TIDM37QC
RNS Number : 9830G
Meadowhall Finance PLC
29 July 2021
The Annual Report and Financial Statements for the year ended 31
March 2021, attached below in accordance with DTR 6.3.5, has been
submitted to the Financial Conduct Authority through the National
Storage Mechanism and will shortly be available for inspection at:
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
The Annual Report and Financial Statements are also available
at:
https://www.britishland.com/investors/strategic-partnerships/meadowhall-finance-plc
Meadowhall Finance PLC
Annual Report and Financial Statements
Year ended 31 March 2021
Company number: 05987141
Strategic Report for the Year Ended 31 March 2021
The directors present their Strategic Report for the year ended
31 March 2021.
Business review and principal activities
Meadowhall Finance PLC ("the company") is a wholly owned
subsidiary of Meadowhall Limited Partnership, which itself is
indirectly owned by MSC Property Intermediate Holdings Limited. MSC
Property Intermediate Holdings Limited and its subsidiaries ("the
group") operate as a joint venture between The British Land Company
PLC and NBIM Victoria Partners LP.
The company's principal activity is to provide funding to fellow
subsidiaries within the group.
As shown in the company's Profit and Loss Account on page 10,
the company's profit on ordinary activities before taxation is
GBP3,279 compared to a profit on ordinary activities before
taxation of GBP3,367 in the prior year.
Dividends of GBPnil (2020: GBPnil) were paid in the year.
The Balance Sheet on page 13 shows that the company's financial
position at the year end has, in net liability terms, decreased
compared with the prior year. This is mainly due to movements in
the valuation of interest rate swaps reflecting the increase in
market interest rates since the beginning of the year.
Details of significant events since the balance sheet date, if
any, are contained in note 15.
Key performance indicators
The directors measure how the group is delivering its strategy
through the key performance indicators.
The directors consider the primary measure of performance of the
group to be turnover and net asset value. The performance of the
group, which includes the company, is discussed in the group's
annual report which can be obtained as per the details in note
15.
The expected future developments of the company are determined
by the strategy of the group. There are no future developments
outside of the company's operations planned.
Principal risks and uncertainties
This company is part of a large property investment group. As
such, the fundamental underlying risks for this company are those
of the property group as discussed below.
The group generates returns to shareholders through long-term
investment decisions requiring the evaluation of opportunities
arising in the following areas:
-- demand for space from occupiers against available supply;
-- identification and execution of investment and development
strategies which are value enhancing;
-- availability of financing or refinancing at an acceptable
cost;
-- economic cycles, including their impact on tenant covenant
quality, interest rates, inflation and property values;
-- legislative changes, including planning consents and taxation;
-- engagement of development contractors with strong covenants;
-- key staff changes; and
-- environmental and health and safety policies.
Principal risks and uncertainties (continued)
These opportunities also represent risks, the most significant
being change to the value of the property portfolio. This risk has
high visibility to directors and is considered and managed on a
continuous basis. Directors use their knowledge and experience to
knowingly accept a measured degree of market risk.
Credit risk is the risk that one party to a financial instrument
will fail to discharge an obligation and cause the other party to
incur a financial loss. In order to manage this risk, management
regularly monitors all amounts that are owed to the company to
ensure that amounts are paid in full and on time.
Liquidity risk is the risk that the entity will encounter
difficulty in raising funds to meet commitments associated with
financial liabilities. This risk is managed through day to day
monitoring of future cash flow requirements to ensure that the
company has enough resources to repay all future amounts
outstanding.
The company's activities expose it primarily to interest rate
risk. The company uses interest rate swap contracts to hedge these
exposures. The company does not use derivative financial
instruments for speculative purposes.
The company finances its operations through public debt issues.
The company borrows in Sterling at both fixed and floating rates of
interest, using interest rate derivatives to hedge the interest
rate risk on variable rate debt.
The company holds one derivative as at 31 March 2021 (2020: one)
to fix the interest rates on external debt at approximately 4.65%
(2020: 4.65%). The fair value of interest rate derivatives at the
year end is a liability of GBP14.4m (2020: GBP17.2m liability) and
has been accounted for using hedge accounting through the Statement
of Comprehensive Income, with the ineffective portion recognised in
the profit and loss account.
Approved by the Board on 28 July 2021 and signed on its behalf
by:
H Shah
Director
Directors' Report for the Year Ended 31 March 2021
The directors present their report and the audited financial
statements for the year ended 31 March 2021.
Directors of the company
The directors, who held office during the year, and up to the
date of signing the financial statements, were as follows:
H Shah
J Brookes
J Patel
P Case
R Peel
Directors' responsibilities statement
The directors acknowledge their responsibilities for preparing
the Annual Report and the financial statements in accordance with
applicable law and regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the directors
have prepared the financial statements in accordance with United
Kingdom Generally Accepted Accounting Practice (United Kingdom
Accounting Standards, comprising FRS 101 "Reduced Disclosure
Framework", and applicable law). 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 apply them consistently;
-- state whether applicable United Kingdom Accounting Standards,
comprising FRS 101, have been followed, subject to any material
departures disclosed and explained in the financial statements;
-- make judgements and accounting estimates that are reasonable
and prudent; 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.
The directors are also responsible for safeguarding the assets
of the company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The directors of the ultimate parent company are responsible for
the maintenance and integrity of the ultimate parent company's
website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Environment
The company recognises the importance of its environmental
responsibilities, monitors its impact on the environment; and
designs and implements policies to reduce any damage that might be
caused by the company's activities. The company operates in
accordance with best practice policies and initiatives designed to
minimise the company's impact on the environment including safe
disposal of manufacturing waste, recycling and reducing energy
consumption.
Going concern
The Directors have reviewed the company's forecast working
capital and cash flow requirements in light of the ongoing impact
that the COVID-19 pandemic has had on the economy. In addition to
making enquiries and examining areas which could give risk to
financial exposure.
At 31 March 2021 the company was in a net liability position of
GBP11,156,252 (2020: GBP13,533,446) mainly due to the result of
market rates being below the fixed rate payable on the company's
interest rate swap. Within the going concern period the company is
required to repay principal amounts of GBP34,845,925 on the secured
bonds and receive GBP34,987,426 on the term loans from Meadowhall
Limited Partnership (the borrower). In the instance of shortfall on
repayment of term loan by the borrower due to lower rent received
from tenants, the Company has access to an undrawn Liquidity
Facility of GBP75m which will be available for the scheduled life
of the bonds to 2032 to meet certain shortfalls in debt service of
the Issuer, including bond interest and certain bond amortisation
amounts. The company also has the ability to defer other debt
service amounts in accordance with the securitisation
documents.
As a result of the above, Meadowhall Finance PLC expects to have
sufficient resources to meet the debt service requirements of the
company despite the current economic climate. Therefore, the
directors have a reasonable expectation that the company has
adequate resources to continue its operations for at least twelve
months after the signing of these financial statements and as a
result they continue to adopt the going concern basis in preparing
the accounts.
Subsequent Events
Details of significant events since the Balance Sheet date, if
any, are contained in note 14.
Disclosure of information to the auditors
Each director has taken steps that they ought to have taken as a
director in order to make themselves aware of any relevant audit
information and to establish that the company's auditors are aware
of that information. The directors confirm that there is no
relevant information that they know of and of which they know the
auditors are unaware.
Reappointment of auditors
The auditors, PricewaterhouseCoopers LLP, have indicated their
willingness to continue in office and a resolution concerning their
re-appointment will be proposed at the next Board Meeting.
Approved by the Board on 28 July 2021 and signed on its behalf
by:
H Shah
Director
Independent auditors' report to the members of Meadowhall
Finance PLC
Report on the audit of the financial statements
Opinion
In our opinion, Meadowhall Finance PLC's financial
statements:
-- give a true and fair view of the state of the company's
affairs as at 31 March 2021 and of its profit for the year then
ended;
-- have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice (United Kingdom Accounting
Standards, comprising FRS 101 "Reduced Disclosure Framework", and
applicable law); and
-- have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the
Annual Report and Financial Statements (the "Annual Report"), which
comprise: the Balance Sheet as at 31 March 2021; the Profit and
Loss Account, the Statement of Comprehensive Income and the
Statement of Changes in Equity for the year then ended; and the
notes to the financial statements, which include a description of
the significant accounting policies.
Our opinion is consistent with our reporting to the
directors.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our
responsibilities under ISAs (UK) are further described in the
Auditors' responsibilities for the audit of the financial
statements section of our report. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Independence
We remained independent of the company in accordance with the
ethical requirements that are relevant to our audit of the
financial statements in the UK, which includes the FRC's Ethical
Standard, as applicable to listed public interest entities, and we
have fulfilled our other ethical responsibilities in accordance
with these requirements.
To the best of our knowledge and belief, we declare that
non-audit services prohibited by the FRC's Ethical Standard were
not provided.
We have provided no non-audit services to the company in the
period under audit.
Our audit approach
Overview
Audit scope
-- We tailored the scope of our audit to ensure that we
performed enough work to be able to give an opinion on the
financial statements as a whole. In particular, we looked at where
the directors made subjective judgements, for example in respect of
significant accounting estimates that involved making assumptions
and considering future events that are inherently uncertain.
Key audit matters
-- Covid-19
Materiality
-- Overall materiality: GBP5,600,000 (2020: GBP5,900,000) based on 1% of total assets.
-- Performance materiality: GBP4,200,000.
The scope of our audit
As part of designing our audit, we determined materiality and
assessed the risks of material misstatement in the financial
statements.
Key audit matters
Key audit matters are those matters that, in the auditors'
professional judgement, were of most significance in the 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) identified by the auditors, including 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, and any comments we make on the
results of our procedures thereon, 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.
This is not a complete list of all risks identified by our
audit.
The key audit matters below are consistent with last year.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed
enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the
company, the accounting processes and controls, and the industry in
which it operates.
The company's principal activity is to provide funding to fellow
subsidiaries within the group. The scoping performed has ensured
sufficient coverage and appropriate audit evidence for our opinion
on the company financial statements as a whole.
Materiality
The scope of our audit was influenced by our application of
materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations,
helped us to determine the scope of our audit and the nature,
timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in evaluating
the effect of misstatements, both individually and in aggregate on
the financial statements as a whole.
Based on our professional judgement, we determined materiality
for the financial statements as a whole as follows:
Overall company GBP5,600,000 (2020: GBP5,900,000).
materiality
How we determined 1% of total assets
it
-------------------------------------------------------
Rationale for We believe that total assets are the primary measure
benchmark applied used by the shareholders in assessing the performance
of the entity, and is a generally accepted auditing
benchmark.
-------------------------------------------------------
We use performance materiality to reduce to an appropriately low
level the probability that the aggregate of uncorrected and
undetected misstatements exceeds overall materiality. Specifically,
we use performance materiality in determining the scope of our
audit and the nature and extent of our testing of account balances,
classes of transactions and disclosures, for example in determining
sample sizes. Our performance materiality was 75% of overall
materiality, amounting to GBP4,200,000 for the company financial
statements.
In determining the performance materiality, we considered a
number of factors - the history of misstatements, risk assessment
and aggregation risk and the effectiveness of controls - and
concluded that an amount at the upper end of our normal range was
appropriate.
We agreed with the directors that we would report to them
misstatements identified during our audit above 282,000 (2020:
297,000) as well as misstatements below that amount that, in our
view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the directors' assessment of the company's
ability to continue to adopt the going concern basis of accounting
included:
-- Corroborated key assumptions (e.g. liquidity forecasts and
financing arrangements) to underlying documentation and ensured
this was consistent with our audit work in these areas;
-- Understood and assessed the appropriateness of the key
assumptions used both in the base case and in the severe but
plausible downside scenario, including assessing whether we
considered the downside sensitivities to be appropriately
severe;
-- Tested the integrity of the underlying formulas and
calculations within the going concern and cash flow models;
-- Considered the appropriateness of the mitigating actions
available to management in the event of the downside scenario
materialising. Specifically, we focused on whether these actions
are within the company's control and are achievable; and
-- Reviewed the disclosures provided relating to the going
concern basis of preparation and found that these provided an
explanation of the directors' assessment that was consistent
with the evidence we obtained.
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.
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.
However, because not all future events or conditions can be
predicted, this conclusion is not a guarantee as to the company's
ability to continue as a going concern.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
Reporting on other information
The other information comprises all of the information in the
Annual Report other than the financial statements and our auditors'
report thereon. The directors are responsible for the other
information. Our opinion on the financial statements does not cover
the other information and, accordingly, we do not express an audit
opinion or, except to the extent otherwise explicitly stated in
this report, any form of assurance 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 an apparent material inconsistency or material
misstatement, we are required to perform procedures to conclude
whether there is a material misstatement of 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. We have nothing to report based on these
responsibilities.
With respect to the Strategic report and Directors' Report, we
also considered whether the disclosures required by the UK
Companies Act 2006 have been included.
Based on our work undertaken in the course of the audit, the
Companies Act 2006 requires us also to report certain opinions and
matters as described below.
Strategic report and Directors' Report
In our opinion, based on the work undertaken in the course of
the audit, the information given in the Strategic report and
Directors' Report for the year ended 31 March 2021 is consistent
with the financial statements and has been prepared in accordance
with applicable legal requirements.
In light of the knowledge and understanding of the company and
its environment obtained in the course of the audit, we did not
identify any material misstatements in the Strategic report and
Directors' Report.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial
statements
As explained more fully in the Directors' responsibilities
statement, the directors are responsible for the preparation of the
financial statements in accordance with the applicable framework
and for being satisfied that they give a true and fair view. The
directors are also responsible for such internal control as they
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.
Auditors' 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
auditors' 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.
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.
Based on our understanding of the company and industry, we
identified that the principal risks of non-compliance with laws and
regulations related to the Companies Act 2006 and the Listing
Rules, and we considered the extent to which non- compliance might
have a material effect on the financial statements. We evaluated
management's incentives and opportunities for fraudulent
manipulation of the financial statements (including the risk of
override of controls), and determined that the principal risks were
related to posting inappropriate journal entries to increase
interest receivable or reduce interest payable. Audit procedures
performed by the engagement team included:
-- Discussions with management and internal audit, including
consideration of known or suspected instances of non- compliance
with laws and regulations and fraud, and review of the reports made
by management and internal audit;
-- Understanding of management's internal controls designed to
prevent and detect irregularities, risk-based monitoring of
customer processes;
-- Assessment of matters reported on the company's
whistleblowing helpline and the results of management's
investigation of such matters;
-- Reviewing the company's litigation register in so far as it
related to non-compliance with laws and regulations and fraud;
and
-- Reviewing relevant meeting minutes.
There are inherent limitations in the audit procedures described
above. We are less likely to become aware of instances of
non-compliance with laws and regulations that are not closely
related to events and transactions reflected in the financial
statements. Also, the risk of not detecting a material misstatement
due to fraud is higher than the risk of not detecting one resulting
from error, as fraud may involve deliberate concealment by, for
example, forgery or intentional misrepresentations, or through
collusion.
Our audit testing might include testing complete populations of
certain transactions and balances, possibly using data auditing
techniques. However, it typically involves selecting a limited
number of items for testing, rather than testing complete
populations. We will often seek to target particular items for
testing based on their size or risk characteristics. In other
cases, we will use audit sampling to enable us to draw a conclusion
about the population from which the sample is selected.
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 auditors' report.
Use of this report
This report, including the opinions, has been prepared for and
only for the company's members as a body in accordance with Chapter
3 of Part 16 of the Companies Act 2006 and for no other purpose. We
do not, in giving these opinions, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you
if, in our opinion:
-- we have not obtained all the information and explanations we require for our audit; or
-- adequate accounting records have not been kept by the
company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- the financial statements are not in agreement with the accounting records and returns.
We have no exceptions to report arising from this
responsibility.
Appointment
Following the recommendation of the directors, we were appointed
by the directors on 15 March 2018 to audit the financial statements
for the year ended 31 March 2018 and subsequent financial periods.
The period of total uninterrupted engagement is four years,
covering the years ended 31 March 2018 to 31 March 2021.
Sandra Dowling (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP Chartered
Accountants and Statutory Auditors London
28 July 2021
Profit and Loss Account for the Year Ended 31 March 2021
2021 2020
Note GBP GBP
Interest received and similar income 3 28,997,405 30,324,389
Interest paid and similar expenses 4 (28,994,126) (30,321,022)
------------ ------------
Profit on ordinary activities before
taxation 3,279 3,367
Taxation 7 (623) (640)
------------ ------------
Profit for the year 2,656 2,727
============ ============
Results were derived from continuing operations within the
United Kingdom.
Statement of Comprehensive Income for the Year Ended 31 March
2021
2021 2020
Note GBP GBP
Profit for the year 2,656 2,727
--------- -----------
Items that may be reclassified subsequently
to profit or loss
Gain / (loss) on cash flow hedges (net) 10 2,919,656 (1,728,037)
Tax relating to components of other
comprehensive income / (expense) 11 (545,118) 639,861
--------- -----------
2,374,538 (1,088,176)
--------- -----------
Total comprehensive income / (expense)
for the year 2,377,194 (1,085,449)
========= ===========
Balance Sheet as at 31 March 2021
31 March 31 March
2021 2020
Note GBP GBP
Current assets
Debtors due within one year 8 41,062,365 39,107,905
Debtors due after more than one year 8 522,322,266 555,187,011
Cash at bank and in hand 17 41,830
------------- -------------
563,384,648 594,336,746
Creditors due within one year 9 (40,909,339) (38,726,111)
------------- -------------
Total assets less current liabilities 522,475,309 555,610,635
Creditors due after more than one year 10 (533,631,561) (569,144,081)
------------- -------------
Net liabilities (11,156,252) (13,533,446)
============= =============
Capital and reserves
Called up share capital 12 12,502 12,502
Cash flow hedging reserve (10,678,043) (13,052,581)
Profit and loss account (490,711) (493,367)
------------- -------------
Total shareholders' deficit (11,156,252) (13,533,446)
============= =============
Approved by the Board on 28 July 2021 and signed on its behalf
by:
H Shah
Director
Statement of Changes in Equity for the Year Ended 31 March
2021
Cash flow Profit and
Share capital hedging reserve loss account Total
GBP GBP GBP GBP
Balance at 1 April
2019 12,502 (11,964,405) (496,094) (12,447,997)
Profit for the year - - 2,727 2,727
Gain / (loss) on
cash flow hedges
(net) - (1,728,037) - (1,728,037)
Tax relating to components
of other comprehensive
expense - 639,861 - 639,861
------------- ---------------- ------------- ------------
Total comprehensive
expense for the year - (1,088,176) 2,727 (1,085,449)
------------- ---------------- ------------- ------------
Balance at 31 March
2020 12,502 (13,052,581) (493,367) (13,533,446)
============= ================ ============= ============
Balance at 1 April
2020 12,502 (13,052,581) (493,367) (13,533,446)
Profit for the year - - 2,656 2,656
Gain / (loss) on
cash flow hedges
(net) - 2,919,656 - 2,919,656
Tax relating to components
of other comprehensive
income - (545,118) - (545,118)
------ ------------ --------- ------------
Total comprehensive
income for the year - 2,374,538 2,656 2,377,194
------ ------------ --------- ------------
Balance at 31 March
2021 12,502 (10,678,043) (490,711) (11,156,252)
====== ============ ========= ============
Meadowhall Finance PLC
Notes to the Financial Statements for the Year Ended 31 March
2021
1 General information
The company is a public company limited by share capital,
incorporated and domiciled in England, United Kingdom.
The address of its registered office is:
York House
45 Seymour Street
London
W1H 7LX
2 Accounting policies
Summary of significant accounting policies and key accounting
estimates
The principal accounting policies applied in the preparation of
these financial statements are set out below. These policies have
been consistently applied to all the years presented, unless
otherwise stated.
Basis of preparation
These financial statements were prepared in accordance with
Financial Reporting Standard 101 Reduced Disclosure Framework ("FRS
101").
The financial statements are prepared in accordance with
international accounting standards in conformity with the
requirements of the Companies Act 2006. Instances in which
advantage of the FRS 101 disclosure exemptions have been taken are
set out below.
The financial statements have been prepared under the historical
cost convention, as modified to include the revaluation of
derivatives. Historical cost is generally based on the fair value
of the consideration given in exchange for the assets.
Summary of disclosure exemptions
The company has taken advantage of the following disclosure
exemptions under FRS 101:
(a) The requirements of IAS 1 to provide a Balance Sheet at
the beginning of the year in the event of a prior year adjustment;
(b) The requirements of IAS 1 to provide a Statement of Cash
flows for the year;
(c) The requirements of IAS 1 to provide a statement of compliance
with IFRS;
(d) The requirements of IAS 1 to disclose information on the
management of capital;
(e) The requirements of paragraphs 30 and 31 of IAS 8 Accounting
Policies, Changes in Accounting Estimates and Errors to
disclose new IFRS's that have been issued but are not yet
effective;
(f) The requirements in IAS 24 Related Party Disclosures to
disclose related party transactions entered into between
two or more members of a group, provided that any subsidiary
which is a party to the transaction is wholly owned by such
a member;
(g) The requirements of paragraph 17 of IAS 24 Related Party
Disclosures to disclose key management personnel compensation;
(h) The requirements of IFRS 7 to disclose financial instruments;
and
(i) The requirements of paragraphs 91-99 of IFRS 13 Fair Value
Measurement to disclose information of fair value valuation
techniques and inputs.
2 Accounting policies (continued)
Disclosure exemptions for subsidiaries are permitted where the
relevant disclosure requirements are met in the consolidated
financial statements. Where required, equivalent disclosures are
given in the group financial statements of MSC Property
Intermediate Holdings Limited. The group financial statements of
MSC Property Intermediate Holdings Limited are available to the
public and can be obtained as set out in note 15.
Going concern
The Directors have reviewed the company's forecast working
capital and cash flow requirements in light of the ongoing impact
that the COVID-19 pandemic has had on the economy. In addition to
making enquiries and examining areas which could give risk to
financial exposure.
At 31 March 2021 the company was in a net liability position of
GBP11,156,252 (2020: GBP13,533,446) mainly due to the result of
market rates being below the fixed rate payable on the company's
interest rate swap. Within the going concern period the company is
required to repay principal amounts of GBP34,845,925 on the secured
bonds and receive GBP34,987,426 on the term loans from Meadowhall
Limited Partnership (the borrower). In the instance of shortfall on
repayment of term loan by the borrower due to lower rent received
from tenants, the Company has access to an undrawn Liquidity
Facility of GBP75m which will be available for the scheduled life
of the bonds to 2032 to meet certain shortfalls in debt service of
the Issuer, including bond interest and certain bond amortisation
amounts. The company also has the ability to defer other debt
service amounts in accordance with the securitisation
documents.
As a result of the above, Meadowhall Finance PLC expects to have
sufficient resources to meet the debt service requirements of the
company despite the current economic climate. Therefore, the
directors have a reasonable expectation that the company has
adequate resources to continue its operations for at least twelve
months after the signing of these financial statements and as a
result they continue to adopt the going concern basis in preparing
the accounts.
Interest payable and receivable policy
Interest payable and receivable is recognised as incurred under
the accruals concept. Interest payable includes financing charges
which are spread over the period to redemption, using the effective
interest method. Commitment fees on non-utilised facilities are
also included within interest payable.
Taxation
Current tax
Current tax is the expected tax payable or receivable on the
taxable income or loss for the year, using tax rates enacted or
substantively enacted at the balance sheet date, and any adjustment
to tax payable in respect of previous years.
Current tax is based on taxable profit for the year and is
calculated using tax rates that have been enacted or substantively
enacted at the balance sheet date. Taxable profit differs from net
profit as reported in the profit and loss account because it
excludes items of income or expense that are not taxable (or tax
deductible).
Deferred tax
Deferred tax is provided on items that may become taxable at a
later date, on the difference between the balance sheet value and
tax base value, on an undiscounted basis. The company recognises
deferred tax assets on derivative revaluations to the extent that
future matching taxable profits are expected to arise.
2 Accounting policies (continued)
Financial assets and liabilities
Trade debtors and creditors are initially recognised at fair
value and subsequently measured at amortised cost and discounted as
appropriate. On initial recognition the Group calculates the
expected credit loss for debtors based on lifetime expected credit
losses under the IFRS 9 simplified approach.
Loans and receivables classified as amortised cost are measured
using the effective interest method, less any impairment. Interest
is recognised by applying the effective interest rate.
Debt instruments are stated at their net proceeds on issue.
Finance charges including premia payable on settlement or
redemption and direct issue costs are spread over the period to
redemption, using the effective interest method. Exceptional
finance charges incurred due to early redemption (including premia)
are recognised in the Consolidated Income Statement when they
occur.
As defined by IFRS 9, cash flow and fair value hedges are
initially recognised at fair value at the date the derivative
contracts are entered into, and subsequently remeasured at fair
value. Changes in the fair value of derivatives that are designated
and qualify as effective cash flow hedges are recognised directly
through other comprehensive income as a movement in the hedging and
translation reserve. Changes in the fair value of derivatives that
are designated and qualify as effective fair value hedges are
recorded in the Consolidated Income Statement, along with any
changes in the fair value of the hedged item that is attributable
to the hedged risk. Any ineffective portion of all derivatives is
recognised in the Consolidated Income Statement. Changes in the
fair value of derivatives that are not in a designated hedging
relationship under IFRS 9 are recorded directly in the Consolidated
Income Statement. These derivatives are carried at fair value on
the balance sheet.
Cash equivalents are limited to instruments with a maturity of
less than three months.
3 Interest received and similar income
2021 2020
GBP GBP
Interest received on amounts owed by group
companies 28,997,405 30,324,389
------------------ ------------------
28,997,405 30,324,389
================== ==================
4 Interest paid and similar expenses
2021 2020
GBP GBP
Bonds and related facilities 27,081,837 28,573,963
Interest paid on cashflow hedge 1,912,289 1,747,059
------------------ ------------------
28,994,126 30,321,022
================== ==================
5 Auditors' remuneration
A notional charge of GBP14,700 (2020: GBP14,700) is deemed
payable to PricewaterhouseCoopers LLP in respect of the audit of
the financial statements for the year ended 31 March 2021. Actual
amounts payable to PricewaterhouseCoopers LLP are paid at group
level by MSC Property Intermediate Holdings Limited.
No non-audit fees (2020 : GBPnil) were paid to
PricewaterhouseCoopers LLP.
6 Staff costs
No director (2020: nil) received any remuneration for services
to the company in either year. The remuneration of the directors
was borne by another company, for which no apportionment or
recharges were made.
Average number of employees, excluding directors, of the company
during the year was nil (2020: nil).
7 Taxation
2021 2020
GBP GBP
Current taxation
UK corporation tax 623 640
---- ----
Tax charge in the profit and loss account 623 640
==== ====
2021 2020
GBP GBP
Tax reconciliation
Profit on ordinary activities before taxation 3,279 3,367
----- -----
Tax on profit on ordinary activities at
UK corporation tax rate of 19% (2020: 19%) 623 640
Effects of:
Total tax charge 623 640
===== =====
In the Spring Budget 2021, the Government announced that from 1
April 2023 the corporation tax rate will increase to 25%. At the
balance sheet date, the proposal to increase the rate to 25% had
not been substantively enacted, substantive enactment occurred on
24 May 2021. Any material impact on deferred tax has been discussed
in note 12.
8 Debtors
31 March 31 March
2021 2020
GBP GBP
Debtors due within one year
Amounts due from related parties 19,503 12,185
Loans to related parties 34,987,426 32,763,480
Accrued income 6,055,436 6,332,240
----------- -----------
41,062,365 39,107,905
=========== ===========
8 Debtors (continued)
31 March 31 March
2021 2020
GBP GBP
Debtors due within more than one year
Deferred tax assets - see note 11 2,728,763 3,273,881
Amounts owed by group companies - Long
term loans 519,593,503 551,913,130
----------- -----------
522,322,266 555,187,011
=========== ===========
9 Creditors due within one year
31 March 31 March
2021 2020
GBP GBP
Accrued expenses 6,052,189 5,959,348
Amounts due to related parties 1,825 1,825
Social security and other taxes 8,777 1,458
Corporation tax liability 623 -
Secured bonds 34,845,925 32,763,480
------------------------- -------------------------
40,909,339 38,726,111
========================= =========================
10 Creditors due after more than one year
31 March 31 March
2021 2020
GBP GBP
Secured bonds due within one to two years 37,301,720 32,643,480
Secured bonds due within two to five years 109,631,640 112,502,960
Secured bonds due after five years 372,336,290 406,766,690
Interest rate derivative liability 14,361,911 17,230,951
------------------------- -------------------------
533,631,561 569,144,081
========================= =========================
10 Creditors due after more than one year (continued)
31 March 31 March
2021 2020
GBP GBP
Borrowings repayment analysis
Repayments due:
Within one year 34,845,925 32,763,480
Within one to two years 37,301,720 32,643,480
Within two to five years 109,631,640 112,502,960
------------------------- -------------------------
181,779,285 177,909,920
After five years 372,336,290 406,766,690
------------------------- -------------------------
Total borrowings 554,115,575 584,676,610
Fair value of interest rate derivatives 14,361,911 17,230,951
------------------------- -------------------------
Net debt 568,477,486 601,907,561
========================= =========================
31 March 31 March
2021 2020
GBP GBP
Secured bonds on the assets of the Meadowhall Limited Partnership
Class A1 4.986% Bonds due 2037 393,259,680 420,760,560
Class A2 Floating Rate Bonds due 2037 42,780,000 44,460,000
Class B 4.988% Bonds due 2037 118,075,895 119,456,050
------------ -----------
Total borrowings 554,115,575 584,676,610
Fair value of interest rate derivatives 14,361,911 17,230,951
------------ -----------
Total secured borrowings 568,477,486 601,907,561
============ ===========
The GBP43m (2020: GBP44m) floating rate bonds are fully hedged
by a swap to 2032. At 31 March 2021, taking into account the effect
of derivatives, 100% of the bonds were fixed (2020: 100%) until
expected maturity. The bonds amortise from 2007 to 2032, and are
secured on the properties of group valued at GBP736m (2020:
GBP1,154m). The weighted average interest rate of the bonds is
5.00% (2020: 5.00%). The weighted average maturity of the bonds is
7.4 years (2020: 8.0 years).
The secured bonds as detailed in this note are issued by
Meadowhall Finance PLC ('Issuer') and the proceeds are on-lent to
Meadowhall Limited Partnership ('Borrower') under the
Issuer/Borrower Loan Agreement. Under this agreement Meadowhall
Limited Partnership will grant security over its beneficial
interest in Meadowhall Shopping Centre ('Mortgaged Property') and
selected other interests and assets.
10 Creditors due after more than one year (continued)
Following the Consent Solicitation Process and Notices announced
by Meadowhall Finance PLC on 17 June 2020, the Extraordinary
Resolutions set out in each such Notice was duly held and passed by
the holders of the relevant Classes of the A1, A2 and B Bonds on 9
July 2020. As a result certain covenant provisions in relation to
Meadowhall Limited Partnership (the Borrower) are modified from 9
July 2020 to (and including) the Interest Payment Date falling in
October 2021.
At 31 March 2021, the company was financed by GBP554.1m bonds
(2020: GBP584.7m).
Except as detailed below, the carrying amounts of financial
assets and financial liabilities recorded at amortised cost in the
financial statements are approximately equal to their fair
values.
31 March 31 March
2021 2020
GBPm GBPm
Bonds fair value 623 702
======== ========
Comparison of fair values and book values and fair value
hierarchy
The table below provides a comparison of fair value and book
value along with the classification per the fair value hierarchy.
The different levels are defined:
Level 1: Quoted prices (unadjusted) in active markets for
identical assets or liabilities.
Level 2: Inputs other than quoted prices included within Level 1
that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: Inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
Fair value Book value Fair value Book value
31 March 31 March 31 March 31 March
2021 2021 2020 2020
Level GBP m GBP m GBP m GBP m
Secured bonds 2 623 554 702 585
Interest rate derivative
liability 2 14 14 17 17
---------- ---------- ---------- ----------
637 568 719 602
========== ========== ========== ==========
The fair values of the bonds have been established by obtaining
quoted market prices from brokers. The derivatives have been valued
by calculating the present value of future cash flows, using
appropriate market discount rates, by an independent treasury
advisor.
The Class A1 and B Loan notes expose the entity to fair value
interest rate risk while the Class A2 Loan notes expose the company
to cash flow interest rate risk.
The ineffectiveness recognised in the income statement on cash
flow hedges in the year ended 31 March 2021 was GBPnil (2020:
GBPnil). The table below summarises variable rate debt hedged at 31
March 2021.
31 March 31 March
2021 2020
GBP GBP
Outstanding after one year 41,220,000 42,780,000
Outstanding after two years 40,500,000 41,220,000
Outstanding after five years 39,060,000 39,060,000
10 Creditors due after more than one year (continued)
Hedge accounting
The company uses interest rate swaps to hedge exposure to the
variability in cash flows on floating rate debt. At 31 March 2021,
the fair value of these derivatives, which have been designated
cash flow hedges under lFRS 9, is a liability of GBP14.4m (2020:
GBP17.2m liability). The valuation movement reflects the decrease
in market interest rates since the beginning of the year.
The derivatives have been valued by calculating the net present
value of future cash flows, using appropriate market discount
rates, by an independent treasury advisor. The effective portion of
changes in fair value of the designated hedging instrument is
recognised in other comprehensive income. The gain or loss relating
to the ineffective portion is recognised immediately in the profit
and loss. Amounts previously recognised in other comprehensive
income and accumulated in equity are reclassified to the profit and
loss in the periods in which the hedged item affects profit or loss
or when the hedging relationship ends.
2021 2020 Movement
Reconciliation to gain / (loss) on cash GBP GBP GBP
flow hedges (net)
Fair value of interest rate derivatives
(gross) (14,361,911) (17,230,951) 2,869,040
Less: Derivative interest posted directly
to income statement 422,887 372,271 50,616
Gain / (loss) on cash flow hedges (net) (13,939,024) (16,858,680) 2,919,656
2020 2019 Movement
Reconciliation to gain / (loss) on cash GBP GBP GBP
flow hedges (net)
Fair value of interest rate derivatives
(gross) (17,230,951) (15,494,231) (1,736,720)
Less: Derivative interest posted directly
to income statement 372,271 363,588 8,683
Gain / (loss) on cash flow hedges (net) (16,858,680) (15,130,643) (1,728,037)
The Treasury Function
The company finances its operations through public debt issues.
The company borrows in Sterling at both fixed and floating rates of
interest, using interest rate derivatives to hedge these borrowings
where appropriate.
Risk Management
Capital risk management:
The company finances its operations through public debt issues
to ensure that sufficient competitively priced finance is available
to support the property strategy of the MSC Property Intermediate
Holdings Limited group.
The approach adopted has been to engage in debt financing with
long term maturity dates and as such the bonds issued are due in
2037, but are expected to be repaid in 2032. Including debt
amortisation 67.6% (2020: 69.6%) of the total borrowings are due
for payment after 5 years. There are no immediate debt refinancing
requirements.
The company maintains a revolving liquidity facility which
provides financial liquidity. This facility is only available for
the requirements of the Meadowhall securitisation. At 31 March 2021
this facility was GBP75.0m (GBP75.0m undrawn) (2020: GBP75.0m
(GBP75.0m undrawn)).
Details of bond covenants are authorised in the bonds Offering
Circular, accessible via:
https://www.britishland.com/investors/debt/strategic-partnerships/meadowhall-financing-plc
Credit risk:
Credit risk is the risk that one party to a financial instrument
will fail to discharge an obligation and cause the other party to
incur a financial loss. The carrying amount of financial assets
recorded in the financial statements represents the company's
maximum exposure to credit risk without taking account of the value
of any collateral obtained.
10 Creditors due after more than one year (continued)
Cash and deposits at 31 March 2021 amounted to GBP17 (2020:
GBP41,830) and are placed with European Financial institutions with
A or better credit ratings. At 31 March 2021, prior to taking
account of any offset arrangements, the largest combined credit
exposure to a single counterparty arising from money market
deposits and interest rate swaps was GBPnil (2020: GBPnil). This
represents 0% (2020: 0%) of gross assets.
The company's principal credit risk relates to an intra-group
loan to Meadowhall Limited Partnership. At 31 March 2021 this loan
stood at GBP554.1m (2020: GBP584.7m). The purpose of this loan is
to provide funding to fellow subsidiaries of the MSC Property
Intermediate Holdings Limited group.
At 31 March 2021, the fair value of all interest rate
derivatives which had a positive value was GBPnil (2020:
GBPnil).
In order to manage this risk, management regularly monitors all
amounts that are owed to the company to ensure that amounts are
paid in full and on time.
Liquidity risk:
Liquidity risk is the risk that the entity will encounter
difficulty in raising funds to meet commitments associated with
financial liabilities. This risk is managed through day to day
monitoring of future cash flow requirements to ensure that the
company has enough resources to repay all future amounts
outstanding.
Interest rate risk:
The company's activities expose it primarily to interest rate
risk. The group uses interest rate swap contracts to hedge these
exposures. The group does not use derivative financial instruments
for speculative purposes.
11 Deferred tax asset
2021 2020
GBP GBP
1 April 3,273,881 2,634,020
Credited to hedging and translation reserve (545,118) 639,861
--------- ---------
31 March 2,728,763 3,273,881
========= =========
The deferred tax balance arises on the fair value gain or loss
on the revaluation of interest rate derivatives as described in
note 11.
In the Spring Budget 2021, the Government announced that from 1
April 2023 the corporation tax rate will increase to 25%. At the
balance sheet date, the proposal to increase the rate to 25% had
not been substantively enacted, substantive enactment occurred on
24 May 2021, therefore, its effects are not included in these
financial statements. However, it is likely that the overall effect
of the change, had it been substantively enacted by the balance
sheet date, would be to increase the tax gain recorded in the
Statement of change in Equity for the period by GBP861,715, to
increase the deferred tax asset by GBP861,715.
12 Share capital
Allotted, called up and fully paid shares
31 March 31 March
2021 2020
No. GBP No. GBP
Ordinary shares of GBP1
each 2 2 2 2
Ordinary shares part
paid of GBP0.25 each 49,998 12,500 49,998 12,500
50,000 12,502 50,000 12,502
====== ====== ====== ======
13 Contingent liabilities
The company is jointly and severally liable with MSC (Cash
Management) Limited and fellow subsidiaries for all monies falling
due under the group VAT registration.
14 Subsequent events
There have been no significant events since the year end.
15 Parent and ultimate parent undertaking
The immediate controlling party is Meadowhall Limited
Partnership.
The ultimate holding company is MSC Property Intermediate
Holdings Limited, a joint venture between The British Land Company
PLC and NBIM Victoria Partners LP.
MSC Property Intermediate Holdings Limited is the smallest and
largest group for which group accounts are available and which
include the company. The accounts of MSC Property Intermediate
Holdings Limited are available on request from British Land, York
House, 45 Seymour Street, London, W1H 7LX.
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END
FR DKCBBABKDNOB
(END) Dow Jones Newswires
July 29, 2021 12:25 ET (16:25 GMT)
Meadow.fin A1 (LSE:37QC)
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