TIDM31PE
RNS Number : 9665M
Canary Wharf Finance II PLC
19 September 2023
CANARY WHARF FINANCE II PLC
19 SEPTEMBER 2023
PUBLICATION OF THE HALF YEARLY FINANCIAL REPORT FOR THE 6
MONTHSED 30 JUNE 2023
Pursuant to sections 4.2 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 2023, which will shortly be
available from
https:group.canarywharf.com/about-us/investors/canary-wharf-finance-ii-plc.
The information contained within this announcement, which was
approved by the board of directors on 19 September 2023, 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
2023 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.fca.org.uk/markets/primary-markets/regulatory-disclosures/national-storage-mechanism.
Dated: 19 September 2023
Contact for queries:
J J Turner
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 2023 and contains information that covers the period from 1
January 2023 to 19 September 2023, the date of publication of this
interim management statement.
BUSINESS REVIEW
The company is a subsidiary of Canary Wharf Group plc, Canary
Wharf Group Investment Holdings plc, and its ultimate parent
undertaking 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, the ultimate parent undertaking Stork Holdco LP and the wider
group subsidiaries. The Group owns, manages and develops the Canary
Wharf Estate (the 'Estate') in East London. References to 'the
Group' and 'Canary Wharf Group' refer to Stork Holdco LP and its
subsidiaries. All activities take place within the United Kingdom.
The company plans to continue trading in the same manner for the
foreseeable future.
At 30 June 2023, the company had GBP1,340,874,320 (31 December
2022 - GBP1,355,536,920) 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.
Going Concern
Having made the requisite enquiries and assessed the resources
at the disposal of the company, the directors have a reasonable
expectation that the company will have adequate resources to
continue its operation for the foreseeable future. Accordingly,
they continue to adopt the going concern basis in preparing the
financial statements.
Results for the period
As shown in the company's Income Statement, the company's loss
after tax for the 6 month period was GBP4,959,754 (period ended 30
June 2022 - loss of GBP4,948,001).
This loss included hedge reserve recycling recognised in the
Income Statement of GBP5,024,076 (period ended 30 June 2022 -
GBP5,005,643). Including the hedge reserve recycling impact in
other comprehensive income the profit for the period was GBP64,322
(period ended 30 June 2022 - GBP57,642).
The balance sheet shows the company's financial position at the
period end and indicates that net assets were GBP5,710,828 (31
December 2022 - GBP5,646,506).
The weighted average maturity of the company's securitised debt
is 9.67 years (31 December 2022 - 10.1 years). The weighted average
interest rate of the securitised debt is 6.04% (31 December 2022 -
6.1%).
In the opinion of the Board, these Financial Statements enable
shareholders to make an informed assessment of the results and
activities of the company for the period ended 30 June 2023.
PRINCIPAL RISKS AND UNCERTAINTIES
The risks and uncertainties facing the business are monitored
through continuous assessment, regular formal reviews and
discussion at the Canary Wharf Group Investment Holdings plc audit
committee and board. Such discussion focuses on the risks
identified as part of the system of internal control which
highlights key risks faced by the Group and allocates specific day
to day monitoring and control responsibilities as appropriate. As a
member of Canary Wharf Group, the current key risks of the company
include: the current geopolitical climate and its potential impact
on the economy, the cyclical nature of the property market,
concentration risk, financing risk, climate risk and policy and
planning risks.
Geopolitical climate
The geopolitical backdrop has been exceptionally turbulent in
the UK and internationally over the past few years. We have also
seen a marked increase in Industrial Action, in part due to falling
real wages, resulting in numerous days of tube and train strikes
impacting the Estate.
Russia's invasion of Ukraine is still ongoing and has driven
longer term security, economic, and energy policy shifts within
Europe, with implications for UK businesses and consumers. The
Group has no contractual relationships with any entity or
individuals based in Russia, Belarus or Ukraine. However, the
impact of a war in Europe and sanctions targeted at Russia and
certain individuals may impact on the UK and world economy,
particularly on energy prices. The long term impacts of these
issues remain difficult to predict.
Cyclical nature of the property market
The valuation of the Group's assets are subject to many other
external economic and market factors. In recent years, the London
real estate market has had to cope with fluctuations in demand
caused by key events such as uncertainty in the Eurozone,
implications of the UK's withdrawal from the EU, the Russian
invasion of Ukraine and sanctions imposed on Russia as a
consequence. During the year, the rapid rise in interest rates has
brought significant turmoil to the debt and capital markets with
consequential impact on investor confidence whilst the longer term
impact of Covid-19 on flexible working has led to occupiers
reviewing their requirements for office space. These factors have
had adverse implications for the property market and particularly
negative market sentiment towards office assets which has impacted
valuations at the period end.
The real estate market has to date, however, been assisted by
the depreciation of sterling since the UK's exit from the EU and
the continuing presence of overseas investors attracted by the
relative transparency of the real estate market in London which is
still viewed as both relatively stable and secure.
Concentration Risk
The Group's real estate assets are currently located on or
adjacent to the Estate. Although a majority of tenants have
traditionally been linked to the financial services industry, this
proportion has now fallen to around only 54.0% of tenants. Wherever
possible steps are still taken to mitigate or avoid material
consequences arising from this concentration.
Although the focus of the Group has been on and around the
Estate, where value can be added the Group will also consider
opportunities elsewhere. The Group is involved as construction
manager and joint development manager in the joint venture with
Qatari Diar to redevelop the Shell Centre in London's South Bank.
The Group has also reviewed current consents for development to
react to changes in the market. This review has led to an increased
focus on the residential build to rent sector as reflected in the
composition of the master plan for the mixed use development at
Wood Wharf.
Financing risk
The broader economic cycle inevitably leads to movements in
inflation, interest rates and bond yields. The company has
borrowing at floating and fixed rates of interest. Where required
the company uses derivative financial instruments to manage
exposure to interest rate fluctuations.
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') ratio covenant.
The maximum LMCTV ratio is 100.0%. Based on the 30 June 2023
valuations of the properties upon which the company's notes are
secured, the LMCTV ratio at the interest payment date in July 2023
was 45.2%. 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).
Climate risk
The Group considers sustainability to be at the forefront of our
business, and as an organisation we have a vision to transform
urban spaces into extraordinary environments. In 2020, the Group
published its Net Zero Carbon Pathway, a roadmap for reaching net
zero carbon by 2030. The Group also published ambitious Science
Based Targets (SBTs) ratified by the Science Based Targets
Initiative (SBTi).
Failure to meet these commitments could result in reputational
damage for the Group and subsequent damage to our relationship with
customers, suppliers and other stakeholders. Similarly, inaccurate
claims around sustainable practices could result in the Group being
subject to fines under the Green code leading to both financial and
reputational harm.
Being an integrated developer, contractor and property manager,
we are in a unique position to embed sustainable principles right
from the initial design of our buildings. However, there are
increasing legal and regulatory requirements for building
performance for which the Group is required to remain compliant.
Failing to meet these requirements could lead to significant
reputational damage and adversely impact asset values.
Whilst we are aware of these risks, we do not consider the Group
to be at considerable risk of non compliance. We are actively
engaging with many industry groups including the UK Green Building
Council (UKGBC), the Better Building Partnership (BBP) and Concrete
Zero to ensure we remain up to date with all regulations. We also
actively monitor the operational performance of our buildings, and
retrofit older buildings where possible, to ensure compliance. Our
dedicated sustainability team produce an annual sustainability
report to drive sustainable initiatives and communicate performance
to our stakeholders. We obtain external assurance over this report
to provide confidence to our stakeholders. The Group actively
engages in sustainable practices and is working in partnership with
the Eden Project to transform the Canary Wharf Estate into a
biodiverse environment.
Policy and planning risks
All of the Group's assets are currently located within London.
Appropriate contact is maintained with local and national
Government, but changes in Governmental policy on planning, tax or
other regulations could limit the ability of the Group to maximise
the long term potential of its assets. These risks are closely
monitored.
The principal risks facing the Group are discussed in the Annual
Report of Canary Wharf Investment Holdings plc, which does not form
part of this report.
DIRECTOR'S RESPONSIBILITY STATEMENT
The board of directors, comprising Sheikh Khalifa Al-Thani,
Theodor Berklayd, Sir George Iacobescu CBE, Shoaib Z Khan, Katy J
Kingston (alternate director to Shoaib Z Khan), J Justin Turner
(alternate director to Sir George Iacobescu CBE) and Rebecca J
Worthington, 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');
-- 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). The interim management report includes
a fair review of the information required by DTR 4.2.8R
(disclosure of related parties' transactions and changes
therein); and
-- the interim management report includes a fair review of
the information required by DTR 4.2.8R (disclosure of related
parties' transactions and changes therein).
STATEMENT OF COMPREHENSIVE INCOME
for the 6 months ended 30 June 2023
Audited Unaudited Unaudited
year ended 6 months 6 months
31 December ended ended
2022 30 June 2023 30 June 2022
GBP Note GBP GBP
------------- ------------- -------------
(37,602) Administrative expenses (9,613) (12,360)
------------- ------------- -------------
(37,602) OPERATING LOSS (9,613) (12,360)
81,331,597 Interest receivable 2 39,796,139 40,700,198
(91,201,694) Interest payable 3 (44,746,280) (45,635,839)
------------- ------------- -------------
(9,907,699) LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (4,959,754) (4,948,001)
- Tax on loss on ordinary activities 4 - -
------------- ------------- -------------
(9,907,699) LOSS ON ORDINARY ACTIVITIES AFTER TAXATION FOR THE PERIOD/YEAR (4,959,754) (4,948,001)
------------- ------------- -------------
OTHER COMPREHENSIVE INCOME
10,020,455 Hedge reserve recycling 5,024,076 5,005,643
10,020,455 OTHER COMPREHENSIVE INCOME FOR THE PERIOD/YEAR 5,024,076 5,005,643
----------- ---------- ----------
112,756 TOTAL COMPREHENSIVE INCOME FOR THE PERIOD/YEAR 64,322 57,642
----------- ---------- ----------
The Notes numbered 1 to 9 form an integral part of this Half
Yearly Financial Report.
STATEMENT OF FINANCIAL POSITION
as at 30 June 2023
Audited Unaudited Unaudited
31 December 30 June 30 June
2022 2023 2022
GBP Note GBP GBP
---------------- ---------------- ----------------
CURRENT ASSETS
Debtors: 5
1,289,142,436 Amounts falling due after one year 1,226,784,730 1,405,445,743
53,811,347 Amounts falling due within one year 59,635,208 50,751,752
3,843,290 Cash at bank 575,800 3,374,335
---------------- ---------------- ----------------
1,346,797,073 1,286,995,738 1,459,571,830
Creditors:
(52,008,129) Amounts falling due within one year 6 (54,500,078) (48,534,594)
---------------- ---------------- ----------------
1,294,788,944 NET CURRENT ASSETS 1,232,495,660 1,411,037,236
---------------- ---------------- ----------------
TOTAL ASSETS LESS CURRENT
1,294,788,944 LIABILITIES 1,232,495,660 1,411,037,236
Creditors:
(1,289,142,438) Amounts falling due after more than one year 7 (1,226,784,832) (1,405,445,844)
---------------- ---------------- ----------------
5,646,506 NET ASSETS 5,710,828 5,591,392
---------------- ---------------- ----------------
CAPITAL AND RESERVES
50,000 Called up share capital 50,000 50,000
(127,052,421) Hedging reserve (122,028,345) (132,067,233)
132,648,927 Retained earnings 127,689,173 137,608,625
---------------- ---------------- ----------------
5,646,506 SHAREHOLDER'S FUNDS 5,710,828 5,591,392
---------------- ---------------- ----------------
The Notes numbered 1 to 9 form an integral part of this Half
Yearly Financial Report.
STATEMENT OF CHANGES IN EQUITY
for the 6 months ended 30 June 2023
Called up
share Hedging Retained
capital reserve earnings Total
GBP GBP GBP GBP
---------- -------------- ------------ ------------
At 1 January 2022 50,000 (137,072,876) 142,556,626 5,533,750
Loss for the period - - (4,948,001) (4,948,001)
Other comprehensive income - 5,005,643 - 5,005,643
---------- -------------- ------------ ------------
Total comprehensive income - 5,005,643 (4,948,001) 57,642
---------- -------------- ------------ ------------
At 30 June 2022 50,000 (132,067,233) 137,608,625 5,591,392
---------- -------------- ------------ ------------
Loss for the period - - (4,959,698) (4,959,698)
Other comprehensive income - 5,014,812 - 5,014,812
---------- -------------- ------------ ------------
Total comprehensive income - 5,014,812 (4,959,698) 55,114
---------- -------------- ------------ ------------
At 31 December 2022 50,000 (127,052,421) 132,648,927 5,646,506
---------- -------------- ------------ ------------
Loss for the period - - (4,959,754) (4,959,754)
Other comprehensive income - 5,024,076 - 5,024,076
---------- -------------- ------------ ------------
Total comprehensive income - 5,024,076 (4,959,754) 64,322
---------- -------------- ------------ ------------
At 30 June 2023 50,000 (122,028,345) 127,689,173 5,710,828
---------- -------------- ------------ ------------
The Notes numbered 1 to 9 form an integral part of this Half
Yearly Financial Report.
NOTES TO THE INTERIM REPORT
for the 6 months ended 30 June 2023
1. ACCOUNTING POLICIES
The year end 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 2023. The
full accounting policies of the company, set out in the 2022
statutory accounts, have been applied in preparing this Interim
Report.
The financial information relating to the 6 months ended 30 June
2023 and 30 June 2022 is unaudited.
A copy of the statutory accounts for the year ended 31 December
2022 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 a 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
30 June 30 June
2022 2023 2022
GBP GBP GBP
------------ ----------- -----------
11,426 Bank interest receivable 7,178 261
Interest receivable from
81,320,171 Group undertakings 39,788,961 40,699,937
------------ ----------- -----------
81,331,597 39,796,139 40,700,198
------------ ----------- -----------
3. INTEREST PAYABLE AND SIMILAR CHARGES
Audited Unaudited Unaudited
year ended 6 months 6 months
31 December ended ended
30 June 30 June
2022 2023 2022
GBP GBP GBP
------------ ----------- -----------
Interest payable on securitised
81,181,239 debt (Note 7) 39,722,204 40,630,196
10,020,455 Hedge reserve recycling 5,024,076 5,005,643
------------ ----------- -----------
91,201,694 44,746,280 45,635,839
------------ ----------- -----------
Included within interest payable on securitised debt is
GBP752,507 (June 2022 - GBP800,129) amortisation of issue premium.
The hedge reserve recycling relates to the release of accumulated
historic fair value movements on derivative financial instruments
that were part of an effective cash flow hedge.
Fair value adjustments
Audited Unaudited Unaudited
year ended 6 months 6 months
31 December ended ended
30 June 30 June
2022 2023 2022
GBP GBP GBP
-------------- ------------- --------------
Derivative financial instruments
(235,963,196) (Note 7) (36,033,045) (139,717,378)
Securitised debt (Note
(35,465,761) 7) (9,954,723) (31,470,817)
Loan to fellow subsidiary
undertaking
271,428,957 (Note 5) 45,987,768 171,188,195
-------------- ------------- --------------
- - -
-------------- ------------- --------------
4. TAXATION
Audited Unaudited Unaudited
year ended 6 months 6 months
31 December ended ended
30 June
2022 2023 30 June 2022
GBP GBP GBP
------------ ------------ -------------
Tax charge
Current tax chargeable to
- income - -
------------ ------------ -------------
- - -
------------ ------------ -------------
Tax reconciliation
Loss on ordinary activities
(9,907,699) before taxation (4,959,754) (4,948,001)
------------ ------------ -------------
Tax on loss at UK corporation
(1,882,463) tax rate (1,091,146) (940,120)
Effects of:
1,903,886 Fair value movements - 951,072
(21,423) Group relief 1,091,146 (10,952)
------------ ------------ -------------
- - -
------------ ------------ -------------
5. DEBTORS
Audited Unaudited Unaudited
31 December 30 June 30 June
2022 2023 2022
GBP GBP GBP
-------------- -------------- --------------
Due within one year:
Loan to fellow subsidiary
29,325,200 undertaking 29,325,200 29,325,200
Accrued interest on loan
15,610,878 to fellow subsidiary undertaking 15,629,968 15,540,418
Amounts owed by fellow subsidiary
8,875,269 undertakings 14,680,040 5,886,134
-------------- -------------- --------------
53,811,347 59,635,208 50,751,752
-------------- -------------- --------------
Due after more than one
year:
Loan to fellow subsidiary
1,289,142,436 undertaking 1,226,784,730 1,405,445,743
-------------- -------------- --------------
1,289,142,436 1,226,784,730 1,405,445,743
-------------- -------------- --------------
The loan to a fellow subsidiary undertaking comprises:
Audited Unaudited Unaudited
31 December 30 June 30 June
2022 2023 2022
GBP GBP GBP
-------------- -------------- --------------
1,622,033,502 Brought forward 1,318,467,636 1,622,033,502
(29,325,200) Repaid in period (14,662,600) (14,662,600)
(1,578,497) Amortisation of issue premium (752,507) (800,128)
(1,233,212) Accrued financing expenses (954,731) (611,636)
(271,428,957) Fair value adjustment (45,987,768) (171,188,195)
-------------- -------------- --------------
1,318,467,636 Carried forward 1,256,110,030 1,434,770,943
-------------- -------------- --------------
Payable within one year
29,325,200 or on demand 29,325,200 29,325,200
Payable after more than
1,289,142,436 one year 1,226,784,830 1,405,445,743
-------------- -------------- --------------
1,318,467,636 1,256,110,030 1,434,770,943
-------------- -------------- --------------
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 A7, B3 C2 and D2 tranches of the intercompany loan are
carried at fair value. The A1, A3 and B tranches are carried at
amortised cost (see Note 7). The total fair value of the loans to
fellow subsidiary undertakings at 30 June 2023 was GBP1,224,656,709
(31 December 2022 - GBP1,325,641,286), calculated by reference to
the fair values of the company's financial liabilities. In the
event that the company were to realise the fair value of the
securitised debt and 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. As such, the fair value of the
loans to Group undertakings is calculated to be the sum of the fair
value of the securitised debt and the fair value of the derivative
financial instruments. The carrying value of financial assets
represents the company's maximum exposure to credit risk.
6. CREDITORS: Amounts falling due within one year
Audited Unaudited Unaudited
31 December 30 June 30 June
2022 2023 2022
GBP GBP GBP
----------------- ----------- -----------
Securitised debt (Note
29,325,200 7) 29,325,200 29,325,200
15,661,393 Accrued interest on debt 15,684,999 15,594,319
- Accounts payable 62,958 126,729
7,020,468 Amounts owed to Group undertakings 9,416,241 3,477,306
1,068 Accruals and deferred income 10,680 11,040
----------------- ----------- -----------
52,008,129 54,500,078 48,534,594
----------------- ----------- -----------
Amounts owed to group undertakings are interest free and
repayable on demand.
7. CREDITORS: Amounts falling after more than one year
Audited Unaudited Unaudited
31 December 30 June 30 June
2022 2023 2022
GBP GBP GBP
-------------- -------------- --------------
1,218,521,786 Securitised debt 1,192,197,225 1,238,579,374
70,620,652 Derivative financial instruments 34,587,607 166,866,470
-------------- -------------- --------------
1,289,142,438 1,226,784,832 1,404,445,844
-------------- -------------- --------------
The amounts at which borrowings are stated comprise:
Audited Unaudited Unaudited
31 December 30 June 30 June
2022 2023 2022
GBP GBP GBP
-------------- -------------- --------------
1,315,449,655 Brought forward 1,247,846,985 1,315,449,655
(29,325,200) Repaid in period (14,662,600) (14,662,600)
Amortisation of issue
(1,578,497) premium (752,507) (800,128)
(1,233,212) Accrued financing expenses (954,730) (611,536)
35,465,761 Fair value adjustment (9,954,723) (31,470,817)
-------------- -------------- --------------
1,247,846,985 Carried forward 1,221,552,425 1,267,904,574
--------------
Payable within one year
29,325,200 or on demand 29,325,200 29,325,200
Payable after more than
1,218,521,785 one year 1,192,197,225 1,238,579,374
-------------- -------------- --------------
1,247,846,985 1,221,522,425 1,267,904,574
-------------- -------------- --------------
The principal terms of the company's borrowings are:
Principal
Tranche GBPm Interest Hedged rate Repayment
--------- ---------- ---------------- ------------ -------------------
By instalment 2009
A1 165.7 6.455% - - 2030
By instalment 2032
A3 400.0 5.952% - - 2035
A7 222.0 SONIA + 0.5943% 5.3985% January 2035
By instalment 2005
B 110.6 6.800% - - 2030
B3 77.9 SONIA + 0.8193% 5.5825% January 2035
C2 239.7 SONIA + 1.4943% 6.2666% January 2035
D2 125.0 SONIA + 2.2193% 7.0605% January 2035
----------
1,340.9
----------
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 2023, GBP9,893,264
(31 December 2022 - GBP10,645,771) remained unamortised.
The notes are secured on 6 properties at Canary Wharf, owned by
fellow subsidiary undertakings, and the rental income stream
therefrom. The 6 properties are 1 Canada Square, 33 Canada Square,
20 Bank Street, 40 Bank Street, 10 Cabot Square/5 North Colonnade
and 20 Cabot Square/10 South Colonnade.
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 5.40% and 7.06%.
The floating rate notes are carried at fair value through profit
or loss. The fixed rate notes are carried at amortised cost. The
total fair value of the securitised debt at 30 June 2023 was
GBP1,190,069,104 (31 December 2022 - GBP1,255,020,633). The fair
values of the sterling denominated notes have been determined by
reference to prices available on the market on which they are
traded.
At 30 June 2023, the fair value of the interest rate derivatives
resulted in the recognition of a liability of GBP34,587,605 (31
December 2022 - GBP70,620,652). The fair values of the derivative
financial instruments have been determined by reference to the
market values provided by a third party valuer.
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 2023, AIG had posted GBP60,804,480 as cash
collateral in respect of this obligation.
The company also has the benefit of a GBP300.0m liquidity
facility provided by Lloyds Bank plc, under which drawings may be
made in the event of a cash flow shortage under the securitisation.
The liquidity facility matures on 22 October 2037 and at 30 June
2023 remains undrawn.
8. CONTINGENT LIABILITIES AND FINANCIAL COMMITMENTS
As at 30 June 2023 and 31 December 2022, 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 7.
9. CONTROLLING PARTY
The company's immediate parent undertaking is Canary Wharf
Finance Holdings Limited.
As at 30 June 2023, the smallest group of which the company is a
member and for which group financial statements are drawn up is the
consolidated financial statements of Canary Wharf Group Investment
Holdings plc. Copies of the financial statements may be obtained
from the Company Secretary, One Canada Square, Canary Wharf, London
E14 5AB.
The largest group of which the company is a member for which
group financial statements are drawn up is the consolidated
financial statements of Stork Holdco LP, an entity registered in
Bermuda and the ultimate parent undertaking and controlling party.
Stork Holdco LP is registered at 73 Front Street, 5th Floor,
Hamilton, HM12, Bermuda.
Stork Holdco LP is controlled as to 50.0% by Brookfield Property
Partners LP and as to 50.0% by Qatar Investment Authority.
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END
IR EKLFFXKLLBBX
(END) Dow Jones Newswires
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