audit the financial statements of
the Company for the period ending 30 September 2016 and
subsequent financial periods.
Our total uninterrupted period of engagement is 4 years,
covering periods from our appointment through to the period
ending 30 September 2019.
Consistency of the audit report with the additional report
to the audit and risk committee
Our audit opinion is consistent with the additional report
to the audit and risk committee we are required to provide
in accordance with ISAs (UK).
Use of our report
===================================================================
This report is made solely to the company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act
2006. 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.
Terri Fielding, ACA (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom
16 December 2019
Wellcome Trust Finance plc
Statement of Income and Retained Earnings
For the year ended 30 September 2019
Year ended Year ended
30 September 30 September
Note 2019 2018
GBP GBP
------------------------------------------- ----- ------------- -------------
Turnover 3 42,715,934 42,693,773
Operating income 42,715,934 42,693,773
Cost of sales (39,236,456) (39,202,305)
Administrative expenses 4 (75,247) (52,082)
Operating profit 3,404,231 3,439,386
Taxation - -
Profit after taxation 3,404,231 3,439,386
Charitable donation - relating to current
year (3,404,231) (3,439,386)
Retained profit/(loss) for the financial - -
year
------------------------------------------- ----- ------------- -------------
Opening shareholder's funds 137,500,000 137,500,000
Retained earnings - -
Retained profit/(loss) for the financial - -
year
Dividends declared and paid or payable - -
during the year
Closing shareholder's funds 137,500,000 137,500,000
------------------------------------------- ----- ------------- -------------
All results are derived from continuing activities.
The Company has no gains or losses other than the results for the financial year as set out above, and therefore no separate Statement of comprehensive income or Statement of changes in equity have been presented.
The notes form part of these Financial Statements.
Wellcome Trust Finance plc
Balance Sheet
As at 30 September 2019
30 September 30 September
Note 2019 2018
GBP GBP
--------------------------------------- ----- -------------- --------------
Non current assets
Loans to Group undertakings 8 704,674,474 704,228,362
Current assets
Loans to Group undertakings 8 245,500,000 245,500,000
Amounts owed by Group undertakings 4,001,414 3,754,174
Accrued interest on loans 9,936,096 9,936,096
Prepayments 26,932 9,450
Cash at bank and in hand 989 16,566
259,465,431 259,216,286
Total assets 964,139,905 963,444,648
--------------------------------------- ----- -------------- --------------
Creditors: amounts falling due within
one year 9 (10,519,665) (10,560,864)
--------------------------------------- ----- -------------- --------------
Net current assets 248,945,766 248,655,422
---------------------------------------
Total assets less current liabilities 953,620,240 952,883,784
--------------------------------------- ----- -------------- --------------
Creditors: amounts falling due after
more than one year 9 (816,120,240) (815,383,784)
Net assets 137,500,000 137,500,000
--------------------------------------- ----- -------------- --------------
Capital reserves
Called up share capital 11 137,500,000 137,500,000
Profit and loss account - -
Total shareholders' funds 10 137,500,000 137,500,000
--------------------------------------- ----- -------------- --------------
The Company has no changes in equity during the year as set out above and therefore no separate statement of changes in equity has been presented.
The Financial Statements were approved by the Board of Directors and authorised for issue on 16 December 2019 and signed on its behalf by:
Karen Chadwick
Director
Wellcome Trust Finance plc
Notes to the Financial Statements
For the year ended 30 September 2019
1. ACCOUNTING POLICIES
The Financial Statements are prepared in accordance with applicable United Kingdom law and United Kingdom accounting standards. The accounting policies which have been adopted consistently in the current and prior year are described below.
(a) Statement of compliance
The Company, a public limited company, is incorporated in England and Wales, United Kingdom under the Companies Act. The address of the registered office is given in the Administrative Details. The nature of the Company's operations and its principal activities are set out in the Strategic Report.
The Company is a wholly owned subsidiary undertaking of the Wellcome Trust through its corporate trustee, The Wellcome Trust Limited, and is included in the Consolidated Financial Statements of the Wellcome Trust, which are publicly available.
The Financial Statements have been prepared on a going concern basis as well as in accordance with applicable UK accounting standards (UK Generally Accepted Accounting Practice), including Financial Reporting Standard 102 the Financial Reporting Standard applicable in the United Kingdom and the Republic of Ireland ("FRS 102"). Refer to the Directors' report for more information.
The functional and presentational currency of the Company is pounds Sterling. Most of transactions undertaken by the Company are denominated in pounds Sterling.
The Company meets the definition of a qualifying entity under FRS 102 and has therefore taken advantage of the disclosure exemptions available to it. Exemptions have been taken in relation to financial instruments, the presentation of a Statement of Cash Flows and the Related Party disclosures. The equivalent disclosures relating to the exemptions have been included in the Consolidated Financial Statements of the Wellcome Trust.
(b) Summary of significant accounting policies
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all years presented, unless otherwise stated.
Basis of preparation
The financial statements have been prepared under the historical cost convention. The preparation of financial statements in conformity with FRS 102 requires the use of certain significant accounting estimates. It also requires management to exercise its judgement in the process of applying the Company's accounting policies. The areas involving more judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 2.
(i) Turnover
Turnover is interest derived from loans to Wellcome Trust Investment Limited Partnership, an undertaking in the Group, and the Wellcome Trust. Income is calculated using the effective interest rate method and is recognised on an accruals basis.
(ii) Cost of sales
Expenditure is the effective interest on the Bond liabilities (as described in Bond Liabilities section below) and is recognised on an accruals basis.
(iii) Gift Aid
The amount of Gift Aid donation recognised for each period is equal to the estimated taxable profits of the Company for that period at the time of the approval of the financial statements. Gift Aid donation payments made within nine months after the balance sheet date are equal to the estimated taxable profits of the Company for the period at the time of payment less any interim donations made in the year. Any difference between the Gift Aid donation accrued and Gift Aid donations paid is recognised at the time of payment.
(iv) Taxation
Although subject to taxation, the Company does not pay UK Corporation Tax because its policy is to donate taxable profits as Gift Aid to the Wellcome Trust.
Subject to the above, current tax, including UK corporation tax and foreign tax, is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
(v) Financial assets and liabilities
The Company has chosen to adopt Sections 11 and 12 of FRS 102 in respect of financial instruments. Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the instrument.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. All financial assets and liabilities are initially measured at transaction price (including transaction costs), and subsequently at amortised cost.
Financial assets which qualify as basic financial instruments as laid out in FRS 102 paragraph 11.8, including trade and other receivables and cash and bank balances, are subsequently valued at amortised cost and assessed for impairment at the end of each reporting period. Financial assets and liabilities are only offset in the Balance Sheet when, and only when, a legally enforceable right exists to set off the recognised amounts and the Group intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Financial assets are derecognised when and only when (a) the contractual rights to the cash flows from the financial asset expire or are settled, (b) the Company transfers to another party substantially all of the risks and rewards of ownership of the financial asset, or (c) the Company, despite having retained some, but not all, significant risks and rewards of ownership, has transferred control of the asset to another party.
Financial liabilities are derecognised only when the obligation specified in the contract is discharged, cancelled or expires.
Loans to Group undertakings
The loans are not quoted in an active market. The loans were recognised initially at fair value and after initial recognition are measured at amortised cost using the effective interest method.
Bond Liabilities
The initial measurement of the liability is equal to the proceeds of issue less all transaction costs directly attributable to the issue for each Bond. After initial recognition the liability is measured at amortised cost using the effective interest method. The Company is not required to, and therefore does not, recognise any adjustment to fair value in the Balance Sheet and Statement of Income and Retained Earnings.
(vi) Foreign Currencies
Transactions in currencies other than Sterling are recorded at the rate of exchange prevailing on the dates of the transactions. At each balance sheet date, recorded monetary assets and liabilities and balances carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. All realised and unrealised profits and losses arising on exchange are included in net profit or loss for the period.
2. SIGNIFICANT ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Accounting judgements
The Company has made no significant accounting judgements in the application of the Company's accounting policies that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
Significant accounting estimates and assumptions
The Company makes estimates and assumptions to produce the Financial Statements. The resulting accounting estimates will seldom equal the related actual results.
The Company has made no significant accounting estimates and assumptions in the application of the Company's accounting policies that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
3. TURNOVER
2019 2018
GBP GBP
Interest receivable on loans to Group undertakings 42,714,862 42,693,678
Interest receivable on cash deposits 1,072 95
42,715,934 42,693,773
------------------------------------------------------------ ----------------------- ----------- -----------
Interest receivable on loans to Group undertakings in the UK (see note 8) is the effective interest on:
-- Loan A to Wellcome Trust Investment Limited Partnership at a fixed rate of 4.75%; -- Loan (new bond) to Wellcome Trust at fixed rate of 4.80%; and -- Loan C to Wellcome Trust at fixed rate of 4.00%; -- Loan D to Wellcome Trust at fixed rate of 4.125%.
4. ADMINISTRATIVE EXPENSES
2019 2018
GBP GBP
Auditors' remuneration 17,688 17,220
Rating agency fees 50,462 26,789
Tax compliance 2,297 3,273
Other 4,800 4,800
75,247 52,082
----------------------------------- -------------------------------------- ------------ ------------
Auditor's remuneration is solely in relation to the statutory audit of the Financial Statements.
5. EMPLOYEE INFORMATION
The Company has no employees (2018: nil). Employees of The Wellcome Trust Limited (acting as trustee of the Wellcome Trust) undertake the administration of the Company at no incremental cost to the Wellcome Trust.
6. REMUNERATION OF DIRECTORS
The Directors of the Company received no remuneration from the Company for their services. There were no Directors for whom retirement benefits provided by the Company are accruing under a money purchase or defined benefit scheme. The Company does not issue share options or offer any long-term incentive schemes, so there were no Directors who exercised share options during the year or became entitled to shares under a long-term incentive scheme.
7. TAX ON RESULT
The profits of the Company for the year will be paid under Gift Aid to the Wellcome Trust, a charity registered in England under the UK Charities Act 2011 (registered charity number 210183). There is no difference between retained profit/(loss) and taxable profits, so there is no provision required for deferred tax.
2019 2018
GBP GBP
Profit before tax 3,404,231 3,439,386
Current tax charge for the
year:
Profit multiplied by standard rate 646,804 653,483
of corporation tax in the UK of 19%
(2018: 19%)
Tax relief on gift aid donations (646,804) (653,483)
Total current tax - -
-------------------------------------------------------- ---------------------- ---------- ----------
8. LOANS TO GROUP UNDERTAKINGS
Principal Interest rate Loan anniversary Amortised cost Amortised cost
amount per annum date 2019 2018
GBP % GBP GBP
Current Assets
Loan
A 245,500,000 4.750 25 July 245,500,000 245,500,000
245,500,000 245,500,000 245,500,000
---------------- ------------ -------------- ----------------- --------------- ---------------
Non Current Assets
Loan (new
bond) 275,000,000 4.800 28 May 274,174,474 273,728,362
Loan
C 280,500,000 4.000 25 July 280,500,000 280,500,000
Loan
D 150,000,000 4.125 25 July 150,000,000 150,000,000
705,500,000 704,674,474 704,228,362
---------------- ------------ -------------- ----------------- --------------- ---------------
Loans to Group undertakings are loans (the "Loans") to Wellcome Trust Investment Limited Partnership (Loan A), Wellcome Trust (Loan C, Loan D and Loan (new bond)). The principal under Loan A is repayable on demand by the Company. The principal under Loan C, Loan D and Loan (new bond) is repayable on agreement between the Company and Wellcome Trust. The Loans have an agreed repayment date in 17 years (Loan A, Loan C and Loan D) and 2 years (Loan (new bond)). Each Loan has a fixed redemption value equal to the principal amount and a fixed interest rate.
9. CREDITORS
2019 2018
GBP GBP
Accruals and deferred income 73,034 79,078
Gift Aid due to the Wellcome
Trust 1,234,130 1,269,286
Bond liabilities 9,212,500 9,212,500
Total creditors: amounts falling due within
one year 9,285,534 10,560,864
-------------------------------------------------------------------------------- ------------ ------------
Bond liabilities 274,172,297 273,724,451
Falling due between one and five
years 274,172,297 273,724,451
--------------------------------------------------------------- ----------------- ------------ ------------
Bond liabilities 541,947,943 541,659,333
Falling due after five years 541,947,943 541,659,333
------------------------------------------------------ ------------------------- ------------ ------------
Total creditors: amounts falling due after
one year 816,120,240 815,383,784
-------------------------------------------------------------------------------- ------------ ------------
The Bond liabilities are stated at the amortised cost using the effective interest method for the GBP550 million 4.625% Guaranteed Bonds due July 2036 ("GBP550 million Bonds"), issued by the Company on 25 July 2006, and the GBP275 million 4.750% Guaranteed Bonds due May 2021 ("GBP275 million Bonds"), issued by the Company on 28 May 2009. The Bond liabilities falling due within one year are the unpaid coupon interest accrued for the year to 30 September 2019 for each Bond. The interest payment to the Bond holders is at a fixed rate of 4.625% per annum (GBP550 million Bonds) and 4.750% per annum (GBP275 million Bonds) and is paid in arrears on 25 July or 28 May respectively each year until repayment of the Bond principals. The bond repayments and amounts receivable from group companies are aligned in timing for liquidity management. Effective interest on bond liabilities is shown as Cost of Sales in the Statement of Income and Retained Earnings.
The obligation of the Company on the Bonds is governed by a Trust Deed dated 25 July 2006 (GBP550 million Bonds) or 28 May 2009 (GBP275 million Bonds) between the Company, The Wellcome Trust Limited, as trustee of the Wellcome Trust, and Citicorp Trustee Company Limited, as the trustee for the holders of the Bonds (the "Trust Deed" and the "new Trust Deed" respectively). The payment of all amounts due in respect of the Bonds is unconditionally and irrevocably guaranteed pursuant to the terms of a guarantee given by The Wellcome Trust Limited, as corporate trustee of the Wellcome Trust; the guarantee is part of the Trust Deed and the new Trust Deed.
10. RECONCILIATION OF MOVEMENTS IN SHAREHOLDER'S FUNDS
Shareholder's
Funds
GBP
As at 30 September 2018 137,500,000
As at 30 September 2019 137,500,000
---------------------------------------------------------- --------------------------------- ------------------------------
11. CALLED UP SHARE CAPITAL
2019 2018
Number GBP GBP
Authorised ordinary shares of GBP1
each 137,500,000 137,500,000 137,500,000
------------------------------------------------------------------- ------------ ---------------------------- ----------------------------
Issued and fully paid ordinary shares
of GBP1 each 137,500,000 137,500,000 137,500,000
----------------------------------------------------------------------- ------------ ---------------------------- ----------------------------
12. RELATED PARTY TRANSACTIONS
The Company has taken advantage of the exemption contained in FRS 102 Section 33 paragraph 33.1A3 "Related Party Disclosures", which exempts it from disclosing details of transactions with the Wellcome Trust and its subsidiary undertakings, as the Company and its related undertakings with whom it may have transactions are wholly owned subsidiaries of the Wellcome Trust through its corporate trustee, The Wellcome Trust Limited. There are no other related party transactions requiring disclosure.
13. FINANCIAL INSTRUMENTS
The Company's financial instruments comprise the loans to Group undertakings and the liability arising from the issue of the Bonds. The Company's loans are non-derivative financial assets with fixed payments which are not available for sale. The Bond liability is a non-derivative financial liability with a fixed redemption value, fixed interest rate and fixed maturity date. The Company has not undertaken any trading in financial instruments during the year.
The financial instruments issued by, or held by, the Company are Sterling denominated and at fixed interest rates and carry no foreign exchange risk or interest rate risk.
The key risks relating to the financial instruments held by the Company are the credit risk and liquidity risk of the counterparties Wellcome Trust Investment Limited Partnership and the Wellcome Trust in relation to the loans to Group undertakings. These risks are in respect of the Wellcome Trust Investment Limited Partnership's and the Wellcome Trust's ability to meet the interest and principal payments as they fall due. The total value exposed to credit risk as at 30 September 2019 is GBP964.1 million (2018: GBP963.4 million), which comprises the value of the loans to Group undertakings, amounts owed by Group undertakings, accrued interest on loans and cash at bank and in hand. The liquidity risk of the Company is mitigated by the exact matching of the cash flows from the Company's loans to Group undertakings to those arising on the Bond Liabilities.
Credit risk exposure of the Company's loans is reduced by the Company only advancing loans to entities within the Group. Credit risk exposure of the Company's remaining financial assets is reduced by stringent selection procedures for any external counterparties with which the Company transacts.
14. COMMITMENTS
The Company has no outstanding commitments to make further investments at 30 September 2019 (2018: GBPnil).
15. ULTIMATE PARENT UNDERTAKING AND CONTROLLING PARTY
The Company is a company limited by shares. Its sole shareholder is the Wellcome Trust through its corporate trustee The Wellcome Trust Limited, whose place of business is Gibbs Building, 215 Euston Road, London, United Kingdom. The Company is considered a wholly owned subsidiary undertaking of the Wellcome Trust for accounting purposes and its assets and liabilities have been consolidated with those of the Wellcome Trust as required by section 9 of FRS 102.
The ultimate parent undertaking and controlling party of the Company is the Wellcome Trust, which is the parent undertaking of the smallest and largest group to consolidate these Financial Statements.
Copies of the Wellcome Trust Annual Report and Financial Statements 2019 are available from Wellcome's website (www.wellcome.ac.uk/about-us) or from the Company Secretary.
16. EVENTS AFTER THE END OF THE REPORTING PERIOD
There have been no subsequent events requiring disclosure.
Wellcome Trust Finance plc
Administrative Details
As at 30 September 2019
Directors
Karen Chadwick (appointed on 21 June 2019)
Nicholas Moakes
Peter Pereira Gray
Fabian Thehos
Company Secretary
Christopher Bird
Registered Company Number
5857955
Registered Office
Gibbs Building
215 Euston Road
London
NW1 2BE
Independent Auditor
Deloitte LLP
Statutory Auditor
1 New Street Square
London
EC4A 3HQ
Banker
HSBC Bank plc
31 Holborn Circus
Holborn
London
EC1N 2HR
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
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