TIDM85QW
RNS Number : 1590T
Broadgate Financing PLC
22 November 2021
Broadgate Financing PLC
The Interim Report and Financial Statements for the six months
ended 30 September 2021 , 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 Interim Report and Financial Statements are also
available
at
https://www.britishland.com/investors/strategic-partnerships/broadgate-financing-plc
Broadgate Financing PLC
Interim Report and Financial Statements
for the six months ended 30 September 2021
Directors' Report for the six months ended 30 September 2021
The directors present their report and unaudited interim
financial statements for the six months ended 30 September
2021.
Directors of the company
The directors, who held office during the period, and up to the
date of signing the interim financial statements, were as
follows:
D Lockyer
H Shah
D Richards
Principal activity
The company's principal activity is to provide funding to fellow
subsidiaries of Broadgate Property Holdings Limited in the United
Kingdom (UK).
Results for the six months
As shown in the company's Profit and Loss Account on page 5, the
company's profit on ordinary activities before taxation has
decreased compared with the prior period. This decrease is a result
of higher interest payable amounts incurred during the year.
Consistent with the prior period, the company has continued to
amortise bonds as well as incur interest on those bonds
outstanding, and charge these costs to fellow subsidiaries.
At 30 September 2021, interest payable on external bonds remains
100% fixed.
The Balance Sheet on page 7 shows the company has net assets of
GBP434,105 at 30 September 2021. Net assets have increased since 31
March 2021 due to the profit recognised in the period.
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 general risk environment in which the Group operates has
remained heightened in the period due to the continued level of
uncertainty associated with the impact of Covid-19 and challenges
in the UK property market. That said it is considered to have
improved during the period, with the lifting of lockdown
restrictions resulting in improvement in activity across the
Group's properties with rental collection rates returning close to
pre-pandemic levels.
Dividends
No dividends were paid by the company in the six month period
ended 30 September 2021 (30 September 2020:
GBPnil).
Going concern
The Directors have reviewed the company's forecast working
capital and cash flow requirements examining areas which could give
rise to financial exposure, including considering the UK's
vaccination led emergence from the Covid-19 pandemic. The company
meets its ongoing financial obligations relating to servicing bond
requirements primarily through amounts receivable from fellow group
undertakings, who in turn derive rental income from the leasing of
investment properties. Should there be any shortfall on the amounts
received from fellow group undertakings, the company has access to
the drawn term loan of GBP52m to meet certain of these financial
obligations as they fall due. The Directors therefore 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.
Responsibility Statement of the Directors in respect of the
Interim Financial Statements
Each of the directors confirms that to the best of their
knowledge:
The condensed set of interim financial statements has been
prepared in accordance with Financial Reporting Standard 104:
Interim Financial Reporting issued by the Financial Reporting
Council.
The Directors' Report report above includes a fair review of the
information required by DTR 4.2.7R of the Disclosure and
Transparency Rules (DTR), being an indication of important events
that have occurred during the first six months of the financial
year and their impact on the condensed set of interim financial
statements; and a description of the principal risks and
uncertainties for the remaining six months of the year.
Approved by the Board on 16 November 2021 and signed on its
behalf by:
Hursh Shah
Director
Independent review report to Broadgate Financing PLC Report on
the condensed interim financial statements
Our conclusion
We have reviewed Broadgate Financing PLC's condensed interim
financial statements (the "interim financial statements") in the
Interim Report and Financial Statements of Broadgate Financing PLC
for the 6 month period ended 30 September 2021 (the "period").
Based on our review, nothing has come to our attention that
causes us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with FRS 104
"Interim Financial Reporting" issued by the Financial Reporting
Council and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
What we have reviewed
The interim financial statements comprise:
-- the Balance Sheet as at 30 September 2021;
-- the Profit and Loss Account and the Statement of
Comprehensive Income for the period then ended;
-- the Statement of Changes in Equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the Interim Report
and Financial Statements of Broadgate Financing PLC have been
prepared in accordance with FRS 104 "Interim Financial Reporting"
issued by the Financial Reporting Council and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The Interim Report and Financial Statements, including the
interim financial statements, is the responsibility of, and has
been approved by the directors. The directors are responsible for
preparing the Interim Report and Financial Statements in accordance
with the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority.
Our responsibility is to express a conclusion on the interim
financial statements in the Interim Report and Financial Statements
based on our review. This report, including the conclusion, has
been prepared for and only for the company for the purpose of
complying with the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority and
for no other purpose. We do not, in giving this conclusion, 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.
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the Interim
Report and Financial Statements and considered whether it contains
any apparent misstatements or material inconsistencies with the
information in the interim financial statements.
PricewaterhouseCoopers LLP Chartered Accountants London
16 November 2021
Broadgate Financing PLC
Profit and Loss Account for the six months ended 30 September
2021
Six months Six months
ended 30 ended 30
September September
2021 2020
Unaudited Unaudited
Note GBP GBP
Turnover - -
Administrative expenses (501) (501)
----------------------- ----------------------
Loss on ordinary activities before
interest and taxation (501) (501)
Interest receivable and similar income 3 53,852,593 30,658,559
Interest payable and similar expenses 4 (53,849,099) (30,621,542)
----------------------- ----------------------
Profit on ordinary activities before
taxation 2,993 36,516
Tax on profit on ordinary activities (569) (6,938)
----------------------- ----------------------
Profit for the period 2,424 29,578
Turnover and results were derived from continuing operations
within the United Kingdom. The company has only one significant
class of business: to provide funding to fellow subsidiaries of
Broadgate Property Holdings Limited in the United Kingdom (UK).
Statement of Comprehensive Income for the Period from 1 April
2021 to 30 September 2021
Six months Six months
ended 30 ended 30
September September
2021 2020
Unaudited Unaudited
GBP GBP
Profit for the period 2,424 29,578
---------------- ----------------
Total comprehensive income for the
period 2,424 29,578
================ ================
Balance Sheet as at 30 September 2021
Six months Six months
ended 30 ended 30
September September
2021 2020
Unaudited Unaudited
Note GBP GBP
Current Assets
Debtors due within one year 5 27,155,351 34,382,934
Cash at bank and in hand 55,900,522 97,578,027
Debtors due after more than
one year 5 1,100,372,878 1,204,907,390
---------------- -------------------
1,183,428,751 1,336,868,351
---------------- -------------------
Creditors due within one year 6 (30,541,718) (39,342,280)
---------------- -------------------
(30,541,718) (39,342,280)
---------------- -------------------
Creditors due after more than
one year 7 (1,152,452,928) (1,297,094,390)
---------------- -------------------
Net assets 434,105 431,681
---------------- -------------------
Capital and reserves
Share capital 8 12,500 12,500
Profit and loss account 421,605 419,181
---------------- -------------------
Total shareholders' funds 434,105 431,861
---------------- -------------------
Approved by the Board on 16 November 2021 and signed on its
behalf by
Hursh Shah
Director
Statement of Changes in Equity for the six months ended 30
September 2021
Retained
Share capital earnings Total
GBP GBP GBP
Balance at 1 April 2020 12,500 414,058 426,558
Profit for the period - 29,578 29,578
----------------------
Total comprehensive income for
the period - 29,578 29,578
---------------------- ----------------------- -----------------------
Balance at 30 September 2020 12,500 443,636 456,136
---------------------- ----------------------- -----------------------
Balance at 1 April 2021 12,500 419,181 431,681
Profit for the period - 2,424 2,424
---------------------- ----------------------- -----------------------
Total comprehensive income for
the period - 2,424 2,424
---------------------- ----------------------- -----------------------
Balance at 30 September 2021 12,500 421,605 434,105
---------------------- ----------------------- -----------------------
Notes to the Interim Financial Statements for the six months
ended 30 September 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 interim financial statements are set out below. These
policies have been consistently applied to all the periods
presented, unless otherwise stated.
Accounting basis
The information for the period ended 30 September 2021 does not
constitute statutory financial statements as defined in section 434
of the Companies Act 2006.
A copy of the statutory financial statements for the year ended
31 March 2021 has been delivered to the Registrar of companies. The
auditors reported on those financial statements: their report was
unqualified, did not draw attention to any matters by way of
emphasis and did not contain a statement under section 498 (2) or
(3) of the Companies Act 2006.
Basis of preparation
These interim financial statements were prepared in accordance
with Financial Reporting Standard 104 Interim Financial Reporting
("FRS 104"). The same accounting policies, estimates, presentation
and methods of computation are followed in the interim financial
statements as applied in the latest annual audited financial
statements, which are 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.
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 Statement of Cash
flows for the period;
(b) The requirements of IAS 1 to provide a statement of
compliance with IFRS;
(c) 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;
(d) 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;
(e) The requirements of IFRS 7 to disclose financial
instruments; and
(f) 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
11.
Going concern
The Directors have reviewed the company's forecast working
capital and cash flow requirements examining areas which could give
rise to financial exposure, including considering the UK's
vaccination led emergence from the Covid-19 pandemic. The company
meets its ongoing financial obligations relating to servicing bond
requirements primarily through amounts receivable from fellow group
undertakings, who in turn derive rental income from the leasing of
investment properties. Should there be any shortfall on the amounts
received from fellow group undertakings, the company has access to
the drawn term loan of GBP52m to meet certain of these financial
obligations as they fall due. The Directors therefore 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.
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 company 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 Income Statement when they occur.
Cash equivalents are limited to instruments with a maturity of
less than three months.
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.
Taxation
Current tax is based on taxable profit for the period and is
calculated using tax rates that have been enacted or substantively
enacted. Taxable profit may differ 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).
3 Interest receivable and similar income
Six months Six months
ended 30 ended 30
September September
2021 2020
Unaudited Unaudited
GBP GBP
Interest income on bank deposits 11,778 197,723
Interest receivable on amounts owed by related
parties 53,840,815 30,460,836
------------------ ------------------------
53,852,593 30,658,559
================== ========================
4 Interest payable and similar expenses
Six months Six months
ended 30 ended 30
September September
2021 2020
Unaudited Unaudited
GBP GBP
Interest payable on bonds and borrowings 28,977,217 30,613,597
Premium costs on early repayment of bonds 24,871,760 -
Interest payable on amounts due to group
companies 122 7,945
------------------------ ------------------------
53,849,099 30,621,542
------------------------ ------------------------
5 Debtors
30 September 31 March
2021 2021
Unaudited Audited
GBP GBP
Debtors due within one year
Amounts due from related parties 14,196,102 20,458,721
Accrued income 12,957,401 13,922,365
Corporation tax asset 1,848 1,848
----------------- ---------------
27,155,351 34,382,934
----------------- ---------------
30 September 31 March
2021 2021
Unaudited Audited
GBP GBP
Debtors due after more than one year
Amounts due from related parties - Long
term loans 1,100,372,878 1,204,907,390
----------------- ---------------
1,100,372,878 1,204,907,390
----------------- ---------------
The intercompany loans to Broadgate (Funding) 2005 Ltd are being
repaid from April 2005 to July 2033, with the average interest rate
of these intercompany loans being 4.93% per annum (31 March 2020:
4.93%). There is no interest charged on the remainder of amounts
owed by related parties.
6 Creditors due within one year
30 September 31 March
2021 2021
Unaudited Audited
GBP GBP
Accrued interest 13,002,406 14,006,824
Amounts due to related parties 14,610,101 14,740,349
Secured bonds 2,884,667 10,589,350
Other creditors 44,544 5,757
-------------- ------------
30,541,718 39,342,280
-------------- ------------
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.
7 Creditors due after more than one year
30 September 31 March
2021 2021
Unaudited Audited
GBP GBP
Borrowings
Borrowings due 1 to 2 years 2,885,576 11,076,579
Borrowings due 2 to 5 years 107,238,365 113,050,137
Borrowings due after 5 years 1,042,328,987 1,172,967,674
-------------- -------------
1,152,452,928 1,297,094,390
-------------- -------------
Amounts due after five years include the term loan of
GBP52,080,000 (31 March 2021: GBP92,187,000) which represents a
liquidity facility with NatWest Markets PLC. The cash received is
held on deposit.
30 September 31 March
2021 2021
Unaudited Audited
GBP GBP
Borrowings repayment analysis
Borrowings due within one year 2,884,667 10,589,350
Borrowings due between one to two years 2,885,576 11,058,270
Borrowings due between two to five years 107,238,365 112,927,160
----------------- ---------------
113,008,608 134,574,780
Borrowings due after five years 1,042,328,987 1,172,967,674
----------------- ---------------
Total borrowings 1,155,337,595 1,307,542,454
----------------- ---------------
Gross debt 1,155,337,595 1,307,542,454
7 Creditors due after more than one year (continued)
Secured bonds on the assets of the Broadgate Property Holdings
Limited Group
30 September 31 March
2021 2021
Unaudited Audited
GBP GBP
Class A2 4.949% Bonds 2031 - 79,633,890
Class A3 4.851% Bonds 2033 143,900,050 175,000,000
Class A4 4.821% Bonds 2036 400,000,000 400,000,000
Class B 4.999% Bonds 2033 365,000,000 365,000,000
Class C2 5.098% Bonds 2035 194,216,810 195,650,000
--------------- -----------------
Total secured bond borrowings 1,103,116,860 1,215,283,890
Term Loan 52,080,000 92,187,000
Total secured borrowings 1,155,196,860 1,307,470,890
At 30 September 2021, 100% (31 March 2021: 100%) 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 term loan
matures on the date when all the bonds have been redeemed in full.
The bonds are secured on properties of the group valued at
GBP3,382m (31 March 2021: GBP4,105m). The weighted average
interest rate of the bonds is 4.93% (31 March 2021: 4.93%). The
weighted average maturity of the bonds is 9.4 years (31 March 2021:
9.5 years).
On 30 June 2021, 100 Liverpool Street was released from the
Broadgate securitisation alongside the redemption of GBP107m of
bonds.
A notice was issued to Bondholders on 3 June 2021 for the
redemption in full of the Class A2 4.949% Bonds, as well as a
partial redemption of the Class A3 4.851% Bonds, totalling GBP107m
principal amount of bonds and a premium of GBP24.9m (see note 4).
These Bonds were redeemed on the Interest Payment Date falling on 5
July 2021.
Fair value of bonds
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.
30 September 31 March
2021 2021
Unaudited Audited
GBP GBP
Secured bonds at fair value 1,347,297,311- 1,454,352,802
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.
7 Creditors due after more than one year (continued)
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, 87% (31 March 2021:
89%) of the total borrowings is due for payment after 5 years.
The principal bond covenant is a requirement to meet interest
and amortisation payments as they fall due. Details of bond
covenants are outlined in the bonds publicly available Offering
Circular.
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 interim financial statements represents the
company's maximum exposure to credit risk without taking account of
the value of any collateral obtained.
Cash and deposits at 30 September 2021 amounted to GBP56m (31
March 2021: GBP98m) and are placed with Financial institutions with
A or better credit ratings. Management regularly reviews the credit
rating of all bank counterparties. At 30 September 2021, prior to
taking account of any offset arrangements, the largest combined
credit exposure to a single counterparty arising from money market
deposits was GBP53m (31 March 2021: GBP49m).
The company's principal credit risk relates to an intra-group
loan to Broadgate (Funding) 2005 Limited. At 30 September 2021,
this loan stood at GBP1,103m (31 March 2021: GBP1,215m). The
purpose of this loan is to provide funding to fellow subsidiaries
of the Broadgate Property Holdings Limited group.
In order to manage this risk, management regularly monitors all
amounts that are owed to the company.
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.
8 Share capital
Allotted, called up and
fully paid shares 30 September 31 March
2021 2021
Unaudited Audited
No. GBP No. GBP
Ordinary shares of GBP0.25
each 50,000 12,500 50,000 12,500
9 Capital commitments
The company had capital commitments contracted as at 30
September 2021 of GBPnil (31 March 2021: GBPnil).
10 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.
11 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.
Bluebutton Properties UK 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.
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END
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(END) Dow Jones Newswires
November 22, 2021 08:11 ET (13:11 GMT)
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