TIDM37QC
RNS Number : 7544F
Meadowhall Finance PLC
29 July 2016
The Annual Report and Accounts for the year ended 31 March 2016,
attached below in accordance with DTR 6.3.5(2), has been submitted
to the Financial Service Authority through the National Storage
Mechanism and will shortly be available for inspection at:
http://www.Hemscott.com/nsm.do
The Annual Report and Accounts are also available at:
http://www.britishland.com/investors/strategic-partnerships/meadowhall-finance-plc.aspx
MEADOWHALL FINANCE PLC
COMPANY NO: 5987141
ANNUAL REPORT AND ACCOUNTS
YEARED 31 MARCH 2016
STRATEGIC REPORT
for the year ended 31 March 2016
The directors present their Strategic Report for the year ended
31 March 2016.
Business review and principal activities
Meadowhall Finance PLC ("the company") is a subsidiary of
Meadowhall Limited Partnership, which itself is wholly owned by MSC
Property Intermediate Holdings Limited. MSC Property Intermediate
Holdings Limited and its subsidiaries ("the group") operate as a
joint venture between The British Land Company PLC and NBIM
Victoria Partners LP. The company's principal activity is to
provide funding to fellow subsidiaries of MSC Property Intermediate
Holdings Limited.
As shown in the company's Profit and Loss Account the company
made a profit of GBP2,854 (2015: loss of GBP529,321). The prior
year loss was driven by ineffectiveness arising from a hedge
accounting relationship. During the year the hedge accounting
relationship was effective and no transfer to profit and loss
account was made resulting in profit for the year.
No dividends (2015: GBPnil) were paid in the year.
The Balance Sheet shows the company's financial position at the
year end is, in net liability terms, an increase from the prior
year, primarily due to movement in the fair value of the interest
rate derivative.
Details of significant events since the balance sheet date, if
any, are contained in note 14.
During the year, the company transitioned from UK GAAP to FRS
101 Reduced Disclosure Framework and has taken advantage of
disclosure exemptions allowed under this framework. Following
transition, no comparitive figures were identified to be
restated.
The expected future developments of the company are determined
by the strategy of the group. There are no future developments
outside of the company's current operations planned.
Principal risks and uncertainties
This company is part of a large property investment group. As
such, the fundamental underlying risks for this company are those
of the property group as discussed below, with additional financing
risks as discussed below.
The group generates returns to shareholders through long-term
investment decisions requiring the evaluation of opportunities
arising in the following areas:
-- demand for space from occupiers against available supply;
-- identification and execution of investment and development
strategies which are value enhancing;
-- availability of financing or refinancing at an acceptable cost;
-- economic cycles, including their impact on tenant covenant
quality, interest rates, inflation and property values;
-- legislative changes, including planning consents and taxation;
-- engagement of development contractors with strong covenants;
-- environmental and health and safety policies; and
-- the period of uncertainty for the UK economy and real estate
markets resulting from the decision on 23 June 2016 of the UK
electorate to vote to leave the European Union.
These opportunities also represent risks, the most significant
being change to the value of the property portfolio. This risk has
high visibility to senior executives and is 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 all amounts that are owed to the company to
ensure that amounts are paid in full and on time.
Liquidity risk is the risk that the entity will encounter
difficulty in raising funds to meet commitments associated with
financial liabilities. This risk is managed through day to day
monitoring of future cash flow requirements to ensure that the
company has enough resources to repay all future amounts
outstanding.
The company's activities expose it to interest rate risk. The
company uses interest rate swap contracts to hedge these exposures.
The company does not use derivative financial instruments for
speculative purposes.
The company finances its operations through public debt issues.
The company borrows in Sterling at both fixed and floating rates of
interest, using interest rate derivatives to hedge the interest
rate risk on variable rate debt.
The company holds one derivative as at 31 March 2016 (2015: one)
to fix the interest rates on external debt at approximately 4.65%
(2015: 4.65%). The fair value of interest rate derivatives at the
year end is a liability of GBP17.8m (2015: GBP17.8m liability) and
has been accounted for using hedge accounting through the Statement
of Comprehensive Income, with the ineffective portion going through
the profit and loss account.
This report was approved by the Board on 28 July 2016 and signed
by the order of the board by:
H Shah
Director
DIRECTORS' REPORT
for the year ended 31 March 2016
The directors present their Annual Report on the affairs of the
company, together with the audited financial statements and
independent Auditor's Report for the year ended 31 March 2016.
Going Concern
The directors consider the company to be a going concern and the
accounts are prepared on this basis. Details of this are shown in
note 1 of the financial statements. When assessing the company's
going concern status the Directors have taken into account the UK
electorate's decision on 23 June 2016 to vote to leave the European
Union, and the resulting period of uncertainty for the UK economy
and real estate markets.
Environment
The company recognises the importance of its environmental
responsibilities, monitors its impact on the environment; and
designs and implements policies to reduce any damage that might be
caused by the company's activities. The company operates in
accordance with best practice policies and initiatives designed to
minimise the company's impact on the environment including safe
disposal of manufacturing waste, recycling and reducing energy
consumption.
Directors
The directors who were in office during the year and up to date
of signing the financial statements, unless otherwise stated,
were:
C A Barber (alternate H Shah)
R J Ford
G Manfredi (resigned 24 December 2015)
J Patel (appointed 24 December 2015)
R J Wise (alternate C M J Forshaw)
Company secretary
N Ekpo
Directors' responsibilities statement
The directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the directors
have elected to prepare financial statements in accordance with
United Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards and applicable law) including FRS 101
"Reduced Disclosure Framework". Under company law the directors
must not approve the financial statements unless they are satisfied
that they give a true and fair view of the state of affairs of the
company and of the profit or loss of the company for that
period.
In preparing these financial statements, the directors are
required to:
- select suitable accounting policies and then apply them consistently;
- make judgments and accounting estimates that are reasonable and prudent;
- state whether applicable UK Accounting Standards have been followed; and
- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the company will
continue in business.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the company's
transactions and disclose with reasonable accuracy at any time the
financial position of the company and enable them to ensure that
the financial statements comply with Companies Act 2006. They are
also responsible for safeguarding the assets of the company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
The directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
company's website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Disclosure of information to auditors
Each of the persons who is a director at the date of approval of
this report confirms that:
a) so far as the director is aware, there is no relevant audit
information of which the company's auditor is unaware; and
b) the director has taken all the steps that he/she ought to
have taken as a director in order to make himself/herself aware of
any relevant audit information and to establish that the company's
auditor is aware of that information.
This confirmation is given and should be interpreted in
accordance with the provisions of s418 of the Companies Act
2006.
Independent auditor
A resolution to reappoint Deloitte LLP as the company's auditor
will be proposed at the Annual General Meeting.
This report was approved by the Board on 28 July 2016 and signed
by the order of the board by:
H Shah
Director
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF
Meadowhall Finance PLC
for the year ended 31 March 2016
We have audited the financial statements of Meadowhall Finance
PLC for the year ended 31 March 2016 which comprise the Profit and
Loss Account, the Statement of Comprehensive Income, the Balance
Sheet, the Statement of Changes in Equity and the related notes 1
to 15. The financial reporting framework that has been applied in
their preparation is applicable law and United Kingdom Accounting
Standards (United Kingdom Generally Accepted Accounting Practice),
including FRS 101 "Reduced Disclosure Framework".
This report is made solely to the company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the company and the company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Respective responsibilities of directors and auditor
As explained more fully in the Directors' Responsibilities
Statement, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true
and fair view. Our responsibility is to audit and express an
opinion on the financial statements in accordance with applicable
law and International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Auditing Practices Board's
Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and
disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from
material misstatement, whether caused by fraud or error. This
includes an assessment of: whether the accounting policies are
appropriate to the company's circumstances and have been
consistently applied and adequately disclosed; the reasonableness
of significant accounting estimates made by the directors; and the
overall presentation of the financial statements. In addition, we
read all the financial and non-financial information in the annual
report to identify material inconsistencies with the audited
financial statements and to identify any information that is
apparently materially incorrect based on, or materially
inconsistent with, the knowledge acquired by us in the course of
performing the audit. If we become aware of any apparent material
misstatements or inconsistencies we consider the implications for
our report.
Opinion on financial statements
In our opinion the financial statements:
- give a true and fair view of the state of the company's
affairs as at 31 March 2016 and of its profits for the year then
ended;
- have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and
- have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matters prescribed by the Companies Act
2006
In our opinion the information given in the Strategic Report and
the Directors' Report for the financial year for which the
financial statements are prepared is consistent with the financial
statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters
where the Companies Act 2006 requires us to report to you if, in
our opinion:
- adequate accounting records have not been kept, or returns
adequate for our audit have not been received from branches not
visited by us; or
- the financial statements are not in agreement with the accounting records and returns; or
- certain disclosures of directors' remuneration specified by law are not made; or
- we have not received all the information and explanations we require for our audit.
Matthew Hall (Senior Statutory Auditor)
for and on behalf of Deloitte LLP
Chartered Accountants and Statutory Auditor
Cambridge
PROFIT AND LOSS ACCOUNT
for the year ended 31 March 2016
Note 2016 2015
GBP GBP
Interest receivable and similar
income 4 36,074,024 37,466,658
Interest payable and similar charges 4 (36,070,457) (38,128,263)
Profit/(loss) on ordinary activities
before taxation 5 3,567 (661,605)
Tax on profit/(loss) on
ordinary activities 7 (713) 132,284
------------- -------------------------
Profit/(loss) for the financial
year 2,854 (529,321)
------------- =========================
Results are derived from continuing operations within the United
Kingdom.
STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2016
2016 2015
GBP GBP
Profit/(loss) for the financial
year 2,854 (529,321)
Gains/(losses) on cash
flow hedge 66,814 (5,724,694)
Tax relating to components
of other comprehensive
income (271,363) 1,144,939
Total comprehensive expense for
the year (201,695) (5,109,076)
================= ========================
BALANCE SHEET
as at 31 March 2016
Note 2016 2015
GBP GBP GBP GBP
Current assets
Debtors - due
within one
year 8 34,128,021 34,556,581
Debtors - due
after more
than
one year 8 673,066,708 699,763,551
Cash and
deposits 28,533 24,947
707,223,262 734,345,079
Creditors due
within one
year 9 (51,382,962) (51,877,604)
Net current assets
(including long
term debtors) 655,840,300 682,467,475
Total assets
less current
liabilities 655,840,300 682,467,475
Creditors due
after one
year 10 (669,871,290) (696,296,770)
Net
liabilities (14,030,990) (13,829,295)
======================= =======================
Capital and
reserves
Called up
share
capital 12 12,502 12,502
Hedging and
translation
reserve (13,539,456) (13,334,907)
Profit and
loss
account (504,036) (506,890)
Total equity (14,030,990) (13,829,295)
======================= =======================
The financial statements of Meadowhall Finance PLC, company
number 5987141, were approved by the Board of Directors and
authorised for issue on 28 July 2016 and signed on its behalf
by:
H Shah
Director
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2016
Called Hedging Profit
up share and translation and loss
capital reserve account Total equity
GBP GBP GBP GBP
Balance at 1 April
2014 12,502 (8,755,152) 22,431 (8,720,219)
Loss for the year - - (529,321) (529,321)
Loss on cash flow
hedges - (5,724,694) - (5,724,694)
Tax relating to
components of
other comprehensive
income - 1,144,939 - 1,144,939
---------- ----------------- ---------- ---------------
Balance at 31
March 2015 12,502 (13,334,907) (506,890) (13,829,295)
Profit for the
year - - 2,854 2,854
Gains on cash
flow hedges - 66,814 - 66,814
Tax relating to
components of
other comprehensive
income - (271,363) - (271,363)
---------- ----------------- ---------- ---------------
Balance at 31
March 2016 12,506 (13,539,456) (504,036) (14,030,990)
========== ================= ========== ===============
Notes to the accounts
for the year ended 31 March 2016
1. Accounting policies
This company is incorporated and domiciled in the United Kingdom
under the Companies Act. The address of the registered office is
York House, 45 Seymour Street, London, W1H 7LX.
The principal accounting policies adopted by the directors are
summarised below. They have been applied consistently throughout
the current and previous year.
Basis of Preparation
These financial statements were prepared in accordance with
Financial Reporting Standard 101 Reduced Disclosure Framework ("FRS
101"). The amendments to FRS 101 (2014/15 Cycle) issued in July
2015 and effective immediately have been applied.
In preparing these financial statements, the company applies the
recognition, measurement and disclosure requirements of
International Financial Reporting Standards as adopted by the EU
("Adopted IFRSs"), but makes amendments where necessary in order to
comply with Companies Act 2006 and has set out below where
advantage of the FRS 101 disclosure exemptions has been taken.
In these financial statements, the company has adopted FRS 101
for the first time.
The company meets the definition of a qualifying entity under
FRS 100 (Financial Reporting Standard 100) issued by the Financial
Reporting Council. Accordingly, in the year ended 31 March 2016,
the company has changed its accounting framework from UK GAAP to
FRS 101 as issued by the Financial Reporting Council and has, in
doing so, applied the requirements of IFRS 1.6-33 and related
appendices. There were no material adjustments in the prior year on
adoption of FRS 101 in the current year.
The financial statements have been prepared under the historical
cost convention. Historical cost is generally based on the fair
value of the consideration given in exchange for the assets.
These financial statements are separate financial statements.
The company is exempt from the preparation of consolidated
financial statements, because it is included in the group accounts
of MSC Property Intermediate Holdings Limited. Details of the
parent in whose consolidated financial statements the company is
included in are shown in note 15 to the financial statements.
The company has taken advantage of the following disclosure
exemptions under FRS 101:
a) The requirements of IAS 1 to provide a Balance Sheet at the
beginning of the year in the event of a prior year adjustment;
b) The requirements of IAS 1 to provide a Statement of Cash flows for the year;
c) The requirements of IAS 1 to provide a statement of compliance with IFRS;
d) The requirements of IAS 1 to disclose information on the management of capital;
e) 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;
f) 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;
g) The requirements of paragraph 17 of IAS 24 Related Party
Disclosures to disclose key management personnel compensation;
h) The requirements of IFRS 7 to disclose financial instruments; and
i) The requirements of paragraphs 91-99 of IFRS13 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 accounts of MSC Property Intermediate Holdings
Limited. The group accounts of MSC Property Intermediate Holdings
Limited are available to the public and can be obtained as set out
in note 15.
The company's financial statements are presented in pounds
sterling, which is the functional currency of the company.
Going concern
The net liability position of the balance sheet at the year end
is as a result of market swap rates being below the fixed rate
payable on the company's interest rate swaps. This has had a
detrimental effect on the fair value of the company's interest rate
derivatives at the year end. The interest rate swaps fix the rate
payable on the company's liabilities at a rate slightly below the
interest on loans receivable. The change in mark to market is not
envisaged to have an impact on the company's cash flow for the
foreseeable future.
Having reviewed the company's forecast working capital and cash
flow requirements, in addition to making enquiries and examining
areas which could give risk to financial exposure, the directors
have a reasonable expectation that the company has adequate
resources to continue its operations for the foreseeable future. As
a result they continue to adopt the going concern basis in
preparing the accounts.
Financial assets and laibilities
Trade debtors and creditors are initially recognised at fair
value and subsequently measured at amortised cost and discounted as
appropriate.
Debt instruments and borrowings are stated at their net proceeds
on issue. Finance charges including premiums payable on settlement
or redemption of bonds and associated direct issue costs are spread
over the period to redemption, using the effective interest
method.
As defined by IAS39, cash flow hedges are carried at fair value
in the balance sheet. Changes in the fair value of derivatives that
are designated and qualify as effective cash flow hedges are
recognised directly in the hedging reserve. Any ineffective portion
is recognised in the profit and loss account.
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.
Investments
Fixed asset investments are stated at the lower of cost and the
underlying net asset value of the investments.
Taxation
Current tax
Current tax is the expected tax payable or receivable on the
taxable income or loss for the year, using tax rates enacted or
substantively enacted at the balance sheet date, and any adjustment
to tax payable in respect of previous years.
Current tax is based on taxable profit for the year and is
calculated using tax rates that have been enacted or substantively
enacted at the balance sheet date. Taxable profit differs from net
profit as reported in the profit and loss account because it
excludes items of income or expense that are not taxable (or tax
deductible).
Deferred tax
Deferred tax is provided on items that may become taxable at a
later date, on the difference between the balance sheet value and
tax base value, on an undiscounted basis. The company recognises
deferred tax assets on derivative revaluations to the extent that
future matching taxable profits are expected to arise.
2. Critical accounting judgements and estimation uncertainty
Determining the carrying amount of some assets requires
estimation of the effect of uncertain future events. The major
sources of estimation uncertainty that have a significant risk of
resulting in a material adjustment to the carrying amounts of
assets are noted below.
Trade and other debtors
The company makes an estimate of the recoverable value of trade
and other debtors. When assessing impairment of trade and other
debtors, the directors consider factors including the current
credit rating of the debtor, the ageing profile of debtors and
historical experience.
3. Explanation of transitions to FRS 101
This is the first year that the company has presented its
financial statements under FRS 101 issued by the Financial
Reporting Council. Following transition from UKGAAP to FRS101 no
comparative figures were identified to be restated. As a result it
was not deemed necessary to present tables reconciling the
transition within these financial statements. The last financial
statements under a previous GAAP (UK GAAP) were for the year ended
31 March 2015 and the date of transition to FRS 101 was therefore 1
April 2014.
Reconciliation of Profit and Loss Account
No adjustments were posted to restate the prior year's Profit
and Loss Account as a result of the transition to FRS 101 from UK
GAAP during the year.
Reconciliation of Equity
No adjustments were posted to the Balance Sheet to restate the
prior year comparatives as a result of the transition to FRS 101
from UK GAAP during the year.
4. Interest payable and receivable
2016 2015
GBP GBP
Interest payable
on
Bonds and related
facilities (33,803,530) (35,070,156)
Derivatives (2,266,927) (2,392,835)
Total Interest
Payable (36,070,457) (37,462,991)
Ineffectiveness on cash
flow hedge - (665,272)
-------------------------- ------------------------
Total interest payable
and other charges (36,070,457) (38,128,263)
========================== ========================
Interest receivable on
Group loans and receivables 36,074,024 37,466,658
Total interest receivable 36,074,024 37,466,658
========================== ========================
5. Profit/(loss) on ordinary activities before taxation
Auditor's remuneration
A notional charge of GBP5,518 (2015: GBP5,206) per company is
deemed payable to Deloitte LLP in respect of the audit of the
financial statements. Actual amounts payable to Deloitte LLP are
paid by MSC Property Intermediate Holdings Limited.
No non-audit fees (2015: GBPnil) were paid to Deloitte LLP.
6. Staff costs
No director received any remuneration for services to the
company in either year.
Average number of employees, excluding directors, of the company
during the year was none (2015: none).
7. Taxation 2016 2015
GBP GBP
Current tax
UK corporation tax 713 770
Total current taxation
charge 713 770
============================== ====================================
Deferred tax
Deferred tax on cash flow hedge - (133,054)
Total deferred tax
credit - (133,054)
Total taxation charge/(credit) 713 (132,284)
============================== ====================================
Tax reconciliation
Profit/(loss) on ordinary activities
before taxation 3,567 (661,605)
------------------------------ ------------------------------------
Tax on profit/(loss) on ordinary
activities at UK corporation
tax rate of 20% (2015: 21%) 713 (138,937)
Effects of:
Expenses not taxable for tax
purposes - 139,707
Deferred tax on cash flow hedge - (133,054)
Total tax charge 713 (132,284)
============================== ====================================
The following corporation tax rates have been substantively
enacted: 20% effective from 1 April 2015 reducing to 19% effective
from 1 April 2017 and 18% effective from 1 April 2020. These rate
reductions have been reflected in the calculation of deferred tax
at the balance sheet date.
In the budget on 16 March 2016, the Chancellor announced
additional planned reductions to 17% effective from 1 April 2020.
This will reduce the company's future current tax charge
accordingly.
8. Debtors 2016 2015
GBP GBP
Current debtors (receivable
within one year)
Amounts owed by group companies -
current accounts 14,717 10,178
Other taxation - 2,700
Prepayments and accrued
income 7,687,824 7,878,223
Amounts owed by group
companies - loan due
for repayment 26,425,480 26,665,480
34,128,021 34,556,581
================ ===============
Long-term debtors (receivable
after more than one year)
Deferred tax asset (see note
11) 3,195,418 3,466,781
Amounts owed by group companies
- Long term loans 669,871,290 696,296,770
---------------- ---------------
673,066,708 699,763,551
================ ===============
9. Creditors due within
one year 2016 2015
GBP GBP
Amounts owed to group companies
- current accounts 1,825 -
Debentures loans (see
note 10) 26,425,480 26,665,480
Interest rate derivative
liability* 17,752,322 17,839,929
Corporation tax 713 770
Other taxation and social
security 784 -
Accruals and deferred
income 7,201,838 7,371,425
51,382,962 51,877,604
================ ===============
* Includes contract cash flow with a maturity greater
than one year at fair value.
10. Creditors due after one year 2016 2015
(including borrowings)
GBP GBP
due 1 to
Secured bonds 2 years 27,325,480 26,425,480
due 2 to
5 years 90,632,680 85,194,680
due after
5 years 551,913,130 584,676,610
669,871,290 696,296,770
=============== ===============
Borrowings repayment analysis
Repayments due:
Within one year 26,425,480 26,665,480
1-2 years 27,325,480 26,425,480
2-5 years 90,632,680 85,194,680
--------------- ---------------
144,383,640 138,285,640
After 5 years 551,913,130 584,676,610
--------------- ---------------
Total borrowings 696,296,770 722,962,250
Fair value of interest rate derivatives 17,752,322 17,839,929
Net debt 714,049,092 740,802,179
=============== ===============
Secured bonds on the assets of the Meadowhall
Limited Partnership
2016 2015
GBP GBP
Class A1 4.986% Bonds due 2037 503,253,520 522,502,200
Class A2 Floating Rate Bonds
due 2037 54,480,000 57,120,000
Class B 4.988% Bonds due 2037 138,563,250 143,340,050
Total borrowings 696,296,770 722,962,250
Fair value of interest rate derivative
liabilities 17,752,322 17,839,929
Total secured borrowings 714,049,092 740,802,179
=============== ===============
The GBP54m floating rate bonds are fully hedged by a swap to
2032. At 31 March 2016, taking into account the effect of
derivatives, 100% of the bonds were fixed (2015: 100%) until
expected maturity. The bonds amortise between 2007 to 2032, and are
secured on the properties of group valued at GBP1,741m (2015:
GBP1,674m). The weighted average interest rate of the bonds is
5.00% (2015: 5.00%). The weighted average maturity of the bonds is
10.4 years (2015: 11.0 years).
On 19 December 2006, Bonds with a nominal value of GBP840m were
issued by Meadowhall Finance PLC ('Issuer') and the proceeds, equal
to the nominal value, were on-lent to Meadowhall Limited
Partnership ('Borrower') under the Issuer/Borrower Loan Agreement.
Under this agreement Meadowhall Limited Partnership will grant
security over its beneficial interest in Meadowhall Shopping Centre
('Mortgaged Property') and all related interest and assets.
At 31 March 2016, the company was financed by GBP696.3m bonds
(2015: GBP723.0m).
Except as detailed below, the carrying amounts of financial
assets and financial liabilities recorded at amortised cost in the
financial statements are approximately equal to their fair
values
2016 2015
GBPm GBPm
Bonds fair value 823 870
================== ==================
Comparison of market values and book values and fair value
hierarchy
The table below provides a comparison of market value and book
value along with the classification per the fair value hierarchy.
The different levels are defined
Level 1: Quoted prices (unadjusted) in active markets for
identical assets or liabilities.
Level 2: Inputs other than quoted prices included within Level 1
that are observable for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived
from prices).
Level 3: Inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
Level Market Book Market Book
value value value value
2016 2016 2015 2015
GBPm GBPm GBPm GBPm
Secured bonds 2 823 696 870 723
Interest rate
derivative liability 2 18 18 18 18
------- ------- ------- -------
841 714 888 741
======= ======= ======= =======
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.
The Class A1 and B Loan notes expose the entity to fair value
interest rate risk while the Class A2 Loan notes expose the company
to cash flow interest rate risk.
The ineffectiveness recognised in the income statement on cash
flow hedges in the year ended 31 March 2016 was GBPnil (2015:
GBP665,272). The table below summarises variable rate debt hedged
at 31 March 2016.
2016 2015
GBP GBP
after one
Outstanding: year 52,080,000 54,480,000
after two
years 48,780,000 52,080,000
after five
years 42,780,000 44,460,000
Hedge accounting
The company uses interest rate swaps to hedge exposure to the
variability in cash flows on floating rate debt. At 31 March 2016,
the market value of these derivatives, which have been designated
cash flow hedges under IAS 39, is a liability of GBP17.8m (2015:
GBP17.8m liability). The valuation movement reflects the reduction
in Sterling interest rates since the beginning of the year.
The Treasury Function
The company finances its operations through public debt issues.
The company borrows in Sterling at both fixed and floating rates of
interest, using interest rate derivatives where appropriate to
generate a suitably prudent mixture of fixed and variable rate
debt.
Risk Management
Capital risk management:
The company finances its operations through public debt issues
to ensure that sufficient competitively priced finance is available
to support the property strategy of the MSC Property Intermediate
Holdings Limited group.
The approach adopted has been to engage in debt financing with
long term maturity dates and as such the bonds issued are due in
2037, but are expected to be repaid in 2032. Including debt
amortisation 79.3% (2015: 80.9%) of the total borrowings are due
for payment after 5 years. There are no immediate debt refinancing
requirements.
The company maintains an undrawn revolving liquidity facility
which provides financial liquidity. This facility is only available
for the requirements of the Meadowhall securitisation. At 31 March
2016 this facility was GBP75.0m (2015: GBP75.0m).
The company aims to ensure that potential debt providers
understand the business and a transparent approach is adopted with
lenders so they can understand the level of their exposure within
the overall context of the MSC Property Intermediate Holdings
Limited group.
Details of bond covenants are authorised in the bonds Offering
Circular, accessible
viahttp://www.britishland.com/investors/strategic-partnerships/meadowhall-finance-plc.aspx
Credit risk:
Credit risk is the risk that one party to a financial instrument
will fail to discharge an obligation and cause the other party to
incur a financial loss. The carrying amount of financial assets
recorded in the financial statements represents the company's
maximum exposure to credit risk without taking account of the value
of any collateral obtained.
Cash and deposits at 31 March 2016 amounted to GBP28,533 (2015:
GBP24,947) and are placed with European Financial institutions with
BBB+ or better credit ratings. At 31 March 2016, prior to taking
account of any offset arrangements, the largest combined credit
exposure to a single counterparty arising from money market
deposits and interest rate swaps was GBPnil (2015: GBPnil).
This represents 0% (2015: 0%) of gross assets.
The company's principal credit risk relates to an intra-group
loan to Meadowhall Limited Partnership. At 31 March 2016 this loan
stood at GBP696.3m (2015: GBP723.0m). The purpose of this loan is
to provide funding to fellow subsidiaries of the MSC Property
Intermediate Holdings Limited group.
At 31 March 2016, the fair value of all interest rate
derivatives which had a positive value was GBPnil (2015:
GBPnil).
In order to manage this risk, management regularly monitors all
amounts that are owed to the company to ensure that amounts are
paid in full and on time.
Liquidity risk:
Liquidity risk is the risk that the entity will encounter
difficulty in raising funds to meet commitments associated with
financial liabilities. This risk is managed through day to day
monitoring of future cash flow requirements to ensure that the
company has enough resources to repay all future amounts
outstanding.
Interest rate risk:
The Company's activities expose it primarily to interest rate
risk. The group uses interest rate swap contracts to hedge these
exposures. The group does not use derivative financial instruments
for speculative purposes.
11. Deferred tax
asset
2016 2015
GBP GBP
1 April 3,466,781 2,188,788
(Debited)/credited to hedging
and translation reserve (271,363) 1,144,939
Credited to the profit and loss
account - 133,054
31 March 3,195,418 3,466,781
======================== ========================
12. Share capital
2016 2015
GBP GBP
Issued share capital - allotted, called up and
fully paid
Ordinary Shares of GBP1.00 each
Balance as at 1 April and as at
31 March : 2 shares 2 2
Ordinary shares of GBP1.00 each
partly paid up to GBP0.25 per share
Balance as at 1 April and as at
31 March : 49,998 shares 12,500 12,500
Total issued share capital 12,502 12,502
======================== ========================
13. Contingent liabilities
The company is jointly and severally liable with MSC (Cash
Management) Limited and fellow subsidiaries for all monies falling
due under the group VAT registration.
14. Subsequent events
On 23 June 2016 the UK electorate voted to leave the European
Union. This decision commences a process that is likely to take a
minimum of two years to complete, and during this time the UK
remains a member of the European Union. There will be a resulting
period of uncertainty for the UK economy and real estate markets,
with increased volatility expected in financial markets. This does
not impact the fair value of assets and liabilities, including
investment properties where relevant, reported at the balance sheet
date of 31 March 2016.
16. Immediate parent and ultimate holding company
The immediate parent company is Meadowhall Limited
Partnership.
The ultimate holding company is MSC Property Intermediate
Holdings Limited, a joint venture between The British Land Company
PLC and NBIM Victoria Partners LP.
MSC Property Intermediate Holdings Limited is the smallest and
largest group for which group accounts are available and which
include the company. The accounts of MSC Property Intermediate
Holdings Limited can be obtained from The British Land Company PLC,
York House, 45 Seymour Street, London W1H 7LX.
This information is provided by RNS
The company news service from the London Stock Exchange
END
ACSUKUBRNAABUAR
(END) Dow Jones Newswires
July 29, 2016 13:23 ET (17:23 GMT)
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