TIDM31PE
RNS Number : 6946R
Canary Wharf Finance II PLC
26 August 2010
CANARY WHARF FINANCE II PLC
26 August 2010
30 JUNE 2010 HALF YEARLY FINANCIAL REPORT
Pursuant to sections 4.1 and 6.3.5 of the Disclosure and Transparency Rules, the
board of Canary Wharf Finance II plc is pleased to announce the publication of
its half yearly financial report for the period ended 30 June 2010, which will
shortly be available from www.canarywharf.com/Investor Relations.
The information contained within this announcement, which was approved by the
board of directors on 25 August 2010, does not comprise statutory accounts
within the meaning of the Companies Act 2006 and is provided in accordance with
section 6.3.5(2)(b) of the Disclosure and Transparency Rules.
Two copies of the 30 June 2010 Half Yearly Financial Report will be submitted to
the UK Listing Authority ("UKLA") in accordance with Paragraph 9.6.1 of the
Listing Rules. The document will shortly be available for inspection at the
UKLA's Document Viewing Facility, which is situated at 25 North Colonnade,
Canary Wharf, London E14 5HS.
INTERIM MANAGEMENT STATEMENT
This interim management statement relates to the six months ended 30 June 2010
and contains information that covers the period from 1 January 2010 to 25 August
2010, the date of publication of this interim management statement.
BUSINESS REVIEW
The company is a wholly owned subsidiary of Canary Wharf Group plc and its
ultimate parent undertaking is Songbird Estates plc.
Canary Wharf Finance II plc is a finance vehicle that issues securities which
are backed by commercial mortgages over high profile properties within the
Canary Wharf estate. The company is engaged in the provision of finance to the
Canary Wharf group, comprising Canary Wharf Group plc and its subsidiaries ('the
group'). All activities take place within the United Kingdom
At 30 June 2010, the company had GBP2,490,823,840 (31 December 2009:
GBP2,519,590,161) of notes listed on the London Stock Exchange and had lent the
proceeds to a fellow subsidiary undertaking, CW Lending II Limited. The notes
are secured on seven properties at Canary Wharf, owned by fellow subsidiary
undertakings, and the rental income therefrom.
No significant non-routine events or transactions occurred during the period
from 1 January 2010 to 26 August 2010.
On 15 September 2008 Lehman Brothers Limited entered into administration in the
UK and its ultimate parent, Lehman Brothers Holdings Inc., applied for Chapter
11 insolvency protection in the USA.
Lehman Brothers Limited (in administration) ('Lehman') originally leased 1.023m
sq ft in 25 Bank Street on a tenancy which is due to expire in July 2033.
Although Lehman has ceased paying rent, the lease legally remains in place and
its obligations are guaranteed by Lehman Brothers Holdings Inc, the US parent.
Of the 1.023m sq ft, approximately 358,000 sq ft was sub-let in December 2008 to
Nomura International Plc. A further 63,000 sq ft (approx) in aggregate was
sub-let to Nomura in May 2009 and March 2010. These subleases will expire in 30
September 2010 following the exercise of breaks.
A further 126,000 sq ft is sublet, of which approximately 101,000 sq ft is
sub-let until 2013 and the balance until September 2010. Each of these sub-lets
revert to Lehman on the expiry of the various sub-leases. The current rent
payable by Lehman for the entire building is GBP54.59 psf.
The securitisation has the benefit of a loan facility agreement ('the HQ2
Facility') with American International Group, Inc ('AIG') which provides for a
shortfall of the contracted rent under the lease (for example following a
default by Lehman or its administrators) to be made up by drawing upon the HQ2
Facility. The Facility provides for drawings over a period of 4 years from
first drawdown. The amounts drawn are repayable from any recoveries received in
respect of the amounts claimed under the Facility and rentals in the property
which exceed the contracted rents that would have been received from Lehman
under the lease.
Under the HQ2 Facility AIG is obliged to maintain a certain credit rating.
Following the fall in its credit rating, AIG posted cash collateral of
approximately GBP224.0 million. This collateral is held in AIG bank accounts
with the Bank of New York Mellon, London branch and AIG has granted security
over the deposits as collateral for its obligations. The amount initially posted
in respect of AIG's obligations is subject to periodic adjustment to reflect
movements in interest rates.
For the first quarter of 2010 Lehman paid rent in respect of 290,146 sq ft only,
being the areas of 25 Bank Street which it occupied at that time and not for the
whole of 25 Bank Street. From 1 April 2010 Lehman ceased paying all rent and
estate service charge on the building. Sub-tenants which currently occupy
547,000 sq ft, including Nomura, continue to pay rent directly to the
securitisation rental receipts account.
Notwithstanding any partial occupation or any subsequent vacation of 25 Bank
Street by the administrators, the company continues to expect full performance
of the Lehman obligations under the lease and payment of rent on the whole of 25
Bank Street is being pursued in line with a recent High Court ruling on
administrator liability in relation to the first quarter of 2010 with the
position reserved as to subsequently. Pending resolution of this issue there
was a net shortfall in rental income of GBP2.6 million within the securitisation
structure in the first quarter of 2010. The shortfall for the second quarter
was GBP4.8m and for the third quarter was GBP5.8m. These shortfalls have been
satisfied from existing cash resources in a coverage reserve account established
within the securitisation to meet such shortfalls. There has therefore been no
immediate drawdown under the HQ2 Facility.
Separately, the securitisation has the benefit of an arrangement with AIG which
covers the rent in the event of a default by the tenant of 33 Canada Square over
the entire term of the lease. AIG has posted a further GBP276.3 million as cash
collateral in respect of this obligation.
The company also has the benefit of a GBP300.0m liquidity facility provided by
Lloyds Bank plc, under which drawings may be made in the event of a cash flow
shortage under the securitisation.
As shown in the company's profit and loss account, the company's loss after tax
for the six month period was GBP29,162,260 (period ended 30 June 2009: profit of
GBP53,727,564).
The balance sheet shows the company's financial position at the period end and
indicates that net liabilities were GBP142,758,625 (31 December 2009:
GBP82,902,534).
The financial position of the company as indicated by its balance sheet is
impacted by the application of Financial Reporting Standard 26 (Financial
Instruments: Recognition and Measurement) ('FRS 26') and its impact on other
financial reporting standards. FRS 26 requires recognition of the mark to
market of derivative financial instruments, which hedge the company's exposure
to interest rate fluctuations, but the mark to market of the company's debtor
loan and securitised debt has not been recognised. Adjusting for the effects of
FRS 26 the net asset value of the company at 30 June 2010 was as follows:
+--------------+-----------------------------+---------------+--------------+
| 31 | | 30 June | 30 June |
| December | | | |
+--------------+-----------------------------+---------------+--------------+
| 2009 | | 2010 | 2009 |
+--------------+-----------------------------+---------------+--------------+
| GBP | | GBP | GBP |
+--------------+-----------------------------+---------------+--------------+
| (82,902,534) | Net (liabilities) per | (142,758,625) | (83,716,114) |
| | balance sheet | | |
+--------------+-----------------------------+---------------+--------------+
| 86,380,000 | Effects of FRS 26 | 146,361,000 | 87,066,000 |
+--------------+-----------------------------+---------------+--------------+
| 3,477,466 | Adjusted net assets | 3,602,375 | 3,349,886 |
+--------------+-----------------------------+---------------+--------------+
The adjusted net assets position reflects the financial position that would
result from the scheduled back to back repayment of the company's debt and
debtor loan.
There have been no significant events since the balance sheet date affecting the
company.
KEY PERFORMANCE INDICATORS
+---------------+-----------------------------+---------------+---------------+
| 31 | | 30 June | 30 June |
| December | | | |
+---------------+-----------------------------+---------------+---------------+
| 2009 | | 2010 | 2009 |
+---------------+-----------------------------+---------------+---------------+
| GBP | | GBP | GBP |
+---------------+-----------------------------+---------------+---------------+
| 2,519,590,161 | Securitised debt | 2,490,823,840 | 2,548,356,480 |
+---------------+-----------------------------+---------------+---------------+
| 153,304,806 | Financing cost (before | 75,205,877 | 76,699,771 |
| | adjustments for FRS 26) | | |
+---------------+-----------------------------+---------------+---------------+
| 269,755 | Adjusted profit before tax | 124,909 | 142,176 |
| | and FRS 26 | | |
+---------------+-----------------------------+---------------+---------------+
| | | | |
+---------------+-----------------------------+---------------+---------------+
| 17.1 years | Weighted average maturity | 16.8 | 17.4 |
| | of debt | years | years |
+---------------+-----------------------------+---------------+---------------+
| 6.2% | Weighted average interest | 6.2% | 6.2% |
| | rate | | |
+---------------+-----------------------------+---------------+---------------+
The adjusted profit before tax comprises the loss on ordinary activities before
tax of GBP29,162,260 (period ended 30 June 2009: profit of GBP53,727,564)
adjusted for the FRS 26 itemslisted in Note 3,totalling GBP29,287,169 (period
ended 30 June 2009: GBP(53,585,388)).
GOING CONCERN
The company's business activities, together with the factors likely to affect
its future development, performance and position (including the principal risks
and uncertainties) are set out in this interim management statement. The
finances of the company and its liquidity position and borrowings are, where
relevant, also described in this statement.
As a result of the fair value of its derivative financial instruments the
company is in a net liability position at 30 June 2010. However, the company's
debtor loan provides an income stream which the directors forecast will enable
it to meet its obligations as they fall due for a period of not less than twelve
months from the signing date of this interim management statement.
Having made the requisite enquiries, the directors have a reasonable expectation
that the company will have adequate resources to continue its operations for the
foreseeable future. Accordingly they continue to adopt the going concern basis
in preparing the Half Yearly Financial Report.
PRINCIPAL RISKS AND UNCERTAINTIES
The risks and uncertainties facing the business are monitored through continuous
assessment, regular formal quarterly reviews and discussion at Canary Wharf
Group plc audit committee and board level. Such discussion focuses on the risks
identified as part of the system of internal control which highlights key risks
faced by the company and allocates specific day to day monitoring and control
responsibilities to management. As a member of Canary Wharf Group, the current
key risks of the company include the cyclical nature of the property market,
concentration risk and financing risk.
These risks, which are summarised below are unchanged from the risks and
uncertainties disclosed in the directors' report to the financial statements for
the year ended 31 December 2009.
Cyclical nature of the property market
The valuation of the group's assets is subject to many external economic and
market factors. The turmoil in the financial markets during 2008 and 2009 was
reflected in the property market by such factors as the oversupply of available
space in the office market, a significant decline in tenant demand for space in
London and a change in the market perception of property as an investment
resulting in a negative impact on property valuations in general. In the latter
half of 2009 and the first half of 2010 there have been signs of a tightening of
supply which has resulted in an increase in valuation and compression of yields.
Changes in financial and property markets are kept under constant review so that
the company can react appropriately. The impact of the ongoing uncertainty in
the financial and property markets continues to be closely monitored.
Concentration risk
The majority of the group's real estate assets are currently located on or
adjacent to the Canary Wharf Estate with tenants that are mainly linked to the
financial services industry. Wherever possible steps are taken to mitigate or
avoid material consequences arising from this concentration.
Financing risk
The broader economic cycle inevitably leads to movement in inflation, interest
rates and bond yields.
The company holds debenture finance in sterling at both fixed and floating rates
and uses interest rate swaps to modify its exposure to interest rate
fluctuations. All of the company's borrowings are fixed after taking account of
interest rate hedges. All borrowings are denominated in sterling and the
company has no intention to borrow amounts in currencies other than sterling.
The company enters into derivative financial instruments solely for the purposes
of hedging its financial liabilities. No derivatives are entered into for
speculative purposes.
The company is not subject to externally imposed capital requirements.
The company's securitisation is subject to a maximum loan minus cash to value
('LMCTV') ratio covenant.
The maximum LMCTV ratio is 100.0%. Based on the 31 December 2009 valuations of
the properties upon which the company's notes are secured, the LMCTV ratio at
the interest payment date in July 2010 would have been 82.1%, excluding the
GBP224.0m of cash collateral posted by AIG in respect of 25 Bank Street, and
74.4% including such cash collateral. The securitisation is not subject to a
minimum interest coverage ratio. The 30 June 2010 valuations were not available
at the date of signing this interim management statement.
A breach of covenant can be remedied by depositing eligible investments
(including cash).
DIRECTORS' RESPONSIBILITY STATEMENT
The board of directors, comprising G Iacobescu, A P Anderson II and P Harned,
confirm to the best of their knowledge that:
a) the condensed set of financial statements, which has been prepared in
accordance with the applicable set of accounting standards, gives a true and
fair view of the assets, liabilities, financial position and profit or loss of
the Company as required by Rule 4.2.4 of the Disclosure and Transparency Rules
of the United Kingdom's Financial Services Authority ('the DTRs'); and
b) the interim management statement includes a fair review of the information
required by Rule 4.2.7 of the DTRs (indication of important events during the
first six months and description of principal risks and uncertainties for the
remaining six months of the year).
UNAUDITED PROFIT AND LOSS ACCOUNT FOR THE SIX MONTHS ENDED 30 JUNE 2010
+--------------+--------------------------+------+---------------+----------+--------------+
| Audited | | | Unaudited | | Unaudited |
+--------------+--------------------------+------+---------------+----------+--------------+
| Year | | | Six | | Six |
| ended | | | months | | months |
+--------------+--------------------------+------+---------------+----------+--------------+
| 31 | | | ended | | ended |
| December | | | | | |
+--------------+--------------------------+------+---------------+----------+--------------+
| 2009 | | | 30 June | | 30 June |
| | | | 2010 | | 2009 |
+--------------+--------------------------+------+---------------+----------+--------------+
| GBP | |Note | GBP | | GBP |
+--------------+--------------------------+------+---------------+----------+--------------+
| | | | | | |
+--------------+--------------------------+------+---------------+----------+--------------+
| (13,950) | Administrative expenses | | (7,050) | | (6,900) |
+--------------+--------------------------+------+---------------+----------+--------------+
| | | | | | |
+--------------+--------------------------+------+---------------+----------+--------------+
| (13,950) | OPERATING LOSS | | (7,050) | | (6,900) |
+--------------+--------------------------+------+---------------+----------+--------------+
| | | | | | |
+--------------+--------------------------+------+---------------+----------+--------------+
| 153,588,511 | Interest receivable and | 2 | 75,337,836 | | 76,848,847 |
| | similar income | | | | |
+--------------+--------------------------+------+---------------+----------+--------------+
| | | | | | |
+--------------+--------------------------+------+---------------+----------+--------------+
| (98,407,784) | Interest payable and | 3 | (104,493,046) | | (23,114,383) |
| | similar charges | | | | |
+--------------+--------------------------+------+---------------+----------+--------------+
| | | | | | |
+--------------+--------------------------+------+---------------+----------+--------------+
| 55,166,777 | | | (29,162,260) | | 53,727,564 |
| | (LOSS)/PROFIT ON | | | | |
| | ORDINARY | | | | |
| | ACTIVITIES BEFORE | | | | |
| | TAXATION | | | | |
+--------------+--------------------------+------+---------------+----------+--------------+
| | | | | | |
+--------------+--------------------------+------+---------------+----------+--------------+
| - | Tax on (loss)/profit on | 4 | - | | - |
| | ordinary activities | | | | |
+--------------+--------------------------+------+---------------+----------+--------------+
| | | | | | |
+--------------+--------------------------+------+---------------+----------+--------------+
| 55,166,777 | (LOSS)/PROFIT ON | 8 | (29,162,260) | | 53,727,564 |
| | ORDINARY | | | | |
| | ACTIVITIES AFTER | | | | |
| | TAXATION FOR THE PERIOD | | | | |
+--------------+--------------------------+------+---------------+----------+--------------+
| | | | | | |
+--------------+--------------------------+------+---------------+----------+--------------+
All amounts relate to continuing activities in the United Kingdom.
The Notes numbered 1 to 9 form an integral part of this Half Yearly Financial
Report.
The Half Yearly Financial Report for the six months ended 30 June 2010 was
approved by the Board of Directors on 25 August 2010.
UNAUDITED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES FOR THE SIX MONTHS
ENDED 30 JUNE 2010
+-------------+------------------------------+--------------+----------+-------------+
| Audited | | Unaudited | | Unaudited |
+-------------+------------------------------+--------------+----------+-------------+
| Year ended | | Six | | Six |
| | | months | | months |
+-------------+------------------------------+--------------+----------+-------------+
| 31 | | ended | | ended |
| December | | | | |
+-------------+------------------------------+--------------+----------+-------------+
| 2009 | | 30 June | | 30 June |
| | | 2010 | | 2009 |
+-------------+------------------------------+--------------+----------+-------------+
| GBP | | GBP | | GBP |
+-------------+------------------------------+--------------+----------+-------------+
| 55,166,777 | (Loss)/profit for the | (29,162,260) | | 53,727,564 |
| | financial year | | | |
+-------------+------------------------------+--------------+----------+-------------+
| 51,512,715 | Fair value adjustment on | (38,282,920) | | 55,878,562 |
| | effective hedging | | | |
| | instruments | | | |
+-------------+------------------------------+--------------+----------+-------------+
| 5,715,286 | Payments from effective | 8,096,920 | | 1,457,438 |
| | hedging instruments | | | |
+-------------+------------------------------+--------------+----------+-------------+
| (1,045,022) | Hedge reserve recycling | (507,831) | | (527,388) |
+-------------+------------------------------+--------------+----------+-------------+
| 111,349,756 | | (59,856,091) | | 110,536,176 |
| | Total recognised | | | |
| | (losses)/gains relating to | | | |
| | the year | | | |
+-------------+------------------------------+--------------+----------+-------------+
| | | | | |
+-------------+------------------------------+--------------+----------+-------------+
The Notes on numbered 1 to 9 form an integral part of this Half Yearly Financial
Report.
UNAUDITED BALANCE SHEET AS AT 30 JUNE 2010
+-----------------+----------------------------+------+-----------------+----------+-----------------+
| Audited | | | Unaudited | | Unaudited |
+-----------------+----------------------------+------+-----------------+----------+-----------------+
| 31 | | | 30 June | | 30 June |
| December | | | | | |
+-----------------+----------------------------+------+-----------------+----------+-----------------+
| 2009 | | | 2010 | | 2009 |
+-----------------+----------------------------+------+-----------------+----------+-----------------+
| GBP | | Note | GBP | | GBP |
+-----------------+----------------------------+------+-----------------+----------+-----------------+
| | | | | | |
+-----------------+----------------------------+------+-----------------+----------+-----------------+
| | CURRENT ASSETS | | | | |
+-----------------+----------------------------+------+-----------------+----------+-----------------+
| | Debtors: | 5 | | | |
+-----------------+----------------------------+------+-----------------+----------+-----------------+
| 2,534,909,653 | Amounts falling due after | | 2,505,469,849 | | 2,564,355,281 |
| | one year | | | | |
+-----------------+----------------------------+------+-----------------+----------+-----------------+
| 88,744,717 | Amounts falling due within | | 88,405,287 | | 89,113,193 |
| | one year | | | | |
+-----------------+----------------------------+------+-----------------+----------+-----------------+
| 1,513,916 | Cash at bank | | 1,441,134 | | 1,189,590 |
+-----------------+----------------------------+------+-----------------+----------+-----------------+
| | | | | | |
+-----------------+----------------------------+------+-----------------+----------+-----------------+
| 2,625,168,286 | | | 2,595,316,270 | | 2,654,658,064 |
+-----------------+----------------------------+------+-----------------+----------+-----------------+
| | | | | | |
+-----------------+----------------------------+------+-----------------+----------+-----------------+
| (86,781,165) | CREDITORS: Amounts falling | 6 | (86,244,045) | | (86,952,897) |
| | due within one year | | | | |
+-----------------+----------------------------+------+-----------------+----------+-----------------+
| | | | | | |
+-----------------+----------------------------+------+-----------------+----------+-----------------+
| 2,538,387,121 | NET CURRENT ASSETS | | 2,509,072,225 | | 2,567,705,167 |
+-----------------+----------------------------+------+-----------------+----------+-----------------+
| | | | | | |
+-----------------+----------------------------+------+-----------------+----------+-----------------+
| 2,538,387,121 | TOTAL ASSETS LESS CURRENT | | 2,509,072,225 | | 2,567,705,167 |
| | LIABILITIES | | | | |
+-----------------+----------------------------+------+-----------------+----------+-----------------+
| | | | | | |
+-----------------+----------------------------+------+-----------------+----------+-----------------+
| (2,621,289,655) | CREDITORS: Amounts falling | 7 | (2,651,830,850) | | (2,651,421,281) |
| | due after more than one | | | | |
| | year | | | | |
+-----------------+----------------------------+------+-----------------+----------+-----------------+
| | | | | | |
+-----------------+----------------------------+------+-----------------+----------+-----------------+
| (82,902,534) | NET LIABILITIES | | (142,758,625) | | (83,716,114) |
+-----------------+----------------------------+------+-----------------+----------+-----------------+
+---------------+------------------------+----+---------------+----------+---------------+
| | CAPTAL AND RESERVES | | | | |
+---------------+------------------------+----+---------------+----------+---------------+
| 50,000 | Called-up share | | 50,000 | | 50,000 |
| | capital | | | | |
+---------------+------------------------+----+---------------+----------+---------------+
| (32,717,455) | Hedging reserve | 8 | (63,411,286) | | (32,091,822) |
+---------------+------------------------+----+---------------+----------+---------------+
| (50,235,079) | Profit and loss | 8 | (79,397,339) | | (51,674,292) |
| | account | | | | |
+---------------+------------------------+----+---------------+----------+---------------+
| | | | | | |
+---------------+------------------------+----+---------------+----------+---------------+
| (82,902,534) | SHAREHOLDER'S DEFICIT | | (142,758,625) | | |
| | | | | | (83,716,114) |
+---------------+------------------------+----+---------------+----------+---------------+
| | | | | | |
+---------------+------------------------+----+---------------+----------+---------------+
The Notes on numbered 1 to 9 form an integral part of this Half Yearly Financial
Report.
1.PRINCIPAL ACCOUNTING POLICIES
The Half Yearly Financial Report has been prepared on a going concern
basis and in accordance with pronouncements on interim reporting issued by the
Accounting Standards Board and on the basis of the accounting policies set out
in the company's financial statements for the year ended 31 December 2009, which
are prepared in accordance with UK GAAP.
The financial information relating to the six month periods ended 30
June 2010 and 30 June 2009 is unaudited.
The results for the year ended 31 December 2009 are not statutory
accounts. A copy of the statutory accounts for the year has been delivered to
the Registrar of Companies. The auditors report on those accounts was not
qualified, did not contain a reference to any matters which the auditors drew
attention by way of emphasis without qualifying the report and did not contain
statements under Section 498(2) or (3) of the Companies Act 2006.
In accordance with the provisions of FRS 1 (Revised) the company is
exempt from the requirements to prepare a cash flow statement, as it is a
wholly-owned subsidiary of Canary Wharf Group plc, which makes its consolidated
financial statements publicly available.
2.INTEREST RECEIVABLE AND SIMILAR INCOME
+-------------+------------------------------+------------+----------+------------+
| Audited | | Unaudited | | Unaudited |
+-------------+------------------------------+------------+----------+------------+
| Year | | Six months | | Six |
| ended | | | | months |
+-------------+------------------------------+------------+----------+------------+
| 31 | | ended | | ended |
| December | | | | |
+-------------+------------------------------+------------+----------+------------+
| 2009 | | 30 June | | 30 June |
| | | 2010 | | 2009 |
+-------------+------------------------------+------------+----------+------------+
| GBP | | GBP | | GBP |
+-------------+------------------------------+------------+----------+------------+
| 30,373 | Bank interest receivable | 7,870 | | 21,938 |
+-------------+------------------------------+------------+----------+------------+
| 153,558,138 | Interest receivable from | 75,329,966 | | 76,826,909 |
| | group undertakings | | | |
+-------------+------------------------------+------------+----------+------------+
| | | | | |
| 153,588,511 | | 75,337,836 | | 76,848,847 |
+-------------+------------------------------+------------+----------+------------+
3.INTEREST PAYABLE AND SIMILAR CHARGES
+--------------+------------------------------+-------------+----------+--------------+
| Audited | | Unaudited | | Unaudited |
+--------------+------------------------------+-------------+----------+--------------+
| Year | | Six months | | Six |
| ended | | | | months |
+--------------+------------------------------+-------------+----------+--------------+
| 31 | | ended | | ended |
| December | | | | |
+--------------+------------------------------+-------------+----------+--------------+
| 2009 | | 30 June | | 30 June |
| | | 2010 | | 2009 |
+--------------+------------------------------+-------------+----------+--------------+
| GBP | | GBP | | GBP |
+--------------+------------------------------+-------------+----------+--------------+
| 153,304,806 | Interest payable on | 75,205,877 | | 76,699,771 |
| | securitised debt (Note 7) | | | |
+--------------+------------------------------+-------------+----------+--------------+
| (53,852,000) | Fair value adjustments on | 29,795,000 | | (53,058,000) |
| | derivative financial | | | |
| | instruments | | | |
+--------------+------------------------------+-------------+----------+--------------+
| (1,045,022) | Hedge reserve recycling | (507,831) | | (527,388) |
| | (Note 8) | | | |
+--------------+------------------------------+-------------+----------+--------------+
| | | | | |
+--------------+------------------------------+-------------+----------+--------------+
| 98,407,784 | | 104,493,046 | | 23,114,383 |
+--------------+------------------------------+-------------+----------+--------------+
Of the interest payable on securitised debt GBP2,538,604 (30 June 2008:
GBP3,863,902) was due to a fellow subsidiary undertaking.
4.TAXATION
No provision for corporation tax has been made since the tax profit for
the year will be covered by the group relief expected to be made available to
the company by other companies in the group. No charge will be made by other
group companies for the surrender of group relief. It is anticipated that group
relief and other tax reliefs will impact on future tax charges. There is no
unprovided deferred taxation.
5.DEBTORS
+-------------+-+--------------------------+------+---------------+----------+---------------+
| Audited | | Unaudited | | Unaudited |
+-------------+-----------------------------------+---------------+----------+---------------+
| 31 | | 30 June | | 30 June |
| December | | | | |
+-------------+-----------------------------------+---------------+----------+---------------+
| 2009 | | 2010 | | 2009 |
+-------------+-----------------------------------+---------------+----------+---------------+
| GBP | | GBP | | GBP |
+-------------+-----------------------------------+---------------+----------+---------------+
| | Due within one year: | | | |
+-------------+-----------------------------------+---------------+----------+---------------+
| 86,617,063 | Loans to fellow subsidiary | 86,284,622 | | 86,994,209 |
| | undertaking | | | |
+-------------+-----------------------------------+---------------+----------+---------------+
| 2,126,381 | Amount owed by fellow subsidiary | 2,119,331 | | 2,116,031 |
| | undertaking | | | |
+-------------+-----------------------------------+---------------+----------+---------------+
| 1,273 | Accrued interest receivable | 1,334 | | 2,953 |
+-------------+-----------------------------------+---------------+----------+---------------+
| | | | | |
+-------------+-----------------------------------+---------------+----------+---------------+
| 88,744,717 | | | | 89,113,193 |
| | | 88,405,287 | | |
+-------------+-----------------------------------+---------------+----------+---------------+
| | | | | | |
+---------------+--------------------------+------+---------------+----------+---------------+
| | Due in more than one | | | | |
| | year: | | | | |
+---------------+--------------------------+------+---------------+----------+---------------+
| 2,534,909,653 | Loans to fellow | | 2,505,469,849 | | 2,564,355,281 |
| | subsidiary undertaking | | | | |
+---------------+--------------------------+------+---------------+----------+---------------+
| | | | 2,505,469,849 | | 2,564,355,281 |
| 2,534,909,653 | | | | | |
+---------------+--------------------------+------+---------------+----------+---------------+
| | | | | | |
+---------------+--------------------------+------+---------------+----------+---------------+
| | | | | | | |
+-------------+-+--------------------------+------+---------------+----------+---------------+
The loans to a fellow subsidiary undertaking bear fixed rates of interest
between 5.12% and 6.81% and are repayable in instalments between 2005 and 2035.
At 30 June 2010 the fair value of the loan was GBP2,527,739,000 (31 December
2009: GBP2,289,728,000), calculated by reference to the fair values of the
company's financial liabilities.
Other amounts owed by group undertakings are non-interest bearing.
6.CREDITORS: Amounts falling due within one year
+------------+------------------------+------------+----------+------------+
| Audited | | Unaudited | | Unaudited |
+------------+------------------------+------------+----------+------------+
| 31 | | 30 June | | 30 June |
| December | | | | |
+------------+------------------------+------------+----------+------------+
| 2009 | | 2010 | | 2009 |
+------------+------------------------+------------+----------+------------+
| GBP | | GBP | | GBP |
+------------+------------------------+------------+----------+------------+
| 86,774,115 | Securitised debt (Note | 86,236,995 | | 86,945,997 |
| | 7) | | | |
+------------+------------------------+------------+----------+------------+
| 7,050 | Accruals and deferred | 7,050 | | 6,900 |
| | income | | | |
+------------+------------------------+------------+----------+------------+
| | | 86,244,045 | | 86,952,897 |
| 86,781,165 | | | | |
+------------+------------------------+------------+----------+------------+
The amount of the securitised debt due within one year comprises GBP28,704,355
(31 December 2009: GBP29,241,475) of interest and GBP57,532,640 (31 December
2009: GBP57,532,640) of capital.
7.CREDITORS: Amounts falling due after more than one year
+---------------+------------------------+---------------+----------+---------------+
| Audited | | Unaudited | | Unaudited |
+---------------+------------------------+---------------+----------+---------------+
| 31 | | 30 June | | 30 June |
| December | | | | |
+---------------+------------------------+---------------+----------+---------------+
| 2009 | | 2010 | | 2009 |
+---------------+------------------------+---------------+----------+---------------+
| GBP | | GBP | | GBP |
+---------------+------------------------+---------------+----------+---------------+
| 2,534,909,655 | Securitised debt | 2,505,469,850 | | 2,564,355,281 |
+---------------+------------------------+---------------+----------+---------------+
| 86,380,000 | Derivate financial | 146,361,000 | | 87,066,000 |
| | instruments | | | |
+---------------+------------------------+---------------+----------+---------------+
| 2,621,289,655 | | 2,651,830,850 | | |
| | | | | 2,651,421,281 |
| | | | | |
+---------------+------------------------+---------------+----------+---------------+
The amounts at which the securitised debt is stated comprise:
+---------------+------------------------+---------------+----------+---------------+
| Audited | | Unaudited | | Unaudited |
+---------------+------------------------+---------------+----------+---------------+
| 31 | | 30 June | | 30 June |
| December | | | | |
+---------------+------------------------+---------------+----------+---------------+
| 2009 | | 2010 | | 2009 |
+---------------+------------------------+---------------+----------+---------------+
| GBP | | GBP | | GBP |
+---------------+------------------------+---------------+----------+---------------+
| 2,626,086,740 | Brought forward | 2,592,442,295 | | 2,626,086,740 |
+---------------+------------------------+---------------+----------+---------------+
| (32,221,760) | Repaid in period | (28,766,320) | | (3,455,440) |
+---------------+------------------------+---------------+----------+---------------+
| (4,990,672) | Amortisation of issue | (2,442,816) | | (2,512,710) |
| | premium | | | |
+---------------+------------------------+---------------+----------+---------------+
| 3,567,987 | Accrued financing | 1,769,331 | | 1,769,331 |
| | expenses | | | |
+---------------+------------------------+---------------+----------+---------------+
| | | 2,563,002,490 | | 2,621,887,921 |
| 2,592,442,295 | Carried forward | | | |
+---------------+------------------------+---------------+----------+---------------+
| | | | | |
+---------------+------------------------+---------------+----------+---------------+
| 57,532,640 | Payable within one | 57,532,640 | | 57,532,640 |
| | year or on demand | | | |
+---------------+------------------------+---------------+----------+---------------+
| 2,534,909,655 | Payable after more | 2,505,469,850 | | 2,564,355,281 |
| | than one year | | | |
+---------------+------------------------+---------------+----------+---------------+
| | | 2,563,002,490 | | 2,621,887,921 |
| 2,592,442,295 | | | | |
+---------------+------------------------+---------------+----------+---------------+
Certain of the A1, A3 and B notes were issued at a premium which is being
amortised to the profit and loss account on a straight-line basis over the life
of the relevant notes. At 30 June 2010 GBP60,809,992 (31 December 2009:
GBP63,252,808) remained unamortised.
On 2 April 2009, a fellow subsidiary undertaking acquired GBP119,778,000
of notes comprising GBP26,101,000 of B3 notes, GBP35,338,000 of C2 notes and
GBP58,339,000 of D2 notes. These notes remain in issue and have not been
cancelled.
At 30 June 2010 there were accrued financing costs of GBP11,368,657 (31 December
2009: GBP9,599,326) relating to future increases in margins.
The securitised debt has a face value of GBP2,490,823,840 (31 December 2009:
GBP2,519,590,161), of which GBP1,764,823,840 (31 December 2009:
GBP1,793,590,160) carries fixed rates of interest between 5.95% and 6.80%. The
other GBP726,000,000 (31 December 2009: GBP726,000,000) of the securitised debt
carries floating rates of interest at LIBOR plus a margin. The company uses
interest rate swaps to hedge exposure to the variability in cash flows on
floating rate debt caused by movements in market rates of interest. The hedged
rates of the floating notes, including the margins, are between 5.11% and 5.80%.
The market value of the securitised debt at 30 June 2010 was
GBP2,381,378,000 (31 December 2009: GBP2,203,349,000). At 30 June 2010 the fair
value of the interest rate derivatives resulted in the recognition of a net
liability of GBP146,361,000 (31 December 2009: GBP86,380,000). Of this net
liability, GBP74,687,000 was in respect of interest rate swaps which qualify for
hedge accounting (31 December 2009: GBP44,501,000) and GBP71,674,000 was in
respect of interest rate swaps which do not qualify for hedge accounting (31
December 2009: GBP41,879,000).
The notes are secured on certain property interests in fellow subsidiary
undertakings and the rental income stream therefrom.
8.RESERVES
+--------------------------+--------------+--------------+----------+---------------+
| | Hedging | Profit | | Total |
| | reserve | and loss | | |
| | | account | | |
+--------------------------+--------------+--------------+----------+---------------+
| | GBP | GBP | | GBP |
+--------------------------+--------------+--------------+----------+---------------+
| At 1 January 2010 | (32,717,455) | (50,235,079) | | (82,952,534) |
+--------------------------+--------------+--------------+----------+---------------+
| Loss for the period | - | (29,162,260) | | (29,162,260) |
+--------------------------+--------------+--------------+----------+---------------+
| Fair value adjustment on | (38,282,920) | - | | (38,282,920) |
| effective hedging | | | | |
| instruments | | | | |
+--------------------------+--------------+--------------+----------+---------------+
| Payments from effective | 8,096,920 | - | | 8,096,920 |
| hedging instruments | | | | |
+--------------------------+--------------+--------------+----------+---------------+
| Movements on | (507,831) | - | | (507,831) |
| discontinued hedge | | | | |
| accounting transferred | | | | |
| to the profit and loss | | | | |
| account | | | | |
+--------------------------+--------------+--------------+----------+---------------+
| At 30 June 2010 | (63,411,286) | (79,397,339) | | (142,808,625) |
+--------------------------+--------------+--------------+----------+---------------+
9.CAPITAL COMMITMENTS
As at 30 June 2010 the company had given a fixed charge over all its
assets, including first fixed charges over its bank accounts, to secure the
notes referred to in Note 7.
Contact for queries:
J R Garwood
Company Secretary
Canary Wharf Finance II plc
Telephone: 020 7418 2000
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR FMGZRMVFGGZM
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