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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 | |
|---|---|---|---|---|---|---|---|---|---|---|
| -0.20 | -0.21% | 96.70 | 95.00 | 98.40 | 0 | 16:35:15 |
From Dec 2021 to Dec 2024
TIDM57MC
RNS Number : 9841X
Wellcome Trust Finance plc
11 January 2022
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 2021 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:
We are pleased to report that our charitable expenditure on Wellcome's mission to support science to solve the urgent health challenges facing everyone was GBP1.2 billion. Our investment base rose to approximately GBP38.2 billion, a total return of 34.5 per cent, or 33.0 per cent after inflation, for the year to 30 September 2021.
These are the strongest annual investment returns in over two decades. We have returned 312 per cent cumulative (15.2 per cent annualised) in the decade since September 2011, recording positive returns in each of these years. Returns have been 635 per cent cumulative (10.5 per cent annualised) over 20 years. Since the inception of our investment portfolio in 1985, it has provided a total return averaging 14.2 per cent a year.
We maintain a AAA/Aaa (stable) credit rating. Leverage stood at 6.7 per cent(1) at 30(th) September. In July 2021, we issued a GBP750m 50-year bond. The final coupon achieved of 1.50 per cent was the lowest for any corporate bond in the Sterling market with a tenor longer than 15 years.
On the back of this performance, we aim to maintain the real level of charitable spending for our core charitable activities, at current record levels for at least the next year. Over the next ten years, we are planning on spending in the region of GBP16 billion. This compares to around GBP5 billion over the last five years. In addition, we have committed an extra GBP750 million to funding of large-scale, high-impact activities that have a time-limited duration, to be drawn down over five years. This funding will increase our commitments to combat the three key worldwide health challenges of mental health, infectious disease and climate and health. Barring any major financial shocks, we expect to be able to increase this by at least another GBP250m next year.
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 strength was a meaningful headwind to returns this year. The Board removed the requirement to hold a minimum 15 per cent in Sterling during the year. At the end of the financial year, Sterling exposure stood at 12.5 per cent.
Our strategy to achieve a net zero portfolio by 2050 at the latest was published in July 2021. The annual report includes the first update on our net zero tracking data. The target and strategy are and will continue to be an integral part of our investment decision-making and engagement.
(1) Leverage is an Alternative Performance Measure, defined and reconciled in Note 15(g) of the Wellcome Trust Annual Report and Financial Statements for the year to 30 September 2021
Julia Gillard, Chair of the Wellcome Trust, said: "The exceptional long-term performance of the investment portfolio has provided us with the means to increase spending commitments significantly at a time when the mission has never been more important.
Our investment team deserve immense credit not only for their efforts this year but for their careful stewardship and long-term thinking over many years, which has put us in such a strong position today. The direct result of their hard work is that more money is being dedicated to science to help solve the world's urgent health challenges."
Nick Moakes, Chief Investment Officer and Managing Partner of the Investment Division at Wellcome, added: "The portfolio has had an exceptional year, the best since 1995, the year in which Wellcome PLC was sold to Glaxo. In part this has been thanks to strong global fiscal and monetary support for asset markets. However, our returns have been strongly boosted by the performance of our private assets, the seeds for which had been planted over the past decade and more. We continue to prepare for a more difficult environment as global fiscal and monetary policy becomes less favourable to financial assets. Our focus now is therefore to find more investments in assets with structural tailwinds that can underpin future long-term returns."
Wellcome Trust Finance plc further announces that a copy of its Annual Report and Financial Statements for the year ended 30 September 2021 has been submitted to the National Storage Mechanism, and will shortly be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism .
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 2021:
Wellcome Trust Finance plc
Annual Report and Financial Statements
Year ended 30 September 2021
Strategic Report
The directors of Wellcome Trust Finance plc (the "Company" and the "Directors") present their strategic report for the year ended 30 September 2021 (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 has 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"). On 28 May 2021, the Company received repayment of the GBP275 million principal and accrued interest arising from the Loan to group undertakings called 'Loan (new bond)' and the Company paid the bondholders the GBP275 million principal and coupon due on the May 2021 Bonds. The Company continued to receive interest on the other loans to Group undertakings and to pay interest on the July 2036 Bond liabilities. The Company has not issued any bonds during the year and does not expect to issue any bonds in the foreseeable future.
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.
Results for the year
The Company made a profit of GBP3,415,927 (2020: GBP 3,434,938 ) during the year ended 30 September 2021. As at 30 September 2021 the Company had net assets of GBP137,500,000 (2020: 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 as 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 as 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 Company's internal control and risk management, which includes consideration of the impact of Covid-19, climate change and the risk associated with Brexit are considered at a group level and documented within the Wellcome Trust Annual Report and Financial Statements 2021 which are available from Wellcome's website at ( wellcome.org/what-we-do/reports ) .
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 wellcome.org/what-we-do/reports . 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.
Section 172 statement
The Board of Directors, in line with their duties under s172 of the Companies Act 2006, act in a way they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole, and in doing so have regard to a range of matters when making decisions for the long term.
The key stakeholders of the Company are considered to be Wellcome Trust (as the sole member), the other Wellcome Trust Group entities and the holders of the Bonds. We ensure that the requirements of s172(1) Companies Act 2006 are met and the interests of our stakeholder groups are considered through a combination of the following:
-- The Board sets the Company's purpose and strategy which considers the long-term sustainable success of the Company and our impact on key stakeholders. The key purpose is discussed under Key performance indicators above.
-- The Board's risks management procedures identify the principal risks facing the Company, and the mitigations in place to manage the impact of these risks. This is discussed under Financial risk management objectives and policies above.
-- The company has no employees and no carbon generating assets. The Wellcome Trust group's consideration of Social Responsibility, including Climate change and energy transition is discussed in their Annual Report and Financial Statements.
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 wellcome.org/what-we-do/reports .
This report was approved by the Board of Directors and signed on 10 January 2022 on its behalf by:
Karen Chadwick
Director
10 January 2022
Directors' Report
The Directors of Wellcome Trust Finance plc p resent their report and the audited Financial Statements for the year ended 30 September 2021.
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 Directors have considered the impact of Covid-19 on the Company and have concluded that there are no material uncertainties related to these events or conditions that may cast doubt upon the Company's ability to continue as a going concern.
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 2021 which are available from Wellcome's website ( wellcome.org/what-we-do/reports ).
Employees
There are no employees of the Company (2020: 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 (2020: 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 2021.
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
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 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 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 10 January 2022 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 10 January 2022 by:
Karen Chadwick
Director
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; and
-- prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the Financial Statements comply with 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.
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF WELLCOME TRUST FINANCE PLC
Report on the audit of the financial statements
1. 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 2021 and of its profit 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).
2. 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 we have not provided any non-audit services prohibited by the FRC's Ethical Standard to the company.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
3. Summary of our audit approach
Hot Features
Premium
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.
Within this report, the key audit matter is identified
as follows:
* Newly identified
* Increased level of risk
* Similar level of risk
* Decreased level of risk
------------------- -------------------------------------------------------------
Materiality The materiality that we used for the financial statements
was GBP13.725m 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 changes There are no significant changes in our approach.
in our approach
------------------- -------------------------------------------------------------
4. Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Our evaluation of the directors' assessment of the company's ability to continue to adopt the going concern basis of accounting included the following:
-- We evaluated management's going concern assessment by reference to the company's current year performance and year-end position;
-- We assessed the accuracy management's forecasts by comparing to actual results;
-- We performed a subsequent events review up until the date of this audit report to assess whether any events have been identified that are relevant to company's going concern assessment.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
5. 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.
5.1. Amortisation of bond liabilities and collectability of intercompany loans
Key audit matter The company has external debt (bonds listed on the
description London Stock Exchange) of GBP550m as at 30 September
2021, which is repayable on 24 July 2036 at an interest
rate of 4.625% per annum.
On 28 May 2021 GBP275m was repaid at an interest
rate of 4.75% per annum.
The company also has receivables relating to intercompany
loans totalling GBP676m due from its parent.
These bonds and intercompany loans are highly material
to the company as they account for 99.9% of total
liabilities and 99.9% 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
2021. This is performed in an amortisation schedule
prepared by management. This calculation has a material
impact on the carrying value of the bond liabilities.
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 their ability to repay
the intercompany loans to the company. The basis
for this collectability relies on accurate assumptions
in the future forecasts of the parent and a liquidity
position which does not indicate the need for impairment.
Loans to group undertakings are disclosed in note
8 and bond liabilities in note 9, as well as the
accounting policies note (note 1).
----------------------- ------------------------------------------------------------------
How the scope With regards to the bond liabilities, we:
of our audit responded * agreed the repayment of the bond liabilities and
to the key audit intercompany loans during the year to the loan
matter agreement and bank statements
* 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;
* assessed the disclosures in the financial statements
relating to bond liabilities as at 30 September 2021.
With regards to the collectability of the loans given
to the parent, we:
* performed a credit risk analysis by assessing the
current net asset and liquidity position of the
parent;
* obtained the cash flow forecast of the parent and
assessed whether the assumptions in the forecast were
reasonable;
* assessed whether the cash flow forecast and the
liquidity position of the parent suggested any
indicators of impairment.
----------------------- ------------------------------------------------------------------
Key observations As a result of our procedures, we concluded that
the bond liabilities and intercompany loans were
appropriately stated.
----------------------- ------------------------------------------------------------------
6. Our application of materiality
6.1. 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:
Financial statements
-------------------------------------------- ------------------------------------------------------------------------
Materiality GBP13.73m (2020: GBP19.30m)
-------------------------------------------- ------------------------------------------------------------------------
Basis for determining materiality 2% of total assets (2020: 2% of total assets)
-------------------------------------------- ------------------------------------------------------------------------
Rationale for the benchmark applied Total assets is considered as an appropriate benchmark, as the principal
activity of the 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.
-------------------------------------------- ------------------------------------------------------------------------
Audit and Risk Committee reporting threshold GBP0.69m
-------------------------------------------- ------------------------------------------------------------------------
6.2. Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and undetected misstatements exceed the materiality for the financial statements as a whole. Performance materiality was set at 70% of materiality for the 2021 audit (2020: 70%).
In determining performance materiality, we considered the following factors:
-- our risk assessment, including our assessment of the overall control environment; and
-- our past experience of the audit, which has indicated a low number of corrected and uncorrected misstatements identified in prior periods.
6.3. Error reporting threshold
We agreed with the Audit and Risk Committee of the Wellcome Trust, which oversees the group entities, that we would report to them all audit differences in excess of GBP686k (2020: GBP965k), 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.
7. An overview of the scope of our audit
7.1. Scoping
Our audit was scoped by obtaining an understanding of the entity and its environment, including internal control, and assessing the risks of material misstatement. The audit work to respond to the risks of material misstatement was performed directly by the audit engagement team .
8. Other information
The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report.
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.
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 course of 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 this gives rise to a material misstatement in the financial statements themselves. 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.
We have nothing to report in this regard.
9. 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.
10. 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.
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.
11. Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
11.1. 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, we considered the following:
-- the nature of the industry and sector, control environment and business performance
-- results of our enquiries of management and the group's Audit and Risk Committee, about their own identification and assessment of the risks of irregularities;
-- any matters we identified having obtained and reviewed the company's documentation of its 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 risks of fraud or non-compliance with laws and regulations;
-- the matters discussed among the engagement team and relevant internal specialists, including IT specialists, regarding how and where fraud might occur in the financial statements and any potential indicators of fraud.
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud. In common with all audits under ISAs (UK), we are required to perform specific procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory framework that the company operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws and regulations we considered in this context included the UK Companies Act and listing rules for the company's listed bonds.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but compliance with which may be fundamental to the company's ability to operate or to avoid a material penalty. These included the Charities Act 2011, as the profit of the Company for the year is paid under Gift Aid to the parent entity, Wellcome Trust, a registered charity.
11.2. 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 provisions of relevant laws and regulations described as having a direct effect on the financial statements;
-- 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
12. 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.
13. Matters on which we are required to report by exception 13.1. Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if, in our opinion:
-- we have not received all the information and explanations we require for our audit; or
-- adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
-- the financial statements are not in agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
13.2. Directors' remuneration
Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of directors' remuneration have not been made.
We have nothing to report in respect of this matter.
14. Other matters which we are required to address 14.1. 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 6 years, covering periods from our appointment through to the period ending 30 September 2021.
14.2. 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).
15. 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
10 January 2022
Wellcome Trust Finance plc
Statement of Income and Retained Earnings
Year ended 30 September 2021
Year ended Year ended
30 September 30 September
Note 2021 2020
GBP GBP
-------------------------------- ----- ------------- -------------
Turnover 3 38,067,314 42,841,010
Operating income 38,067,314 42,841,010
Cost of sales (34,666,669) (39,381,085)
Administrative expenses 4 15,282 (24,987)
Operating profit 3,415,927 3,434,938
Taxation - -
Profit after taxation 3,415,927 3,434,938
Charitable donation - relating
to current year (3,415,927) (3,434,938)
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
Year ended 30 September 2021
As at As at
30 September 30 September
Note 2021 2020
GBP GBP
--------------------------------------- ----- -------------- --------------
Non current assets
Loans to Group undertakings 8 676,000,000 676,000,000
Current assets
Loans to Group undertakings 8 - 274,680,890
Amounts owed by Group undertakings 4,834,474 4,561,107
Accrued interest on loans 5,415,548 9,936,096
Prepayments 9,000 17,265
Cash at bank and in hand - 5
10,259,022 289,195,363
Total assets 686,259,022 965,195,363
--------------------------------------- ----- -------------- --------------
Creditors: amounts falling due
within one year 9 (6,117,569) (285,373,965)
--------------------------------------- ----- -------------- --------------
Net current assets 4,141,453 249,321,398
---------------------------------------
Total assets less current liabilities 680,141,453 679,821,398
--------------------------------------- ----- -------------- --------------
Creditors: amounts falling due
after more than one year 9 (542,641,453) (542,321,398)
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 10 January 2022 and signed on its behalf by:
Karen Chadwick
Director
Wellcome Trust Finance plc
Notes to the Financial Statements
Year ended 30 September 2021
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 section. 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. Income is calculated using the effective interest rate method and is recognised on an accruals basis. Interest is earned on amounts due from group undertakings which are repayable on demand. Interest is charged at average money market rates quoted by HSBC UK Bank plc.
(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 and recognised in the statement of income and retained earnings.
(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.
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 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
2021 2020
GBP GBP
Interest receivable on loans
to Group undertakings 38,067,312 42,841,005
Interest receivable on
cash deposits 2 5
38,067,314 42,841,010
------------------------------ ----------- -----------
Interest receivable on loans to Group undertakings in the UK (see note 8) is the effective interest on:
-- Loan A at a fixed rate of 4.75%; -- Loan (new bond) to Wellcome Trust at fixed rate of 4.80% until it matured on 28 May 2021; -- Loan C to Wellcome Trust at fixed rate of 4.00%; and -- Loan D to Wellcome Trust at fixed rate of 4.125%.
All income is derived from the United Kingdom.
4. ADMINISTRATIVE EXPENSES
2021 2020
GBP GBP
Auditors' remuneration 24,912 23,652
Rating agency fees (44,565) (6,556)
Tax compliance 1,886 3,086
Other 2,485 4,805
(15,282) 24,987
------------------------ --------- --------
Auditor's remuneration is solely in relation to the statutory audit of the Financial Statements. Rating agency fees include the release of a legacy fee accrual of GBP69,948.
5. EMPLOYEE INFORMATION
The Company has no employees (2020: 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.
2021 2020
GBP GBP
Profit before
tax 3,415,927 3,434,938
Current tax charge for
the year:
Profit multiplied by standard
rate 649,026 652,638
of corporation tax in the UK
of 19% (2020: 19%)
Tax relief on gift aid
donations (649,026) (652,638)
Total current - -
tax
------------------------ ----------------------------------- ------------ -----------
8. LOANS TO GROUP UNDERTAKINGS
Principal Interest Loan anniversary Amortised Amortised
amount rate per date cost cost
annum
2021 2020
GBP % GBP GBP
Current Assets
Loan (new bond) 275,000,000 4.800 28 May - 274,680,890
275,000,000 - 274,680,890
----------------- ------------ ---------- ----------------- ------------ ------------
Non Current
Assets
Loan
A 245,500,000 4.750 25 July 245,500,000 245,500,000
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
676,000,000 676,000,000 676,000,000
----------------- ------------ ---------- ----------------- ------------ ------------
Loans to Group undertakings are loans (the "Loans") to Wellcome Trust (Loan A, Loan C, Loan D and Loan (new bond)). On 28 May 2021, Loan (new bond) was repaid by Wellcome Trust with the proceeds being used to settle the principal of the 2021 Bond which matured on the same day. The principal under Loan A is repayable on demand by the Company. The principal under Loan C and Loan D is repayable on agreement between the Company and Wellcome Trust. The Loans have an agreed repayment date on 25 July 2036 (Loan A, Loan C and Loan D). Each Loan has a fixed redemption value equal to the principal amount and a fixed interest rate.
The Company has changed the classification of GBP245.5m of Loans to Group undertakings from current assets to non-current assets in line with requirements of FRS 102 based on when the asset is expected to be realised.
9. CREDITORS
2021 2020
GBP GBP
Accruals and deferred income 3,258 28,504
Gift Aid due to the Wellcome
Trust 1,375,270 1,453,034
Bond liabilities 4,739,041 283,892,427
Total creditors: amounts falling
due within one year 6,117,569 285,373,965
--------------------------------------- ------------ ------------
Bond liabilities 542,641,453 542,321,398
Falling due after five
years 542,641,453 542,321,398
-------------------------------------- ------------ ------------
Total creditors: amounts falling
due after one year 542,641,453 542,321,398
--------------------------------------- ------------ ------------
The 2021 Bonds (GBP275 million 4.75% Guaranteed Bonds due in May 2021) were repaid during the year.
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. The Bond liabilities falling due within one year are the unpaid coupon interest accrued for the year to 30 September 2021. The interest payment to the Bond holders is at a fixed rate of 4.625% per annum (GBP550 million Bonds) and is paid in arrears on 25 July each year until repayment of the Bond principal. The bond repayment 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) 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"). 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.
10. RECONCILIATION OF MOVEMENTS IN SHAREHOLDER'S FUNDS
Shareholder's
Funds
GBP
As at 30 September 2020 137,500,000
As at 30 September 2021 137,500,000
----------------------------- --------------------
11. CALLED UP SHARE CAPITAL
2021 2020
Number GBP GBP
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 counterparty Wellcome Trust in relation to the loans to Group undertakings. These risks are in respect of 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 2021 is GBP686.2 million (2020: GBP963.8 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 2021 (2020: 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 2021 are available from Wellcome's website ( wellcome.org/what-we-do/reports ) 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
Year ended 30 September 2021
Directors
Karen Chadwick
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
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