TIDM85QT
RNS Number : 1132T
Broadgate Financing PLC
30 November 2011
The Interim Management Report & Accounts for the six months
ended 30 September 2011, attached below in accordance with DTR
6.3.5(1), has been submitted to the National Storage Mechanism and
will shortly be available for inspection at
www.Hemscott.com/nsm.do
The Interim Management Report & Accounts are also available
at www.britishland.com
BROADGATE FINANCING PLC
COMPANY NO: 5316365
INTERIM MANAGEMENT REPORT & ACCOUNTS
SIX MONTHS ENDED 30 SEPETMBER 2011
The directors submit their Interim Management Report and Accounts
for the six months ended 30 September 2011.
Principal activities
The company is a wholly owned subsidiary of Broadgate Property
Holdings Limited, whose ultimate holding company is Bluebutton
Properties Limited (Jersey Registered). Bluebutton Properties Limited
operates as a joint venture between The British Land Company PLC
and BRE/Brick Limited. The company's principal activity is to provide
funding to fellow subsidiaries of Bluebutton Properties Limited.
Business review
At 30 September 2011, taking into account the effect of derivatives,
interest payable on the external bonds remains 100% fixed. Funds
loaned to Broadgate (Funding) 2005 Limited are charged with a margin
resulting in a profit (page 3). The derivatives are not used speculatively
and accordingly valuation movements are taken through the hedging
and translation reserve. Adjusting the total reserves for the derivative
valuation and associated deferred tax gives a stable profit and
loss account reserves position of approximately GBP366,000.
No dividends were paid in the current period (30 Sep 2010: GBPnil).
Risk and Uncertainties
The key risks of the company are the performance of the properties,
tenant defaults and the credit risk of counterparties for any large
cash deposits within the securitisation upon which the company
is dependent for receipt of principal and interest, and the strength
of the derivative counterparty upon which the company is dependent
for fixing its interest rate exposure. These risks are mitigated
by the preference for tenants with strong covenants on long leases
and by using highly rated counterparties and monitoring those ratings.
Responsibility Statement
We confirm that to the best of our knowledge:
(a) the condensed set of financial statements has been prepared
in accordance with pronouncements on interim reporting issued by
the Accounting Standards Board; and
(b) the interim management report includes a fair review of the
information required by Section DTR 4.2.7R (indication of important
events during the first six months and description of principal
risks and uncertainties for the remaining six months of the year)
of the Disclosure and Transparency Rules of the United Kingdom's
Financial Services Authority.
By order of the Board
Director
INDEPENDENT REVIEW REPORT TO BROADGATE FINANCING PLC
for the six months ended 30 September 2011
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for
the six months ended 30 September 2011 which comprises the condensed
profit and loss account, the condensed balance sheet, the condensed
statement of total recognised gains and losses and related notes
1 to 9 . We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information
in the condensed set of financial statements.
This report is made solely to the company 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. Our work
has been undertaken so that we might state to the company those
matters we are required to state to them in an independent review
report and for no other purpose. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone other
than the company, for our review work, for this report, or for
the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure and Transparency Rules of the United Kingdom's Financial
Services Authority.
As disclosed in note 1, the annual financial statements of the
company are prepared in accordance with United Kingdom Generally
Accepted Accounting Practice. The condensed set of financial statements
included in this half-yearly financial report have been prepared
in accordance with the accounting policies the group intends to
use in preparing its next annual financial statements.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly financial
report based on our review.
Scope of Review
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 inquiries, 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 Ireland) 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.
Conclusion
Based on our review, nothing has come to our attention that causes
us to believe that the condensed set of financial statements in
the half-yearly financial report for the six months ended 30 September
2011 is not prepared, in all material respects, in accordance with
the Disclosure and Transparency Rules of the United Kingdom's Financial
Services Authority.
Deloitte LLP
Chartered Accountants and Statutory Auditors
Cambridge, UK
CONDENSED PROFIT AND LOSS ACCOUNT
for the six months ended 30 September 2011
Year Six months Six months
ended ended ended
31 March 30 September 30 September
2011 2011 2010
Audited Unaudited Unaudited
GBP GBP GBP
(1,000) Administrative expenses
(1,000) Operating loss
Interest receivable
96,916,224 Group 48,046,136 49,298,986
99,419 External - other 41,420 45,973
Interest payable
(99,418) Group (41,420) (45,973)
(96,906,573) External - debentures (48,041,360) (49,294,086)
Profit on ordinary activities
8,652 before taxation 4,776 4,900
(2,423) Taxation (1,337) 117
6,229 Profit for the financial period 3,439 5,017
================== ================= ==================
Turnover and results are derived from continuing operations within
the United Kingdom. The company has only one significant class
of business, that of to provide funding to fellow subsidiaries
of Bluebutton Properties Limited in the United Kingdom.
CONDENSED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the six months ended 30 September 2011
Year Six months Six months
ended ended ended
31 March 30 September 30 September
2011 2011 2010
Audited Unaudited Unaudited
GBP GBP GBP
Profit on ordinary activities after
6,229 taxation 3,439 5,017
6,108,608 Derivative valuation movement (33,803,142) (21,669,109)
Deferred tax movement on interest
(2,547,723) rate derivatives 8,788,817 6,067,351
Total recognised gains and losses
3,567,114 relating to the financial period (25,010,886) (15,596,741)
================== =================== ====================
CONDENSED BALANCE SHEET
as at 30 September 2011
Note 30 September 2011 31 March 2011
Unaudited Audited
GBP GBP GBP GBP
Current
assets
Debtors
- due within
one year 2 68,987,225 68,445,630
Debtors
- due after
more than
one year 2 1,855,647,443 1,870,100,867
Cash and
deposits 15,121,572 15,121,679
1,939,756,240 1,953,668,176
Creditors
due within
one year 3 (159,399,389) (125,058,198)
Net current
assets 1,780,356,851 1,828,609,978
Total assets
less current
liabilities 1,780,356,851 1,828,609,978
Creditors
due after
one year 4 (1,835,973,559) (1,859,215,800)
Net liabilities (55,616,708) (30,605,822)
========================= =======================
Capital
and reserves
Called up
share capital 7 12,500 12,500
Hedging
and translation
reserve 7 (55,994,900) (30,980,575)
Profit and
loss account 7 365,692 362,253
Shareholders'
deficit 7 (55,616,708) (30,605,822)
========================= =======================
Notes to the accounts
for the six months ended 30 September 2011
1. Accounting policies
The principal accounting policies adopted by the directors are summarised
below. They have been applied consistently throughout the current
and previous period.
Accounting basis
The information for the year ended 31 March 2011 does not constitute
statutory accounts as defined in section 434 of the Companies Act
2006.
A copy of the statutory accounts for that year has been delivered
to the Registrar of companies. The auditors reported on those accounts:
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
The Company's business activities, financial position and financing
structure are discussed on page 1. The Directors have a reasonable
expectation that the company has adequate resources to continue in
operational existence for the foreseeable future. Though the Company's
balance sheet is currently showing a net liabilities position this
is entirely due to the fair value of the derivatives and the Directors
believe that this will not affect the Company's ability to meet its
continuing obligations as they fall due. They thus continue to adopt
the going concern basis of accounting in preparing the financial
statements.
The financial information included in this announcement has been
prepared on a going concern basis using accounting policies consistent
with applicable United Kingdom law and Accounting Standards. The
same accounting policies, presentation and methods of computation
are followed in the half - yearly report as applied in the company's
latest annual audited financial statements. The current period financial
information presented in this document is unaudited.
Financial assets
The company classified all financial assets, with the exception of
derivative financial instruments into the category Loans and Debtors.
Loans and Debtors are initially measured at fair value including
any transaction costs. They are subsequently measured at amortised
cost using the effective interest rate method.
Cash flow statement
The company is exempt under FRS 1 (Revised) from preparing a cashflow
statement, as its results are included in those of Bluebutton Properties
UK Limited.
Financial liabilities
Debt instruments are stated at their net proceeds on issue. Finance
charges including premiums payable on settlement or redemption and
direct issue costs are spread over the period to redemption, using
the effective interest method.
Derivative financial instruments
As defined by FRS 26, derivative financial instruments are measured
at fair value in the balance sheet. Changes in the fair value of
derivatives that are designated and qualify as effective cash flow
hedges are recognised directly in the hedging reserve. Any ineffective
portion is recognised in the profit and loss account.
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). In particular the group
(including this company) became a REIT on 1 January 2007 where income
and gains on qualifying assets are exempt from taxation. On 3 November
2009, the sale of 50% of the group to a non-REIT entity resulted
in now only 50% of the income and gains on qualifying assets being
exempt from taxation.
Deferred tax is recognised in respect of all timing differences
that have originated but not reversed at the balance sheet date
where transactions or events that result in an obligation to pay
more tax in the future or a right to pay less tax in the future
have occurred at the balance sheet date. Timing differences are
differences between the company's taxable profits and its results
as stated in the financial statements that arise from the inclusion
of gains and losses in tax assessments in periods different from
those in which they are recognised in the financial statements.
A net deferred tax asset is regarded as recoverable and therefore
recognised only when, on the basis of all available evidence, it
can be regarded as more likely than not that there will be suitable
taxable profits from which the future reversal of the underlying
timing differences can be deducted.
30 Sep 31 Mar
2. Debtors 2011 2011
Unaudited Audited
GBP GBP
Current debtors (receivable within
one year)
Amounts owed by group companies - current account
with Broadgate (Funding) 2005 Ltd 46,499,618 46,169,728
Prepayments and accrued income 22,487,607 22,275,902
68,987,225 68,445,630
============== ================
Long-term debtors (receivable after
more than one year)
Deferred tax asset (see note 5) 19,673,884 10,885,067
Amounts owed by group companies - Long
term loans 1,835,973,559 1,859,215,800
1,855,647,443 1,870,100,867
============== ================
3. Creditors due within one 30 Sep 31 Mar
year 2011 2011
Unaudited Audited
GBP GBP
Debenture loans (see note 4) 46,499,618 46,169,728
Interest rate derivative liabilities* 80,086,824 46,436,544
Amounts owed to group companies - current
accounts 14,745,904 14,764,391
Corporation tax 5,250 3,913
Other creditors 6,000 6,000
Accruals and deferred income 18,055,793 17,677,622
159,399,389 125,058,198
============== ================
* Includes contracted cash flows with a maturity
greater than one year at fair value.
Amounts owed to fellow group companies are repayable on demand.
4. Creditors due after one year 30 Sep
(including borrowings) 2011 31 Mar 2011
Unaudited Audited
GBP GBP
Debentures and
loans due 1 to 2 years 46,966,188 46,765,677
due 2 to 5 years 146,879,951 145,135,726
due after 5
years 1,642,127,420 1,667,314,397
1,835,973,559 1,859,215,800
================ ===========================
Hedge accounting
The company uses interest rates swaps to hedge exposure
to the variability in cash flows on floating rate debt.
At 30 September 2011 the market value of these derivatives,
which have been designated cash flow hedges under FRS
26, is a liability of GBP80.1m (31 March 2011: GBP46.4m).
The Treasury Function
The company finances its operations by a mixture of equity
and 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 exposure on
the floating rate loans.
Risk Management
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 group uses interest rate swap contracts
to hedge these exposures. The group does not use derivative
financial instruments for speculative purposes.
The ineffectiveness recognised in the income statement
on cash flow hedges for the 6 months ended 30 September
2011 was GBPnil (31 March 2011: GBPnil). The table below
summarises variable rate debt hedged at 30 September 2011.
30 Sep
2011 31 Mar 2011
Unaudited Audited
GBP GBP
after one
Outstanding: year 420,625,000 439,416,510
after two
years 383,041,510 401,833,490
after five
years 274,382,460 292,492,390
Borrowings repayment analysis
Borrowings are repayable
as follows:
Within one year 46,499,618 46,169,728
1-2 years 46,966,188 46,765,677
2-5 years 146,879,951 145,135,726
240,345,757 238,071,131
After 5
years 1,642,127,420 1,667,314,397
Total 1,882,473,177 1,905,385,528
Fair value of interest
rate derivative liabilities 80,086,824 46,436,544
1,962,560,001 1,951,822,072
================ ===========================
30 Sep 2011 31 Mar
2011
Secured on the assets of the Broadgate Unaudited Audited
Property Holdings Group
GBP GBP
Class A1 Floating Rate Bonds
due 2032 * 225,000,000 225,000,000
Class A2 4.949% Bonds due
2031 268,638,300 272,867,490
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 365,626,387 365,518,038
Class C1 Floating Rate Bonds
due 2022 * 166,458,490 176,250,000
Class C2 5.098% Bonds due
2035 215,000,000 215,000,000
Class D Floating Rate Bonds
due 2025 * 66,750,000 75,750,000
Total borrowings 1,882,473,177 1,905,385,528
Fair value of interest rate
derivative liabilities 80,086,824 46,436,544
1,962,560,001 1,951,822,072
=============== ===============
* At 30 September 2011 taking into account the effect of derivatives,
100% (31 March 2011: 100%) of the bonds were fixed. The bonds
amortise between 2005 to 2036, and are secured on properties
of the group valued at GBP2,650m (31 March 2011: GBP2,566m) and
cash and deposits of GBPnil (31 March 2011: GBPnil). The weighted
average interest rate of the bonds is 5.01% (31 March 2011: 5.02%).
The weighted average maturity of the bonds is 14.9 years (31
March 2011: 15.3 years).
At 30 September 2011 the company was financed by GBP1,882m bonds
(31 March 2011: GBP1,905m bonds).
The market value of the bonds at 30 September 2011 was GBP98.0m
less than the book value (31 March 2011: GBP187.0m less than
the book value).
There is an undrawn 364 day revolving liquidity facility totalling
GBP185m which is only available for requirements of the Broadgate
securitisation.
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.
31 Mar
5. Deferred tax asset 30 Sep 2011 2011
Unaudited Audited
GBP GBP
1 April 2011 10,885,067 13,432,790
Debited / (credited) to hedging
and translation reserve 8,788,817 (2,547,723)
30 September
2011 19,673,884 10,885,067
=============== ===============
The Directors consider that a deferred tax asset, that relates
primarily to timing differences arising with respect to the revaluation
of interest rate derivatives, is required to be provided for
in the current year.
6. Share capital
31 Mar
30 Sep 2011 2011
Unaudited Audited
GBP GBP
Issued share capital - allotted, called up and partly paid
Ordinary Shares of GBP1 each called up
to the extent of GBP0.25 each
Balance as at 1 April 2011 and as at 30
September 2011: 50,000 shares 12,500 12,500
=============== ===============
7. Reconciliation of movements in shareholders' funds and
reserves
Hedging
& translation Profit and
Share capital reserve loss account Total
GBP GBP GBP GBP
Opening shareholders'
deficit - audited 12,500 (30,980,575) 362,253 (30,605,822)
Profit for the financial
period 3,439 3,439
Derivatives valuation
movement (33,803,142) (33,803,142)
Taxation on hedging
and translation movements 8,788,817 8,788,817
Closing shareholders' deficit
- unaudited 12,500 (55,994,900) 365,692 (55,616,708)
============== =============== ============== =============
8. Capital commitments
The company had capital commitments contracted at 30 Sep
2011 of GBPnil (31 Mar 2011 - GBPnil).
9. Immediate parent and ultimate holding company
The immediate parent company is Broadgate Property Holdings Limited.
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 is Bluebutton Properties Limited (Jersey
Registered), a joint venture between The British Land Company PLC and
BRE/Brick Limited. The accounts of Bluebutton Properties UK Limited
are available on request from The British Land Company PLC, York House,
45 Seymour Street, London, W1H 7LX.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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