TIDMBC84
RNS Number : 3755X
Trafford Centre Finance Ld
28 August 2015
THE TRAFFORD CENTRE FINANCE LIMITED
INTERIM REPORT
FOR THE SIX MONTHS ENDED 30 JUNE 2015
Company number 91678 (Cayman Islands)
OPERATING AND FINANCIAL REVIEW
FOR THE SIX MONTHS ENDED 30 JUNE 2015
The Trafford Centre Finance Limited ("the company") is
incorporated and registered in the Cayman Islands. The company's
registered office is 89 Nexus Way, Camana Bay, Grand Cayman, Cayman
Islands KY1-9007.
The principal activity of the company is the provision of
financing to The Trafford Centre Limited which owns the intu
Trafford Centre shopping centre. This is funded by the issue of
loan notes. The company receives interest on the provision of
financing to The Trafford Centre Limited at rates equal to those
paid on its external debt plus additional interest of 0.01% per
annum. Any financing related fees incurred by the company are also
charged on to The Trafford Centre Limited.
The company's results and financial position for the period
ended 30 June 2015 are set out in full in the income statement,
balance sheet, statement of changes in equity, statement of cash
flows and the notes to the condensed interim financial
statements.
The company's profit before taxation for the six months to 30
June 2015 was GBP20,000 (year ended 31 December 2014 GBP33,000, six
months ended 30 June 2014 GBP12,000) with net assets increasing to
GBP845,000 (as at 31 December 2014 GBP825,000, as at 30 June 2014
GBP804,000).
Given the straightforward nature of the business, the company's
directors are of the opinion that analysis using KPIs is not
necessary for an understanding of the development, performance or
position of the business. The directors expect that the present
level of activity will continue for the foreseeable future.
The directors who held office during the period and until the
date of this report are given below:
Raulin Amy
Michael Butterworth
David Fischel
Matthew Roberts
OPERATING AND FINANCIAL REVIEW
FOR THE SIX MONTHS ENDED 30 JUNE 2015
KEY RISKS AND UNCERTAINTIES
As the company's principal activity is to provide financing to
The Trafford Centre Limited, the company's key risks and
uncertainties are those faced by The Trafford Centre Limited to the
extent that they impact that entity's ability to meet its
obligations to the company including those related to the terms of
the company's borrowings which are secured on the assets of The
Trafford Centre Limited. The key risks and uncertainties facing the
company are set out below:
Risk & Mitigation Change 2015 commentary
Impact
Property Likelihood and severity of
market * Prime asset - potential impact unchanged
Macro during 2015 with continued
environment strong demand for assets and
weakness * Active management of tenant mix stable rental levels.
could * Valuations stable with a small increase in the value
undermine at intu Trafford Centre in the period
rental * Regular monitoring of tenant strength and diversity
income
levels * Tenant administrations reduced compared to 2014
and * Lobbying on key policies, for example business rate
property s
values, * Digital investment to improve relevance as shopping
reducing habits change
return on
investment
and
covenant
headroom
------------------------------------------------------------- ------- -----------------------------------------------------------
Financing Likelihood and severity of
The * Cash flow forecasting - potential impact is unchanged
Trafford
Centre
Limited * Long term nature of debt profile
fails to
generate
sufficient
returns to
enable it
to
meet its
obligations
to The
Trafford
Centre
Finance
Limited
------------------------------------------------------------- ------- -----------------------------------------------------------
OPERATING AND FINANCIAL REVIEW
FOR THE SIX MONTHS ENDED 30 JUNE 2015
KEY RISKS AND UNCERTAINTIES (CONTINUED)
Risk & Impact Mitigation Change 2015 commentary
Operations Likelihood and severity of
Accident, system * Strong business process and procedures, supported by - potential impact have not
failure or regular training and exercises, designed to adapt and changed significantly during
external factors respond to changes in risk levels 2015
could threaten * Ongoing cyber security project with key focus being
the safe and proactive monitoring of technical infrastructure to
secure environment * Annual audits of operational standards carried out mitigate cyber threats
provided for internally and by external consultants
shoppers and
retailers, * Work continues towards achieving ISO 9001, 14001,
leading to * Culture of visitor safety 18001 and 55001 accreditation
financial and/or
reputational
loss * Crisis management and business continuity plans in * intu Retail Services has continued to deliver
place and tested, including cyber security threats improvements in systems and processes, including
investment in facilities management and contractor
tracking systems
* Retailer liaison and briefings
* intu Trafford Centre and intu Retail Services awarded
* Appropriate levels of insurance Investors in People accreditation
* Staff succession planning and development in place to
ensure continued delivery of World Class Service
* Strong relationships and frequent liaison with Police
,
NaCTSO and other agencies
--------------------------------------------------------------- ------- -------------------------------------------------------------------------
Brand Likelihood and severity of
The * Intellectual property protection potential impact have increased
integrity during 2015 as the brand has
of the continued to gain momentum
brand * Strong guidelines for use of brand with a higher UK profile
is damaged * Increased media interest in intu and our opinions
or the
commercial * Strong underlying operational controls and crisis
benefits management procedures * Increase in nationally promoted campaigns
of
the brand
are * Ongoing training programme and rewards and
not recognition schemes designed to embed brand values
realised and culture throughout the organisation
* Traditional and digital media monitoring and analysis
* Tell intu customer feedback programme
--------------------------------------------------------------- ------- -------------------------------------------------------------------------
DIRECTORS' RESPONSIBILITY STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2015
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The directors are responsible for preparing the interim report
and condensed set of interim financial statements (interim
financial statements), in accordance with applicable law and
regulations. The directors confirm that, to the best of their
knowledge:
-- the interim financial statements have been prepared in
accordance with IAS 34 Interim Financial Reporting, as adopted by
the European Union; and
-- the interim report includes a fair review of both the
information required by Sections DTR 4.2.7R, and that which is
subject of DTR 4.2.8R of the Disclosure and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
The Operating and Financial Review refers to important events
which have taken place in the period.
The principal risks and uncertainties facing the business are
referred to in the Operating and Financial Review.
Related party transactions are set out in note 11 of the interim
financial statements.
A list of current directors is provided in the Operating and
Financial Review.
On behalf of the Board
David Fischel
Director
Matthew Roberts
Director
27 August 2015
INDEPENDENT REVIEW REPORT TO THE DIRECTORS OF
THE TRAFFORD CENTRE FINANCE LIMITED
Report on the condensed interim financial statements
Our conclusion
We have reviewed the condensed interim financial statements,
defined below, in the interim report of The Trafford Centre Finance
Limited for the six months ended 30 June 2015. Based on our review,
nothing has come to our attention that causes us to believe that
the condensed interim financial statements are not prepared, in all
material respects, in accordance with International Accounting
Standard 34 as adopted by the European Union and the Disclosure and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
This conclusion is to be read in the context of what we say in
the remainder of this report.
What we have reviewed
The condensed interim financial statements, which are prepared
by The Trafford Centre Finance Limited, comprise:
-- the balance sheet as at 30 June 2015;
-- the income statement for the period then ended;
-- the statement of cash flows for the period then ended;
-- the statement of changes in equity for the period then ended; and
-- the explanatory notes 1 to 11 to the condensed interim financial statements.
As disclosed in note 1, the financial reporting framework that
has been applied in the preparation of the full annual financial
statements of the company is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the European
Union.
The condensed interim financial statements included in the
interim report have been prepared in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', as adopted
by the European Union and the Disclosure and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
What a review of condensed financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK and
Ireland) and, consequently, does not enable us to obtain assurance
that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
We have read the other information contained in the interim
report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed interim financial statements.
Other matter
The accompanying financial statements include comparative
information as required by International Accounting Standard 34 as
adopted by the European Union. The comparative information as at,
and for the period ended, 30 June 2014 has not been audited or
reviewed.
INDEPENDENT REVIEW REPORT TO THE DIRECTORS OF
THE TRAFFORD CENTRE FINANCE LIMITED
Responsibilities for the condensed interim financial statements
and the review
Our responsibilities and those of the directors
The interim report, including the condensed interim financial
statements, is the responsibility of, and has been approved by, the
directors. The directors are responsible for preparing the interim
report in accordance with the Disclosure and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
Our responsibility is to express to the company a conclusion on
the condensed interim financial statements in the interim report
based on our review. This report, including the conclusion, has
been prepared for and only for the company for the purpose of
complying with the Disclosure and Transparency Rules of the
Financial Conduct Authority and for no other purpose. We do not, in
giving this conclusion, 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.
PricewaterhouseCoopers LLP
Chartered Accountants
London
27 August 2015
Notes:
(a) The maintenance and integrity of the Intu Properties plc
group website, on which this interim report will be presented, is
the responsibility of the directors; the work carried out by the
auditors does not involve consideration of these matters and,
accordingly, the auditors accept no responsibility for any changes
that may have occurred to the financial statements since they were
initially presented on the website.
(b) Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
INCOME STATEMENT (unaudited)
FOR THE SIX MONTHS ENDED 30 JUNE 2015
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2015 2014 2014
Notes GBP000 GBP000 GBP000
Administration expenses (7) (1) (6)
----------- ----------- ------------
Operating loss (7) (1) (6)
Finance income 4 24,343 23,487 47,816
Finance costs 4 (24,316) (23,474) (47,777)
Change in fair value of financial 4 - - -
instruments
----------- ----------- ------------
Net finance income 27 13 39
----------- ----------- ------------
Profit before tax 20 12 33
Taxation - - -
----------- ----------- ------------
Profit for the year 20 12 33
=========== =========== ============
Other than the items in the income statement above, there are no
other items of comprehensive income and accordingly a separate
statement of comprehensive income has not been prepared.
BALANCE SHEET (unaudited)
AS AT 30 JUNE 2015
As at As at As at
30 June 31 December 30 June
2015 2014 2014
Notes GBP000 GBP000 GBP000
Non-current assets
Trade and other receivables 5 776,656 783,142 790,576
Derivative financial instruments 79,987 91,054 47,918
---------- ------------ ----------
856,643 874,196 838,494
Current assets
Trade and other receivables 5 23,028 24,959 25,694
Derivative financial instruments 1,465 1,488 1,471
Cash and cash equivalents 265 222 177
---------- ------------ ----------
24,758 26,669 27,342
Total assets 881,401 900,865 865,836
---------- ------------ ----------
Current liabilities
Borrowings 7 (13,875) (15,609) (16,190)
Trade and other payables 6 (8,573) (8,747) (8,877)
Derivative financial instruments (1,465) (1,488) (1,471)
---------- ------------ ----------
(25,844) (26,538)
(23,913)
Non-current liabilities
Borrowings 7 (776,656) (783,142) (790,576)
Derivative financial instruments (79,987) (91,054) (47,918)
---------- ------------ ----------
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August 28, 2015 04:30 ET (08:30 GMT)
(856,643) (874,196) (838,494)
Total liabilities (880,556) (900,040) (865,032)
---------- ------------ ----------
Net assets 845 825 804
========== ============ ==========
Equity
Share capital 8 - - -
Retained earnings 845 825 804
---------- ------------ ----------
Total equity 845 825 804
========== ============ ==========
STATEMENT OF CHANGES IN EQUITY (unaudited)
FOR THE SIX MONTHS ENDED 30 JUNE 2015
Share Retained Total
capital earnings equity
GBP000 GBP000 GBP000
At 1 January 2014 - 792 792
---------- --------- -------
Profit for the period - 12 12
---------- --------- -------
Total comprehensive income for
the period - 12 12
---------- --------- -------
At 30 June 2014 - 804 804
========== ========= =======
At 1 July 2014 - 804 804
---------- --------- -------
Profit for the period - 21 21
---------- --------- -------
Total comprehensive income for
the period - 21 21
---------- --------- -------
At 31 December 2014 - 825 825
========== ========= =======
At 1 January 2015 - 825 825
---------- --------- -------
Profit for the period - 20 20
---------- --------- -------
Total comprehensive income for
the period - 20 20
---------- --------- -------
At 30 June 2015 - 845 845
========== ========= =======
STATEMENT OF CASH FLOWS (unaudited)
FOR THE SIX MONTHS ENDED 30 JUNE 2015
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2015 2014 2014
Notes GBP000 GBP000 GBP000
Cash generated from operations 10 3 20 46
Interest received 24,071 21,845 46,286
Interest paid (24,031) (21,827) (46,249)
----------- ----------- ------------
Cash flows from operating activities 43 38 83
----------- ----------- ------------
Amounts owed by group undertaking
-paid - (106,616) (106,616)
Amounts owed by group undertaking
-received 8,666 8,055 16,456
----------- ----------- ------------
Cash flows from investing activities 8,666 (98,561) (90,160)
Borrowings drawn - 106,616 106,616
Borrowings repaid (8,666) (8,055) (16,456)
Cash flows from financing activities (8,666) 98,561 90,160
----------- ----------- ------------
Net increase in cash and cash
equivalents 43 38 83
Cash and cash equivalents at beginning
of
period 222 139 139
----------- ----------- ------------
Cash and cash equivalents at end
of period 265 177 222
=========== =========== ============
NOTES (unaudited)
FOR THE SIX MONTHS ENDED 30 JUNE 2015
1. Basis of preparation
The condensed set of interim financial statements (interim
financial statements) for the six months ended 30 June 2015 are
unaudited. The interim financial statements have been prepared in
accordance with the Disclosure and Transparency Rules of the
Financial Conduct Authority and with IAS 34 as adopted by the
European Union.
The comparative information presented for the year ended 31
December 2014 is not the company's financial statements for that
year. Those financial statements have been reported on by the
company's auditors. The auditors' opinion on those financial
statements was unqualified and did not contain an emphasis of
matter paragraph. The comparative information presented for the six
months ended 30 June 2014 has not been subject to independent
review or audit.
The interim financial statements should be read in conjunction
with the company's financial statements for the year ended 31
December 2014 which have been prepared in accordance with
International Financial Reporting Standards (IFRSs) as adopted by
the European Union.
Use of estimates and assumptions
The preparation of interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amount of assets and liabilities, income and expense. Actual
results may differ from these estimates. In preparing the interim
financial statements, the areas of significant judgement made by
management in applying the company accounting policies and the key
sources of estimation uncertainty were the same as those applied to
the financial statements as at and for the year ended 31 December
2014.
Going concern
In assessing whether the going concern basis of preparation is
appropriate to adopt, the directors considered a number of factors
including financial projections of the company and the level of
financial support that may be available to the company by its
ultimate parent, Intu Properties plc. In addition investment
property held by The Trafford Centre Limited, a fellow subsidiary
of Intu Properties plc, acts as security for the financial
instruments which are held in The Trafford Centre Finance Limited.
The ability of the company to meet the obligations of these
financial instruments is dependent upon the performance of The
Trafford Centre Limited and its ability to meet its obligations to
the company. In concluding that the going concern basis of
preparation is appropriate the directors have considered the cash
flow forecasts of The Trafford Centre Limited in combination with
the cash flow forecasts of the company. Based on this review the
directors have concluded that it is appropriate to continue to
adopt the going concern basis of accounting in preparing the
entity's interim financial statements.
NOTES (unaudited) (continued)
FOR THE SIX MONTHS ENDED 30 JUNE 2015
2. Accounting policies
The accounting policies applied are consistent with those of the
company's statutory financial statements for the year ended 31
December 2014 as set out on pages 11 to 13 of that Report and
Financial Statements except for amendments arising from the Annual
Improvements Cycle to IFRSs 2011-2013 which are effective for the
first time for the company's 31 December 2015 year end. These have
been applied in preparing these interim financial statements to the
extent they are relevant to the preparation of interim financial
information but have not resulted in any material changes to the
information presented.
Taxes on income in interim periods are accrued using tax rates
expected to be applicable to total annual earnings.
3. Seasonality and cyclicality
There is no material seasonality or cyclicality impacting
interim financial reporting.
4. Net finance costs
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2015 2014 2014
GBP000 GBP000 GBP000
Finance income
On amounts due from group undertaking 24,343 23,487 47,812
Other interest - - 4
---------- ---------- ------------
24,343 23,487 47,816
========== ========== ============
Finance costs
On borrowings (24,303) (23,474) (47,777)
Other interest (13) - -
(MORE TO FOLLOW) Dow Jones Newswires
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---------- ---------- ------------
(24,309) (23,474) (47,777)
========== ========== ============
Change in fair value of financial
instruments
On external derivative financial
instruments (11,067) 8,240 (51,375)
On derivative financial instruments
with
The Trafford Centre Limited 11,067 (8,240) 51,375
---------- ---------- ------------
- - -
========== ========== ============
NOTES (unaudited) (continued)
FOR THE SIX MONTHS ENDED 30 JUNE 2015
5. Trade and other receivables
As at As at As at
30 June 31 December 30 June
2015 2014 2014
GBP000 GBP000 GBP000
Current
Amounts owed by group undertaking 14,703 16,496 17,067
Less: finance costs (908) (887) (877)
------- ----------- -------
Net loan amount 13,875 15,609 16,190
Accrued income and other amounts
due
from group undertaking 8,761 8,925 9,355
Prepayments 392 417 148
Other debtors - 8 1
------- ----------- -------
23,028 24,959 25,694
======= =========== =======
As at As at As at
30 June 31 December 30 June
2015 2014 2014
GBP000 GBP000 GBP000
Non-current
Amounts owed by group undertaking 789,787 796,175 804,571
Less: finance costs (13,131) (13,033) (13,995)
--------- ----------- ---------
Net loan amount 776,656 783,142 790,576
========= =========== =========
The amounts owed by group undertaking relate to an intercompany
loan with The Trafford Centre Limited where the company's
borrowings with external parties are passed to The Trafford Centre
Limited. The amounts owed are unsecured and the repayment profile
matches the maturity profile of the company's borrowings as The
Trafford Centre Limited is required to provide funds to the company
in order for it to meet its external funds obligations. The
recoverability of these balances has been reviewed and as a result
no allowance for doubtful debts is considered to be required. There
have been no impairments on receivables or amounts written off in
the year.
Interest is due on the intercompany loans at rates equal to
those paid on the external debt plus additional interest of 0.01%
per annum. Interest is also due to cover any fees and costs
incurred by the company.
NOTES (unaudited) (continued)
FOR THE SIX MONTHS ENDED 30 JUNE 2015
6. Trade and other payables
As at As at As at
30 June 31 December 30 June
2015 2014 2014
GBP000 GBP000 GBP000
Trade payables - - 331
Amounts owed to group undertaking 55 47 -
Accruals 8,518 8,700 8,546
------- ----------- -------
8,573 8,747 8,877
======= =========== =======
NOTES (unaudited) (continued)
FOR THE SIX MONTHS ENDED 30 JUNE 2015
7. Borrowings
Interest Final As at Year ended As at
rate maturity 30 June 31 December 30 June
2015 2014 2014
GBP000 GBP000 GBP000
Current
Secured notes:
Class
A1(N) Floating 2015 1,100 3,247 4,238
B 7.03% 2029 3,756 3,631 3,508
A2 6.5% 2033 9,927 9,618 9,321
--------- ------------ ---------
Debt falling
due
within one year 14,783 16,496 17,067
Less: finance
costs (908) (887) (877)
--------- ------------ ---------
Net loan
amount 13,875 15,609 16,190
========= ============ =========
Non-current
Secured notes:
Class
A1(N) Floating 2015 - - 1,100
A2 6.5% 2033 314,271 319,313 324,198
A3 Floating 2035 188,500 188,500 188,500
A4 2.875% 2019 20,000 20,000 20,000
B 7.03% 2029 77,962 79,873 81,719
B2 Floating 2035 20,000 20,000 20,000
B3 4.250% 2024 20,000 20,000 20,000
D1(N) Floating 2035 29,054 29,054 29,054
D2 8.28% 2022 50,000 50,000 50,000
D3 4.750% 2024 70,000 70,000 70,000
Debt falling
due
after one year 789,787 796,740 804,571
Less: finance
Costs (13,131) (13,598) (13,995)
--------- ------------ ---------
Net loan
amount 776,656 783,142 790,576
========= ============ =========
Total
borrowings 790,531 798,751 806,766
========= ============ =========
The fair value of borrowings as at 30 June 2015 was GBP904.7
million.
NOTES (unaudited) (continued)
FOR THE SIX MONTHS ENDED 30 JUNE 2015
7. Borrowings (continued)
The maturity profile of gross debt is as follows:
As at As at As at
30 June 31 December 30 June
2015 2014 2014
GBP000 GBP000 GBP000
Wholly repayable within one year 14,783 16,496 17,067
Wholly repayable in more than
one year
but not more than two years 14,591 14,129 14,783
Wholly repayable in more than
two years
but not more than five years 91,430 84,773 78,430
Wholly repayable in more than
five years 683,767 697,838 711,357
-------- ----------- --------
804,570 813,236 821,637
======== =========== ========
The secured notes have the benefit of a floating charge over all
of the assets and undertakings of the company and in addition are
secured against The Trafford Centre Securitisation Agreements
together with the benefit of a fixed legal charge over the land and
buildings comprising The Trafford Centre granted by The Trafford
Centre Limited, a fellow subsidiary undertaking of Intu Trafford
Centre Group (UK) Limited and owner of intu Trafford Centre.
Interest on the Class A1(N), Class A3, Class B2 and Class D1(N)
secured notes whose rates are based on LIBOR plus an applicable
margin has been hedged under interest rate swap contracts totalling
GBP221,203,463 (31 December 2014 GBP220,404,594, 30 June 2014
GBP219,729,982) with rates of 4.2%, 4.34% and 4.66% and an interest
rate cap of GBP17,451,000 (31 December 2014 GBP20,396,000, 30 June
2014 GBP23,162,000 with a capped rate of 6.66% plus an applicable
margin on each bond. The fair value of these interest rate swaps at
30 June 2015 was a liability of GBP81,451,000 (31 December 2014
GBP92,542,000, 30 June 2014 GBP49,390,000).
8. Share capital
2013
GBP
Issued, called up and fully paid
At 1 January 2015 and 30 June 2015 - 2 ordinary shares
of GBP1 each 2
====
NOTES (unaudited) (continued)
FOR THE SIX MONTHS ENDED 30 JUNE 2015
9. Financial instruments
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