TIDM85QW
RNS Number : 4607M
Broadgate Financing PLC
23 May 2022
Broadgate Financing PLC
Annual Report and Financial Statements for the year ended 31
March 2022
The Annual Report and Financial Statements for the twelve months
ended 31 March 2022, attached below in accordance with DTR 6.3.5,
have been submitted to the Financial Conduct Authority through the
National Storage Mechanism and will shortly be available for
inspection at
https://www.fca.org.uk/markets/primary-markets/regulatory-disclosures/national-storage-mechanism
The Annual Report and Financial Statements are also available at
https://www.britishland.com/investors/debt/strategic-partnerships/broadgate-financing-plc
Strategic Report for the Year Ended 31 March 2022
The directors present their Strategic Report for the year ended
31 March 2022.
Business review and principal activities
Broadgate Financing PLC ("the company") is a wholly owned
subsidiary of Broadgate Property Holdings Limited and operates as a
constituent of Broadgate REIT Limited group of companies ("the
group"). Broadgate REIT Limited operates as a joint venture between
Euro Bluebell LLP, an affiliate of GIC, Singapore's sovereign
wealth fund, and BL Bluebutton 2014 Limited, a wholly owned
subsidiary of The British Land Company PLC.
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 12,
the company has no turnover and this has remained consistent with
the prior year. Profit before taxation is GBP8,570 compared to a
profit before taxation of
GBP6,325 in the prior year. This is broadly in line with the
prior year.
Dividends of GBPnil (2021: GBPnil) were paid in the year.
The Balance Sheet on page 14 shows that the company's financial
position at the year end has, in net asset terms, stayed consistent
with the prior year.
On 30 June 2021, 100 Liverpool Street was released from the
Broadgate securitisation alongside the redemption of GBP107m of
bonds, incurring a premium of GBP24.9m. These Bonds were redeemed
on the Interest Payment Date falling on 5 July 2021.
Any expected future developments of the company are determined
by the strategy of the group. For more information also see
Broadgate REIT Limited group annual report.
The performance of the group, which includes the company, is
discussed in the group's annual report which does not form part of
this report.
Key performance indicators
The directors measure how the group, of which this company is a
member, is delivering its strategy through the key performance
indicators.
The directors consider the primary measure of performance of the
group to be net asset value.
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. The key risks of this group are the
performance of the properties and tenant default and credit risk of
counterparties for holding cash deposits. These risks are mitigated
by preference for tenants with strong covenants on long leases and
by using highly rated Financial Institutions for placing cash
deposits.
These risks have high visibility to senior executives and are
considered and managed on a continuous basis. Executives use their
knowledge and experience to knowingly accept a measured degree of
market risk.
The group's preference for prime assets and their secure long
term contracted rental income, primarily with upward only rent
review clauses, presents lower risks than many other property
portfolios.
Credit risk is the risk that one party to a financial instrument
will fail to discharge an obligation and cause the other party to
incur a financial loss. In order to manage this risk, management
regularly monitors the credit rating of credit counterparties and
monitors all amounts that are owed to the company.
Liquidity risk is the risk that the entity will encounter
difficulty in raising funds to meet commitments associated with
financial liabilities. This risk is managed through day to day
monitoring of future cash flow requirements to ensure that the
company has enough resources to repay all future liabilities as
they fall due.
The impact of the Covid-19 pandemic is considered to have
decreased in the period with the lifting of national lockdown
restrictions and activities, in some cases, returning to
pre-pandemic levels.
The emergence of the conflict in Ukraine in February 2022 has
led to increased global economic uncertainty with sanctions imposed
upon Russia and heightened political and diplomatic tensions. The
Directors do not consider the conflict at this stage to have had a
material impact on the Company's financial statements owing to the
nature of the Company's UK focused operations and limited exposure
to Ukrainian and Russian markets and businesses. The Directors are
closely monitoring the conflict for any future developments that
may change the risk environment in which the Company operates.
The conflict has impacted inflation and related interest rates,
however, third party debt of the Company is at fixed rates of
interest. An increase in market interest rates has no impact on the
finance costs of the Company.
Approved by the Board on 17 May 2022 and signed on its behalf
by:
H Shah
Director
Directors' Report for the Year Ended 31 March 2022
The directors present their report and the audited financial
statements for the year ended 31 March 2022.
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:
H Shah
D Richards D Lockyer
Directors' responsibilities statement
The directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
regulation.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the directors
have prepared the financial statements in accordance with United
Kingdom Generally Accepted Accounting Practice (United Kingdom
Accounting Standards, comprising FRS 101 "Reduced Disclosure
Framework", and applicable law).
Under company law, 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 the 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 applicable United Kingdom Accounting Standards,
comprising FRS 101 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 safeguarding the assets of the
company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The directors are also 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.
Directors' confirmations
In the case of each director in office at the date the
directors' report is approved:
-- so far as the director is aware, there is no relevant audit
information of which the company's auditors are unaware; and
-- they have taken all the 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.
Environmental matters
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 the safe
disposal of manufacturing waste, recycling and reducing energy
consumption.
In preparing the financial statements, the impact of climate
change has been considered. Whilst noting the Group's commitment to
sustainability, there has not been a material impact on the
financial reporting judgements and estimates arising from our
considerations, which include physical climate and transitional
risk assessments conducted by the Group.
Directors' Report for the Year Ended 31 March 2022
(continued)
Going concern
The Directors have reviewed the company's forecast working
capital and cash flow requirements and in addition to making
enquiries and examining areas which could give risk to financial
exposure. The directors have an expectation that the forecast cash
flows on the secured properties will be sufficient to cover debt
service on the bonds. The company has access to the drawn down term
loan of GBP52,080,000 (2021: GBP92,187,000) to meet certain
shortfalls on bond service, if there was a shortfall from the rent
received. Therefore, the directors have a reasonable expectation
that the company has adequate resources to continue its operations
for at least twelve months after the signing of the these financial
statements and as a result they continue to adopt the going concern
basis in preparing the accounts.
Subsequent Events
Details of significant events since the Balance Sheet date, if
any, are contained in note 16.
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.
Reappointment of independent auditors
The auditors, PricewaterhouseCoopers LLP, have indicated their
willingness to continue in office and a resolution concerning their
re-appointment will be proposed at the next Board Meeting.
Approved by the Board on 17 May 2022 and signed on its behalf
by:
H Shah
Director
Independent auditors' report to the members of Broadgate
Financing PLC
Report on the audit of the financial statements
Opinion
In our opinion, Broadgate Financing PLC's financial
statements:
-- give a true and fair view of the state of the company's
affairs as at 31 March 2022 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 2022; 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 the
directors.
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.
We have provided no non-audit services to the company in the
period under audit.
Our audit approach
Overview
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. 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.
Key audit matters
-- Accounting for loans and borrowings Materiality
-- Overall materiality: GBP11,832,000 (2021: GBP13,369,000) based on 1% of total assets.
-- Performance materiality: GBP8,874,000 (2021: GBP10,027,000).
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.
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. These matters, and any comments we make on the
results of our procedures thereon, 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.
This is not a complete list of all risks identified by our
audit.
Accounting for loans and borrowings is a new key audit matter
this year. Covid-19, which was a key audit matter last year, is no
longer included because of the limited impact it has had on the
company's business and operations. Otherwise, the key audit matters
below are consistent with last year.
Key audit matter How our audit addressed the key
audit matter
Accounting for loans and borrowings
Refer to the Notes to the financial We obtained and reviewed each loan
statements - Note 11 (Loans and contract to understand the terms
borrowings). The company has and conditions.
debt totalling Where debt covenants were identified,
GBP1,154 million (2021: GBP1,308 we re-performed management's calculations
million). to verify compliance with the loan
contracts.
There was a redemption in full We have either agreed the carrying
of the Class A2 4.949% Bonds value of debt to third party confirmations
(principal of GBP77 million), or performed alternative procedures.
as well as a partial redemption We traced payments to bank statements
of the Class A3 4.851% Bonds to confirm repayments made in the
(principal of year on the bonds and term loans.
GBP30 million), totalling a principal From our work on the terms of the
amount of GBP107 million, as debt arrangements in place as at
well as a premium cost for early 31 March 2022, we consider the loans
payment of GBP24.9 million in and borrowings to be accounted for
July 2021. There was a repayment appropriately.
of GBP40 million on the company's
existing facility with Natwest
and RBS.
The only business activity of
the company is to provide funding
to fellow subsidiaries of the
Broadgate group, and therefore
the loans and borrowings are
considered an area of focus.
---------------------------------------------
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.
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 company GBP11,832,000 (2021: GBP13,369,000).
materiality
How we determined 1% of total assets
it
-------------------------------------------------------
Rationale for We believe that total assets are the primary measure
benchmark applied used by the shareholders in assessing the performance
of the entity, and is a generally accepted auditing
benchmark.
-------------------------------------------------------
We use performance materiality to reduce to an appropriately low
level the probability that the aggregate of uncorrected and
undetected misstatements exceeds overall materiality. Specifically,
we use performance materiality in determining the scope of our
audit and the nature and extent of our testing of account balances,
classes of transactions and disclosures, for example in determining
sample sizes. Our performance materiality was 75% (2021: 75%) of
overall materiality, amounting to GBP8,874,000 (2021:
GBP10,027,000) for the company financial statements.
In determining the performance materiality, we considered a
number of factors - the history of misstatements, risk assessment
and aggregation risk and the effectiveness of controls - and
concluded that an amount at the upper end of our normal range was
appropriate.
We agreed with the directors that we would report to them
misstatements identified during our audit above GBP591,600
(2021:
GBP668,450) as well as misstatements below that amount that, in
our view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the directors' assessment of the company's
ability to continue to adopt the going concern basis of accounting
included:
-- Corroborated key assumptions (e.g. liquidity forecasts and
financing arrangements) to underlying documentation and ensured
this was consistent with our audit work in these areas;
-- Understood and assessed the appropriateness of the key
assumptions used both in the base case and in the severe but
plausible downside scenario, including assessing whether we
considered the downside sensitivities to be appropriately
severe;
-- Tested the integrity of the underlying formulas and
calculations within the going concern and cash flow models;
-- Considered the appropriateness of the mitigating actions
available to management in the event of the downside scenario
materialising. Specifically, we focused on whether these actions
are within the company's control and are achievable; and
-- Reviewed the disclosures provided relating to the going
concern basis of preparation and found that these provided an
explanation of the directors' assessment that was consistent with
the evidence we obtained
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
company's ability to continue as a going concern for a period of at
least twelve months from when the financial statements are
authorised for issue.
In auditing the financial statements, we have concluded that the
directors' use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
However, because not all future events or conditions can be
predicted, this conclusion is not a guarantee as to the company's
ability to continue as a going concern.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
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 our work undertaken in the course of the audit, the
Companies Act 2006 requires 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 2022 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 the directors for the financial
statements
As explained more fully in the Directors' responsibilities
statement, 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.
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including
fraud, is detailed below.
Based on our understanding of the company and industry, we
identified that the principal risks of non-compliance with laws and
regulations related to the Companies Act 2006 and the Listing
Rules, and we considered the extent to which non-compliance might
have a material effect on the financial statements. We also
considered those laws and regulations that have a direct impact on
the financial statements such as the Companies Act 2006. We
evaluated management's incentives and opportunities for fraudulent
manipulation of the financial statements (including the risk of
override of controls), and determined that the principal risks were
related to posting inappropriate journal entries to increase
revenue or reduce expenditure. Audit procedures performed by the
engagement team included:
-- Discussions with management and internal audit, including
consideration of known or suspected instances of non-compliance
with laws and regulations and fraud, and review of the reports made
by management and internal audit;
-- Understanding of management's internal controls designed to
prevent and detect irregularities, risk-based monitoring of
customer processes;
-- Assessment of matters reported on the company's
whistleblowing helpline and the results of management's
investigation of such matters;
-- Reviewing the company's litigation register in so far as it
related to non-compliance with laws and regulations and fraud;
-- Reviewing relevant meeting minutes; and
-- Designing audit procedures to incorporate unpredictability
around the nature, timing or extent of our testing of interest
income on bank deposits, a balance which would otherwise be
immaterial.
There are inherent limitations in the audit procedures described
above. We are less likely to become aware of instances of
non-compliance with laws and regulations that are not closely
related to events and transactions reflected in the financial
statements. Also, 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.
Our audit testing might include testing complete populations of
certain transactions and balances, possibly using data auditing
techniques. However, it typically involves selecting a limited
number of items for testing, rather than testing complete
populations. We will often seek to target particular items for
testing based on their size or risk characteristics. In other
cases, we will use audit sampling to enable us to draw a conclusion
about the population from which the sample is selected.
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. In our engagement letter, we also
agreed to describe our audit approach, including communicating key
audit matters.
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 obtained 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 the directors, we were appointed
by the members on 31 March 2015 to audit the financial statements
for the year ended 31 March 2015 and subsequent financial periods.
The period of total uninterrupted engagement is 8 years, covering
the years ended 31 March 2015 to 31 March 2022.
Other matter
In due course, as required by the Financial Conduct Authority
Disclosure Guidance and Transparency Rule 4.1.14R, these financial
statements will form part of the ESEF-prepared annual financial
report filed on the National Storage Mechanism of the Financial
Conduct Authority in accordance with the ESEF Regulatory Technical
Standard ('ESEF RTS'). This auditors' report provides no assurance
over whether the annual financial report will be prepared using the
single electronic format specified in the ESEF RTS.
Sandra Dowling (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP Chartered
Accountants and Statutory Auditors London
17 May 2022
Profit and Loss Account for the Year Ended 31 March 2022
Note 2022 2021
GBP GBP
Turnover - -
Administrative expenses (1,000) (1,000)
--------------------- ---------------------
Operating loss (1,000) (1,000)
Loss on ordinary activities before
interest and taxation (1,000) (1,000)
Interest receivable and similar income 3 80,997,965 60,294,016
Interest payable and similar expenses 4 (80,988,395) (60,286,691)
--------------------- ---------------------
Profit on ordinary activities before
taxation 8,570 6,325
Tax on profit on ordinary activities 7 (1,628) (1,202)
--------------------- ---------------------
Profit for the year 6,942 5,123
===================== =====================
Turnover and results were derived from continuing operations
within the United Kingdom. The company has only one class of
business, that of to provide funding to fellow subsidiaries within
the group.
Statement of Comprehensive Income for the Year Ended 31 March
2022
2022 2021
GBP GBP
Profit for the year 6,942 5,123
------ ------
Total comprehensive income for the year 6,942 5,123
====== ======
(Registration number: 05316365)
Balance Sheet as at 31 March 2022
Note 31 March 31 March
2022 2021
GBP GBP
Current assets
Debtors due within one year 8 28,288,111 34,382,974
Cash at bank and in hand 9 56,037,031 97,578,027
Debtors due after more than one year 8 1,098,840,136 1,204,907,390
---------------- ----------------
1,183,165,278 1,336,868,391
Creditors due within one year 10 (31,806,469) (39,342,320)
---------------- ----------------
Total assets less current liabilities 1,151,358,809 1,297,526,071
Loans and borrowings 11 (1,150,920,186) (1,297,094,390)
---------------- ----------------
Net assets 438,623 431,681
================ ================
Capital and reserves
Share capital 12 12,500 12,500
Profit and loss account 426,123 419,181
---------------- ----------------
Total shareholders' funds 438,623 431,681
================ ================
Approved by the Board on 17 May 2022 and signed on its behalf
by:
H Shah
Director
Statement of Changes in Equity for the Year Ended 31 March
2022
Share capital Profit and Total
GBP loss GBP
Account
GBP
Balance at 1 April 2020 12,500 414,058 426,558
Profit for the year - 5,123 5,123
-------------- ----------- --------
Total comprehensive income for
the year - 5,123 431,681
-------------- ----------- --------
Balance at 31 March 2021 12,500 419,181 431,681
============== =========== ========
At 1 April 2021 12,500 419,181 431,681
Profit for the year - 6,942 6,942
-------------- ----------- --------
Total comprehensive income for
the year - 6,942 6,942
-------------- ----------- --------
Balance at 31 March 2022 12,500 426,123 438,623
============== =========== ========
Notes to the Financial Statements for the Year Ended 31 March
2022
1 General information
The company is a public limited company limited by share capital
and 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.
The directors do not consider there to be any significant
accounting judgements or key sources of estimation uncertainty in
the preparation of these financial statements.
Basis of preparation
These financial statements were prepared in accordance with
Financial Reporting Standard 101 Reduced Disclosure Framework ("FRS
101").
The financial statements are prepared in accordance with
international accounting standards in conformity with the
requirements of the Companies Act 2006. Instances in which
advantage of the FRS 101 disclosure exemptions have been taken are
set out below.
The financial statements have been prepared under the historical
cost convention, modified to include the revaluation of derivative
financial instruments. Historical cost is generally based on the
fair value of the consideration given in exchange for the
assets.
These financial statements are separate financial
statements.
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;
2 Accounting policies (continued)
(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 financial statements of Broadgate REIT Limited.
The group financial statements of Broadgate REIT Limited are
available to the public and can be obtained as set out in note
17.
Going concern
The Directors have reviewed the company's forecast working
capital and cash flow requirements and in addition to making
enquiries and examining areas which could give risk to financial
exposure. The directors have an expectation that the forecast cash
flows on the secured properties will be sufficient to cover debt
service on the bonds. The company has access to the drawn down term
loan of GBP52,080,000 (2021: GBP92,187,000) to meet certain
shortfalls on bond service, if there was a shortfall from the rent
received. Therefore, the directors have a reasonable expectation
that the company has adequate resources to continue its operations
for at least twelve months after the signing of the these financial
statements and as a result they continue to adopt the going concern
basis in preparing the accounts.
Taxation
Current tax is based on taxable profit for the year and is
calculated using tax rates that have been enacted or substantively
enacted. 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 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.
Financial assets and liabilities
Trade debtors and creditors are initially recognised at fair
value and subsequently measured at amortised cost and discounted as
appropriate. On initial recognition the company calculates the
expected credit loss for debtors based on lifetime expected credit
losses under the IFRS 9 simplified approach.
Loans and receivables classified as amortised cost are measured
using the effective interest method, less any impairment. Interest
is recognised by applying the effective interest rate.
Debt instruments are stated at their net proceeds on issue.
Finance charges including premia payable on settlement or
redemption and direct issue costs are spread over the period to
redemption, using the effective interest method. Exceptional
finance charges incurred due to early redemption (including premia)
are recognised in the Income Statement when they occur.
Cash equivalents are limited to instruments with a maturity of
less than three months.
Impairment of financial assets
The company assesses at the end of each reporting period whether
there is objective evidence that a financial asset or group of
financial assets is impaired. A financial asset or a group of
financial assets is impaired and impairment losses are incurred
only if there is objective evidence of impairment as a result of
one or more events that occurred after the initial recognition of
the asset (a 'loss event') and that loss event (or events) has an
impact on the estimated future cash flows of the financial asset or
group of financial assets that can be reliably estimated.
2 Accounting policies (continued) Interest payable and receivable
Interest payable and receivable is recognised as incurred under
the accruals concept. Interest payable includes financing charges
which are spread over the period to redemption, using the effective
interest method. Commitment fees on non-utilised facilities are
also included within interest payable.
Premiums payable and receivable on early redemption are
recognised as finance charges and income when incurred.
3 Interest receivable and similar income
2022 2021
GBP GBP
Interest receivable on amounts due from
related parties 56,067,650 60,085,780
Premium income on early repayment due from
related parties 24,871,910 -
Interest income on bank deposits 58,405 208,236
------------ ------------
80,997,965 60,294,016
------------ ------------
See note 11 for information on the increase in Interest
receivable on amounts due from related parties.
4 Interest payable and similar expenses
2022 2021
GBP GBP
Interest payable on bonds and borrowings 56,116,413 60,278,226
Premium costs on early repayment 24,871,860 -
Interest payable on amounts due to group
companies 122 8,465
------------- -------------
80,988,395 60,286,691
============= =============
See note 11 for information on the Premium costs on early
repayment.
5 Auditors' remuneration
A notional charge of GBP15,000 (2021: GBP5,377) is deemed
payable to PricewaterhouseCoopers LLP in respect of the audit of
the financial statements for the year ended 31 March 2022.
Fees of GBP8,500 (2021: GBP7,027) were paid to
PricewaterhouseCoopers LLP in relation to audit related assurance
services.
Actual amounts payable to PricewaterhouseCoopers LLP are paid by
Bluebutton Properties UK Limited. Bluebutton Properties UK Limited
is a holding company within the group.
Non-audit fees for the period were nil (2021: nil.)
6 Staff costs
No director (2021: nil) 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.
Average number of employees, excluding directors, of the company
during the year was nil (2021: nil).
7 Taxation
Tax charged in the profit and loss account
2022 2021
GBP GBP
Current taxation
---------- ----------
UK corporation tax 1,628 1,202
========== ==========
Tax reconciliation
Profit on ordinary activities 8,570 6,325
Tax on profit on ordinary activities at UK
corporation tax rate of 19% (2021 : 19%) 1,628 1,202
---------- ----------
Income tax expense (1,628) (1,202)
========== ==========
8 Debtors
31 March 31 March
2022 2021
GBP GBP
Debtors due within one year
Amounts due from related parties 15,363,873 20,458,721
Accrued income 12,911,052 13,921,998
Prepayments - 367
Other debtors 11,338 40
Corporation tax asset 1,848 1,848
-------------- --------------
28,288,111 34,382,974
============== ==============
Debtors due after more than one year
Amounts due from related parties -
Long term loans 1,098,840,136 1,204,907,390
-------------- --------------
1,098,840,136 1,204,907,390
============== ==============
The intercompany loans to Broadgate Funding (2005) Ltd are being
repaid from April 2005 to July 2033, with the average interest rate
of these intercompany loans being 4.93% per annum (31 March 2021
4.93%). As at 31 March 2022, the intercompany loans to Broadgate
Funding (2005) Ltd were GBP1,102m (31 March 2021: GBP1,215m). There
is no interest charged on the remainder of amounts owed by related
parties.
9 Cash at bank and in hand
31 March 31 March
2022 2021
GBP GBP
Cash at bank 131,031 131,027
Short-term deposits 55,906,000 97,447,000
------------ ------------
56,037,031 97,578,027
------------ ------------
Short term deposits mature within 3 months and therefore meet
the definition of cash and cash equivalents.
10 Creditors due within one year
31 March 31 March
2022 2021
GBP GBP
Accruals 12,994,986 14,006,824
Amounts due to related parties 15,927,798 14,740,349
Debenture Loans 2,866,380 10,589,350
Other creditors 17,305 5,797
------------- -------------
31,806,469 39,342,320
============= =============
Amounts due to related parties relate to amounts owed to group
companies and are repayable on demand. There is no interest charged
on these balances.
11 Loans and borrowings
2022 2021
GBP GBP
Loans
Loans due 1 to 2 years 2,866,810 11,076,579
Loans due 2 to 5 years 129,050,000 113,050,137
Loans due after 5 years 1,019,003,376 1,172,967,674
--------------- ---------------
1,150,920,186 1,297,094,390
--------------- ---------------
Amounts due after five years includes GBP52,080,000 (2021:
GBP92,187,000) in relation to the non-current revolving liquidity
facility with NatWest Markets PLC. The cash received is held on
deposit.
2022 2021
GBP GBP
Borrowings repayment analysis
Borrowing repayments due within one year 2,866,380 10,589,350
Borrowing repayments due within 1-2 years 2,866,810 11,058,270
Borrowing repayments due within 2-5 years 129,050,000 112,927,160
-------------- --------------
134,783,190 134,574,780
After 5 years 1,019,003,376 1,172,967,674
Total borrowings 1,153,786,566 1,307,542,454
-------------- --------------
Gross debt 1,153,786,566 1,307,542,454
============== ==============
2022 2021
GBP GBP
Borrowings repayment analysis
Class A2 4.949% bonds due 2031 - 79,633,890
Class A3 4.851% bonds due 2033 143,900,050 175,000,000
Class A4 4.821% bonds due 2036 400,000,000 400,000,000
Class B 4.999% bonds due 2033 365,000,000 365,000,000
Class C2 5.098% bonds due 2035 192,783,190 195,650,000
---------------- ----------------
Total secured bond borrowings 1,101,683,240 1,215,283,890
Other borrowings
Term loan 52,080,000 92,187,000
---------------- ----------------
Total secured borrowings 1,153,763,240 1,307,470,890
================ ================
At 31 March 2022, 100% (2021: 100%) of the bonds were fixed. The
bonds amortise from 2005 and are expected to be repaid by 2033.
Legal repayment is required by 2036. The term loan matures on the
date when all the bonds have been redeemed in full. The bonds are
secured on properties of the group valued at GBP3,413m (2021:
GBP4,086m) and cash of GBPnil (2021: GBPnil).
On 30 June 2021, 100 Liverpool Street was released from the
Broadgate securitisation alongside the redemption of GBP107m of
bonds.
A notice was issued to Bondholders on 3 June 2021 for the
redemption in full of the Class A2 4.949% Bonds, as well as a
partial redemption of the Class A3 4.851% Bonds, totalling GBP107m
principal amount of bonds and a premium of GBP24.9m (see note 4).
These Bonds were redeemed on the Interest Payment Date falling on 5
July 2021.
At 31 March 2022 the company was financed by GBP1,102m bonds
(2021: GBP1,215m). The weighted average interest rate of the bonds
is 4.93% (2021: 4.93%). The weighted average maturity of the bonds
is 8.9 years (2021: 9.5 years).
The fair values of the bonds have been established by obtaining
quoted market prices from brokers.
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:
2022 2021
GBP GBP
Secured bonds at fair value 1,265,148,835 1,454,352,802
================ ================
Risk Management
Capital risk management:
The company finances its operations by a mixture of equity and
public debt issues to support the property strategy of the
group.
The approach adopted has been to engage in debt financing with
long term maturity dates and as such the bonds issued are due from
2005 and are expected to be repaid by 2033. Legal repayment is
required by 2036. Including debt amortisation 88% (2021: 89%) of
the total company borrowings is due for payment after 5 years.
The company aims to ensure that potential debt providers
understand the business and a transparent approach is adopted with
lenders so they can understand the level of their exposure within
the overall context of the group.
Details of bond covenants are outlined in the bonds publicly
available Offering Circular.
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.
12 Share capital
Allotted, called up and
fully paid shares
31 March 31 March
2022 2021
No. GBP No. GBP
Ordinary shares of GBP0.25
each 50,000 12,500 50,000 12,500
============ ============== ======= ============
13 Capital commitments
The total amount contracted for but not provided in the
financial statements was GBPnil (2021: GBPnil).
14 Contingent liabilities
The company has no contingent liabilities as at 31 March 2022 of
GBPnil (2021: GBPnil).
15 Related party transactions
The company has taken advantage of the exemption granted to
wholly owned subsidiaries not to disclose transactions with group
companies under the provisions of FRS 101.
16 Subsequent events
There have been no subsequent events since 31 March 2022.
17 Parent and ultimate parent undertaking
The immediate parent company is Broadgate Property Holdings
Limited.
The ultimate parent company is Broadgate REIT Limited. Broadgate
REIT Limited operates as a joint venture between Euro Bluebell LLP,
an affiliate of GIC, Singapore's sovereign wealth fund, and BL
Bluebutton 2014 Limited, a wholly owned subsidiary of The British
Land Company PLC.
Broadgate REIT Limited is the largest group for which group
accounts are available and which include the company. Bluebutton
Properties UK Limited is the smallest group for which group
accounts are available and which include this company. The ultimate
holding company and controlling party is Broadgate REIT Limited.
Group accounts for Broadgate REIT Limited are available on request
from British Land, York House, 45 Seymour Street, London, W1H
7LX.
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END
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