TIDM37QC
RNS Number : 9397V
Meadowhall Finance PLC
26 July 2018
The Annual Report and Accounts for the year ended 31 March 2018,
attached below in accordance with DTR 6.3.5R, has been submitted to
the Financial Conduct Authority through the National Storage
Mechanism and will shortly be available for inspection at:
http://www.morningstar.co.uk/uk/NSM
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Meadowhall Finance PLC
Annual Financial Reports
Year ended 31 March 2018
Company number: 05987141
STRATEGIC REPORT
for the year ended 31 March 2018
The directors present their Strategic Report for the year ended
31 March 2018.
Business review and principal activities
Meadowhall Finance PLC ("the company") is a wholly owned
subsidiary of Meadowhall Limited Partnership, which itself is
indirectly 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 within the group.
As shown in the company's Profit and Loss Account on page 9, the
company's profit on ordinary activities before taxation is GBP3,433
compared to a profit on ordinary activities before taxation of
GBP2,920 in the prior year.
Dividends of GBPnil (2017: GBPnil) were paid in the year.
The Balance Sheet on page 11 shows that the company's financial
position at the year end has, in net liability terms, decreased
compared with the prior year. This is mainly due to favourable
movements in the valuation of interest rate swaps reflecting the
increase in Sterling interest rates since the beginning of the
year.
Details of significant events since the balance sheet date, if
any, are contained in note 15.
Key performance indicators
The directors measure how the group is delivering its strategy
through the key performance indicators.
The directors consider the primary measure of performance of the
group to be turnover and net asset value. These are discussed
above.
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 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.
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;
-- key staff changes; and
-- environmental and health and safety policies.
These opportunities also represent risks, the most significant
being change to the value of the property portfolio. This risk has
high visibility to directors and is considered and managed on a
continuous basis. Directors 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 primarily 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 2018 (2017: one)
to fix the interest rates on external debt at approximately 4.65%
(2017: 4.65%). The fair value of interest rate derivatives at the
year end is a liability ofGBP15.4m (2017: GBP18.0m liability) and
has been accounted for using hedge accounting through the Statement
of Comprehensive Income, with the ineffective portion recognised in
the profit and loss account.
Approved by the Board on 24 July 2018 and signed on its behalf
by:
Victoria Cooper
British Land Company Secretarial Limited Company secretary
DIRECTORS' REPORT
For the year ended 31 March 2018
The directors present their report and the financial statements
for the year ended 31 March 2018.
Directors of the company
The directors, who held office during the year, and up to the
date of signing the financial statements, were as follows:
J Patel
E Strysse (appointed 17 July 2017)
R Peel (appointed 4 December 2017 and resigned 5 December
2017)
P Case (appointed 4 December 2017)
R Ford (resigned 17 July 2017)
C A Barber (alternate: H Shah)
R J Wise (resigned 4 December 2017)
Directors' responsibilities statement
The directors acknowledge their responsibilities 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 the financial statements in accordance with
United Kingdom Accounting Standards (United Kingdom Generally
Accepted Accounting Practice), including FRS 101 'Reduced
Disclosure Framework' ('FRS 101'). 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 apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether FRS 101 has been followed, subject to any
material departures disclosed and explained in the financial
statements; 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 the 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.
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.
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 2 of the financial statements.
Subsequent Events
Details of significant events since the Balance Sheet date, if
any, are contained in note 15.
Disclosure of information to the auditors
Each director has taken steps that they ought to have taken as a
director in order to make themselves aware of any relevant audit
information and to establish that the company's auditors are aware
of that information. The directors confirm that there is no
relevant information that they know of and of which they know the
auditors are unaware.
Independent Auditors
PricewaterhouseCoopers LLP were appointed as auditors of the
company for the year ended 31 March 2018 and have indicated their
willingness to continue in office. Deloitte LLP were the auditors
of the company for the year ended 31 March 2017.
Approved by the Board on 24 July 2018 and signed on its behalf
by:
Victoria Cooper
British Land Company Secretarial Limited Company secretary
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF
MEADOWHALL FINANCE PLC
For the year ended 31 March 2018
Report on the audit of the financial statements
Opinion
In our opinion, Meadowhall Finance PLC's financial
statements:
-- give a true and fair view of the state of the Company's
affairs as at 31 March 2018 and of its profit for the year then
ended;
-- have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice (United Kingdom Accounting
Standards, comprising FRS 101 "Reduced Disclosure Framework", and
applicable law); and
-- have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the
Annual Report and Financial Statements (the "Annual Report"), which
comprise: the Balance Sheet as at 31 March 2018; the Profit and
Loss Account, the Statement of Comprehensive Income, and the
Statement of Changes in Equity for the year then ended; and the
Notes to the Financial Statements, which include a description of
the significant accounting policies.
Our opinion is consistent with our reporting to those charged
with governance.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our
responsibilities under ISAs (UK) are further described in the
Auditors' responsibilities for the audit of the financial
statements section of our report. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Independence
We remained independent of the Company in accordance with the
ethical requirements that are relevant to our audit of the
financial statements in the UK, which includes the FRC's Ethical
Standard, as applicable to listed public interest entities, and we
have fulfilled our other ethical responsibilities in accordance
with these requirements.
To the best of our knowledge and belief, we declare that
non-audit services prohibited by the FRC's Ethical Standard were
not provided to the Company.
We have provided no non-audit services to the Company in the
period from 1 April 2017 to 31 March 2018.
Our audit approach
Overview
-- Overall materiality: GBP6,522,000, based on 1% of total assets.
-- Our 2018 audit was planned and executed having regard to the
fact that this is our first year auditing the Company. Our areas of
focus were on the movements in bonds, interest income and interest
expense and the valuation of derivatives.
-- We have no key audit matters to report.
The scope of our audit
As part of designing our audit, we determined materiality and
assessed the risks of material misstatement in the financial
statements. In particular, we looked at where the directors made
subjective judgements, for example in respect of significant
accounting estimates that involved making assumptions and
considering future events that are inherently uncertain.
We gained an understanding of the legal and regulatory framework
applicable to the Company and the industry in which it operates,
and considered the risk of acts by the Company which were contrary
to applicable laws and regulations, including fraud. We designed
audit procedures to respond to the risk, recognising that the risk
of not detecting a material misstatement due to fraud is higher
than the risk of not detecting one resulting from error, as fraud
may involve deliberate concealment by, for example, forgery or
intentional misrepresentations, or through collusion. We focused on
laws and regulations that could give rise to a material
misstatement in the Company's financial statements, including, but
not limited to, the Companies Act 2006 and the Listing Rules. Our
tests included, but were not limited to, review of the financial
statement disclosures to underlying supporting documentation and
enquiries of management. There are inherent limitations in the
audit procedures described above and the further removed
non-compliance with laws and regulations is from the events and
transactions reflected in the financial statements, the less likely
we would become aware of it.
We did not identify any key audit matters relating to
irregularities, including fraud. As in all of our audits we also
addressed the risk of management override of internal controls,
including testing journals and evaluating whether there was
evidence of bias by the directors that represented a risk of
material misstatement due to fraud.
Key audit matters
Key audit matters are those matters that, in the auditors'
professional judgement, were of most significance in the audit of
the financial statements of the current period and include the most
significant assessed risks of material misstatement (whether or not
due to fraud) identified by the auditors, including those which had
the greatest effect on: the overall audit strategy; the allocation
of resources in the audit; and directing the efforts of the
engagement team. We determined that there were no key audit matters
applicable to the Company to communicate in our report.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed
enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the
Company, the accounting processes and controls, and the industry in
which it operates.
Materiality
The scope of our audit was influenced by our application of
materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations,
helped us to determine the scope of our audit and the nature,
timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in evaluating
the effect of misstatements, both individually and in aggregate on
the financial statements as a whole.
Based on our professional judgement, we determined materiality
for the financial statements as a whole as follows:
Overall materiality GBP6,522,000
How we determined it 1% of total assets.
Rationale for benchmark applied We believe that total assets is
the primary measure used by the shareholders in assessing the
performance of the entity, and is a generally accepted auditing
benchmark.
We agreed with those charged with governance that we would
report to them misstatements identified during our audit above
GBP326,000 as well as misstatements below that amount that, in our
view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in
relation to which ISAs (UK) require us to report to you when:
-- the Directors' use of the going concern basis of accounting
in the preparation of the financial statements is not appropriate;
or
-- the Directors have not disclosed in the financial statements
any identified material uncertainties that may cast significant
doubt about the Company's ability to continue to adopt the going
concern basis of accounting for a period of at least twelve months
from the date when the financial statements are authorised for
issue.
However, because not all future events or conditions can be
predicted, this statement is not a guarantee as to the Company's
ability to continue as a going concern.
Reporting on other information
The other information comprises all of the information in the
Annual Report other than the financial statements and our auditors'
report thereon. The Directors are responsible for the other
information. Our opinion on the financial statements does not cover
the other information and, accordingly, we do not express an audit
opinion or, except to the extent otherwise explicitly stated in
this report, any form of assurance thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit, or otherwise appears to be materially misstated. If we
identify an apparent material inconsistency or material
misstatement, we are required to perform procedures to conclude
whether there is a material misstatement of the financial
statements or a material misstatement of the other information. If,
based on the work we have performed, we conclude that there is a
material misstatement of this other information, we are required to
report that fact. We have nothing to report based on these
responsibilities.
With respect to the Strategic Report and Directors' Report, we
also considered whether the disclosures required by the UK
Companies Act 2006 have been included.
Based on the responsibilities described above and our work
undertaken in the course of the audit, ISAs (UK) require us also to
report certain opinions and matters as described below.
Strategic Report and Directors' Report
In our opinion, based on the work undertaken in the course of
the audit, the information given in the Strategic Report and
Directors' Report for the year ended 31 March 2018 is consistent
with the financial statements and has been prepared in accordance
with applicable legal requirements.
In light of the knowledge and understanding of the Company and
its environment obtained in the course of the audit, we did not
identify any material misstatements in the Strategic Report and
Directors' Report.
Responsibilities for the financial statements and the audit
Responsibilities of directors for the financial statements
As explained more fully in the Directors' responsibilities
statement set out on page 3, the Directors are responsible for the
preparation of the financial statements in accordance with the
applicable framework and for being satisfied that they give a true
and fair view. The directors are also responsible for such internal
control as they determine is necessary to enable the preparation of
financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the 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.
Auditors' responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditors' report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
A further description of our responsibilities for the audit of
the financial statements is located on the FRC's website at
www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditors' report.
Use of this report
This report, including the opinions, has been prepared for and
only for the Company's members as a body in accordance with Chapter
3 of Part 16 of the Companies Act 2006 and for no other purpose. We
do not, in giving these opinions, 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.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you
if, in our opinion:
-- we have not received all the information and explanations we
require for our audit; or
-- adequate accounting records have not been kept by the
Company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- certain disclosures of Directors' remuneration specified by law are not made; or
-- the financial statements are not in agreement with the
accounting records and returns.
We have no exceptions to report arising from this
responsibility.
Appointment
Following the recommendation of those charged with governance,
we were appointed by the directors on 15 March 2018 to audit the
financial statements for the year ended 31 March 2018 and
subsequent financial periods. This is therefore our first year of
uninterrupted engagement.
PROFIT AND LOSS ACCOUNT
For the year ended 31 March 2018
2018 2017
Note GBP GBP
Interest receivable and similar income 4 33,304,534 34,639,249
Interest payable and similar expenses 5 (33,301,101) (34,636,329)
------------ ------------
Profit on ordinary activities before
taxation 3,433 2,920
Tax on profit on ordinary activities 8 (652) (584)
------------ ------------
Profit for the year 2,781 2,336
============ ============
Turnover and results were derived from continuing operations
within the United Kingdom.
STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2018
2018 2017
Note GBP GBP
Profit for the year 2,781 2,336
--------- ---------
Gain/(loss) on cash flow hedges (net) 2,590,912 (256,044)
Tax relating to components of other
comprehensive expense (448,561) (134,246)
--------- ---------
2,142,351 (390,290)
--------- ---------
Total comprehensive income/(expense)
for the year 2,145,132 (387,954)
========= =========
BALANCE SHEET
as at 31 March 2018
31 March 31 March
2018 2017
Note GBP GBP
Current assets
Debtors due within one year 9 36,514,002 34,721,524
Debtors due after more than one year 9 615,743,821 645,606,982
Cash at bank and in hand 34,901 31,437
------------- -------------
652,292,724 680,359,943
Creditors due within one year 10 (51,435,326) (52,233,077)
------------- -------------
Total assets less current liabilities 600,857,398 628,126,866
Creditors due after more than one year 11 (613,131,210) (642,545,810)
------------- -------------
Net liabilities (12,273,812) (14,418,944)
============= =============
Capital and reserves
Called up share capital 13 12,502 12,502
Cash flow hedging reserve (11,787,395) (13,929,746)
Profit and loss account (498,919) (501,700)
------------- -------------
Shareholders' deficit (12,273,812) (14,418,944)
============= =============
Approved by the Board on 24 July 2018 and signed on its behalf
by:
Hursh Shah
Director
STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2018
Cash flow Profit and
Share capital hedging reserve loss account Total
GBP GBP GBP GBP
Balance at 1 April
2016 12,502 (13,539,456) (504,036) (14,030,990)
Profit for the year - - 2,336 2,336
Gain/(loss) on cash
flow hedges (net) - (256,044) - (256,044)
Tax relating to components
of other comprehensive
expense - (134,246) - (134,246)
------------- ---------------- ------------- ------------
Total comprehensive
(expense)/income
for the year - (390,290) 2,336 (387,954)
------------- ---------------- ------------- ------------
Balance at 31 March
2017 12,502 (13,929,746) (501,700) (14,418,944)
============= ================ ============= ============
Profit for the year - - 2,781 2,781
Gain/(loss) on cash
flow hedges (net) - 2,590,912 - 2,590,912
Tax relating to other
comprehensive expense - (448,561) - (448,561)
------ ------------ --------- ------------
Total comprehensive
income for the year - 2,142,351 2,781 2,145,132
------ ------------ --------- ------------
Balance at 31 March
2018 12,502 (11,787,395) (498,919) (12,273,812)
====== ============ ========= ============
NOTES TO THE ACCOUNTS
For the year ended 31 March 2018
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 financial statements are set out below. These policies have
been consistently applied to all the years presented, unless
otherwise stated.
Basis of preparation
These financial statements were prepared in accordance with
Financial Reporting Standard 101 Reduced Disclosure Framework ("FRS
101").
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.
The financial statements have been prepared under the historical
cost convention, as modified to include the revaluation of
derivatives. Historical cost is generally based on the fair value
of the consideration given in exchange for the assets.
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 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 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 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 16.
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.
All financing covenant requirements in place have been met and
are forecast to continue to be met in the future.
Changes in accounting policy
None of the standards, interpretations and amendments effective
for the first time from 1 April 2017 have had a material effect on
the financial statements.
Interest payable and receivable policy
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.
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.
Financial assets and liabilities
Classification
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.
3 Significant accounting judgements and key sources of estimation
uncertainty
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.
Hedge accounting
The key source of estimation uncertainty relates to the
valuation of derivatives. The potential for management to make
judgements or estimates relating to those items which would have a
significant impact on the financial statements is considered, by
the nature of the group's business to be limited. The derivatives
have been valued by calculating the net present value of future
cashflows, using appropriate market discount rates, by an
independent treasury advisor.
4 Interest receivable and similar income
2018 2017
GBP GBP
Interest receivable on amounts owed by
group companies 33,304,534 34,639,249
------------------- -------------------
33,304,534 34,639,249
=================== ===================
5 Interest payable and similar expenses
2018 2017
GBP GBP
Bonds and related facilities 31,151,240 32,419,184
Derivatives 2,149,861 2,217,145
------------------- -------------------
33,301,101 34,636,329
=================== ===================
6 Auditors' remuneration
A notional charge of GBP14,841 (2017 Deloitte LLP: GBP5,706) is
deemed payable to PricewaterhouseCoopers LLP in respect of the
audit of the financial statements for the year ended 31 March 2018.
Actual amounts payable to PricewaterhouseCoopers LLP are paid at
group level by MSC Property Intermediate Holdings Limited.
6 Auditors' remuneration (continued)
No non-audit fees (2017 Deloitte LLP: GBPnil) were paid to
PricewaterhouseCoopers LLP.
7 Staff costs
No director received any remuneration for services to the
company in either year. The remuneration of the directors was borne
by another company, for which no apportionment or recharges were
made. The value of this service was negligible.
Average number of employees, excluding directors, of the company
during the year was nil (2017: nil)
8 Tax on profit on ordinary activities
2018 2017
GBP GBP
Current taxation
UK corporation tax 652 584
------------------ ------------------
Tax charge in the profit and loss account 652 584
================== ==================
2018 2017
GBP GBP
Tax reconciliation
Profit on ordinary activities before taxation 3,433 2,920
----- -----
Tax on profit on ordinary activities at
UK corporation tax rate of 19% (2017 :
20%) 652 584
Effects of:
Total tax charge 652 584
===== =====
A reduction in the UK corporation tax rate from 19% to 17%
(effective from 1 April 2020) was substantially enacted on 6
September 2016. This rate reduction has been reflected in the
calculation of deferred tax on the Balance Sheet date, where
relevant.
9 Debtors
31 March 31 March
2018 2017
GBP GBP
Amounts due from related parties 13,640 13,992
Loans to related parties 29,414,600 27,325,480
Accrued income 7,085,762 7,382,052
----------- -----------
36,514,002 34,721,524
=========== ===========
Debtors due after more than one year
Deferred tax assets - see note 12 2,612,611 3,061,172
Amounts owed by group companies - Long
term loans 613,131,210 642,545,810
----------- -----------
615,743,821 645,606,982
=========== ===========
The company's interest on outstanding debt is discussed in note
11 and applied to amounts owing from related parties in the same
manner.
10 Creditors due within one year
31 March 31 March
2018 2017
GBP GBP
Accrued expenses 6,648,994 6,897,570
Amounts due to related parties 1,825 1,825
Social security and other taxes 1,294 1,144
Corporation tax liability 317 166
Secured bonds 29,414,600 27,325,480
Interest rate derivative liability* 15,368,296 18,006,892
--------------- --------------
51,435,326 52,233,077
=============== ==============
* Includes contracted cash flow with a maturity greater than one
year at fair value
11 Creditors due after more than one year
31 March 31 March
2018 2017
GBP GBP
Secured bonds due within one to two years 28,454,600 29,414,600
Secured bonds due within two to five years 102,708,680 93,861,560
Secured bonds due after five years 481,967,930 519,269,650
------------------- -------------------
613,131,210 642,545,810
=================== ===================
31 March 31 March
2018 2017
GBP GBP
Borrowings repayment analysis
Repayments due:
Within one year 29,414,600 27,325,480
Within one to two years 28,454,600 29,414,600
Within two to five years 102,708,680 93,861,560
--------------------------- -----------------------
160,577,880 150,601,640
After five years 481,967,930 519,269,650
--------------------------- -----------------------
Total borrowings 642,545,810 669,871,290
Fair value of interest rate derivatives 15,368,296 18,006,892
--------------------------- -----------------------
Net debt 657,914,106 687,878,182
=========================== =======================
31 March 31 March
2018 2017
GBP GBP
Secured bonds on the assets of the Meadowhall Limited Partnership
Class A1 4.986% Bonds due 2037 464,756,160 484,004,840
Class A2 Floating Rate Bonds due 2037 48,780,000 52,080,000
Class B 4.988% Bonds due 2037 129,009,650 133,786,450
--------------------------- -----------------------
Total borrowings 642,545,810 669,871,290
Fair value of interest rate derivatives 15,368,296 18,006,892
--------------------------- -----------------------
Total secured borrowings 657,914,106 687,878,182
=========================== =======================
11 Creditors due after more than one year (continued)
The GBP49m (2017: GBP52m) floating rate loan is fully hedged by
a swap to 2032. At 31 March 2018, taking into account the effect of
derivatives, 100% of the bonds were fixed (2017: 100%) until
expected maturity. The bonds amortise from 2007 to 2032, and are
secured on the properties of group valued at GBP1,850m (2017:
GBP1,797m). The weighted average interest rate of the bonds is
5.00% (2017: 5.00%). The weighted average maturity of the bonds is
9.1 years (2017: 9.7 years).
The secured bonds as detailed in this note are issued by
Meadowhall Finance PLC ('Issuer') and the proceeds are 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
selected other interests and assets.
At 31 March 2018, the company was financed by GBP642.5m bonds
(2017: GBP669.9m).
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.
31 March 31 March
2018 2017
GBPm GBPm
Bonds fair value 772 824
======== ========
Comparison of fair values and book values and fair value
hierarchy
The table below provides a comparison of fair 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).
Fair value Book value Fair value Book value
31 March 31 March 31 March 31 March
2018 2018 2017 2017
Level GBP m GBP m GBP m GBP m
Secured bonds 2 772 643 824 670
Interest rate derivative
liability 2 15 15 18 18
---------- ---------- ---------- ----------
787 658 842 688
========== ========== ========== ==========
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 2018 was GBPnil (2017:
GBPnil). The table below summarises variable rate debt hedged at 31
March 2018.
31 March 31 March
2018 2017
GBP GBP
Outstanding after one year 46,140,000 48,780,000
Outstanding after two years 44,460,000 46,140,000
Outstanding after five years 40,500,000 41,220,000
Hedge accounting
The company uses interest rate swaps to hedge exposure to the
variability in cash flows on floating rate debt. At 31 March 2018,
the fair value of these derivatives, which have been designated
cash flow hedges under lAS 39, is a liability of GBP15.4m (2017:
GBP18.0m liability). The valuation movement reflects the increase
in Sterling interest rates since the beginning of the year.
The derivatives have been valued by calculating the net present
value of future cash flows, using appropriate market discount
rates, by an independent treasury advisor. The effective portion of
changes in fair value of the designated hedging instrument is
recognised in other comprehensive income. The gain or loss relating
to the ineffective portion is recognised immediately in the profit
and loss. Amounts previously recognised in other comprehensive
income and accumulated in equity are reclassified to the profit and
loss in the periods in which the hedged item affects profit or loss
or when the hedging relationship ends.
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 75.0% (2017: 77.5%) of the total borrowings are due
for payment after 5 years. There are no immediate debt refinancing
requirements.
The company maintains undrawn revolving liquidity facilities
which provide financial liquidity. These facilities are only
available for the requirements of the Meadowhall securitisation. At
31 March 2018 this facility was GBP75.0m (2017: GBP75.0m).
Details of bond covenants are authorised in the bonds Offering
Circular, accessible via:
http://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 2018 amounted to GBP34,901 (2017:
GBP31,437) and are placed with European Financial institutions with
BBB+ or better credit ratings. At 31 March 2018, 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 (2017: GBPnil). This
represents 0% (2017: 0%) of gross assets.
The company's principal credit risk relates to an intra-group
loan to Meadowhall Limited Partnership. At 31 March 2018 this loan
stood at GBP642.5m (2017: GBP669.9m). The purpose of this loan is
to provide funding to fellow subsidiaries of the MSC Property
Intermediate Holdings Limited group.
At 31 March 2018, the fair value of all interest rate
derivatives which had a positive value was GBPnil (2017:
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.
12 Deferred tax asset
2018 2017
GBP GBP
1 April 3,061,172 3,195,418
Debited to hedging and translation reserve (448,561) (134,246)
--------- ---------
31 March 2,612,611 3,061,172
========= =========
13 Share capital
Allotted, called up and fully paid shares
31 March 31 March
2018 2017
Restated
No. GBP No. GBP
Ordinary shares of GBP1
each 2 2 2 2
Ordinary shares part
paid of GBP0.25 each 49,998 12,500 49,998 12,500
50,000 12,502 50,000 12,502
====== ====== ======== ======
Restatement
In the prior year the number of ordinary shares was listed as 1
share when in fact 2 shares were in issue. The prior year balance
has been restated as a consequence.
14 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.
15 Subsequent events
There have been no significant events since the year end.
16 Parent and ultimate parent undertaking
The immediate controlling party 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 are available on request from British Land, York
House, 45 Seymour Street, London, W1H 7LX.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR FKADPABKDPOB
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July 26, 2018 13:01 ET (17:01 GMT)
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