TIDM57UT
RNS Number : 2443L
Grand Union Group Fundings PLC
04 September 2019
Grand Union Group Funding PLC
Annual report and financial statements
For the year ended 31 March 2019
Company Number: 08757850
Company information 2
Strategic report 3 - 4
Directors' report 5 - 7
Independent auditor's report to the members of
Grand Union Group Funding PLC 8 - 13
Statement of Comprehensive Income 14
Statement of Financial Position 15
Statement of Changes in Equity 16
Notes to the financial statements 17 - 23
Directors
Aileen Evans
Anna Simpson (Resigned 26 October 2018)
John Edwards (Appointed Chair 1 April 2018)
Nicola Ewen
Peter Fielder (Appointed 1 April 2018)
Mona Shah (Appointed 1 February 2019)
Company Secretary
Anna Simpson (Resigned 26 October 2018)
Chris Bellamy (Appointed 26 October 2018)
Registered Office Derwent House
Cranfield Technology Park
University Way
Cranfield
Bedfordshire
MK43 0AZ
Company Number 08757850
Auditor UHY Hacker Young
Quadrant House
4 Thomas More Square
London
E1W 1YW
Bankers U.S. Bank
125 Old Broad Street
London
EC2N 1AR
The directors present their strategic report for Grand Union
Group Funding PLC (the "Company") for the year ended 31 March
2019.
Principal activities
The principal activity of the Company is to act as the funding
vehicle for Grand Union Housing Group (the Group).
Review of the business
On 4 December 2013, the Company successfully issued a GBP150m
bond, which included a retained element of GBP35m, at a coupon of
4.625% with repayment after 30 years (4 December 2043). The bond
was issued at a discount so funds received totalled GBP114.3m.
The keen pricing demonstrated the Group's strong financial
position which had been reflected in the A2 (Stable) credit rating
issued by Moody's Investor Services in December 2014. The rating
outlook was changed to A2 (Negative) on 29 June 2016 following the
result of the UK's referendum to leave the European Union. This
change applied across all sub sovereign organisations and reflected
the uncertain future for the UK Government and closely related
businesses. This rating was changed by Moody's Investor Services to
A3 stable in November 2018 following their annual review.
The cost of issuing the bond was GBP1.4m leaving a balance of
GBP112.9m which was immediately on-lent to Aragon Housing
Association Limited (a member of the Grand Union Housing Group)
under a facility arrangement between the Company (as lender) and
Aragon Housing Association Limited (as borrower), following this
the effective interest rate on the GBP112.9m is 4.7948%.
As part of modernising the Group's services to improve the
customer offer and consistency in process, we simplified our
structure by unification. On 1 October 2018 the unification bought
together GUHG (2018) Limited (formerly Grand Union Housing Group
Limited), Aragon Housing Association Limited, Rockingham Forest
Housing Association Limited and South Northants Homes Limited to
form a single organisation called Grand Union Housing Group.
The bond is listed on the London Stock Exchange.
The bond is for a period of 30 years and secured on assets owned
by Grand Union Housing Group Limited, with a covenant that requires
a minimum level of asset cover of 105% on an Existing Use Value -
Social Housing basis or 115% on a Market Value subject to Tenancies
basis. Grand Union Housing Group Limited pays 4.625% interest on
its borrowing from the Company.
Since incorporation the Company has not carried out any business
or activities other than incidental to the financing of Grand Union
Housing Group Limited.
A trust deed, entered into at the time of the bond issue,
required that the retained bond (GBP35m) be cancelled if not sold
by the Company within three years of the issue date i.e. by 4
December 2016. The Company reviewed the funding requirements at
that date in line with the Group's strategic objectives and
cancelled the retained bond.
As the Company's activities are limited to the raising and
management of private finance for Grand Union Housing Group, it
employs no staff and all administration functions are carried out
by the finance team of Grand Union Housing Group. As a result there
is no significant information to report on regarding environmental
matters, employees or social and community issues.
Future Outlook
The directors do not anticipate any change in the Company's
principal activity, and expect future financial performance to
continue on the same basis.
Principal risks and uncertainties
The Company on-lent all the proceeds from the bond issue to
members of Grand Union Housing Group Limited. The main risk facing
the Company is that Grand Union Housing Group Limited is unable to
make interest or principal payments when they fall due. Grand Union
Housing Group is financially strong, with a long term business plan
that shows capacity to repay interest and principal when due. This
plan has been fully risk assessed and stress tested with any
potential mitigation activities clearly identified. Processes are
in place for forward monitoring lead indicators and early warning
triggers.
Key performance indicators
The Company operates as the Grand Union Housing Group funding
vehicle and as such has no specific key performance indicators.
Future developments, performance and position
The directors do not anticipate any change in the Company's
principal activity, and expect future financial performance to
continue on the same basis.
The directors do not recommend a dividend for the year ended 31
March 2019 (2018: GBPnil).
Directors' indemnity provision
The board confirms that Company has in place directors' and
officers' insurance.
Other information
The Company has no direct employees and it exists solely to
on-lend the proceeds of capital market transactions. The Company
had five directors as at 31 March 2019.
Approved by the board on 30 July 2019 and signed on its behalf
by:
John Edwards
Chair
The directors present their report and the financial statements
for the Company for the year ended 31 March 2019.
Directors
The Company's directors are listed on page 2.
Financial risk management
Risk management objectives and policies
The directors acknowledge their responsibility for establishing
and maintaining a sound system of internal control and for
reviewing its effectiveness. The directors have delegated the
on-going review of controls to the Grand Union Housing Group Audit
and Risk Committee. The directors will receive an annual report
from the Committee prior to the publication of the financial
statements.
The system of internal control is designed to manage, rather
than eliminate the risk of failure to achieve business objectives,
and to provide reasonable and not absolute assurance against
material misstatement or loss.
The process for identifying, evaluating and managing the
significant risks faced by the Company was on-going throughout the
year and to the date of approval of these financial statements.
The Group has a formal Treasury Management Policy ensuring that
the member companies have sufficient resources to meet on-going
capital and revenue commitments and to protect against adverse
movement in interest rates. The Company acknowledges that effective
treasury management will support the delivery of the business and
service objectives. The Group is committed to the principles of
achieving value for money in treasury management within the context
of effective risk management.
Interest rate risk and hedging
As at 31 March 2019, 100% of the Company's debt was on fixed
rate terms. There is no intention to repay any debt prior to
maturity, therefore any movement in the market value of debt due to
changes in interest rates is deemed immaterial to the ongoing
operations of the Company.
Liquidity risk
The Company actively lends the full amount it has borrowed, thus
the assets fully offset its liabilities and Grand Union Housing
Group Limited (GUHG) pays to the Company the interest on the due
dates. There is considered to be no net exposure to either
liquidity risk from repayment or interest risk. Further
quantitative information and sensitivity analysis is not provided
as these risks are considered to be immaterial.
Credit risk
As at 31 March 2019 the Company had lent all its funds to Grand
Union Housing Group Limited and therefore the main risk is that
GUHG will be unable to pay interest or principal when they fall
due. The underlying assets of issuance belong to GUHG through a
security trust arrangement with the Prudential Trustee Company
Limited. The loan to GUHG is made under the terms of an agreement
between the Company and GUHG.
The maximum exposure to credit risk is represented by the total
carrying amount of the Company's assets at the reporting date.
All amounts loaned to other members of the Group are considered
recoverable, and therefore no impairment of these assets is
considered necessary.
Statement of directors' responsibilities
The directors are responsible for preparing the strategic
report, the directors' 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 Generally Accepted Accounting Practice (United
Kingdom Accounting Standards, including FRS 102 "The Financial
Reporting Standard applicable in the UK and Republic of Ireland"
and applicable law). 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, subject to any material departures disclosed and
explained in the financial statements
-- 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.
Going concern
After making all reasonable enquiries, the directors have a
reasonable expectation that Grand Union Group Funding PLC has
adequate resources to continue in operational existence for the
foreseeable future. For this reason they have adopted the going
concern basis in preparing the accounts.
Annual general meeting
The annual general meeting will be held on 30 July 2019.
Matters presented in the strategic report
As permitted by paragraph 1A of Schedule 7 to the Large and
Medium-sized Companies and Groups (Accounts and Reports)
Regulations 2008 certain matters which are required to be disclosed
in the directors' report have been omitted as they are included in
the strategic report. These matters relate to:
-- information regarding the future developments of the Company
-- information regarding directors' indemnity provisions.
Statement as to disclosure of information to auditor
So far as each person who is a director is aware, there is no
relevant audit information of which the Company's auditor is
unaware. Each director has taken all steps that they ought to have
taken in their duty as a director in order to make themselves aware
of any relevant audit information and to establish that the
Company's auditor is aware of that information.
Auditor
UHY Hacker Young were appointed as auditors. It is our intention
to retender the external audit contract during 2019.
Approved by the board on 30 July 2019 and signed on its behalf
by:
John Edwards
Chair
Opinion
We have audited the financial statements of Grand Union Group
Funding Plc for the year ended 31 March 2019 which comprise the
Statement of Comprehensive Income, the Statement of Financial
Position, the Statement of Changes in Equity, and the related notes
to the financial statements, including a summary of significant
accounting policies. The financial reporting framework that has
been applied in their preparation is applicable law and United
Kingdom Accounting Standards, including Financial Reporting
Standard 102 "The Financial Reporting standard applicable in the UK
and Republic of Ireland".
In our opinion the financial statements:
-- give a true and fair view of the state of the company's
affairs as at 31 March 2019 and of the company's result 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.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's Responsibilities for the audit of the financial
statements section of our report. We are independent of the company
in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the
FRC's Ethical Standard as applied to listed public interest
entities, and we have fulfilled our other ethical responsibilities
in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in
relation to which the ISAs (UK) require us to report to you
where:
-- 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.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our 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) we identified, 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.
These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these
matters.
Our assessment of risks of material misstatements
We identified the following risks that we believe have had the
greatest impact on our audit strategy and scope:
Key audit matter How our audit addressed the key
audit matter
Inability to meet obligations Audit procedures:
in respect of Bond deed Our audit procedures included,
During November 2013, Grand Union but were not limited to;
Housing Group issued a GBP115m * confirming that the payments made and interest
listed bond through its special accrued in the year were in line with the underlying
purpose vehicle Grand Union Group bond agreement;
Funding Plc.
The proceeds are loaned to other
group companies to fund the development * that there were no identified issues with regards to
of social housing. the payment of the principle liability in line with
The main risk to the company contractual payment dates; and
is the non-payment of interest
and principal under the bond
documentation to the debt holders * that no other breaches of contractual terms had
of the issued bond. occurred or had been brought to the attention of
management.
Conclusion:
We concluded that on the basis
of our audit procedures, we have
not identified any misstatements
with the interest expense recognised
in the financial statements,
or any issues in relation to
the future expected payments
of the underlying liability.
------------------------------------------------------------------------
Counterparty risk Audit procedures:
Our audit procedures included,
During November 2013, Grand Union but were not limited to;
Housing Group issued a GBP115m * Substantive procedures concerning management
listed bond through its special assessment of going concern, the performance of the
purpose vehicle Grand Union Group social housing activities of other group members and
Funding Plc. the long term assumptions in the financial forecasts;
The proceeds are loaned to other
group members who guarantee the
timely payment of principal and
interest by the company to its Conclusion:
debt holders. On the basis of our audit procedures,
Under the terms of the loan agreement we have not identified any significant
other group members are required issues regarding the ability
to reimburse the company for of the counterparty to continue
all expenditure incurred in respect to support the company in meeting
of the bond. the obligations of the issued
There is the risk that contractual bonds.
terms with other group members
are not adhered to.
------------------------------------------------------------------------
Management override of controls Audit procedures:
We reviewed the nominal ledger
Intrinsically, there is always accounts and journals to identify
a risk of material misstatement any unusual or exceptional transactions.
due to fraud as a result of possible We investigated and tested a
management override of internal sample of items to ensure amounts
controls. paid during the year related
to business expenses and that
transactions were appropriate.
We reviewed and enquired into
the accounting systems, processes,
controls and segregation of duties
that existed in the company.
We also evaluated whether there
was evidence of bias by the directors
that represented a risk of material
misstatement due to fraud.
Conclusion:
We concluded that on the basis
of our audit procedures, we have
not identified any misstatements
in the financial statements or
any risk of material misstatement
due to fraud.
------------------------------------------------------------------------
Revenue Recognition Audit procedures:
We assessed whether interest
Auditing standards require that received was appropriately recognised
revenue recognition is considered and received.
a significant risk unless it Conclusion:
may be appropriately rebutted. We have not found any issues
or errors involving interest
income and are therefore satisfied
we have assurance over income
recognition and its treatment.
----------------------------------------- ------------------------------------------------------------------------
Our application of materiality
We apply the concept of materiality in planning and performing
our audit, in evaluating the effect of misstatements on our audit
and on the financial statements. We define financial statement
materiality as the magnitude by which misstatements, including
omission, could influence the economic decisions taken on the basis
of the financial statements by reasonable users.
We also determine a level of performance materiality which we
use to determine the extent of testing needed to reduce to an
appropriately low level of the probability that the aggregate of
uncorrected and undetected misstatements exceeds materiality for
the financial statements as a whole.
We determine materiality for the financial statements as a whole
to be GBP1,148,000. In determining this we based our assessment on
the gross assets of the company. This benchmark is considered to be
the most appropriate because the assets of the company comprise
almost entirely of the amount loaned to a fellow Group Company. On
the basis of our risk assessment, together with our assessment of
the company's control environment, our judgement is that
performance materiality for the financial statements should be 75%
of materiality, being GBP861,000.
We also determine a lower level of performance materiality for
related party transactions of GBP1,000.
We determined the threshold at which we will communicate
misstatements to the Audit Committee to be GBP57,400. In addition,
we communicate misstatements below that threshold that, in our
view, warrant reporting on qualitative grounds.
An overview of the scope of our audit
The approach we took to the assessed risks described above was
as follows:
-- evaluation of the company's internal control environment,
including documentation of relevant processes and assessment of
design effectiveness of controls pertaining to the Key Audit
Matters discussed above in the Key Audit Matters section above;
-- testing performed on over 99% of the company's total assets
and liabilities and 99% of its total income and expenditure;
and
-- our audit approach was fully substantive in nature.
Other information
The directors are responsible for the other information. The
other information comprises the information included in the annual
report, other than the financial statements and our auditor's
report thereon. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of
assurance conclusion 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 such material inconsistencies or apparent material
misstatements, we are required to determine 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 in this regard.
In this context, we have nothing to report.
Opinions on other matters prescribed by the Companies Act
2006
In our opinion, based on the work undertaken in the course of
the audit:
-- 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; and
-- the strategic report and the directors' report have been
prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company
and its environment obtained in the course of the audit, we have
not identified material misstatements in the strategic report or
the directors' report. We have nothing to report in respect of the
following matters in relation to which 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.
Responsibilities of directors
As explained more fully in the directors' responsibilities
statement set out on page 6, the directors are responsible for the
preparation of the financial statements and for being satisfied
that they give a true and fair view, and for such internal control
as the directors 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.
Auditor's 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
auditor's 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 Financial Reporting
Council's website at: www.frc.org.uk/auditors/audit-assurance. This
description forms part of our auditor's report.
Other matters which we are required to address
We were appointed by Grand Union Group Funding Plc in May 2019.
The audit for the year ended 31 March 2019 is the first audit we
have undertaken. The non-audit services prohibited by the FRC's
Ethical Standard were not provided to the company and we remain
independent of the company in conducting our audit.
Our audit opinion is consistent with the additional report to
the Audit Committee.
Use of our report
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 auditors' 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.
Subarna Banerjee (Senior Statutory Auditor)
For and on behalf of
UHY Hacker Young
Chartered Accountants
Statutory Auditor
Quadrant House
4 Thomas More Square
London, E1W 1YW
31 July 2019
Statement of Comprehensive Income
For the year ended 31 March 2019
2019 2018
Note GBP'000 GBP'000
Interest receivable and similar charges 3 5,358 5,319
Interest payable and similar charges 4 (5,358) (5,319)
Operating profit 5 - -
Profit on ordinary activities before
taxation - -
Taxation - -
Profit for the year - -
Other comprehensive income - -
Total comprehensive income for the
year - -
======= =======
The notes on pages 17 to 23 are an integral part of these
financial statements.
Statement of Financial Position
As at 31 March 2019
Company number 08757850
Note 2019 2018
GBP'000 GBP'000
Current assets
Debtors: amounts falling due within
one year 8 38 38
Debtors: amounts falling due after
one year 8 114,790 114,750
Cash at bank and in hand 12 12
114,840 114,800
Creditors: amounts falling due within
one year 9 - -
Net current assets 114,840 114,800
Creditors: amounts falling due after
one year 9 (114,790) (114,750)
Net assets 50 50
========= =========
Share Capital and reserves
Called up share capital 50 50
Profit and loss account - -
Total equity 50 50
========= =========
These financial statements were approved by the board on 30 July
2019 and signed on its behalf by:
John Edwards Chris Bellamy
Chair Secretary
The notes on pages 17 to 23 are an integral part of these
financial statements.
Statement of Changes in Equity
For the year ended 31 March 2019
Called up share
Note capital Profit and loss account Total equity
GBP'000 GBP'000 GBP'000
At 1 April 2017 50 - 50
Profit for the year - - -
Other comprehensive income - - -
Total comprehensive income - - -
At 31 March 2018 50 - 50
================ ======================== =============
Profit for the year - - -
Other comprehensive income - - -
Total comprehensive income - - -
At 31 March 2019 50 - 50
================ ======================== =============
Reserves
Profit and loss account
The profit and loss account represents cumulative profits and
losses and gains and losses of the Company.
The notes on pages 17 to 23 are an integral part of these
financial statements.
1. Accounting policies
1.1 General information
Grand Union Group Funding PLC (the Company) is a public limited
company incorporated in the United Kingdom. The address of its
registered office and principal place of business is Derwent House,
Cranfield Technology Park, University Way, Cranfield, Bedfordshire,
MK43 0AZ.
These financial statements have been presented in Pound Sterling
as this is the Company's functional currency, being the currency of
the primary economic environment in which the Company operates.
1.2 Basis of preparation
These financial statements have been prepared in accordance with
FRS 102 "The Financial Reporting Standard Applicable in the UK and
Republic of Ireland" (FRS 102) and applicable legislation, as set
out in the Companies Act 2006 and The Large and Medium-sized
Companies and Groups (Accounts and Reports) Regulations 2008. These
financial statements have been prepared under the historical cost
convention.
FRS 102 allows a qualifying entity certain disclosure
exemptions, subject to certain conditions, which have been complied
with, including notification of and no objection to, the use of
exemptions by the Company's shareholders. The Company is included
in the consolidated financial statements of its parent undertaking
Grand Union Housing Group Limited. Note 11 provides details of
where those consolidated financial statements may be obtained
from.
In preparing the financial statements, the Company has taken
advantage of the following exemptions:
-- from disclosing key management personnel compensation, as
required by paragraph 7 of Section 33 Related Party Disclosures
-- from presenting a reconciliation of the number of shares
outstanding at the beginning and end of the year, as required by
paragraph 12 of Section 4 Statement of Financial Position
-- from presenting a statement of cash flows, as required by
Section 7 Statement of Cash Flows.
On the basis that equivalent disclosures are given in the
consolidated accounts of the parent company, the Company has also
taken advantage of the exemption not to provide certain disclosures
as required by Section 11 Basic Financial Instruments and Section
12 Other Financial Instrument Issues.
1.3 Interest receivable
Interest receivable and similar income is recognised as interest
accrued using the effective interest rate method.
1.4 Taxation
The tax expense for the year comprises current and deferred tax.
Tax currently payable, relating to UK corporation tax, is
calculated on the basis of the tax rates and laws that have been
enacted or substantively enacted as at the reporting date.
Deferred tax is recognised on all timing differences that have
originated but not reversed at the reporting date. Transactions or
events that result in an obligation to pay more tax in the future
or a right to pay less tax in the future give rise to a deferred
tax liability or asset. Timing differences are differences between
taxable profits and total comprehensive income as stated in the
financial statements that arise from the inclusion of income and
expenses in tax assessments in years different from those in which
they are recognised in the financial statements.
Deferred tax is measured using the tax rates and laws that have
been enacted or substantively enacted as at the reporting date,
that is expected to apply to the reversal of the timing difference.
The tax expense is recognised in the same component of
comprehensive income or equity as the transaction or other event
that resulted in the tax expense.
Deferred income tax assets are recognised only to the extent
that, on the basis of all available evidence, it is deemed probable
that there will be suitable taxable profits from which the future
reversal of the underlying timing differences can be deducted.
Current and deferred tax assets and liabilities are offset only
when there is a legally enforceable right to set off the amounts
and there is the intention either to settle on a net basis or to
realise the asset and settle the liability simultaneously.
1.5 Financial instruments
Financial assets and liabilities are recognised when the Company
becomes party to the contractual provisions of the financial
instrument. The Company holds only basic financial instruments,
which comprise cash and cash equivalents, debtors and creditors.
The Company has chosen to apply the measurement and recognition
provisions of Section 11 Basic Financial Instruments and Section 12
Other Financial Instrument Issues in full.
Financial assets - classified as basic financial instruments
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held
with banks, other short-term highly liquid investments with
original maturities of three months or less.
Debtors
Debtors are initially recognised at the transaction price,
including any transaction costs, and are subsequently measured at
amortised cost using the effective interest method, less any
provision for impairment.
Amounts that are receivable within one year are measured at the
undiscounted amount expected to be receivable, net of any
impairment.
Where a financial asset constitutes a financing transaction it
is initially and subsequently measured at the present value of the
future payments, discounted at a market rate of interest.
At each reporting date, the Company assesses whether there is
objective evidence that any financial asset may be impaired. A
provision for impairment is established when there is objective
evidence that the Company will not be able to collect all amounts
due according to the original terms of the financial assets. The
amount of the provision is the difference between the asset's
carrying amount and the present value of the estimated future cash
flows. The amount of the provision is recognised immediately in
profit or loss.
Financial liabilities - classified as basic financial
instruments
Creditors
Creditors are initially measured at the transaction price,
including any transaction costs, and are subsequently measured at
amortised cost using the effective interest method.
Amounts that are payable within one year are measured at the
undiscounted amount expected to be payable.
Where a financial liability constitutes a financing transaction
it is initially and subsequently measured at the present value of
the future payments, discounted at a market rate of interest.
2. Critical accounting judgements and key sources of estimation uncertainty
In applying the Company's accounting policies, the directors are
required to make judgements, estimates and assumptions in
determining the carrying amounts of assets and liabilities. The
directors' judgements, estimates and assumptions are based on the
best and most reliable evidence available at the time when the
decisions are made, and are based on historical experience and
other factors that are considered to be applicable. Due to the
inherent subjectivity involved in making such judgements, estimates
and assumptions, the actual results and outcomes may differ.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the year in which the estimate is revised, if the revision affects
only that year, or in the year of the revision and future years, if
the revision affects both current and future years.
2.1 Critical judgements in applying the Company's accounting policies
The critical judgements that the directors have made in the
process of applying the Company's accounting policies and that have
the most significant effect on the amounts recognised in the
financial statements are discussed below.
Assessing whether the Company meets the definition of a
financial institution
The directors have performed an assessment to conclude whether
the Company meets the definition of a financial institution as set
out by FRS 102. Entities that meet this definition are required to
present additional disclosures as required by FRS 102 Section 34
Specialised Activities.
A financial institution includes entities "whose principal
activity is to generate wealth or manage risk through financial
instruments". The principal activity of the Company is deemed by
the directors to be the sourcing of funding directly from the
capital markets to on-lend to other Group members. Funding obtained
is secured on the assets of other group members, and interest
charges are passed to other Group members, hence the Company itself
does not generate profit from the arrangement.
As such, the directors do not regard the Company falls within
the definition of a financial institution; this being on the basis
that the Company's use of financial instruments is not primarily
for the generation of wealth or for the management of risk, but
rather for the purpose of raising finance on behalf of the parent
company.
2.2 Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources
of estimation uncertainty, that have a significant risk of causing
a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are discussed below.
The directors have not identified any such sources of estimation
uncertainty.
3. Interest receivable and similar income
2019 2018
GBP'000 GBP'000
Interest receivable from fellow group subsidiary 5,358 5,319
5,358 5,319
======= =======
4. Interest payable and similar charges
2019 2018
GBP'000 GBP'000
Interest payable to bond holders 5,358 5,319
5,358 5,319
======= =======
5. Operating profit
During the period, the Company recharged interest paid on loans
to Grand Union Housing Group Limited, to whom the proceeds of the
capital market issue were on-lent. The Company's operating costs
are also met by Grand Union Housing Group Limited, this companies
ultimate parent undertaking. Consequently, during the current and
prior year, the Company made neither a profit nor a loss.
Audit and non-audit fees charged by UHY Hacker Young LLP
relating to Grand Union Group Funding PLC are expensed by Grand
Union Housing Group Limited in accordance with the loan agreement,
and disclosed within its consolidated accounts. The proportion of
the audit fee attributable to the Grand Union Group Funding PLC is
GBP13,500 (2018: GBP5,200). All figures are net of VAT.
6. Employee benefits
The Company does not have any employees. All employees acting on
behalf of the Company are employed by Grand Union Housing Group
Limited, whose costs are disclosed in those financial
statements.
7. Directors' emoluments
The directors of Grand Union Group Funding PLC did not receive
any emoluments for their duties as directors of the Company for the
year ended 31 March 2019 (2018: GBPnil). Aileen Evans, Anna Simpson
(resigned 26 October 2018) and Mona Shah (appointed 1 February
2019) are / were directors, employed and remunerated by Grand Union
Housing Group. Full accounting disclosures on directors'
remuneration are therefore included within the Group accounts.
8. Debtors
2019 2018
GBP'000 GBP'000
Amounts due within one year:
Interest due from the parent company - -
Unpaid share capital 38 38
38 38
======= =======
Amounts due after one year:
Loan due from fellow Group subsidiary 114,790 114,750
114,790 114,750
======= =======
The terms of the on-lending agreement underlying the intra-group
debtor mirror those of the Company's bond liability shown within
creditors. Further information in respect of these instruments are
set out in note 9.
9. Creditors
2019 2018
GBP'000 GBP'000
Amounts due within one year:
Interest due to bondholders - -
Amounts due to fellow Group subsidiary - -
- -
======= =======
Amounts falling due in more than one year:
Issue 4/12/43 (Semi annual coupon) 114,790 114,750
114,790 114,750
======= =======
On 4 December 2013 Grand Union Group Funding PLC successfully
issued a GBP115.0m bond at a coupon of 4.625% with repayment after
30 years in 2043. The bond was issued at a discount of 0.578% so
that funds of GBP114.3m were received.
The bond discount and costs of issue are amortised over the term
of the bond, 30 years, with Grand Union Housing Group Limited being
liable to Grand Union Group Funding PLC for both.
The cost of issuing the bond was GBP1.4m leaving a net balance
of GBP112.9m; this was on-lent to Grand Union Housing Group Limited
to enable it to repay some of its existing loans and to fund future
development. The effective interest rate, and actual interest rate,
associated with the listed bond and on-lent funds is 4.7948% and
4.625% respectively. The underlying assets of the issuance belong
to Grand Union Housing Group Limited through a security trust
arrangement with the Prudential Trustee Company Ltd.
10. Called up share capital
Number Number 2019 2018
2019 2018 GBP'000 GBP'000
Issued share capital:
Ordinary shares of GBP1
each 50,000 50,000 50 50
====== ====== ======= =======
Grand Union Housing Group Limited is the registered holder of
50,000 shares of GBP1, of which GBP12,500 has been paid. The shares
were issued on incorporation of the Company on 1 November 2013.
Grand Union Housing Group Limited acquired its 50,000 ordinary
shares on 1 November 2013, and paid GBP12,500. The remaining
balance of unpaid share capital (GBP37,500) is shown within debtors
(note 8).
The holders of the ordinary shares are each entitled to one vote
per share. The shares carry no right to fixed income and are
non-redeemable.
11. Parent undertaking and ultimate controlling party
The immediate and ultimate parent undertaking and controlling
party is Grand Union Housing Group Limited, a registered provider
and a registered society under the Co-operative and Community
Benefit Societies Act 2014 with registration number 7853 and
registered with the Regulator pursuant to sections 111 and 112 of
the Housing and Regeneration Act 2008 (Registration No. 5060).
Copies of Group accounts can be obtained at
www.grandunionhousing.co.uk.
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 USSORKNAKRAR
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September 04, 2019 09:54 ET (13:54 GMT)
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