Canary Wharf Group - Final Results - Part 2
RNS Number:9228J
Canary Wharf Group PLC
13 September 2001
PART 2
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2001
1 BASIS OF PREPARATION
The financial information is prepared on the basis of accounting
policies set out in the group's statutory accounts for the year ended
30 June 2000, consistently applied in all material respects.
The financial information is abridged and does not constitute the
group's full financial statements for the year ended 30 June 2000 or
30 June 2001. Full financial statements for the year ended 30 June
2000 (which received an unqualified audit report) have been filed with
Registrar of Companies.
2 OPERATING PROFIT
Year ended Year ended
30 June 30 June
2001 2000
£000 £000
The operating profit is stated after charging:
- Depreciation (Note 9) 334 289
- Directors' emoluments 1,887 1,517
- Operating lease rentals:
Land and buildings 5,271 934
- Remuneration of the auditors:
Audit fees 278 237
Fees for other services 316 123
For the year ended 30 June 2001, fees of £116,000 (year ended 30
June 2000 - £98,000) were also paid to the auditors in connection with
the group's securitisations. These fees are deferred and amortised
over the life of the debt in accordance with FRS4 (Capital
Instruments).
For the year ended 30 June 2001, depreciation of £2,222,000 (year
ended 30 June 2000 £1,100,000) relating to fixtures and fittings in
offices occupied by the group's construction personnel has been
treated as a development expense and capitalised within the cost of
properties under construction.
3 INTEREST RECEIVABLE
Year ended Year ended
30 June 30 June
2001 2000
£m £m
Bank interest receivable 50.7 36.9
During the year ended 30 June 2001, security over cash deposits
totalling £94.3 million held by the group's finance lessors was
released and at the same time interest rate swaps relating to these
deposits were unwound resulting in a net gain to the group of £4.5
million. This amount is included within interest receivable.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE
2001
4 INTEREST PAYABLE
Year Year
ended ended
30 30
June June
2001 2000
£m £m
Notes and debentures 71.7 44.4
Bank loans and overdrafts 9.3 7.3
Finance lease charges 46.0 44.7
127.0 96.4
Less:
Interest at 6.5% (year ended 30 June 2000 - 6.7%)
on development financings transferred
to development properties
(27.5) (11.7)
99.5 84.7
Interest payable of £27.5 million (year ended 30 June 2000 - £
11.7 million) has been transferred to development properties (Note 8).
The amount transferred in respect of the year ended 30 June 2001
includes £8.1 million (year ended 30 June 2000 - £2.7 million)
attributable to funds borrowed specifically for the purpose of
financing the construction of development properties. In addition, the
amount transferred includes £19.4 million (year ended 30 June 2000 - £
9.0 million) attributable to the cost of funds forming part of the
group's general borrowings which were utilised in financing
construction.
5 TAXATION
No provision for corporation tax has been made in the
consolidated results of the group for the year to June 2001 due to the
availability of tax losses brought forward from previous periods and
other tax reliefs available to offset the profit for the year.
6 EMPLOYEE INFORMATION
Staff costs of all employees of the group, including directors,
were:
Year ended Year ended
30 June 30 June
2001 2000
£m £m
Wages and salaries 38.0 26.1
Social Security costs 3.9 2.6
Other pension costs (Note 19) 2.1 1.5
44.0 30.2
The average monthly number of employees, including directors, of
the group during the year to 30 June 2001 was 972 (year ended 30 June
2000 - 721).
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE
2001
7 EARNINGS PER SHARE
Basic earnings per share is calculated by reference to the profit
attributable to ordinary shareholders of £42.5 million (June 2000 - £
54.1 million) and on the weighted average of 688.0 million shares in
issue (June 2000 - 684.7 million).
The calculation of diluted earnings per share for the year ended
30 June 2001 is based on profit attributable to ordinary shareholders
of £42.5 million (June 2000 - £54.1 million) and the diluted weighted
average of 700.4 million shares (June 2000 - 692.4 million). The
difference between the basic weighted average number of shares and the
diluted weighted average comprises the following:
Shares
million
Warrants 6.2
Share options 4.4
Long Term Incentive Plan 1.8
Total 12.4
The calculation of the number of shares which are dilutive is based on
the number of each instrument outstanding (Note 16) as adjusted for
the difference between the exercise price and the weighted average
share price for the relevant year.
The basic earnings per share before exceptional item and diluted
earnings per share before exceptional item for the year ended 30 June
2000 has been calculated on profit for that year of £15.0 million,
excluding the exceptional item of £39.1 million relating to the net
profit on sale of completed properties (Note 8).
8 INVESTMENT PROPERTIES AND PROPERTIES UNDER CONSTRUCTION AND
HELD
FOR DEVELOPMENT
Freehold properties held as tangible fixed assets:
Investment Properties
under
Properties construction Properties held
for development
£m £m £m
As at 1 July 2000 2,196.7 182.4 147.0
Additions including interest 19.4 409.8 26.8
Acquisitions of development
properties - - 93.1
Transfer from investments - - 6.2
(Note 10)
Transfer to
properties under - 163.2 (163.2)
construction
Transfer from properties
held as - - 14.9
current assets
Revaluation 84.4 - -
As at 30 June 2001 2,300.5 755.4 124.8
Of which, subject to lease
and finance leaseback 1,228.5
arrangements
Historical cost 1,013.4 755.4 124.8
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE
2001
Freehold properties held as current assets:
£m
As at 1 July 2000 142.6
Additions including interest 121.9
Transfer to properties held as fixed assets (14.9)
As at 30 June 2001 249.6
Properties under construction or held for development where the group
has entered into an agreement for the sale of the property, subject to
the satisfaction of certain conditions and, where relevant, completion
of construction, are categorised as current assets being held for
sale.
On 6 November 2000, the group entered into an Agreement for Lease with
Clifford Chance LLP for the lease of 785,000 sq ft in a new 1 million
sq ft building under construction at Heron Quays (parcel HQ5). The
group has acquired the sub-leasehold interest (with approximately 16.5
years unexpired at the balance sheet date) in 200/202 Aldersgate
Street, a 437,000 sq ft office building in the City of London, and has
underlet the premises to Clifford Chance for a term with approximately
6.5 years unexpired at the balance sheet date at the same rent as that
under the sublease. Clifford Chance has the right to terminate its
lease on giving not less than three months notice following practical
completion of HQ5, in which event the group intends to dispose of its
interest on the open market or sublet the premises.
On 27 November 2000 the group completed the purchase of a 6.7 acre
site immediately to the north of Canary Wharf. The consideration for
this acquisition was £57.9 million, including stamp duty and other
acquisition costs. The group acquired the property in conjunction with
a partner who has a minority share. The property is carried at cost.
The minority partner's share which is included in the total
acquisition cost, is carried at £2.0 million and the directors are of
the opinion that its value does not and will not exceed this amount.
On 7 December 2000 the group's interest in the Canary Riverside joint
venture was varied so as to achieve a reconstruction of the interests
of the joint venture partners. As part of this reconstruction the
group's share in the completed first phase of Canary Riverside was
transferred to the other two joint venture partners for a nominal sum.
This investment had a book value of £6.2 million (Note 10). A payment
of £34 million was also made to the two remaining partners to buy out
the contract relating to phases 2 and 3 of the development. As a
result of this transaction the group has regained full ownership and
control over phases 2 and 3 which has the benefit of planning
permission for approximately 1 million sq ft gross of development. A
further payment of £1 million, which has been accrued, will become due
in the event that planning consent is achieved for significant
incremental development on the site.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2001
The group's investment properties have been valued as at 30 June 2001
by either FPDSavills Commercial Limited, Chartered Surveyors, or CB
Hillier Parker Limited, Surveyors and Valuers, on the basis of Open
Market Value. Each property has been valued individually on a free and
clear basis and not as part of a portfolio and no account has been
taken of any intragroup loans or arrangements. No allowance has been
made for any seller's expenses of realisation nor for any taxation
which may arise in the event of disposal (see Note 15). The surplus
arising on the year end valuations (£84.4 million) has been
transferred to the revaluation reserve.
Properties under construction and properties held for development at
30 June 2001 which are to be retained are carried at their fair value
at the time of the acquisition of the Canary Wharf Holdings Limited
(CWHL) group in December 1995, less subsequent disposals plus
additions at cost, subject to any provision for impairment. The
property under construction that is contracted to be sold is carried
at the lower of cost (namely fair value at date of acquisition plus
additions at cost) and net realisable value.
At 30 June 2001 properties under construction held as fixed assets
included £33.8 million (30 June 2000 - £6.3 million) in respect of
financing costs. No financing costs are included in properties under
construction held as current assets.
During the year ended 30 June 2000 the group completed two properties
which were sold, generating a net profit on disposal of £39.1 million.
9. OTHER TANGIBLE FIXED ASSETS
Fixtures and Computer
equipment equipment Total
£m £m £m
Cost:
At 1 July 2000 5.3 0.3 5.6
Additions 8.3 0.1 8.4
At 30 June 2001 13.6 0.4 14.0
Depreciation:
At 1 July 2000 (1.6) (0.2) (1.8)
Charge for the year (Note 2) (2.5) (0.1) (2.6)
At 30 June 2001 (4.1) (0.3) (4.4)
Net book amount:
At 30 June 2001 9.5 0.1 9.6
At 1 July 2000 3.7 0.1 3.8
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE
2001
10. INVESTMENTS
At June 2001 At June 2000
£m £m
Associated - 6.6
undertakings
Other investments 2.1 -
Own shares 13.7 -
15.8 6.6
The movement in the group's investment in associated undertakings
during the year ended 30 June 2001 comprised:
Group
investments in associated
undertakings
£m
Cost:
At 1 July 2000 9.3
Share of post acquisition loss (3.1)
after tax
Transfer to properties held for
development (Note 8) (6.2)
At 30 June 2001 -
Provision against unrealised (2.7)
profit on sale of land
At 1 July 2000
Release of provision 2.7
At 30 June 2001 -
Net book amount
At 30 June 2001 -
At 30 June 2000 6.6
Net charge to profit and loss (0.4)
account
In May 1997 the group sold an undeveloped plot of land at Canary
Wharf to Canary Riverside Holdings Pte Limited ('CRH'), incorporated
in Singapore, in which it acquired a 20% equity interest in the 'A'
ordinary shares of that company. CRH was engaged in the development
and operation of the Riverside site at Canary Wharf and the other
shareholders comprise two companies registered in Singapore, Hotel
Properties Limited ('HPL') and Pidemco Land Limited. On 7 December
2000 the company's interest in CRH was transferred to the other two
shareholders for a nominal sum in conjunction with the consolidation
of interests referred to in Note 8.
In February 1997 the group acquired a 50% interest in the shares of
Canary Riverside Management (UK) Limited ('Manco'), a company
registered in England and Wales. Upon formation Manco was 50:50
jointly owned with HPL and was established to manage the development
of the Riverside site. Manco ceased trading with effect from 31
October 2000.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE
2001
The results of the above associates attributable to the group up to
the date of disposal or cessation of trade have been derived from the
associates' management accounts for six months to 31 December 2000.
The group's share of the results and net assets of its associates are
as follows:
CRH Manco Total
£000 £000 £000
(Loss)/profit before interest and taxation (9,659) (86)
Interest (5,204) -
(Loss)/profit after taxation (14,863) (86)
Group share: (20%) (50%)
Year ended 30 June 2001 (2,973) (43) (3,016)
Year ended 30 June 2000 (853) 216 (637)
Net assets - -
Group share: (20%) (50%)
At June 2001 - - -
At June 2000 9,187 83 9,270
On 23 March 2001, the group acquired 52,079 £1 ordinary shares and
2,604 convertible shares in Highspeed Office Limited, an unlisted
company registered in England and Wales, being approximately 13% of
its nominal share capital. The principal activity of Highspeed Office
Limited is the provision of broadband telecommunications services. The
consideration paid was £2.1 million representing the historical cost
to the group including fees. The directors are of the opinion that the
value of the investment at 30 June 2001 was not less than this amount.
During the year ended 30 June 2001 the company acquired 2,671,668 of
its own shares at a cost of £13.9 million, in connection with the
group's share option schemes. The carrying value of own shares at 30
June 2001 was £13.7 million, net of amortisation for the period of £
0.2 million.
In October 1996 the group sold its interest in the limited partner
companies of the First Tower Limited Partnership for a nominal
consideration. Further consideration may become payable to the group
in the future, contingent upon the satisfaction of certain conditions.
11 DEBTORS
30 June 2001 30 June 2000
Due within one year: £m £m
Trade debtors 3.4 3.6
Other debtors 57.5 12.6
Prepayments and accrued income 25.6 15.7
86.5 31.9
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE
2001
12 FINANCIAL ASSETS
The group's financial assets comprise short term trade debtors
(Note 11) and cash deposits. Cash deposits totalled £1,458.4 million
at 30 June 2001 (30 June 2000 - £1,020.6 million), comprising deposits
placed on money market at call and term rates. Total cash deposits
include £707.2 million (30 June 2000 - £574.8 million) held by third
parties as cash collateral for the group's borrowings, deposits
arising from prepayments in respect of buildings contracted to be sold
of £45.9 million (30 June 2000 - £207.0 million) and a further £2.3
million (30 June 2000 - £2.3 million) charged to third parties as
security for the group's obligations.
Of the total cash deposits, £46.9 million (30 June 2000 - £296.6
million) were invested at fixed rates and the remainder were at
floating rates. The weighted average rate of interest on fixed rate
deposits at 30 June 2001 was 6.4% (30 June 2000 - 6.7%). The weighted
average period remaining on fixed deposits was 8 months at 30 June
2001 (30 June 2000 - 48 months).
13. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
30 June 2001 30 June 2000
£m £m
Borrowings (Note 14) 29.7 17.9
Trade creditors 61.7 31.4
Taxation and Social Security costs 1.4 0.9
Other creditors 30.4 0.6
Accruals 132.8 113.6
Deferred income 486.0 20.6
742.0 185.0
At 30 June 2001 deferred income included £467.0 million (30 June 2000 - £
Nil) in connection with agreements for the sale, upon completion, of
buildings presently under construction at Canary Wharf. The income
deferred will be recognised upon completion of construction of the
relevant building.
At 30 June 2001 accruals included £50.2 million (30 June 2000 - £50.2
million) in respect of the group's remaining contribution to the Jubilee
Line Extension.
14. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
Creditors due after more than one year comprise:
30 June 2001 30 June 2000
£m £m
Securitised debt 1,943.6 923.9
Finance lease obligations 676.8 675.1
Deferred income - 424.6
2,620.4 2,023.6
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2001
At 30 June 2000 deferred income of £424.6 million was held in
connection with an agreement for the sale, upon completion, of a
building presently under construction at Canary Wharf. The anticipated
completion date of this building is April 2002, and therefore the
deferred income has been transferred to Creditors: Amounts Falling Due
Within One Year.
The amounts at which borrowings are stated comprise:
Construction Finance
loans lease
Securitised obligations Total
debt
£m £m £m £m
At 30 June 2000 941.8 - 675.1 1,616.9
Drawn down in year 1,029.5 161.7 - 1,191.2
Deferred financing
expenses (9.8) - 0.2 (9.6)
Accrued finance
charges 11.8 5.6 1.5 18.9
Repaid in year - (167.3) - (167.3)
At 30 June 2001 1,973.3 - 676.8 2,650.1
Payable within
one year or on 29.7 - - 29.7
demand
Payable in more
than one year 1,943.6 - 676.8 2,620.4
1,973.3 - 676.8 2,650.1
(1) In December 1997 the company's subsidiary, Canary
Wharf Finance plc (CWF), issued £555m of first mortgage
debentures, the principal terms of which are:
Tranche £m Interest Repayment
A 270 7.230% By instalment 2004 to 2027
B 80 7.425% By instalment 2004 to 2027
C 120 Stepped By instalment 2006 to 2027
D 85 Floating By instalment 2007 to 2020
555
The debentures are secured on certain property interests of
the CWHL group and the rental income stream therefrom.
Interest on Tranche C increases in steps from 5% payable
until October 1999, to 9.535% payable from October 2006.
Interest on Tranche D is payable at LIBOR plus 1.1% until
January 2003 and thereafter 3.1%, but the company has entered
into an interest rate cap arrangement so as to cap the portion
of interest linked to LIBOR at 8.5%.
(2) In February 2001, CWF issued an additional £120
million of first mortgaged debentures at a premium of £14.7
million. The tap issue comprised a further issue of A and B
notes which are subject to the same conditions as the original
notes issued in December 1997.
Including the original notes, the weighted average maturity of
the debentures at 30 June 2001 was 14.5 years. The debentures
may be redeemed at the option of the issuer in an aggregate
amount of not less than £1 million on any interest payment
date, subject to the current ratings of the debentures not
being adversely affected and certain other conditions
affecting the amount to be redeemed.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2001
(3) In June 2000 a group company, Canary Wharf Finance II
plc (CWFII), issued £975 million of first mortgage debentures.
The notes comprised:
(a) £475 million term notes
The term notes consist of five tranches, two of which,
totalling £90 million were immediately re-purchased and are
held by a group company. The principal terms of the tranches
are:
Tranche £m Interest Repayment
Issued:
A1 240 6.455% By instalment 2009 to 2033
A2 60 Floating By instalment 2003 to 2012
B 85 6.800% By instalment 2005 to 2033
385
Re-acquired:
C 45 6.966% By instalment 2011 to 2033
D 45 Floating By instalment 2011 to 2033
475
The notes are secured on certain property interests of the
CWHL group and the rental income stream therefrom.
The class A2 notes were issued in a principal amount of Euro
100 million, with interest payable at three month EURIBOR plus
a margin of 0.3%. The A2 notes are fully hedged via a currency
swap, whereby all principal and interest liabilities are
swapped into sterling providing an initial principal of £60
million and interest payable fixed at 6.995%.
Interest on the D notes is payable at a rate of three month
LIBOR plus a margin of 1.75% until July 2005, and thereafter
4.375%. The D notes are fully hedged using an interest rate
collar, with a cap of 9% and a floor of 5%.
(b) £500 million revolving notes
The securitisation allows for £500 million of 'AAA' and 'AA'
rated fully revolving short term notes, of which £250 million
is underwritten for 5 years from June 2000 by a banking
syndicate. There were no immediate proceeds from the revolving
notes as they were repurchased by the issuer. Drawings will
commence once further fully constructed and leased properties
are added to the securitisation pool. The pricing is based on
three month LIBOR with a margin of 0.40% for the 'AAA' notes
and 0.50% for the 'AA' notes. The commitment fee is 0.25% of
the £250 million underwritten. Hedging is not required until
first drawdown.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2001
(4) In June 2001, CWFII raised an additional £875 million
of first mortgage debentures at a premium of £19.8 million.
The notes comprise further issues of A1 and A2 notes together
with three new tranches. The principal terms of the notes
issued are:
Tranche £m Interest Repayment
A1 475 6.455% By instalment 2009 to 2033
A2 50 Floating By instalment 2003 to 2012
A3 200 5.952% By instalment 2032 to 2037
A4 90 Floating By instalment 2004 to 2028
B1 60 Floating By instalment 2005 to 2024
875
The notes are secured on certain property interests of the
CWHL group and the rental income stream therefrom.
The class A1 notes were issued at a premium of £20.2 million
on a principal amount of £475 million.
The class A2 notes were issued in a principal amount of Euro83
million, with interest payable at three month EURIBOR plus a
margin of 0.3%. These notes are fully hedged via a currency
swap, whereby all principal and interest liabilities are
swapped into sterling providing an initial principal of £50.0
million plus a premium of £0.2 million and interest payable
fixed at 6.0775%.
The class A3 notes were issued at par in a principal amount of
£200 million.
Interest on the class A4 notes is payable at three month LIBOR
plus 0.375% stepping up to LIBOR plus 0.95% in July 2011.
These notes are fully hedged at a fixed rate of 6.155% to July
2011 and 6.73% thereafter.
The class B1 notes were issued in a principal amount of Euro
100 million with interest payable at three month EURIBOR plus
a margin of 0.45%. These notes are fully hedged via a currency
swap, whereby all principal and interest liabilities are
swapped into sterling providing an initial principal of £60
million less a discount of £0.6 million and interest payable
fixed at 6.265%.
Including the original notes issued in June 2000, the weighted
average maturity of the debentures at 30 June 2001 was 19.5
years. The debentures may be redeemed at the option of the
issuer in an aggregate amount of not less than £1 million
(except classes A2 and B1 which may not be less than Euro1
million) on any interest payment date subject to the current
rating of the debentures not being adversely affected and
certain other conditions affecting the amount to be redeemed.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2001
(5) On 3 November 2000 the group concluded a seven year, £
1 billion revolving construction loan facility of which £167.3
million including finance costs was drawn down prior to
repayment in June 2001. Drawings under the facility are
secured by first-ranking fixed and floating charges over the
properties which are subject to the financing and by the
guarantee of the parent company. Drawings bear interest at a
margin of 1% over LIBOR and are repayable on the date falling
three months after the scheduled completion date for the
property being financed, subject to the group's ability to
extend on certain conditions. At 30 June 2001 the full amount
of the £1 billion facility was available to fund future
construction.
(6) The group's obligations under certain finance leases
are secured by first- ranking fixed and floating charges over
the property which is the subject of those finance leases and
over certain cash deposits (Note 23). The weighted average
rate of interest implicit in the group's finance leases is
6.9%.
(7) Loans and finance lease obligations falling due after
more than one year are repayable as follows:
Loans Finance Loans Finance
Leases leases
2001 2001 2000 2000
£m £m £m £m
In more than one
year but - - - -
less than two years
In more than two
years but 140.4 - 60.1 -
not more than five
years
In more than five years 1,803.2 676.8 863.8 675.1
1,943.6 676.8 923.9 675.1
(8) After taking into account interest rate hedging
entered into by the group, the interest rate profile of the
group's financial liabilities at 30 June 2001 (not including
creditors falling due within one year) was:
At 30 June 2001 At 30 June 2000
Floating Fixed rate Floating Fixed rate
rate financial rate financial
financial liabilities financial liabilities
liabilities liabilities
Total Total
£m £m £m £m £m £m
Securitised 84.7 1,888.6 1,973.3 87.0 854.8 941.8
debt
Finance 446.7 230.1 676.8 448.4 226.7 675.1
leases
531.4 2,118.7 2,650.1 535.4 1,081.5 1,616.9
Less: Cash
collateral
for (426.8) (280.4) (707.2) (424.5) (150.3) (574.8)
borrowings
(Note 12)
104.6 1,838.3 1,942.9 110.9 931.2 1,042.1
The group's floating rate liabilities comprise sterling
denominated bank borrowings, debentures and finance leases
which bear interest at rates linked to LIBOR.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2001
In respect of the group's fixed rate financial
liabilities:
30 June 2001 30 June 2000
Weighted Weighted Weighted Weighted
average average period average average period
interest rate fixed interest rate fixed
% Years % Years
Securitised 6.6 18.0 7.1 17.9
debt
Finance 10.0 14.7 10.0 15.5
leases
(9)In accordance with FRS 13 (Derivatives and Other Financial
Instruments:
Disclosures) the group is required to disclose the fair
values of its financial assets and liabilities (excluding
debtors and creditors falling due within one year) and at 30
June 2001 these were as follows:
30 June 2001 30 June 2000
Book Fair Book Fair
Value Value value value
£m £m £m £m
Primary
financial
instruments
held or
issued to
finance the
group's
operations:
Cash on
deposit
earning
- floating 1,411.5 1,411.5 724.0 724.0
rates of
interest
- fixed 46.9 55.8 296.6 329.9
rates of
interest
Short term
financial
liabilities
and current (29.7) (29.7) (17.9) (17.9)
portion of
long term
borrowings
Long term (1,943.6) (2,023.4) (923.9) (962.8)
borrowings
Finance (676.8) (711.2) (675.1) (704.1)
leases
Derivative
financial
instruments
held to
manage
interest
rate and
exchange
rate
profile:
- interest - 6.7 - -
rate swaps
- interest 2.4 (0.1) 2.7 1.5
rate caps
- currency - (1.0) - 2.7
swaps
The fair value of the interest rate swaps and sterling denominated
fixed rate debt and deposits have been determined by reference to prices
available on the markets on which they are traded. All other fair values
shown have been calculated by discounting cash flows at the relevant zero
coupon LIBOR interest rates prevailing at the balance sheet date.
During the year to June 2001 £2.5 million was realised on certain interest
rate hedges. These hedges were entered into in anticipation of the tap
issue completed in June 2001 and the gains have therefore been deferred
and will be recognised over the term of the debt. In addition, security
over certain cash deposits was released and at the same time interest rate
swaps relating to these deposits were unwound resulting in a net gain to
the group of £4.5 million which was included in interest receivable (see
Note 3).
During the year to June 2000 £3.8 million was realised on certain interest
rate hedges. These hedges were entered into in anticipation of the group's
securitisation completed in June 2000 and the gains have therefore been
deferred and will be recognised over the term of the debt.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2001
Other than the above no gains or losses on derivative financial
instruments have been recognised in the year.
Unrecognised gains and losses on instruments used for hedging, and the
movements therein, are as follows:
2001 2000
Total net Total net
gains/ gains/
Gains (Losses) (losses) Gains (Losses) (losses)
£m £m £m £m £m £m
Unrecognised
gains and
losses 2.7 (1.2) 1.5 49.6 (0.3) 49.3
on
hedges
at
1 July
Gains and losses - - - - - -
arising
in previous
years that
were
recognised
in the year
Gains and
losses 2.7 (1.2) 1.5 49.6 (0.3) 49.3
arising
before
1 July that
were not
recognised in
the year
Gains and
losses 4.0 (2.3) 1.7 (46.9) (0.9) (47.8)
arising in
the year that
were not
recognised
in the year
Unrecognised
gains and 6.7 (3.5) 3.2 2.7 (1.2) 1.5
losses on
hedges at
30 June
Of which:
Gains and
losses - - - - - -
expected
to be
recognised in
the
following year
Gains and
losses 6.7 (3.5) 3.2 2.7 (1.2) 1.5
expected
to be
recognised
after
the
following year
(10) At 30 June 2001, the group had one (30 June 2000 - None)
undrawn committed borrowing facility. The facility enables the
group to drawdown funds of up to £1 billion over the period to
November 2007.
(11)The group has no material monetary assets or liabilities in
currencies other than pounds sterling.
15 PROVISION FOR LIABILITIES AND CHARGES
£m
Provision for amounts payable in relation to partially vacant
leasehold properties:
As at 1 July 2000 2.9
Release to profit and loss account (2.6)
As at 30 June 2001 0.3
During the year to 30 June 2001, a vacant leasehold property was
assigned to a third party. The surplus arising as a result of this
assignment was therefore released to the profit and loss account.
Deferred taxation:
There were no potential deferred taxation liabilities requiring
provision at 30 June 2001 or 30 June 2000.
If the group's investment properties were sold at their open
market value, a tax liability of approximately £218.9 million (30 June
2000 - £201.3 million) would arise. As the company has no intention to
sell its investment properties and it is not expected that any
liability will arise in the foreseeable future, no provision for this
contingent liability has been made.
MORE TO FOLLOW
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