Interim Report and Consolidated Financial Statements. Six month period to 30 September Company number:

Transcription

1 BLD Properly Holdings Limited Interim Report and Consolidated Financial Statements Six month period to 30 September 2017 Company number:

2 Interim Report and Consolidated Financial Statements for the six month period ended 30 September2017 Contents Page: 1 Company information 2 Strategic Report 3 Directors Report 4 Consolidated Income Statement 5 Consolidated Balance Sheet 6 Consolidated Statement of Changes in Equity 7 Consolidated Statement of Cash Flows S Notes to the financial statements

3 Interim Report and Consolidated Financial Statements for the six month period ended 30 September2017 Corn pany information Country of incorporation of parent company United Kingdom Legal form Private limited company Directors S Barzycki L Bell J McNuff C Forshaw (Resigned 5 April 2017) P Macey TRoberts N Webb C Middleton Secretary and registered office British Land Company Secretarial Limited, York Hoise, 45 Seymour Street, London, WiLl 7LX Company number

4 Interim Report and Consolidated Financial Statements for the six month period ended 30 September2017 Strategic Report The directors, in preparing this Strategic Report, have complied with s4 14C of the Companies Act This Strategic Report has been prepared for the group as a whole and therefore gives greater emphasis to those matters which are sienificant to BLD Property Holdings Limited and its subsidiary undertakings when viewed as a whole. Business review and principal activities BID Property Holdings Limited ( the company ) is a wholly owned subsidiary of The British Land Company P1-C and operates as a constituent of The British Land Company PLC group of companies. The company s principal activity is that of an investment holding company of the BLO Property Holdings Limited group of companies ( the group ). The group s principal activity is that of property investment in the United Kingdom. As shown in the Consolidated income Statement on page 4, the group s revenue was 7.Om (six months to 30 September 2016: 7.Om) and loss on ordinary activities before taxation was 9. Ian (six months to 30 September2016: 1 1-Sm loss). The Consolidated Balance Sheet on page 5 shows that the group s financial position at 30 September 2017 has, in net asset terms, decreased on the prior year. This is primarily due to the revaluation losses on investment property of 5.Om. as described in note 4 and fmance costs off l0.2m driven by the early redemption of debenture stock. as described in note 3, of1et by the profit from operations of 6.1 m, as shown in the Consolidated Income Statement on page 4. The value of investment properties held as at 30 September 2017 decreased by I.Sm. This is due to 2.7m of additions, revaluation losses of 5.Om and 0.5m of other movements as shown in note 4 to the Consolidated Balance Sheet, On I September 2017 the Company issued a notice of early redemption of its debenture stock. The debenture stock was redeemed in full on 3 October 2017 at the redemption price of per cent of the principal aniounl Following redemption. the stock was cancelled from the Official List of the UKLA. These interim financial statements have not been reviewed by the group s auditors pursuant to the Financial Reporting Council guidance on Review of Interim Financial Information. Key risks The key risks of this group are the performance of the properties and tenant defliults. These risks are mitigated by the preference for prime assets with secure long term contracted rental income, primarily with upward only rent review clauses. The group is financed by a combination of fixed rate debentures and intercompany funding from its ultimate holding company. The covenants attached to the debentures are reviewed regularly and prospectively, in order that any potential breaches may be remedied in accordance with the relevant provisions. This report was approved by the Board on (SNo vn.tbe( and signed by the order ofthe board by: Director C!MrLES NIJiàLeTof / L 7

5 Interim Report and Consolidated Financial Statements for the six month period ended 30 September 2017 Directors Report The directors present their report on the affairs of BLD Property Holdings Limited and its subsidiaries (together the group ) together with the unaudited condensed consolidated financial statements for the six month period ended 30 September2017. Directors The directors of the Company are listed on page 1. Environment Across the group, The British Land Company PLC 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 group s activities. The British Land Company PLC group of companies full sustainability report is available online at 7. Dividends No dividends were paid to shareholders in the current or prior period. No dividend has been proposed by the directors in the current period (2016: nil). Significant events since the balance sheet date Derails of significant events since the balance sheet date are contained in note 14 of the financial statements. Going concern The directors consider the company and roup to be a going concern and the financial statements are prepared on this basis. Details of this are shown in note I of the fmancial statements. Responsibility Statement of the directors in respect of the half-yearly financial report Each of the directors (as detailed above) confirms that to the best of his/her knowledge: the condensed set of fmancial statements has been prepared in accordance with las 34, Interim Financial Reporting, as adopted by the European Union; the interim management report above includes a fair review of the information required by: a). DTR 4.2.7R of the Disclosure and Transparency Rules ( DTR ), being an indication of important events that have occured during the first six months of the financial year and their impact on the condensed set of fmancial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and b) DTR 4.2.8R of the DTR, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the company during that period and any changes in the related party transactions described in the last annual report that could do so. This report was approved by the Board on /.Si Vove.Mke..f and signed by the order of the board I: 2.01 Director CHQL-E! MIbbLeTO J 3

6 Interim Report and Consolidated Financial Statements for the six month period ended 30 September 2017 Consolidated Income Statement for the six month period to 30 September 2017 Unaudited Unaudited Six months ended Six months ended 30 September 30 September Note Continuing operations m Revenue Property operating expenses (0.9) (1.5) Gross profit Administrative expenses - (0.8) Operating profit Revaluation of investment property 4 (5.0) (143) Finance costs 3 (10.2) (1.5) Loss before tax (9.1) (11.5) Taxation - Loss for the period after taxation attributable to shareholders of the company (9.1) (11.5) All recognised income and expense in the current and prior year six month periods are included in the Income Statement. Accordingly, no Statement of Comprehensive Income is given. The notes on pages 8 to IS form part of these financial statements. 4

7 Interim Report and Consolidated Financial Statements for the six month period ended 30 September 2017 Consolidated Balance Sheet as at 30 September 2017 Unaudited Audited 30 September March2017 Note La La Non-current assets lmvestment property Current assets Trade and other receivables Current liabilities Trade and other payables 6 (70.6) (84.8) Net current assets Total assets less current liabilities Non-current liabilities Financial liabilities 7 (2.6) (32.2) Net assets Equity Share capital Share premium Capital redemption reserve Profit and loss account TOTAL EQUITY The condensed consolidated unaudited financial statements of BLD Property Holdings Limited, company number , on pages 4 to 15, were approved by the Board of Directors and authorised for issue on ( Noye,,er20 17 and signed on its behalf :.tor L L1, The notes on pages 8 to 15 form part of these financial statements. 5

8 Interim Report and Consolidated Financial Statements for the six month period ended 30 September2017 Consolidated Statement of Changes in Equity for the six month period ended 30 September 2017 (unaudited) Capital Share redemption Profit and Share capital premium reserve loss account Total equity Lm f.m f.m f.m La Balance at 1 April 2017 brought forward Loss for the period - Total comprehensive expense for the period (9.1) - - (9.1) (9.1) (9.1) Dividends paid in period Balance at 30 September Capital Share redemption Profit and Share capital premium reserve loss account Total equity f.m f.m f.m f.m f.m Balance at 1 April 2016 brought forward [.ossfortheperiod (11.5) (11.5) Total comprehensive expense for the period - (11.5) (11.5) Dividends paid in period Balance at 30 September The following describes the nature and purpose of each reserve within owners! equity: Reserve Share premium Capital redemption Profit and loss account Description and purpose Amount subscribed for share capital in excess of nominal value. Amounts transferred from share capital on redemption of issued shares. Cumulative net gains and losses recognised in the Consolidated Income Statement. The notes on pages 8 to 15 form part of these financial statements. 6

9 Interim Report and Consolidated Financial Statements for the six month period ended 30 September2017 Consolidated Statement of Cash Flous for the six month period ended 30 September 2017 Unaudited Unaudited Six months ended Six months ended 30 September September 2016 f.m f.m Cash flows from operating activities Loss for the period (9.1) (11.5) Adjustments for Revaluation loss Straightllning of tenant incentives (0.5) 0.2 Finance costs Operating profit before changes in working capital and provisions (Increase)Idecrease in trade and other receivables (1.2) (1.8) Increase in trade and other payables Decreasei(increase) in receivable from ultimate parent 2.4 (23) (Decrease)increase in payable to ultimate parent (2.4) 1.7 (0.7) 1.9 Net cash from operating activities Cash flows from investing activities Development and other capital expenditure (2.7) (1.6) Net cash used in investing activities (2.7) (1.6) Cash flows from financing activities Interest paid on debenture stock (22) (1.4) Net cash used in financing activities (2.2) (1.4) Increase in cash and cash equivalents - Cash and cash equivalents at 1 April - Closing cash and cash equivalents at 30 September The notes on pages 8 to 15 form part of these financial statements. 7

10 interim Report and Consolidated Financial Statements for the six month period ended 30 September 2017 Notes forming part of the financial statements for the six month period ended 30 September 2017 I. Accounting policies Groupfinoncial stwemeal Basis ofpreparation The financial information for the period ended 30 September 2017 does not constitute statutory accounts as defined in section 434 of the Companies Act A copy of the statutory accounts for the year ended 31 March 2017 has been delivered to the Registrar of Companies. The auditors report on those accounts was not qualified, did not include a reference to any mailers to which the auditor drew attention by way of emphasis without qua1iiying the report, and did not contain statements under section 498(2) or (3) ofthe Companies Act 200& The financial inforniation included in this announcement has been prepared on a going concern basis using accounting policies consistent with International Financial Reporting Standards (IFRS) as adopted by the European Union and in accordance with LAS 34 Interim Financial Reporting as adopted by the European Union. The interim financial statements have not been reviewed by the group s auditors pursuant to the Financial Reporting Council guidance on Review of Interim Financial infomiation. The condensed interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 March which have been prepared in accordance with IFRS as adopted by the European Union. A number of new standards and amendments to standards and interpretations have been issued but are not yet effective for the current accounting period. None of these are expected to have a material impact on the consolidated financial statements of the Group, except the following set out below: IFRS Financial Instruments - the new standard addresses the classification, measurement and recognition of financial assets and financial liabilities. It simplifies the exisiting categories of financial instruments, introduces an expected credit loss model and redefines the criteria required for hedge effectiveness. On adoption of the new standard, these changes are not expected to have a material impact on the consolidated financial statements of the Group. There will however be changes to presentation and disclosure. - IFRS 15 - Revenue from contracts with customers - the new standard combines a number of previous standards, setting out a five step model for the recognition of revenue and establishing principles for reporting useful information to users of fmancial statements about the nature, amount, liming and uncertainty of revenue and cash flows arising from an entity s contracts with customers. The new standarad does not apply to gross rental income but does apply to service charge income, management and performance fees and trading property disposals. The impact of the new standard on these items of revenue is not expected to have a material impact on the consolidated financial statements of the Group. - IFRS 16 - Leases, is effective for the groups year ending 31 March For lessees, it will result in almost all leases being recognised on the balance sheet, as the distinction between operating and finance leases will be removed. The accounting for lessors will however not significantly change. As a result on adoption of the new standard, these changes are not expected to have a material impact on the consolidated financial statements of the Group. The Group conducted an impact assessment of the above new standards in the prior year, and concluded that whilst adoption of these new standards based on the Group s current activities would lead to some limited changes to presentation and disclosure, they are not expected to have a material impact on the consolidated financial statements. Signj/icantjudgements and sources ofestimation uncertainty In applying the group s accounting policies, the directors are required to make judgements and estimates that affect the financial statements. The key accounting judgements made are summarised below: Valuation of properties: the group uses external professional valuers to determine the carrying value of the properties. The primary source of evidence for property valuations should be recent, comparable market transactions on an arms-length basis. However, the valuation of the group s property portfolio is inherently subjective, as it is made on the basis of assumptions made by the valuers which may not prove to be accurate. 8

11 BLI) Property Holdings Limited Interim Report and Consolidated Financial Statements for the six month period ended 30 September 2017 Notes forming part of the financial statements for the six month period ended 30 September Accounting policies (continued) Going concern These financial statements have been prepared on the going concern basis. The group is in a net asset position. Having reviewed the company s forecast working capital and cash flow requirements. in addition to making enquiries and examining areas, described within the risk management section of the Strategic Report, which could give rise to fmancial exposure, the directors have a reasonable expectation that the company and group has adequate resources to continue its operations for the foreseeable future. As a result the continue to adopt the going concern basis in preparing the financial statements. 2. Revenue Revenue represents rental income and is wholly attributable to the principal activity of the group which operates solely in the United Kingdom. Unaudited Unaudited Six months Six months ended ended 30 September 30 September Rent receivable Service charge income Spreading of tenant incentives and guaranteed rent increases 0.5 (0.2) Total revenue Finance costs Unaudited Unaudited Six months Six months ended ended 30 September 30 September Liii Bank borrowings and other interest payable Debenture stock interest payable Redemption costs

12 Professional BLD Property Holdings Limited Interim Report and Consolidated Financial Statements for the six month period ended 30 September2017 Notes forming part of the financial statements for the six month period ended 30 September Investment property Unaudited UK Retail Offices Dci elopment Total Level 3 Level 3 Level 3 Level 3 Lm Lm La Lm Group Canying value at 1 April & Additions Movement in lease incentive and rent review receivables Revaluation loss (3.6) 0. I) (1.3) (5.0) Carrying value at 30 September Head lease liabilities (note 7) (2.6) Total group property portfolio valuation at 30 September The group s property portfolio was valued as at 30 September The properties have each been valued by Knight Frank [.LP, CBRE or Cushman and Wakefield L[.P on the basis of fitir value, in accordance with the RICS Valuation Standards 20 14, ninth edition, published by The Royal Institution of Chartered Surveyors. The information provided to the valuers, and the assumptions and valuations model used by the valuers are reviewed by the property portfolio team, the Head of Offices, the Head of Retail and the Chief Financial Officer. The valuers meet with the external auditors and also present directly to the Audit Committee on a half yearly basis. Property valuations are inherently subjective as they are made on the basis of assumptions made by the valuer which may not prove to be accurate. For these reasons, and consistent with EPRA s guidance. we have classified the valuations of our properly portfolio as Level 3 as defined by IFRS 13. There were no transfers between levels in the period. Inputs to the valuation, including equivalent yields, rental values and costs to complete, are defined as unobservable as defined by IFRS 13. Investment properties are valued by adopting the investment method of valuation. This approach involves applying capitalisation yield to current and estimated fluture rental streams net of income voids arising from vacancies or rent-free periods and associated running costs. These capitalisation yields and rental values are based on comparable property and leasing transactions in the market, using the valuers professional judgment and market observation. Other factors taken into account in the valuations include the tenure of property, tenancy details and ground and structural conditions. In the case of ongoing developments, the approach applied is the residual method of valuation, which is the investment method of valuation with a deduction for all costs necessary to complete the development, including a notional finance cost. together with a further allowance for remaining risk. Properties held for development are generally valued by adopting the higher of the residual method of valuation, allowing for all associated risks, or the investment method of valuation for the existing asset. At 30 September 2017, the book value of group s investment properties of 264.Sm (31 March 2017: 266.6m) comprises freeholds of I 98.4m (31 March 2017: 198.Om) and long leaseholds of 66.4m (31 March 2017: 66.Om). Long leaseholds are those for which the unexpired term at the balance sheet date is not less than 50 years. 10

13 BLL) Property Holdings Limited Interim Report and Consolidated Financial Statements for the six month period ended 30 September 2017 Notes forming part of the financial statements for the six month period ended 30 September Investment property (continued) The prior period movement is shown below: Audited UK Retail Offices Development Level 3 Level 3 Level 3 Total Carrying value at I April Additions Disposals (6.1) (6.1) Movement in lease incentive and rent review receivables (0..) 02 (0.1) Revaluation gain (13.7) 1.8 (2.4) (14.3) Canying value at 31 March Head lease liabilities (note 7) (2.6) Total group property portfolio valuation at 31 March Trade and other receivables Unaudited Audited Group Group 30 September 31 March Amount owed by ultimate parent company Trade and other debtors Prepayments and accmed income The directors consider that the carrying amount of trade and other debtors approximates to their fair value. There is no concentration of credit risk with respect to trade debtors as the group has a large number of customers, who are paying their rental income in advance. There is a 0.5m (31 March 2017: 0.4m) bad debt provision in respect of debtors. II

14 Interim Report and Consolidated Financial Statements for the six month period ended 30 September 2017 Notes forming part of the financial statements for the six month period ended 30 September Trade and other pavables - current Unaudited Audited Group Group 30 September 31 March Amounts owed to ultimate parent company Other taxation and social security Trade and other creditors Accmals and deferred income Debenture stock (secured) Redemption premium The First Mortgage Debenture Stocks are secured on certain investment properties and cash held by the Group. The stock is listed on the London Stock Exchange. On 1 September 2017, the Company issued a notice of early redemption of the debenture stock. The debenture stock was redeemed in full on3 October 2017 at the redemption price of per cent of the principal amouni Following redemption, the stock was cancelled from the Official List of the IJKLA. Consequently as at period end the debenture stock is reco2nised as a current liability. 7. Non-current financial liabilities Unaudited Audited Group Group 30 September 31 March m Debenture stock (secured) Obligations under finance leases The obligations under finance leases are presented according to the maturity of the payments required. Alatztriiv ofdebt: Unaudited Audited Group Group 30 September 31 March Due between two and five years 29.6 Due after more than five years

15 Interim Report and Consolidated Financial Statements for the six month period ended 30 September2017 Notes funning part of the financial statements for the six month period ended 30 September Financial instruments Fair values of financial instruments Market values have been used to determine the fur value of the first mortgage debenture stocks. Fair value Book value at Fair value at adjustment at 30 September 30 September 30 September First Mortgage Debenture stocks Fair value Book value at Fair value at adjustment at 3IMarch2Ol7 3lMarch2OIl 3lMarch2OI7 First Mortgage Debenture stocks The First Mortgage Debenture Stock financial liability is classified as Level I under the fur value measurements hierarchy as the input is a directly observable market price, being the contracted redemption price per the notice of early redemption issued on I September2017, for redemption on 3 October The canying value of trade debtors, trade creditors and finance lease obligations represents their fuir value at the balance sheet date. These fmancial instruments are excluded from the above analysis. The debenture stocks are fixed rate and have no associated derivatives, therefore there is no sensitivity to interest rate changes. 9. Share capital Unaudited Audited 30 September 30 September 31 March 31 March Number m Number AioUea called up andpaid Ordinary shares of 20p each 75,943, ,943, Authorised share capital at 30 September 2017 is 120,000,000 ordinary shares (31 March 2017: 120,000,000). 13

16 Interim Report and Consolidated Financial Statements for the six month period ended 30 September 2017 Notes forming part of the financial statements for the six month period ended 30 September Segment information The group allocates resources to properties it expects to perform over the medium term. The segmental analysis below, as required by IFRS 8, follows the information provided to the Chief Operating Decision Maker and reflects the two principal sectors in which the group is currently invested - offices and retail. The relevant revenue, net rental income, assets and capital expenditure are set out below: Offices Retail Total Unaudited Audited linaudited Audited Unaudiled Audited 30 September 31 March September31 March September 31 March fin Revenue ,4 Gross profit Property assets Capital expenditure Reconciliation to net assets: Unaudited Audited 30 September 31 March Property assets Trade and other receivables Total assets Trade and other payables (70.6) (84.8) Financial liabilities (2.6) (32.2) Net assets Revenue is derived from the rental of buildings. Corporate costs, including administrative and interest expenses are not allocated to the segments shown, therefore a segmental profit or loss is not disclosed. No customer exceeds 10% of the groups revenues. 14

17 BID Property Holdings Limited Interim Report and Consolidated Financial Statements for the six month period ended 30 September2017 Notes forming part of the financial statements for the six month period ended 30 September Capital commitments The group has capital conuuitments contracted at 30 September 2017 off I Im (31 March 2017: 0.6m). 12. Contingent liabilities There are no contingent liabilities. 13. Related party transactions The group has intercompany flmding with its ultimate parent company, The British Land Company PLC. The balance outstanding at 30 September 2017 is shown in note 5 - Trade and other receivables and note 6- Trade and oilier payables. There is no interest charged on this balance. 14. Subsequent events The First Moriuae Debenture Stock 2020 was redeemed in full for a total amount of 38.3m on the 3 October This is recognised as a current liability in Note 6 with 296m in relation to the principal of the debenture stock and &7m relating to the premium for the early redemption ofthe debenture stock. 15. Ultimate parent company The immediate parent company is BL Davidson Limited which is incorporated in the United Kingdom and registered in England and Wales. BID Pmpert v Holdings Limited is the smallest group for which group financial statements are available and which include the group. The British Land Company PLC is the largest group for which group financial statements are available and which include the group. The ultimate holding company and controlling party is The British Land Company PLC, which is incorporated in the United Kingdom and registered in England and Wales. Group financial statements for this company are available on request from York House, 45 Seymour Street, London, Will 7LX. IS