TIDM85QW
RNS Number : 1254O
Broadgate Financing PLC
27 May 2020
The Annual Report and Financial Statements for the twelve months
ended 31 March 2020 , attached below in accordance with DTR 6.3.5,
have been submitted to the Financial Conduct Authority through the
National Storage Mechanism and will shortly be available for
inspection at
https://www.fca.org.uk/markets/primary-markets/regulatory-disclosures/national-storage-mechanism
The Annual Report and Financial Statements are also
available
at
https://www.britishland.com/investors/strategic-partnerships/broadgate-financing-plc
Broadgate Financing PLC
Annual Report and Financial Statements
Strategic Report
The directors present their Strategic Report for the year ended
31 March 2020.
Business review and principal activities
Broadgate Financing PLC ("the company") is a wholly owned
subsidiary of Broadgate Property Holdings Limited and operates as a
constituent of Broadgate REIT Limited group of companies ("the
group"). Broadgate REIT Limited operates as a joint venture between
Euro Bluebell LLP, an affiliate of GIC, Singapore's sovereign
wealth fund, and BL Bluebutton 2014 Limited, a wholly owned
subsidiary of The British Land Company PLC.
The company's principal activity is to provide funding to fellow
subsidiaries within the group.
As shown in the company's Profit and Loss Account, the company
has no turnover and this has remained consistent with the prior
year. Profit on ordinary activities before taxation is GBP6,276
compared to a profit on ordinary activities before taxation of
GBP6,654 in the prior year.
Dividends of GBPnil (2019: GBPnil) were paid in the year.
The Balance Sheet shows that the company's financial position at
the year end has, in net assets terms, increased compared with the
prior year, predominantly as a result of interest received.
The expected future developments of the company are determined
by the strategy of the group. There are no future developments
outside of the company's current operations planned.
For more information also see Broadgate REIT Limited group
annual report.
The performance of the group, which includes the company, is
discussed in the group's annual report which does not form part of
this report.
Key performance indicators
The directors measure how the group, of which this company is a
member, is delivering its strategy through the key performance
indicators.
The directors consider the primary measure of performance of the
group to be net asset value.
Principal risks and uncertainties
This company is part of a large property investment group. As
such, the fundamental underlying risks for this company are those
of the property group. The key risks of this group are the
performance of the properties and tenant default and credit risk of
counterparties for holding cash deposits. These risks are mitigated
by preference for tenants with strong covenants on long leases and
by using highly rated Financial Institutions for placing cash
deposits.
These risks have high visibility to senior executives and are
considered and managed on a continuous basis. Executives use their
knowledge and experience to knowingly accept a measured degree of
market risk.
The group's preference for prime assets and their secure long
term contracted rental income, primarily with upward only rent
review clauses, presents lower risks than many other property
portfolios.
Credit risk is the risk that one party to a financial instrument
will fail to discharge an obligation and cause the other party to
incur a financial loss. In order to manage this risk, management
regularly monitors the credit rating of credit counterparties and
monitors all amounts that are owed to the company.
Liquidity risk is the risk that the entity will encounter
difficulty in raising funds to meet commitments associated with
financial liabilities. This risk is managed through day to day
monitoring of future cash flow requirements to ensure that the
company has enough resources to repay all future liabilities as
they fall due.
The outbreak of COVID-19 has created a unprecedented degree of
uncertainty over both the severity of the above risks and the
effectiveness of the above mitigating actions. The decline in
economic activity resulting from the pandemic has heightened the
risk of tenants becoming financially distressed. The pandemic has
also reduced the degree of certainty around the valuation of the
properties, and around the availability and pricing of finance.
Approved by the Board on 26 May 2020 and signed on its behalf
by:
H Shah Director
Directors' Report for the Year Ended 31 March 2020
The directors present their report and the audited financial
statements for the year ended 31 March 2020.
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
D Richards D Lockyer
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 elected to prepare the financial statements in accordance with
United Kingdom Accounting Standards (United Kingdom Generally
Accepted Accounting Practice), including FRS 101 'Reduced
Disclosure Framework' ('FRS 101'). 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;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether FRS 101 has been followed, subject to any
material departures disclosed and explained in the financial
statements; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the company will
continue in business.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the company's
transactions and disclose with reasonable accuracy at any time the
financial position of the company and enable them to ensure that
the financial statements comply with 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 of the ultimate parent company are responsible for
the maintenance and integrity of the of the ultimate parent
company's website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Environmental matters
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 the 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 COVID-19
pandemic and in addition to making enquiries and examining areas
which could give risk to financial exposure. The company has access
to the drawn down term loan of GBP92m to meet certain shortfalls on
bond service, if there was a shortfall from the rent received.
Broadgate Financing PLC is part of the Broadgate REIT Limited group
which expects to have sufficient resources to meet the debt
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 the 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 17.
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 independent auditors
The auditors, PricewaterhouseCoopers LLP, have indicated their
willingness to continue in office and a resolution concerning their
re-appointment will be proposed at the next Board Meeting.
Approved by the Board on 26 May 2020 and signed on its behalf
by:
H Shah Director
Independent auditors' report to the members of Broadgate
Financing PLC
Report on the audit of the financial statements
Opinion
In our opinion, Broadgate Financing PLC's financial
statements:
-- give a true and fair view of the state of the Company's
affairs as at 31 March 2020 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 2020; 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 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 to the Company.
We have provided no non-audit services to the Company in the
period from 1 April 2019 to 31 March 2020.
Our audit approach
Overview
* Overall materiality: GBP13,995,000 (2019:
GBP14,746,000), based on 1% of total assets.
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* 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.
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* COVID-19.
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. 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. Capability
of the audit in detecting irregularities, including fraud
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 also
considered those laws and regulations that have a direct impact on
the preparation of the financial statements such as the Companies
Act 2006. 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
revenue or reduce expenditure. 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;
-- Reviewing relevant meeting minutes;
-- Designing audit procedures to incorporate unpredictability
around the nature, timing or extent of our testing of interest
income on bank deposits, a balance which would otherwise be
immaterial;
-- Testing transactions entered into outside of the normal course of the Company's business;
There are inherent limitations in the audit procedures described
above and the further removed non-compliance with laws and
regulations is from the events and transactions reflected in the
financial statements, the less likely we would become aware of it.
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.
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.
Key audit matter How our audit addressed the key audit
matter
--------------------------------------------- ----------------------------------------------
COVID-19
Refer to page 1 (Strategic Report We evaluated the Company's updated
- Principal risks and uncertainties) risk assessment and considered whether
and pages 15 and 21 (Notes to the it addresses the relevant threats
financial statements - Note 2 Accounting posed by COVID-19. We also evaluated
policies and Note 12 Loans and borrowings). management's assessment and corroborated
The outbreak of the novel coronavirus evidence of the operational impacts,
(known as COVID 19) in many countries considering their consistency with
is rapidly evolving and the socio- other available information and our
economic impact is unprecedented. understanding of the business.
It has been declared as a global Our conclusions relating to going
pandemic and is having a major impact concern and other
on economies and financial markets. information are set out in the 'Conclusions
The efficacy of government measures relating to Going Concern' and 'Reporting
will materially influence the length on other information' sections of
of economic disruption, but it is our report, respectively, below.
probable there will be a recession We have assessed the disclosures
in the United Kingdom. presented in the Annual Report in
The Company's bonds are secured relation to COVID-19 by reading the
on properties of the Company's parent other information, including the
Group (Broadgate REIT Limited) valued Principal risks and uncertainties
at GBP4,105m. The property valuations statement set out in the Strategic
of GBP4,105m as at 31 March 2020 Report, and assessing its consistency
against which the bonds are secured with the financial statements and
are reported on the basis of "material the evidence we obtained in our audit.
valuation uncertainty" as per VPS In respect of going concern, we assessed
3 and VPGA 10 of the RICS Red Book the Directors' going concern analysis
Global due to the COVID-19 global in light of COVID-19 and obtained
pandemic. Consequently, less certainty evidence to support the key assumptions
- and a higher degree of caution used in preparing the going
- should be attached to the valuations concern model, including the base
provided than would normally be and downside case scenarios. We challenged
the case. In the key assumptions and the
--------------------------------------------- ----------------------------------------------
order to conclude that it is appropriate reasonableness of the mitigating
for the financial statements to actions used in preparing the analysis.
be drawn up on a going concern basis, In conjunction with the above, we
the Directors have prepared an analysis have reviewed
of the impact of COVID- 19 on the management's analysis of liquidity
revenues, profits, cash flows and and recalculated loan covenant compliance
liquidity position of the Company to satisfy ourselves that no breaches
for the next 12 months. are anticipated over the going concern
Management's analysis includes base period of assessment.
and downside case scenarios and We considered whether changes to
a robust analysis of planned mitigating working practices brought about
actions. by COVID-19 had had an adverse impact
In making their assessment management on the effectiveness of management's
took into account the covenant headroom business process and IT controls.
on the Company's loan facilities. Our planned tests of controls did
After considering all of these factors, not identify any evidence of material
management have concluded that preparing deterioration in the control environment.
the financial statements on a going
concern basis remains appropriate.
No material uncertainty in relation
to going concern exists.
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.
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 materiality GBP13,995,000 (2019: GBP14,746,000).
------------------------ ----------------------------------------------------------
How we determined 1% of total assets.
it
------------------------ ----------------------------------------------------------
Rationale for benchmark We believe that total assets are the primary measure
applied used by the shareholders in assessing the performance
of the entity, and is a generally accepted auditing
benchmark.
------------------------ ----------------------------------------------------------
We agreed with the directors that we would report to them
misstatements identified during our audit above GBP699,700 (2019:
GBP737,300) as well as misstatements below that amount that, in our
view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in
relation to which ISAs (UK) require us to report to you where:
-- the directors' use of the going concern basis of accounting
in the preparation of the financial statements is not
appropriate; or
-- the directors have not disclosed in the financial statements
any identified material uncertainties that may cast significant
doubt about the Company's ability to continue to adopt the going
concern basis of accounting for a period of at least twelve months
from the date when the financial statements are authorised for
issue.
However, because not all future events or conditions can be
predicted, this statement is not a guarantee as to the Company's
ability to continue as a going concern.
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 the responsibilities described above and our work
undertaken in the course of the audit, ISAs (UK) require 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 2020 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 set out on page 3, 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.
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 received 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
We were appointed by the directors on 27 March 2015 to audit the
financial statements for the year ended 31 March 2015 and
subsequent financial periods. The period of total uninterrupted
engagement is 6 years, covering the years ended 31 March 2015 to 31
March 2020.
Sandra Dowling (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP Chartered
Accountants and Statutory Auditors London
26 May 2020
Profit and Loss Account for the Year Ended 31 March 2020
2020 2019
Note GBP GBP
Turnover - -
Administrative expenses (1,000) (1,000)
------------ -------------
Operating loss (1,000) (1,000)
Loss on ordinary activities before
interest and taxation (1,000) (1,000)
Interest receivable and similar income 4 76,701,509 109,234,930
Interest payable and similar expenses 5 (76,694,233) (109,227,276)
------------ -------------
Profit on ordinary activities before
taxation 6,276 6,654
Tax on profit on ordinary activities 8 (1,192) (1,264)
------------ -------------
Profit for the year 5,084 5,390
Turnover and results were derived from continuing operations
within the United Kingdom. The company has only one class of
business, that of to provide funding to fellow subsidiaries within
the group.
Statement of Comprehensive Income for the Year Ended 31 March
2020
2020 2019
GBP GBP
Profit for the year 5,084 5,390
----- ----------
Items that may be reclassified subsequently
to profit or loss
Gain on interest rate derivatives - 4,530,473
Interest rate derivatives transferred
to income statement (cash flow hedges) - 30,686,000
----- ----------
Profit on ordinary activities before
taxation - 35,216,473
----- ----------
Total comprehensive income for the year 5,084 35,221,863
===== ==========
Balance Sheet as at 31 March 2020
31 March 31 March
Note 2020 2019
GBP GBP
Current assets
Debtors due within one year 9 33,496,422 38,395,470
Cash at bank and in hand 10 150,574,079 150,573,967
Tax asset 9 1,848 1,848
Debtors due after more than one year 9 1,215,496,740 1,285,735,154
--------------- ---------------
1,399,569,089 1,474,706,439
Creditors due within one year 11 (91,458,791) (44,510,811)
--------------- ---------------
Total assets less current liabilities 1,308,110,298 1,430,195,628
Loans and borrowings 12 (1,307,683,740) (1,429,774,154)
--------------- ---------------
Net assets 426,558 421,474
--------------- ---------------
Capital and reserves
Share capital 13 12,500 12,500
Profit and loss account 414,058 408,974
--------------- ---------------
Total shareholders ' funds 426,558 421,474
--------------- ---------------
Approved by the Board on 26 May 2020 and signed on its behalf
by:
H Shah Director
Statement of Changes in Equity for the Year Ended 31 March
2020
Share capital Cash flow Profit and Total
hedging reserve loss account
GBP GBP GBP GBP
Balance at 1 April 2018 12,500 (35,216,473) 403,584 (34,800,389)
Profit for the year - - 5,390 5,390
Derivative valuation movements
on cash flow hedges - 4,530,473 - 4,530,473
Interest rate derivatives
transferred to income statement
(cash flow hedges) - 30,686,000 30,686,000
------------- ------------------ ------------- ------------
Total comprehensive income
for the year - 35,216,473 5,390 35,221,863
------------- ------------------ ------------- ------------
Balance at 31 March 2019 12,500 - 408,974 421,474
------------- ------------------ ------------- ------------
At 1 April 2019 12,500 - 408,974 421,474
Profit for the year - - 5,084 5,084
------------- ------------------ ------------- ------------
Total comprehensive income
for the year - - 5,084 5,084
------------- ------------------ ------------- ------------
Balance at 31 March 2020 12,500 - 414,058 426,558
============= ================== ============= ============
1 General information
The company is a public limited company limited by share capital
and 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").
In preparing these financial statements, the company applies the
recognition, measurement and disclosure requirements of
International Financial Reporting Standards as adopted by the EU
("Adopted IFRSs"), but makes amendments where necessary in order to
comply with Companies Act 2006 and has set out below where
advantage of the FRS 101 disclosure exemptions has been taken.
The financial statements have been prepared under the historical
cost convention, modified to include the revaluation of derivative
financial instruments. Historical cost is generally based on the
fair value of the consideration given in exchange for the
assets.
These financial statements are separate financial
statements.
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
2 Accounting policies (continued)
(i) The requirements of paragraphs 91-99 of IFRS 13 Fair Value
Measurement to disclose information of fair value valuation
techniques and inputs.
Disclosure exemptions for subsidiaries are permitted where the
relevant disclosure requirements are met in the consolidated
financial statements. Where required, equivalent disclosures are
given in the group financial statements of Broadgate REIT Limited.
The group financial statements of Broadgate REIT Limited are
available to the public and can be obtained as set out in note
18.
Going concern
The directors have reviewed the company's forecast working
capital and cash flow requirements in light of the COVID-19
pandemic and in addition to making enquiries and examining areas
which could give risk to financial exposure. The company has access
to the drawn down term loan of GBP92m to meet certain shortfalls on
bond service, if there was a shortfall from the rent received.
Broadgate Financing PLC is part of the Broadgate REIT Limited group
which expects to have sufficient resources to meet the debt
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 the these financial
statements and as a result they continue to adopt the going concern
basis in preparing the accounts.
Taxation
Current tax is based on taxable profit for the year and is
calculated using tax rates that have been enacted or substantively
enacted. 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 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.
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.
2 Accounting policies (continued) Impairment of financial assets
The company assesses at the end of each reporting period whether
there is objective evidence that a financial
asset or group of financial assets is impaired. A financial
asset or a group of financial assets is impaired and impairment
losses are incurred only if there is objective evidence of
impairment as a result of one or more events that occurred after
the initial recognition of the asset (a 'loss event') and that loss
event (or events) has an impact on the estimated future cash flows
of the financial asset or group of financial assets that can be
reliably estimated.
Interest payable and receivable
Interest payable and receivable is recognised as incurred under
the accruals concept. Interest payable includes financing charges
which are spread over the period to redemption, using the effective
interest method. Commitment fees on non-utilised facilities are
also included within interest payable.
Premiums payable and receivable on early redemption are
recognised as finance charges and income when incurred.
3 Significant accounting judgements and key sources of estimation uncertainty
Determining the carrying amount of some assets requires
estimation of the effect of uncertain future events. The major
sources of estimation uncertainty that have a significant risk of
resulting in a material adjustment to the carrying amounts of
assets are noted below.
Trade and other debtors
The company makes an estimate of the recoverable value of trade
and other debtors. When assessing impairment of trade and other
debtors, the Directors consider factors including the current
credit rating of the debtor, the ageing profile of debtors and
historical experience.
4 Interest receivable and similar income
2020 2019
GBP GBP
Interest income on bank deposits 1,127,823 1,181,134
Premium income on early repayment due from
related parties 12,087,180 6,014,610
Derivative close out costs due from related
parties - 30,686,000
Interest receivable on amounts due from
related parties 63,486,506 71,353,186
------------ -------------
76,701,509 109,234,930
------------ -------------
5 Interest payable and similar expenses
2020 2019
GBP GBP
Interest on derivatives - 4,391,982
Interest payable on bonds and borrowings 64,549,417 68,052,145
Premium costs on early repayment 12,087,180 6,014,610
Derivative close out costs* - 30,686,000
Interest payable on amounts due to related
parties 57,636 82,539
------------ -------------
76,694,233 109,227,276
------------ -------------
* Hedging instruments were closed out when the relevant floating
rate bonds were repaid on 5 October 2018.
6 Auditors' remuneration
A notional charge of GBP5,452 (2019: GBP4,040) is deemed payable
to PricewaterhouseCoopers LLP in respect of the audit of the
financial statements for the year ended 31 March 2020. Actual
amounts payable to PricewaterhouseCoopers LLP are paid by
Bluebutton Properties UK Limited. Bluebutton Properties UK Limited
is a holding company within the group.
No non-audit fees (2019: GBPnil) were paid to
PricewaterhouseCoopers LLP.
7 Staff costs
No director (2019: 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. The value of this service was negligible.
Average number of employees, excluding directors, of the company
during the year was nil (2019: nil).
8 Taxation
Tax charged in the profit and loss account
Current taxation
2020 2019
GBP GBP
UK corporation tax 1,192 1,264
====== ======
8 Taxation (continued)
2020 2019
GBP GBP
Tax reconciliation
Profit on ordinary activities 6,276 6,654
------- -------
Tax on profit on ordinary activities at
UK corporation tax rate of 19% (2019: 19%) 1,192 1,264
======= =======
Income tax expense (1,192) (1,264)
------- -------
9 Debtors
31 March 31 March
2020 2019
GBP GBP
Debtors due within one year
Amounts due from related parties 18,992,996 23,173,628
Accrued income 14,503,426 15,221,842
Corporation tax asset 1,848 1,848
--------------- ---------------
33,498,270 38,397,318
--------------- ---------------
Debtors due after more than one year
Amounts due from related parties - Long
term loans 1,215,496,740 1,285,735,154
--------------- ---------------
1,215,496,740 1,285,735,154
--------------- ---------------
The company's interest on outstanding debt is discussed in note
12 and applied to amounts owing from related parties in the same
manner. Amounts due from related parties relate to amounts owed
from group companies and are repayable on demand. Interest is
charged at 0.01% on interest receivable from Broadgate (Funding)
2005 Limited. There is no interest charged on the remainder of
amounts owed by related parties.
10 Cash and cash equivalents
31 March 31 March
2020 2019
GBP GBP
Cash at bank 131,079 130,967
Short-term deposits 150,443,000 150,443,000
------------- -------------
150,574,079 150,573,967
------------- -------------
Short term deposits mature within 3 months and therefore meet
the definition of cash and cash equivalents.
11 Creditors due within one year
31 March 31 March
2020 2019
GBP GBP
Accruals 14,564,911 15,280,467
Amounts due to related parties 14,797,618 14,730,575
Term loan 51,852,000 -
Borrowings 10,238,475 14,484,504
Other creditors 5,787 15,265
------------ ------------
91,458,791 44,510,811
------------ ------------
Amounts due to related parties relate to amounts owed to group
companies and are repayable on demand. There is no interest charged
on these balances.
12 Loans and borrowings
2020 2019
GBP GBP
Loans
Loans due 1 to 2 years 10,606,771 15,265,245
Loans due 2 to 5 years 67,673,970 50,243,793
Loans due after 5 years 1,229,402,999 1,364,265,116
--------------- ---------------
1,307,683,740 1,429,774,154
--------------- ---------------
Amounts due after five years includes GBP92,187,000 in relation
to the non-current portion of the term loan of
GBP144,039,000 which represents a revolving liquidity facility
with NatWest Markets PLC. The cash received is held on deposit.
12 Loans and borrowings (continued)
2020 2019
GBP GBP
Borrowings repayment analysis
Borrowing repayments due within one year 62,090,475 14,484,504
Borrowing repayments due within 1-2 years 10,606,771 15,265,245
Borrowing repayments due within 2-5 years 67,673,970 50,243,793
------------- ---------------
140,371,216 79,993,542
After 5 years 1,229,402,999 1,364,265,116
---------------
Total borrowings 1,369,774,215 1,444,258,658
---------------
Gross Debt 1,369,774,215 1,444,258,658
---------------
2020 2019
GBP GBP
Borrowings repayment analysis
Class A2 4.949% bonds due 2031 86,916,690 158,522,490
Class A3 4.851% bonds due 2033 175,000,000 175,000,000
Class A4 4.821% bonds due 2036 400,000,000 400,000,000
Class B 4.999% bonds due 2033 365,301,715 365,313,979
Class C2 5.098% bonds due 2035 198,516,810 201,383,190
--------------- ---------------
Total secured bond borrowings 1,225,735,215 1,300,219,659
Other borrowings
Term loan 144,039,000 144,039,000
--------------- ---------------
Total secured borrowings 1,369,774,215 1,444,258,659
=============== ===============
At 31 March 2020, 100% (2019: 100% taking into account the
effect of derivatives) of the bonds were fixed. The bonds amortise
from 2005 and are expected to be repaid by 2033. Legal repayment is
required by 2036. The bonds are secured on properties of the group
valued at GBP4,105m (2019: GBP3,602m) and cash of GBPnil (2019:
GBPnil). The property valuations of GBP4,105m as at 31 March 2020
against which the bonds are secured are reported on the basis of
"material valuation uncertainty" as per VPS 3 and VPGA 10 of the
RICS Red Book Global due to the COVID-19 global pandemic.
Consequently, less certainty - and a higher degree of caution -
should be attached to the valuations provided than would normally
be the case.
At 31 March 2020 the company was financed by GBP1,225m bonds
(2019: GBP1,300m). The weighted average interest rate of the bonds
is 4.93% (2019: 4.93% including derivatives). The weighted average
maturity of the bonds is
10.4 years (2019: 11.0 years).
The fair values of the bonds have been established by obtaining
quoted market prices from brokers.
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:
2020 2019
GBP GBP
Secured bonds at fair value 1,582,511,892 1,614,373,908
===================== =====================
Risk Management
Capital risk management:
The company finances its operations by a mixture of equity and
public debt issues to support the property strategy of the
group.
The approach adopted has been to engage in debt financing with
long term maturity dates and as such the bonds issued are due from
2005 and are expected to be repaid by 2033. Legal repayment is
required by 2036. Including debt amortisation 90% (2019: 94.5%) of
the total Broadgate REIT group borrowings is due for payment after
5 years.
The company aims to ensure that potential debt providers
understand the business and a transparent approach is adopted with
lenders so they can understand the level of their exposure within
the overall context of the group.
Details of bond covenants are outlined in the bonds publicly
available Offering Circular.
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.
13 Share capital
Allotted, called up and
fully paid shares
31 March 31 March
2020 2019
No. GBP No. GBP
Ordinary shares of GBP0.25
each 50,000 12,500 50,000 12,500
14 Capital commitments
The total amount contracted for but not provided in the
financial statements was GBPnil (2019: GBPnil).
15 Contingent liabilities
The company has no contingent liabilities as at 31 March 2020 of
GBPnil (2019: GBPnil).
16 Related party transactions
The company has taken advantage of the exemption granted to
wholly owned subsidiaries not to disclose transactions with group
companies under the provisions of FRS 101.
17 Subsequent events
There have been no subsequent events since 31 March 2020.
18 Parent and ultimate parent undertaking
The immediate parent company is Broadgate Property Holdings
Limited.
The ultimate parent company is Broadgate REIT Limited. Broadgate
REIT Limited operates as a joint venture between Euro Bluebell LLP,
an affiliate of GIC, Singapore's sovereign wealth fund, and BL
Bluebutton 2014 Limited, a wholly owned subsidiary of The British
Land Company PLC.
Broadgate REIT Limited is the smallest and largest group for
which group accounts are available and which include the company.
The ultimate holding company and controlling party is Broadgate
REIT Limited. Group accounts for this company are available on
request from British Land, York House, 45 Seymour Street, London,
W1H 7LX.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR SEAFIWESSEEI
(END) Dow Jones Newswires
May 27, 2020 12:09 ET (16:09 GMT)
Broad.fin.a4 (LSE:85QW)
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