TIDM31PE

RNS Number : 5030M

Canary Wharf Finance II PLC

16 September 2019

CANARY WHARF FINANCE II PLC

16 SEPTEMBER 2019

PUBLICATION OF THE HALF YEARLY FINANCIAL REPORT FOR THE 6 MONTHSED 30 JUNE 2019

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 6 months ended 30 June 2019, which will shortly be available from https://group.canarywharf.com/investors/canary-wharf-finance-ii-plc/.

The information contained within this announcement, which was approved by the board of directors on 16 September 2019, 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.

In compliance with the Listing Rule 9.6.1, a copy of the 30 June 2019 half yearly financial report will be submitted to the UK Listing Authority via the National Storage Mechanism and will shortly be available to the public for inspection at www.hemscott.com/nsm.do.

Dated: 16 September 2019

Contact for queries:

J R Garwood

Company Secretary

Canary Wharf Finance II plc

Telephone: 020 7418 2000

INTERIM MANAGEMENT STATEMENT

This interim management statement relates to the 6 months ended 30 June 2019 and contains information that covers the period from 1 January 2019 to 16 September 2019, the date of publication of this interim management statement.

BUSINESS REVIEW

The company is a subsidiary of Canary Wharf Group plc and its ultimate parent undertaking is Stork HoldCo LP, an entity registered in Bermuda.

The company is a finance vehicle that issues securities which are backed by commercial mortgages over 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 2019, the company had GBP1,458,175,120 (31 December 2018 - GBP1,472,837,720) of notes listed on the London Stock Exchange and had lent the proceeds to a fellow subsidiary undertaking, CW Lending II Limited ('the Borrower') under a loan agreement ('the Intercompany Loan Agreement'). The notes are secured on a pool of properties at Canary Wharf, owned by fellow subsidiary undertakings, and the rental income therefrom.

Results for the period

As shown in the company's Income Statement, the company's loss after tax for the 6 month period was GBP14,236,411 (period ended 30 June 2018 - profit of GBP15,932,230).

This loss included an unrealised fair value loss on derivative financial instruments and hedge reserve recycling of GBP17,237,858 (period ended 30 June 2018 - profit of GBP15,860,835). Excluding the fair value gain movement on derivative financial instruments and hedge reserve recycling, the profit for the period was GBP71,011 (period ended 30 June 2018 - GBP71,395).

The balance sheet shows the company's financial position at the period end and indicates that net liabilities were GBP284,749,209 (31 December 2018 - GBP258,130,841).

The movement in the financial position of the company is primarily due to the impact of the fair value of financial instruments, derived by reference to the market values provided by the relevant counter parties.

In adopting FRS 102, the company elected to apply IAS 39 (Financial Instruments: Recognition and Measurement).

IAS 39 requires recognition of the mark to market of derivative financial instruments, which hedge the company's exposure to interest rate fluctuations. However, the mark to market of the company's debtor loan and securities debt has not been recognised.

Adjusting for the effects of IAS 39 and the deferred tax arising, the underlying net asset value of the company at 30 June 2019 was as follows:

 
       Audited                                             Unaudited       Unaudited 
   31 December                                               30 June         30 June 
          2018                                                  2019            2018 
           GBP                                                   GBP             GBP 
--------------                                        --------------  -------------- 
 
                  Net liabilities per balance 
 (258,130,841)     sheet                               (284,749,209)   (252,078,810) 
                  Add back: Effects of IAS 39 
   317,338,975     (Note 8)                              349,494,853     309,950,654 
                  Less: Deferred tax thereon (Note 
  (53,947,625)     4)                                   (59,414,124)    (52,691,613) 
 
     5,260,509    Adjusted net assets                      5,331,520       5,180,231 
--------------                                        --------------  -------------- 
 
 
       Audited                                             Unaudited       Unaudited 
   31 December                                               30 June         30 June 
          2018                                                  2019            2018 
           GBP                                                   GBP             GBP 
--------------                                        --------------  -------------- 
 
 1,472,837,720    Securitised debt                     1,458,175,120   1,487,500,320 
                  Financing cost (before adjustments 
    88,467,105     for IAS 39)                            43,360,243      44,268,319 
                  Adjusted profit before tax and 
       151,674     IAS 39                                     71,011          71,395 
 
                  Weighted average maturity of 
    13.1 years     debt                                   12.7 years      13.5 years 
          6.1%    Weighted average interest rate                6.1%            6.1% 
 

The adjusted profit before tax comprises the loss on ordinary activities before tax of GBP17,166,847 (30 June 2018 - GBP19,180,834) adjusted for the IAS 39 items listed in Note 3 totalling a gain of GBP17,237,858 (30 June 2018 - GBP19,109,439).

There have been no significant events since the balance sheet date.

GOING CONCERN

The directors are required to prepare the financial statements for each financial period on a going concern basis, unless to do so would not be appropriate. Having made the requisite enquiries, the directors have a reasonable expectation that the company has adequate resources to continue its operations for the foreseeable future and hence the financial statements have been prepared on that basis.

At 30 June 2019 the company had a deficit of GBP284,749,209 attributable solely to the fair value of its derivative financial instruments and deferred tax thereon. The company recognises the fair value of its derivative financial instruments in the balance sheet. In the event that the company were to realise the fair value of the derivative financial instruments, it would have the right to recoup its losses as a repayment premium on its loans to CW Lending II Limited. The standard does not permit this potential asset to be accounted for in conjunction with the hedges.

Notwithstanding the deficit in net assets resulting from the treatment of derivative financial instruments, the directors have prepared the financial statements on a going concern basis on the grounds that the company will be able to meet its obligations as they fall due for a period of not less than 12 months from the date of the financial statements.

The directors have also reached the view that the value of the company's assets at the balance sheet date was not less than the amount of its liabilities for the purposes of Section 123(2) of the Insolvency Act 1986.

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 board level and Canary Wharf Group Investments Holdings 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.

Cyclical nature of the property market

The valuation of the Canary Wharf Group's assets is subject to many external economic and market factors. Following the turmoil in the financial markets and uncertainty in the Eurozone experienced in recent years, the London real estate market has had to cope with fluctuations in demand. The market has, however, been assisted by the depreciation of sterling since the EU referendum and the continuing presence of overseas investors attracted by the relative transparency of the real estate market in London which is viewed as both stable and secure. The market has also been underpinned by continuing demand for sites capable of incorporating residential development. Recent Government announcements, in particular the changes to stamp duty on residential property market have however, contributed to a slowing of residential land prices. In particular, there is uncertainty over the full impact of the changes to stamp duty on the residential property market. The full implications of the EU referendum held on 23 June 2016 are also not yet clear. In the meantime, there is likely to be uncertainty which will be unhelpful to confidence across the whole real estate sector.

Changes in financial and property markets are kept under constant review so that the company can react appropriately and tailor its business accordingly.

Concentration risk

The majority of the Canary Wharf Group's real estate assets are currently located on or adjacent to the Canary Wharf Estate with a majority of tenants linked to the financial services industry. Wherever possible steps are taken to mitigate or avoid material consequences arising from this concentration and to diversify the tenant base.

Financing risk

The broader economic cycle is reflected in movements in inflation, interest rates and bond yields.

The company has issued 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') ration covenant.

The maximum LMCTV ratio is 100.0%. Based on the 30 June 2019 valuations of the properties upon which the company's notes are secured, the LMCTV ratio at the interest payment date in July 2019 was 44.4%. The securitisation is not subject to a minimum interest coverage ratio. A breach of certain financial covenants can be remedied by depositing eligible investments (including cash).

DIRECTOR'S RESPONSIBILITY STATEMENT

The board of directors, comprising A P Anderson II, Sir George Iacobescu CBE, J R Garwood (alternate director to Sir George Iacobescu CBE), Sheikh Khalifa Al-Thani who replaced A A Aluthman Fakhroo as a director of the company on 9 August 2018, R J J Lyons (alternate director to A P Anderson II) and Z B Vaughan who replaced B Brown as a director of the company on 26 June 2018, confirms to the best of its knowledge that:

 
            --    the condensed set of financial statements which has been prepared 
                   in accordance with the applicable set of accounting standards give 
                   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 
                   Conduct Authority (the 'DTRs'); and 
 
            --    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 6 months and description of principal risks and uncertainties 
                   for the remaining 6 months of the year). 
 

INCOME STATEMENT

for the 6 months ended 30 June 2019

 
      Audited                                                      Unaudited      Unaudited 
   year ended                                                       6 months       6 months 
  31 December                                                          ended          ended 
         2018                                                   30 June 2019   30 June 2018 
          GBP                                            Note            GBP            GBP 
-------------                                                  -------------  ------------- 
 
      (9,949)     Administrative expenses                            (8,952)        (8,244) 
 
      (9,949)     OPERATING LOSS                                     (8,952)        (8,244) 
 
   88,628,728     Interest receivable                       2     43,440,206     44,347,958 
 
 (72,952,862)     Interest payable                          3   (60,598,101)   (25,158,880) 
 
                  (LOSS)/PROFIT ON ORDINARY ACTIVITIES 
   15,665,917      BEFORE TAXATION                              (17,166,847)     19,180,834 
 
                  Tax on (loss)/profit on ordinary 
  (2,637,422)      activities                               4      2,930,436    (3,248,604) 
 
                  LOSS ON ORDINARY ACTIVITIES 
   13,028,495      AFTER TAXATION FOR THE PERIOD/YEAR           (14,236,411)     15,932,230 
-------------                                                  -------------  ------------- 
 

All amounts relate to continuing activities in the United Kingdom.

The Notes numbered 1 - 9 form an integral part of this Half Yearly Financial Report.

The Half Yearly Financial Report for the 6 month ended 30 June 2019 was approved by the Board of Directors on 16 September 2019.

STATEMENT OF COMPREHENSIVE INCOME

for the 6 months ended 30 June 2019

 
     Audited                                                  Unaudited      Unaudited 
  year ended                                                   6 months       6 months 
 31 December                                                      ended          ended 
        2018                                               30 June 2019   30 June 2018 
         GBP                                                        GBP            GBP 
------------                                              -------------  ------------- 
 
  13,028,495       Loss for the financial period/year      (14,236,411)     15,932,230 
 
 
                Fair value movement on effective hedging 
 (1,261,159)     instruments                               (21,055,135)      8,786,205 
                Interest paid on effective hedging 
  13,545,855     instruments                                  6,408,434      7,011,567 
   (568,790)    Hedge reserve recycling                       (271,319)      (288,740) 
                Tax relating to components of other 
 (1,991,704)     comprehensive income                         2,536,063    (2,636,534) 
 
                Other comprehensive income for the 
   9,724,202     period/year                               (12,381,957)     12,872,498 
 
                Total comprehensive income for the 
  22,752,697     period/year                               (26,618,368)     28,804,728 
------------                                              -------------  ------------- 
 

The Notes numbered 1 - 9 form an integral part of this Half Yearly Financial Report.

STATEMENT OF FINANCIAL POSITION

as at 30 June 2019

 
         Audited                                                         Unaudited         Unaudited 
     31 December                                                           30 June           30 June 
            2018                                                              2019              2018 
             GBP                                            Note               GBP               GBP 
----------------                                                  ----------------  ---------------- 
 
                    CURRENT ASSETS 
                   Debtors                                     5 
                    Amounts falling due after one 
   1,534,802,943     year                                            1,524,052,313     1,549,800,559 
                    Amounts falling due within one 
      48,763,858     year                                               48,352,235        48,681,414 
       3,161,839   Cash at bank                                6         3,218,677         3,100,111 
 
   1,586,728,640                                                     1,575,623,225     1,601,582,084 
 
                    CREDITORS: Amounts falling due 
    (46,665,187)     within one year                           7      (46,239,391)      (46,601,294) 
 
   1,540,063,453    NET CURRENT ASSETS                               1,529,383,834     1,554,980,790 
----------------                                                  ----------------  ---------------- 
 
   1,540,063,453    TOTAL ASSETS LESS CURRENT LIABILITIES            1,529,383,834     1,554,980,790 
 
                    CREDITORS: Amounts falling due 
 (1,798,194,294)     after more than one year                  8   (1,814,133,043)   (1,807,059,600) 
 
   (258,130,841)    NET LIABILITIES                                  (284,749,209)     (252,078,810) 
----------------                                                  ----------------  ---------------- 
 
                    CAPITAL AND RESERVES 
          50,000    Called up share capital                                 50,000            50,000 
   (122,050,010)    Hedging reserve                                  (134,431,967)     (118,901,714) 
   (136,130,831)    Retained earnings                                (150,367,242)     (133,227,096) 
 
   (258,130,841)    SHAREHOLDER'S DEFICIT                            (284,749,209)     (252,078,810) 
----------------                                                  ----------------  ---------------- 
 

The Notes numbered 1 - 9 form an integral part of this Half Yearly Financial Report.

STATEMENT OF CHANGES IN EQUITY

for the 6 months ended 30 June 2019

 
                                    Called 
                                        up 
                                     share         Hedging        Retained 
                                   capital         reserve        earnings           Total 
                                       GBP             GBP             GBP             GBP 
                                  --------  --------------  --------------  -------------- 
 
     At 1 January 2018              50,000   (131,774,212)   (149,159,326)   (280,883,538) 
     Profit for the period               -               -      15,932,230      15,932,230 
 Other comprehensive income              -      12,872,498               -      12,872,498 
 
 
     Total comprehensive income          -      12,872,498      15,932,230      28,804,728 
 
     At 30 June 2018                50,000   (118,901,714)   (133,227,096)   (252,078,810) 
                                  --------  --------------  --------------  -------------- 
 
     Loss for the period                 -               -     (2,903,735)     (2,903,735) 
     Other comprehensive loss            -     (3,148,296)               -     (3,148,296) 
 
 
     Total comprehensive loss            -     (3,148,296)     (2,903,735)     (6,052,031) 
 
     At 31 December 2018            50,000   (122,050,010)   (136,130,831)   (258,130,841) 
                                  --------  --------------  --------------  -------------- 
 
     Loss for the period                 -               -    (14,236,411)    (14,236,411) 
     Other comprehensive income          -    (12,381,957)               -    (12,381,957) 
 
 
     Total comprehensive income          -    (12,381,957)    (14,236,411)    (26,618,368) 
 
     At 30 June 2019                50,000   (134,431,967)   (150,367,242)   (284,749,209) 
                                  --------  --------------  --------------  -------------- 
 

The Notes numbered 1 - 9 form an integral part of this Half Yearly Financial Report.

NOTES TO THE INTERIM REPORT

for the 6 months ended 30 June 2019

   1.           ACCOUNTING POLICIES 

The statutory accounts have been prepared in accordance with Financial Reporting Standard (FRS) 102 "The Financial Report Standard applicable in the UK and Republic of Ireland". Accordingly, this condensed set of financial statements has been prepared in accordance with FRS 104 "Interim Financial Reporting".

The accounting policies applied in the preparation of this Interim Report are consistent with those that will be adopted in the statutory accounts for the year ending 31 December 2019. The full accounting policies of the company, set out in the 2018 statutory accounts, have been applied in preparing this Interim Report.

The financial information relating to the 6 months ended 30 June 2019 and 30 June 2018 is unaudited.

The results for the year ended 31 December 2018 are not the company's statutory accounts. A copy of the statutory accounts for the year has been delivered to the Registrar of Companies. The auditor's report on those accounts was not qualified, did not contain any reference to any matters which the auditor 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 FRS 102, the company will be exempt from presentation of cash flow statement in its next annual financial statements as it will be included in the consolidated financial statements of Canary Wharf Group Investing Holdings plc, and accordingly the company has taken an equivalent exemption in preparing these condensed interim financial statements.

   2.           INTEREST RECEIVABLE AND SIMILAR INCOME 
 
     Audited                                       Unaudited      Unaudited 
  year ended                                        6 months       6 months 
 31 December                                           ended          ended 
        2018                                    30 June 2019   30 June 2018 
         GBP                                             GBP            GBP 
------------                                   -------------  ------------- 
 
      11,158   Bank interest receivable                7,340          4,116 
               Interest receivable from group 
  88,617,570    undertakings                      43,432,866     44,343,842 
 
  88,628,728                                      43,440,206     44,347,958 
------------                                   -------------  ------------- 
 
 
   3.           INTEREST PAYABLE AND SIMILAR CHARGES 
 
      Audited                                             Unaudited      Unaudited 
   year ended                                              6 months       6 months 
  31 December                                                 ended          ended 
         2018                                          30 June 2019   30 June 2018 
          GBP                                                   GBP            GBP 
-------------                                         -------------  ------------- 
 
                Interest payable on securitised 
   88,467,105    debt (Note 8)                           43,360,243     44,268,319 
                Fair value adjustments on derivative 
 (14,945,453)    financial instruments                   17,509,177   (18,820,699) 
    (568,790)   Hedge reserve recycling                   (271,319)      (288,740) 
 
   72,952,862                                            60,598,101     25,158,880 
-------------                                         -------------  ------------- 
 
 

Unrealised fair value gains or losses on derivative financial instruments which do not qualify for hedge accounting are recognised in the Income Statement (Note 8).

   4.           TAXATION 
 
     Audited                                                Unaudited      Unaudited 
  year ended                                                 6 months       6 months 
 31 December                                                    ended          ended 
        2018                                             30 June 2019   30 June 2018 
         GBP                                                      GBP            GBP 
------------                                            -------------  ------------- 
 
                Tax charge 
           -    Current tax chargeable to income                    -              - 
 (2,637,422)    Deferred tax                                2,930,436    (3,248,604) 
 
 (2,637,422)                                                2,930,436    (3,248,604) 
------------                                            -------------  ------------- 
 
                Tax reconciliation 
                (Loss)/profit on ordinary activities 
  15,665,917     before taxation                         (17,166,847)     19,180,834 
 
 
                Tax on (loss)/profit at UK corporation 
 (2,976,524)     tax rate                                   3,261,701    (3,644,358) 
                Effects of: 
     310,284    Changes in tax rates                        (344,757)        382,188 
      28,818    Group relief                                   13,492         13,565 
 
 (2,637,422)                                                2,930,436    (3,248,604) 
------------                                            -------------  ------------- 
 
 

Deferred tax

 
     Audited                                                   Unaudited      Unaudited 
  year ended                                                    6 months       6 months 
 31 December                                                       ended          ended 
        2018                                                30 June 2019   30 June 2018 
         GBP                                                         GBP            GBP 
------------                                               -------------  ------------- 
 
 
  58,576,751       Brought forward                            53,947,625     58,576,751 
                   (Charge)/credit to profit and loss 
 (2,637,422)        account                                    2,930,436    (3,248,604) 
                   (Charge)/credit to other comprehensive 
 (1,991,704)        income                                     2,536,063    (2,636,534) 
 
  53,947,625                                                  59,414,124     52,691,613 
------------                                               -------------  ------------- 
 
   5.           DEBTORS 
 
       Audited                                                   Unaudited       Unaudited 
   31 December                                                     30 June         30 June 
          2018                                                        2019            2018 
           GBP                                                         GBP             GBP 
--------------                                              --------------  -------------- 
 
                     Due within one year: 
    46,613,637       Loan to fellow subsidiary undertaking      46,177,842      46,541,742 
                     Amounts owed by fellow subsidiary 
     2,150,221        undertakings                               2,174,393       2,139,672 
 
    48,763,858                                                  48,352,235      48,681,414 
--------------                                              --------------  -------------- 
 
                     Due after more than one year: 
    53,947,625       Deferred tax                               59,414,124      52,691,613 
 1,480,855,318       Loan to fellow subsidiary undertaking   1,464,638,189   1,497,108,946 
 
 1,534,802,943                                               1,524,052,313   1,549,800,559 
--------------                                              --------------  -------------- 
 

The loans to a fellow subsidiary undertaking bear fixed rates of interest between 5.41% and 7.07% and are repayable in instalments between 2005 and 2037.

Other amounts owed by group companies are non interest bearing and repayable on demand.

The amount of the loan due within one year comprises GBP16,852,642 (31 December 2018 - GBP17,288,437) of interest and GBP29,325,200 (31 December 2018 - GBP29,325,200) of capital.

The carrying values of debtors due within one year also represent their fair values. The fair value of the loans to fellow subsidiary undertakings at 30 June 2019 was GBP1,977,860,892 (31 December 2018 - GBP1,911,950,529), calculated by reference to the fair values of the company's financial liabilities. The carrying value of financial assets represents the company's maximum exposure to credit risk.

   6.           CASH AT BANK 
 
     Audited                                 Unaudited   Unaudited 
 31 December                                   30 June     30 June 
        2018                                      2019        2018 
         GBP                                       GBP         GBP 
------------                                ----------  ---------- 
 
   3,161,839    Unrestricted cash balances   3,218,677   3,100,111 
 
   3,161,839    Cash at bank                 3,218,677   3,100,111 
------------                                ----------  ---------- 
 
   7.           CREDITORS: Amounts falling due within one year 
 
     Audited                                    Unaudited    Unaudited 
 31 December                                      30 June      30 June 
        2018                                         2019         2018 
         GBP                                          GBP          GBP 
------------                                  -----------  ----------- 
 
  46,665,187    Securitised debt (Note 8)      46,230,439   46,593,050 
           -    Accruals and deferred income        8,952        8,244 
 
  46,665,187                                   46,239,391   46,601,294 
------------                                  -----------  ----------- 
 

The amount of the securitised debt due within one year comprises GBP16,905,239 (31 December 2018 - GBP17,339,987) of interest and GBP29,325,200 (31 December 2018 - GBP29,325,200) of capital.

   8.           CREDITORS: Amounts falling after more than one year 
 
       Audited                                            Unaudited       Unaudited 
   31 December                                              30 June         30 June 
          2018                                                 2019            2018 
           GBP                                                  GBP             GBP 
--------------                                       --------------  -------------- 
 
 1,480,855,319     Securitised debt                   1,464,638,190   1,497,108,946 
   317,338,975     Derivative financial instruments     349,494,853     309,950,654 
 
 1,798,194,294                                        1,814,133,043   1,807,059,600 
--------------                                       --------------  -------------- 
 

The amounts at which borrowings are stated comprise:

 
       Audited                                            Unaudited       Unaudited 
   31 December                                              30 June         30 June 
          2018                                                 2019            2018 
           GBP                                                  GBP             GBP 
--------------                                       --------------  -------------- 
 
 1,542,698,896     Brought forward                    1,510,180,519   1,542,698,896 
  (29,325,200)     Repaid in period                    (14,662,600)    (14,662,600) 
   (1,959,965)     Amortisation of issue premium          (942,991)       (990,612) 
   (1,233,212)     Accrued financing expenses             (611,538)       (611,538) 
 
 1,510,180,519     Carried forward                    1,493,963,390   1,526,434,146 
--------------                                       --------------  -------------- 
 
                   Payable within one year or on 
    29,325,200      demand                               29,325,200      29,325,200 
 1,480,855,319     Payable after more than one year   1,464,638,186   1,497,108,946 
 
 1,510,180,519                                        1,493,963,386   1,526,434,146 
--------------                                       --------------  -------------- 
 

The company's securitised debt was issued in tranches, with notes of classes A1, A3, A7, B, B3, C2 and D2 remaining outstanding. The class A1, A3 and B notes were issued at a premium which is being amortised to the income statement on a straight line basis over the life of the relevant notes. At 30 June 2019 GBP16,588,970 (31 December 2018 - GBP17,531,961) remained unamortised.

At 30 June 2019, there were accrued financing costs of GBP19,199,299 (31 December 2018 - GBP19,810,837) relating to increases in margins as described below.

The notes are secured on 6 properties at Canary Wharf, owned by fellow subsidiary undertakings, and the rental income stream therefrom.

The securitised debt has a face value on 30 June 2019 of GBP1,458,175,120 (31 December 2018 - GBP1,472,837,720), of which GBP793,614,120 (31 December 2018 - GBP808,276,720 carries fixed rates of interest between 5.95% and 6.8%. The other GBP664,561,000 (31 December 2018 - GBP664,561,000) 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 5.30% and 6.74%.

The fair value of the securitised debt at 30 June 2019 was GBP1,628,366,039 (31 December 2018 - GBP1,594,611,554). At 30 June 2019, the fair value of the interest rate derivatives resulted in the recognition of a liability of GBP349,494,853 (31 December 2018 - GBP317,338,975). Of this liability, GBP165,163,014 was in respect of interest rate swaps which qualify for hedge accounting (31 December 2018 - GBP150,516,313) and GBP184,331,839 was in respect of interest rate swaps which do not qualify for hedge accounting (31 December 2018 - GBP166,822,662).

The securitisation continues to have 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. At 30 June 2019, AIG had posted GBP146,580,235 as cash collateral in respect of this obligation.

The company also has the benefit of a GBP300.0 million liquidity facility provided by Lloyds Bank plc, under which drawings may be made in the event of a cash flow shortage under the securitisation.

   9.           CONTINGENT LIABILITIES AND FINANCIAL COMMITMENTS 

As at 30 June 2019 and 31 December 2018, the company had given security over all its assets, including security expressed as a first fixed charge over its bank accounts, to secure the notes referred to in Note 8.

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

IR EQLFFKKFFBBD

(END) Dow Jones Newswires

September 16, 2019 11:29 ET (15:29 GMT)

Canary 6.455%33 (LSE:31PE)
Historical Stock Chart
From Feb 2025 to Mar 2025 Click Here for more Canary 6.455%33 Charts.
Canary 6.455%33 (LSE:31PE)
Historical Stock Chart
From Mar 2024 to Mar 2025 Click Here for more Canary 6.455%33 Charts.