TIDM85QW
RNS Number : 6687G
Broadgate Financing PLC
16 November 2022
Broadgate Financing PLC
Interim Report and Financial Statements for the period ended 30
September 2022
The Interim Report and Financial Statements for the period ended
30 September 2022, attached below in accordance with DTR 6.3.5,
have been submitted to the Financial Conduct Authority through the
National Storage Mechanism and will shortly be available for
inspection at
https://www.fca.org.uk/markets/primary-markets/regulatory-disclosures/national-storage-mechanism
The Annual Report and Financial Statements are also available at
https://www.britishland.com/investors/debt/strategic-partnerships/broadgate-financing-plc
Directors' Report
for the six months ended 30 September 2022
The Directors present their report and unaudited interim
financial statements for the six months ended 30 September
2022.
Directors of the Company
The Directors, who held office during the period, and up to the
date of signing the interim financial statements, were as
follows:
D Lockyer
H Shah
D Richards
Principal activity
The Company's principal activity is to provide funding to fellow
subsidiaries of Broadgate Property Holdings Limited in the United
Kingdom (UK).
Results for the six months
As shown in the Company's Profit and Loss Account on page 5, the
Company's profit on ordinary activities before taxation has
remained stable compared with the prior period. Consistent with the
prior period, the Company has continued to amortise bonds as well
as incur interest on those bonds outstanding, and charge these
costs to fellow subsidiaries.
At 30 September 2022, interest payable on external bonds remains
100% fixed.
The Balance Sheet on page 7 shows the Company has net assets of
GBP439,564 at 30 September 2022. Net assets have stayed consistent
during the period.
Principal risks and uncertainties
This Company is part of a large property investment group,
headed by Broadgate REIT Limited (the "Group") . As such, the
fundamental underlying risks for this Company are those of the
property Group. The key risks of this Group are the performance of
the properties and tenant default and credit risk of counterparties
for holding cash deposits. These risks are mitigated by preference
for tenants with strong covenants on long leases and by using
highly rated Financial Institutions for placing cash deposits.
These risks have high visibility to senior executives and are
considered and managed on a continuous basis. Executives use their
knowledge and experience to knowingly accept a measured degree of
market risk.
The Group's preference for prime assets and their secure long
term contracted rental income, primarily with upward only rent
review clauses, presents lower risks than many other property
portfolios.
Credit risk is the risk that one party to a financial instrument
will fail to discharge an obligation and cause the other party to
incur a financial loss. In order to manage this risk, management
regularly monitors the credit rating of credit counterparties and
monitors all amounts that are owed to the Company.
Liquidity risk is the risk that the entity will encounter
difficulty in raising funds to meet commitments associated with
financial liabilities. This risk is managed through day to day
monitoring of future cash flow requirements to ensure that the
Company has enough resources to repay all future liabilities as
they fall due.
The general risk environment in which the Group operates has
remained heightened during the period. Whilst the UK economy
strengthened in comparison to the prior period, which was impacted
by the ongoing Covid-19 pandemic, increasing geopolitical and
macroeconomic uncertainty has continued to present a challenging
environment for the sectors in which we operate. Whilst the trend
for increased workforce flexibility (including working from home)
remains, businesses continue to recognise the value of prime,
sustainable places and occupier demand for this very best space has
remained robust. The conflict in Ukraine, as well as wider
geopolitical uncertainties, has contributed to significant
inflation over the period, including energy prices, which has the
potential to materially impact the economic viability of some
retailers. In response to inflation, rising interest rates will
also have the impact of dampening investor demand for real estate,
with the resulting impact on valuations. The Directors remain
vigilant to these risks, as well as any potential resulting
opportunities that may arise.
Dividends
No dividends were paid by the Company in the six month period
ended 30 September 2022 (30 September 2021: GBPnil).
Going Concern
The Directors have reviewed the Company's forecast working
capital and cash flow requirements and in addition to making
enquiries and examining areas which could give risk to financial
exposure. The Directors have an expectation that the forecast cash
flows on the secured properties will be sufficient to cover debt
service on the bonds. The Company has access to the drawn down term
loan of GBP52,080,000 (2021: GBP52,080,000) to meet certain
shortfalls on bond service, if there was a shortfall from the rent
received. Therefore, the Directors have a reasonable expectation
that the Company has adequate resources to continue its operations
for at least twelve months after the signing of the these financial
statements and as a result they continue to adopt the going concern
basis in preparing the accounts.
Responsibility Statement of the Directors in respect of the
Interim Financial Statements
Each of the Directors confirms that to the best of their
knowledge:
The condensed set of interim financial statements has been
prepared in accordance with Financial Reporting Standard 104:
Interim Financial Reporting issued by the Financial Reporting
Council.
The Directors' Report above includes a fair review of the
information required by DTR 4.2.7R of the Disclosure and
Transparency Rules (DTR), being an indication of important events
that have occurred during the first six months of the financial
year and their impact on the condensed set of interim financial
statements; and a description of the principal risks and
uncertainties for the remaining six months of the year.
Approved by the Board on 15 November 2022 and signed on its
behalf by:
H Shah
Director
Independent Review Report Broadgate Financing PLC
Report on the condensed interim financial statements
Our conclusion
We have reviewed Broadgate Financing PLC's condensed interim
financial statements (the "interim financial statements") in the
Interim Report and Financial Statements of Broadgate Financing PLC
for the 6 month period ended 30 September 2022 ("the period").
Based on our review, nothing has come to our attention that
causes us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with FRS 104
"Interim Financial Reporting" issued by the Financial Reporting
Council and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
The interim financial statements comprise:
-- the Balance Sheet as at 30 September 2022;
-- the Profit and Loss Account and the Statement of Comprehensive
Income for the period then ended;
-- the Statement of Changes in Equity for the period then ended;
and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the Interim Report
and Financial Statements of Broadgate Financing PLC have been
prepared in accordance with FRS 104 "Interim Financial Reporting"
issued by the Financial Reporting Council and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410, 'Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity' issued by the Financial Reporting Council for use in the
United Kingdom. A review of interim financial information consists
of making enquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review
procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the Interim
Report and Financial Statements and considered whether it contains
any apparent misstatements or material inconsistencies with the
information in the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention to suggest that the directos have inappropriately adopted
the going concern basis of accounting or that the directors have
identified material uncertainties relating to going concern that
are not appropriately disclosed. This conclusion is based on the
review procedures performed in accordance with this ISRE. However,
future events or conditions may cause the company to cease to
continue as a going concern.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The Interim Report and Financial Statements, including the
interim financial statements, is the responsibility of, and has
been approved by, the directors. The directors are responsible for
preparing the Interim Report and Financial Statements in accordance
with the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority. In preparing the
Interim Report and Financial Statements, including the interim
financial statements, the directors are responsible for assessing
the company's ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to
liquidate the company or to cease operations, or have no realistic
alternative but to do so.
Our responsibility is to express a conclusion on the interim
financial statements in the Interim Report and Financial Statements
based on our review. Our conclusion, including our Conclusions
relating to going concern, is based on procedures that are less
extensive than audit procedures, as described in the Basis for
conclusion paragraph of this report. This report, including the
conclusion, has been prepared for and only for the company for the
purpose of complying with the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom's Financial Conduct
Authority and for no other purposed. We do not, in giving this
conclusion, accept or assume responsibility for any other purpose
or to any other person to whom this report is shown or into whose
hands it may come save where expressly agreed by our prior consent
in writing.
PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Chartered Accountants
London
Date: 15 November 2022
Profit and Loss Account
for the six months ended 30 September 2022
Six months Six months
ended ended
30 September 30 September
2022 2021
Unaudited Unaudited
Note GBP GBP
Turnover - -
Administrative expenses (501) (501)
------------- -------------
Loss on ordinary activities before
interest and taxation (501) (501)
Interest receivable and similar income 3 27,501,498 53,852,593
Interest payable and similar expenses 4 (27,499,835) (53,849,099)
------------- -------------
Profit on ordinary activities before
taxation 1,162 2,993
Tax on profit on ordinary activities (221) (569)
------------- -------------
Profit for the period 941 2,424
============= =============
Turnover and results were derived from continuing operations
within the United Kingdom. The Company has only one significant
class of business: to provide funding to fellow subsidiaries of
Broadgate Property Holdings Limited in the United Kingdom (UK).
The notes on pages 9 to 16 form an integral part of these
interim financial statements.
Statement of Comprehensive Income
for the Period from 1 April 2022 to 30 September 2022
Six months Six months
ended 30 September ended 30 September
2022 2021
Unaudited Unaudited
GBP GBP
Profit for the period 941 2,424
------------------- -------------------
Total comprehensive income for the period 941 2,424
=================== ===================
(Registration number: 05316365)
Balance Sheet
as at 30 September 2022
30 September 31 March
2022 2022
Unaudited Audited
Note GBP GBP
Current assets
Debtors due within one year 5 28,443,410 28,288,111
Cash at bank and in hand 6 56,037,080 56,037,031
Debtors due after more than one year 5 1,097,361,898 1,098,840,136
--------------- ---------------
1,181,842,388 1,183,165,278
--------------- ---------------
Current liabilities
Creditors due within one year 7 (31,960,875) (31,806,469)
=============== ===============
Net current assets 1,149,881,513 1,151,358,809
Non-current liabilities
Loans and borrowings 8 (1,149,441,949) (1,150,920,186)
--------------- ---------------
Net assets 439,564 438,623
=============== ===============
Capital and reserves
Share capital 9 12,500 12,500
Profit and loss account 427,064 426,123
--------------- ---------------
Total shareholders' funds 439,564 438,623
=============== ===============
Approved by the Board on 15 November 2022 and signed on its
behalf by:
H Shah
Director
Statement of Changes in Equity
for the six months ended 30 September 2022
Retained
Share capital earnings Total
GBP GBP GBP
Balance at 1 April 2021 (audited) 12,500 419,181 431,681
Profit for the period (unaudited) - 2,424 2,424
------------- --------- -------
Total comprehensive income
for the period (unaudited) - 2,424 2,424
------------- --------- -------
Balance at 30 September 2021
(unaudited) 12,500 421,605 434,105
============= ========= =======
Balance at 1 April 2022 (audited) 12,500 426,123 438,623
Profit for the period (unaudited) - 941 941
------ ------- -------
Total comprehensive income
for the period (unaudited) - 941 941
------ ------- -------
Balance at 30 September 2022
(unaudited) 12,500 427,064 439,564
====== ======= =======
Notes to the Interim Financial Statements
for the six months ended 30 September 2022
1 General information
The Company is a public company limited by share capital,
incorporated and domiciled in England, United Kingdom.
The address of its registered office is:
York House
45 Seymour Street
London
W1H 7LX
2 Accounting policies
Summary of significant accounting policies and key accounting
estimates
The principal accounting policies applied in the preparation of
these interim financial statements are set out below. These
policies have been consistently applied to all the periods
presented, unless otherwise stated.
Accounting basis
The information for the period ended 30 September 2022 does not
constitute statutory financial statements as defined in section 434
of the Companies Act 2006.
A copy of the statutory financial statements for the year ended
31 March 2022 has been delivered to the Registrar of companies. The
auditors reported on those financial statements: their report was
unqualified, did not draw attention to any matters by way of
emphasis and did not contain a statement under section 498 (2) or
(3) of the Companies Act 2006.
Basis of preparation
These interim financial statements were prepared in accordance
with Financial Reporting Standard 104 Interim Financial Reporting
("FRS 104") and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
The interim financial statements does not include all of the
notes of the type normally included in an annual reports and
accounts. Accordingly, this report is to be read in conjunction
with the annual report and accounts for the year ended 31 March
2022, which has been prepared in accordance with with Financial
Reporting Standard 101 Reduced Disclosure Framework ("FRS
101").
The same accounting policies, estimates, presentation and
methods of computation are followed in the interim financial
statements as applied in the latest annual audited financial
statements.
Instances in which the advantage of the FRS 101 disclosure
exemptions have been taken are set out below.
Summary of disclosure exemptions
The Company has taken advantage of the following disclosure
exemptions under FRS 101:
(a) The requirements of IAS 1 to provide a Statement of Cash
flows for the period;
(b) The requirements of IAS 1 to provide a statement of
compliance with IFRS;
(c) The requirements of paragraphs 30 and 31 of IAS 8 Accounting
Policies, Changes in Accounting Estimates and Errors to disclose
new IFRS's that have been issued but are not yet effective;
(d) The requirements in IAS 24 Related Party Disclosures to
disclose related party transactions entered into between two or
more members of a group, provided that any subsidiary which is a
party to the transaction is wholly owned by such a member;
(e) The requirements of IFRS 7 to disclose financial
instruments; and
(f) The requirements of paragraphs 91-99 of IFRS 13 Fair Value
Measurement to disclose information of fair value valuation
techniques and inputs.
Disclosure exemptions for subsidiaries are permitted where the
relevant disclosure requirements are met in the consolidated
financial statements. Where required, equivalent disclosures are
given in the Group financial statements of Broadgate REIT Limited.
The Group financial statements of Broadgate REIT Limited are
available to the public and can be obtained as set out in note
12.
Adoption status of relevant new financial reporting standards
and interpretations
During the period, no new accounting standards were adopted by
the Company.
Going Concern
The Directors have reviewed the Company's forecast working
capital and cash flow requirements and in addition to making
enquiries and examining areas which could give risk to financial
exposure. The Directors have an expectation that the forecast cash
flows on the secured properties will be sufficient to cover debt
service on the bonds. The Company has access to the drawn down term
loan of GBP52,080,000 (2022: GBP52,080,000) to meet certain
shortfalls on bond service, if there was a shortfall from the rent
received. Therefore, the Directors have a reasonable expectation
that the Company has adequate resources to continue its operations
for at least twelve months after the signing of the these financial
statements and as a result they continue to adopt the going concern
basis in preparing the accounts.
Financial assets and liabilities
Trade debtors and creditors are initially recognised at fair
value and subsequently measured at amortised cost and discounted as
appropriate. On initial recognition the Company calculates the
expected credit loss for debtors based on lifetime expected credit
losses under the IFRS 9 simplified approach.
Loans and receivables classified as amortised cost are measured
using the effective interest method, less any impairment. Interest
is recognised by applying the effective interest rate.
Debt instruments are stated at their net proceeds on issue.
Finance charges including premia payable on settlement or
redemption and direct issue costs are spread over the period to
redemption, using the effective interest method. Exceptional
finance charges incurred due to early redemption (including premia)
are recognised in the Profit and Loss Account when they occur.
Cash equivalents are limited to instruments with a maturity of
less than three months.
Impairment of financial assets
The Company assesses at the end of each reporting period whether
there is objective evidence that a financial asset or group of
financial assets is impaired. A financial asset or a group of
financial assets is impaired and impairment losses are incurred
only if there is objective evidence of impairment as a result of
one or more events that occurred after the initial recognition of
the asset (a 'loss event') and that loss event (or events) has an
impact on the estimated future cash flows of the financial asset or
group of financial assets that can be reliably estimated.
Interest payable and receivable
Interest payable and receivable is recognised as incurred under
the accruals concept. Interest payable includes financing charges
which are spread over the period to redemption, using the effective
interest method. Commitment fees on non-utilised facilities are
also included within interest payable.
Premia payable and receivable on early redemption are recognised
as finance charges and income when incurred.
Taxation
Current tax is based on taxable profit for the period and is
calculated using tax rates that have been enacted or substantively
enacted. Taxable profit may differ from net profit as reported in
the Profit and Loss Account because it excludes items of income or
expense that are not taxable (or tax deductible).
3 Interest receivable and similar income
Six months Six months
ended 30 September ended 30 September
2022 2021
Unaudited Unaudited
GBP GBP
Interest income on bank deposits 352,327 11,778
Premium income on early repayment owed
by related parties - 24,871,860
Interest receivable on amounts owed by
related parties 27,149,171 28,968,955
------------------- -------------------
27,501,498 53,852,593
=================== ===================
4 Interest payable and similar expenses
Six months Six months
ended ended
30 September 30 September
2022 2021
Unaudited Unaudited
GBP GBP
Interest payable on bonds and borrowings 27,499,835 28,977,217
Premium costs on early repayment of bonds - 24,871,760
Interest payable on amounts due to group
companies - 122
------------------- -------------------
27,499,835 53,849,099
=================== ===================
5 Debtors
30 September 31 March
2022 2022
Unaudited Audited
GBP GBP
Debtors due within one year
Amounts due from related parties 15,380,867 15,363,873
Accrued income 13,059,187 12,911,052
Other debtors 1,508 11,338
Corporation tax asset 1,848 1,848
------------ ----------
28,443,410 28,288,111
============ ==========
30 September 31 March
2022 2022
Unaudited Audited
GBP GBP
Debtors due after more than one year
Amounts due from related parties - Long
term loans 1,097,361,898 1,098,840,136
------------- -------------
1,097,361,898 1,098,840,136
============= =============
The intercompany loans to Broadgate (Funding) 2005 Ltd are being
repaid from April 2005 to July 2033, with the average interest rate
of these intercompany loans being 4.93% per annum (31 March 2021:
4.93%). There is no interest charged on the remainder of amounts
owed by related parties.
6 Cash and cash equivalents
30 September 31 March
2022 2022
GBP GBP
Cash at bank 131,080 131,031
Short-term deposits 55,906,000 55,906,000
------------ ----------
56,037,080 56,037,031
============ ==========
Short term deposits mature within 3 months and therefore meet
the definition of cash and cash equivalents.
7 Creditors due within one year
30 September 31 March
2022 2022
Unaudited Audited
GBP GBP
Accrued interest 13,158,072 12,994,986
Amounts due to related parties 15,928,520 15,927,798
Secured bonds 2,866,810 2,866,380
Other creditors 7,473 17,305
------------ ----------
31,960,875 31,806,469
============ ==========
Amounts due to related parties relate to amounts owed to group
companies and are repayable on demand. There is no interest charged
on these balances.
8 Creditors due after more than one year
30 September 31 March
2022 2022
Unaudited Audited
GBP GBP
Borrowings
Borrowings due 1 to 2 years 13,816,380 2,866,810
Borrowings due 2 to 5 years 140,000,000 129,050,000
Borrowings due after 5 years 995,625,569 1,019,003,376
------------- -------------
1,149,441,949 1,150,920,186
============= =============
Amounts due after five years include the term loan of
GBP52,080,000 (31 March 2021: GBP92,187,000) which represents a
liquidity facility with NatWest Markets PLC. The cash received is
held on deposit.
30 September 31 March
2022 2022
Unaudited Audited
GBP GBP
Borrowings repayment analysis
Borrowings due within one year 2,866,810 2,866,380
Borrowings due between one to two years 13,816,380 2,866,810
Borrowings due between two to five years 140,000,000 129,050,000
------------- -------------
156,683,190 134,783,190
Borrowings due after five years 995,625,569 1,019,003,376
------------- -------------
Total borrowings 1,152,308,759 1,153,786,566
------------- -------------
Gross debt 1,152,308,759 1,153,786,566
============= =============
Secured bonds on the assets of the Broadgate Property Holdings
Limited Group
30 September 31 March
2022 2022
Unaudited Audited
GBP GBP
Class A3 4.851% Bonds 2033 143,900,050 143,900,050
Class A4 4.821% Bonds 2036 400,000,000 400,000,000
Class B 4.999% Bonds 2033 364,978,709 365,023,326
Class C2 5.098% Bonds 2035 191,350,000 192,783,190
------------- -------------
Total secured bond borrowings 1,100,228,759 1,101,706,566
Term Loan 52,080,000 52,080,000
------------- -------------
Total secured borrowings 1,152,308,759 1,153,786,566
============= =============
At 30 September 2022, 100% (31 March 2022: 100%) of the bonds
were fixed. The bonds amortise from 2005 and are expected to be
repaid by 2033. Legal repayment is required by 2036. The term loan
matures on the date when all the bonds have been redeemed in full.
The bonds are secured on properties of the Group valued at
GBP3,304m (31 March 2022: GBP3,413m). The weighted average interest
rate of the bonds is 4.93% (31 March 2022: 4.93%). The weighted
average maturity of the bonds is 8.4 years (31 March 2022: 8.9
years).
Fair value of bonds
The fair values of the bonds have been established by obtaining
quoted market prices from brokers. The derivatives have been valued
by calculating the present value of future cash flows, using
appropriate market discount rates, by an independent treasury
advisor.
30 September 31 March
2022 2022
Unaudited Audited
GBP GBP
Secured bonds at fair value 1,004,928,222 1,265,148,835
============= =============
9 Share capital
Allotted, called up and fully paid shares
30 September 31 March
2022 2022
Unaudited Audited
No. GBP No. GBP
Ordinary shares of GBP0.25
each 50,000 12,500 50,000 12,500
10 Capital commitments
The Company had capital commitments contracted as at 30
September 2022 of GBPnil (31 March 2022: GBPnil).
11 Related party transactions
The Company has taken advantage of the exemption granted to
wholly owned subsidiaries not to disclose transactions with group
companies under the provisions of FRS 101.
12 Parent and ultimate parent undertaking
The immediate parent company is Broadgate Property Holdings
Limited.
The ultimate parent company is Broadgate REIT Limited. Broadgate
REIT Limited operates as a joint venture between Euro Bluebell LLP,
an affiliate of GIC, Singapore's sovereign wealth fund, and BL
Bluebutton 2014 Limited, a wholly owned subsidiary of The British
Land Company PLC.
Broadgate REIT Limited is the largest group, and Bluebutton
Properties UK Limited is the smallest group, for which group
accounts are available and which include the Company. The ultimate
holding company and controlling party is Broadgate REIT Limited.
Group accounts for this company are available on request from
British Land, York House, 45 Seymour Street, London, W1H 7LX.
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