TIDM57MC TIDMTTM

RNS Number : 3634U

Wellcome Trust Finance plc

21 December 2011

Wellcome Trust Finance plc

Annual Financial Report

Wellcome Trust and Wellcome Trust Finance plc (a wholly owned subsidiary of Wellcome Trust) announce that they have each published their Annual Report and Financial Statements for the year to 30 September 2011 today. A copy of each document is available on the Wellcome Trust website at: http://www.wellcome.ac.uk/About-us/Publications .

Wellcome Trust has today issued the following press release in connection with the publication of its Annual Report and Financial Statements:

2010/11 was another challenging year for economies and financial markets. Having advanced almost 20% between October 2010 and May 2011, stock markets stalled and then sold off sharply in the last quarter of our financial year. Fears grew about the cohesion of the Euro, the pace of the US recovery and the impact of inflationary pressures on faster growing economies, notably China.

In these circumstances, we were pleased that our investment portfolio recorded a total return of 2%, equating to almost GBP270 million on a portfolio value of GBP13.9 billion at the start of the year.

We have returned a total of 19% (annualised 6%) over three years and 24% (annualised 4%) over five years to September 2011. Since the inception of our investment portfolio in 1985, it has provided a total return averaging almost 14% a year.

These returns enabled us to spend GBP602 million this year in support of our mission and also supported our AAA rating, with our investment asset base ending the year at GBP13.6 billion. They also should enable us to spend a projected amount in excess of GBP3 billion on our charitable activities between 2011 and 2016, a 29% increase over the previous five year period.

Positive returns over the year from each element of the 56% of our portfolio held in private equity, venture capital, hedge funds and property more than offset lower stock markets.

Our buyout investments have returned 12% over the past year and 66% over the past five years, outperforming public markets by almost 9% a year. The net annual internal rate of return from our private equity portfolio since inception in 1994 now stands at 15%, driven by excellent returns on growth and venture investments. Our property assets returned 13% in 2010/11 and 22% over the past five years driven by total returns from our direct residential property at 70%, and our direct commercial property which has delivered 60%.

Our public equity returns were minus 5% for the year. Over three and five years, public equities have delivered 7% and 3% per annum respectively, each representing an outperformance of the MSCI World Index by at least 1.0% per annum. Our hedge funds delivered a total return of 5% for the year and 10% and 8% over three and five years respectively.

Sir William Castell, Chairman of the Trust, said: 'I am pleased to report a steady performance from our investment portfolio in a year when stock-markets recorded negative returns. This will enable us to give record amounts to medical research at a time when economic headwinds remain strong.'

Danny Truell, CIO of the Trust, added: 'Good market timing and strong investment performance from illiquid assets has again helped in 2010/11. Long term themes will continue to inform our choice of investments; we expect to generate substantial free cash-flows over the next five years. In such uncertain economic times, we count it an advantage to work with only very broad asset allocation constraints. With a talented investment team and a robust long term investment philosophy, we believe that we are well positioned for the future'.

Wellcome Trust Finance plc further announces that a copy of its Annual Report and Financial Statements for the year ended 30 September 2011 has been submitted to the National Storage Mechanism, and will shortly be available for inspection at www.Hemscott.com/nsm.do .

In accordance with the Disclosure and Transparency Rules, the following information is taken from the Annual Report and Financial Statements for Wellcome Trust Finance plc for the year ended 30 September 2011:

Wellcome Trust Finance plc

Annual Report and Financial Statements

Year ended 30 September 2011

Report of the Directors

The Directors of Wellcome Trust Finance plc present their report and the audited Financial Statements for the year ended 30 September 2011.

Activities

The principal activity of Wellcome Trust Finance plc (the "Company") is to meet its obligations relating to the bonds that it has previously issued on the London Stock Exchange and to continue to invest the proceeds in other group entities.

Review of the Business

The Company issued two tranches of bonds: GBP550 million on 25 July 2006 of 4.625% Guaranteed Bonds due July 2036 and GBP275 million on 28 May 2009 of 4.750% Guaranteed Bonds due May 2021 (the "Bonds"). The Bonds are listed on the London Stock Exchange. The obligations of the Company on the Bonds are governed by Trust Deeds between the Company, The Wellcome Trust Limited, as trustee of the Wellcome Trust, and Citicorp Trustee Company Limited, as the trustee for the holders of the Bonds. The payment of all amounts due in respect of the Bonds is unconditionally and irrevocably guaranteed pursuant to the terms of a guarantee given by The Wellcome Trust Limited, as trustee of the Wellcome Trust; the guarantee is part of the Trust Deeds.

The Company loaned the proceeds from the Bonds issued to Wellcome Trust Group (the "Group") undertakings and receives interest on these loans.

Results for the Year

The Company made a profit of GBPnil (2010: GBPnil)during the year ended 30 September 2011, after recognising a Gift Aid donation of GBP6,534,546 (2010: GBP6,559,405) to the Wellcome Trust, a charity registered in England under the UK Charities Act 1993 (as amended by the Charities Act 2006) (registered charity number 210183). As at 30 September 2011 the Company had net assets of GBP137,500,000 (2010: GBP137,500,000). The Directors do not propose the payment of a dividend (2010: GBPnil).

Political and Charitable Donations

The Company made no political donations during the year (2010: GBPnil). The Company made charitable donations of GBP6,534,546 (2010: GBP6,559,405) to the Wellcome Trust under Gift Aid.

Financial Risk Management

The Directors of the Company implement policies to manage the inherent risks relating to the financial assets and liabilities of the Company.

The Directors have assessed for each financial asset and liability: the market risk, interest rate risk, liquidity risk, and credit risk exposure. The Company is not exposed to significant market risk or interest rate risk because the Company's main financial assets and liabilities have fixed redemption values, fixed interest rates and fixed maturity dates. The liquidity risk of the Company is mitigated by the matching of the cash flows from the Company's financial assets and liabilities. Credit risk exposure of the Company's loans is reduced by the Company only advancing loans to entities within the Group. Credit risk exposure of the Company's remaining financial assets is reduced by stringent selection procedures for any external counter parties with which the Company transacts.

Key Performance Indicators

Due to the nature of the Company's operations, the key performance measures are that the Company meets all its legal obligations to the Bond holders and that the Company achieves sufficient return on its assets to be profitable, before any donations to the Wellcome Trust under Gift Aid. During the year the Company met all its legal obligations to the Bond holders and had profits before donations to the Wellcome Trust under Gift Aid.

Environment

Due to the nature of its activities the Company has a minimal environmental impact. Social responsibility of the Wellcome Trust group is detailed in the Wellcome Trust Annual Report and Financial Statements, which are available at www.wellcome.ac.uk.

Employees

There are no employees of the Company.

The management and administration of the Company is undertaken by staff from the Wellcome Trust. The Wellcome Trust has not incurred any incremental costs due to the management of this Company.

Corporate Governance

The Company is limited by shares. Its governing documents are its memorandum of association and its articles of association. The shareholder of the company is The Wellcome Trust Limited, as trustee of the Wellcome Trust.

The Company is considered to be a wholly owned subsidiary of The Wellcome Trust Limited, as trustee of the Wellcome Trust. The Company is not subject to the requirements of the Combined Code because it does not have any equity shares listed on the London Stock Exchange. A statement on governance policies of the Group and of the Wellcome Trust is included in the Wellcome Trust's Annual Report and Financial Statements for the year ended 30 September 2011.

The Company has a separate Audit Committee. The Investment Committee, the Risk Committee and the internal audit function of the Wellcome Trust oversee all group entities.

The Company complies with all appropriate filing and information requirements of the Financial Services Authority.

Internal Control and Risk Management

The Company's internal control and risk management is undertaken as part of the Wellcome Trust's processes. The key elements of this specifically applicable to the Company are:

-- delegation: there is a clear organisational structure with documented lines of authority and responsibility for control and documented procedures for reporting decisions, actions and issues; and

-- review: the Audit Committee reviews the effectiveness of the Company's internal control, its financial reporting process, the independence of its statutory auditors and its compliance with relevant statutory and finance regulations and advises the Directors of any relevant matters. The Audit Committee members are listed in the Administrative Details section below.

Creditor Payment Terms

The Company pays suppliers in accordance with contractual terms or within 30 days of invoice date.

Directors and their interests

The Directors of the Company who served during the year and to the date of this report are set out below:

Mr Simon Jeffreys

Mr Nicholas Moakes

Mr Peter Pereira Gray

Mr Daniel Truell

None of the Directors held any beneficial interest in the shares of the Company or any interest in its parent company, The Wellcome Trust Limited, as trustee of the Wellcome Trust.

Each of the Directors is an employee of the Wellcome Trust and receives remuneration from the Wellcome Trust as an employee. No remuneration is paid to any Director for their services as a Director.

Directors' Indemnity Policy

There are no qualifying indemnity provisions (as defined in the Companies Act 2006) that benefit the Directors of the Company.

Statement of Directors' responsibilities

The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepared the Financial Statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these Financial Statements, the Directors are required to:

   --      select suitable accounting policies and then apply them consistently; 
   --      make judgements and accounting estimates that are reasonable and prudent; 

-- state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the Financial Statements respectively; and

-- prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the Financial Statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of the company's website. Legislation in the United Kingdom governing the preparation and dissemination of Financial Statements may differ from legislation in other jurisdictions.

Each of the Directors, whose names are listed in the Directors' report, confirm that, to the best of their knowledge:

-- the Financial Statements, which have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), give a true and fair view of the assets, liabilities, financial position and profit of the company; and

-- the Directors' report contained in this section of the Annual Report includes a fair review of the development and performance of the business and the position of the company, together with a description of the principal risks and uncertainties that it faces.

Statement of disclosure of information to auditors

Each Director in office at the date of approving this report confirms that so far as the Director is aware, there is no relevant audit information of which the company's auditors are unaware and each Director has taken all the steps that ought to have been 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.

Auditors

A resolution was passed by the Board of Directors on 20 December 2011 appointing PricewaterhouseCoopers LLP as auditors until such time as the Company decides otherwise.

This report was approved by the Board of Directors and signed on its behalf on 20 December 2011 by:

Mr Daniel Truell

Director

INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF WELLCOME TRUST FINANCE PLC

We have audited the financial statements of Wellcome Trust Finance Plc for the year ended 30 September 2011 which comprise the Profit and Loss Account, the Balance Sheet, the Cash Flow Statement and the related notes which include Accounting Policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

Respective responsibilities of directors and auditors

As explained more fully in the Directors' Responsibilities Statement in the Directors' Report, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

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.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Wellcome Trust Finance Plc annual report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on financial statements In our opinion the financial statements:

-- give a true and fair view of the state of the company's affairs as at 30 September 2011 and of its result and cash flows for the year then ended;

-- have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

   --      have been prepared in accordance with the requirements of the Companies Act 2006. 

Opinion on other matter prescribed by the Companies Act 2006

In our opinion the information given in the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

-- adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

   --      the financial statements are not in agreement with the accounting records and returns; or 
   --      certain disclosures of directors' remuneration specified by law are not made; or 
   --      we have not received all the information and explanations we require for our audit. 

Alison Morris (Senior Statutory Auditor)

for and on behalf of PricewaterhouseCoopers LLP

Chartered Accountants and Statutory Auditors

London

20 December 2011

The Financial Statements are published on the Wellcome Trust website, www.wellcome.ac.uk. The maintenance and integrity of the Wellcome Trust website 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.

Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Wellcome Trust Finance plc

Profit and Loss Account

for the year ended 30 September 2011

 
                                                  Year ended     Year ended 
                                         Note   30 September   30 September 
                                                        2011           2010 
                                                         GBP            GBP 
--------------------------------------  -----  -------------  ------------- 
 
 Turnover                                 2       45,609,174     45,594,967 
 
 Cost of sales                                  (38,995,045)   (38,972,088) 
 
 Gross profit                                      6,614,129      6,622,879 
 
 Administrative expenses                  3         (79,583)       (63,474) 
 
 Operating profit                                  6,534,546      6,559,405 
 
 Gift Aid donation                               (6,534,546)    (6,559,405) 
 
 Profit on ordinary activities before                      -              - 
  taxation 
 
 Taxation on ordinary activities          6                -              - 
 
 Profit on ordinary activities after                       -              - 
  taxation 
--------------------------------------  -----  -------------  ------------- 
 

All income is derived from continuing activities.

The Company has no other gains or losses other than the results for the financial year as set out above and therefore no separate statement of recognised gains and losses has been presented.

Notes 1 to 15 below form part of these Financial Statements.

Wellcome Trust Finance plc

Balance Sheet

as at 30 September 2011

 
                                                       As at           As at 
                                        Note    30 September    30 September 
                                                        2011            2010 
                                                         GBP             GBP 
-------------------------------------  -----  --------------  -------------- 
 
 Fixed assets 
 Investment in subsidiaries              7                 -               1 
 Loans to Group undertakings             8       271,080,095     270,780,921 
 
 Current assets 
 Loans to Group undertakings             8       676,000,000     676,000,000 
 Amounts due from Group undertakings               1,541,131       1,351,821 
 Accrued interest on loans                         9,387,671       9,387,671 
 Prepayments                                          41,536          37,929 
 Cash at bank and in hand                            124,197         105,575 
 
 Creditors: amounts falling due 
  within one year                        9       (9,762,446)     (9,746,779) 
-------------------------------------  -----  --------------  -------------- 
 Net current assets                              677,332,089     677,136,217 
 
 Creditors: amounts falling due 
  after more than one year               9     (810,912,184)   (810,417,139) 
 
 Net assets                                      137,500,000     137,500,000 
-------------------------------------  -----  --------------  -------------- 
 
 Capital reserves 
 Called up share capital                 11      137,500,000     137,500,000 
 Profit and loss account                                   -               - 
 Total shareholders' funds                       137,500,000     137,500,000 
-------------------------------------  -----  --------------  -------------- 
 

The Financial Statements were approved by the Board of Directors on 20 December 2011 and signed on its behalf by:

Mr Daniel Truell

Director

Wellcome Trust Finance plc

Cash Flow Statement

for the year ended 30 September 2011

 
                                                Year ended     Year ended 
                                              30 September   30 September 
                                                      2011           2010 
                                                       GBP            GBP 
-------------------------------------------  -------------  ------------- 
 
 Net cash inflow from operating activities       6,538,026      6,931,216 
 
 Gift aid donations paid                       (6,519,404)    (6,834,913) 
 
 Net increase in cash                               18,622         96,303 
-------------------------------------------  -------------  ------------- 
 Cash at beginning of year                         105,575          9,272 
-------------------------------------------  -------------  ------------- 
 Cash at end of year                               124,197        105,575 
-------------------------------------------  -------------  ------------- 
 

Reconciliation of operating profit to net cash inflow from operating activities

 
                                                Year ended     Year ended 
                                              30 September   30 September 
                                                      2011           2010 
                                                       GBP            GBP 
-------------------------------------------  -------------  ------------- 
 
 Operating profit                                6,534,546      6,559,405 
 
 (Increase) in loans to Group undertakings       (299,174)      (380,921) 
 Increase in Bond liabilities                      495,045        472,088 
 (Increase)/decrease in prepayments and 
  accrued income                                   (3,607)         94,729 
 Increase/(decrease) in accruals and 
  deferred income                                      527       (21,867) 
 (Increase)/decrease in amounts owed 
  from Group undertakings                        (189,311)        207,782 
 
 Net cash inflow from operating activities       6,538,026      6,931,216 
-------------------------------------------  -------------  ------------- 
 

Reconciliation to net debt

 
                                                        Non-cash 
                                                        changes: 
                            Year ended                 effective     Year ended 
                          30 September     Cash flow    interest   30 September 
                                  2010                                     2011 
                                   GBP           GBP         GBP            GBP 
 ----------------------  -------------  ------------  ----------  ------------- 
 Cash in hand and 
  at bank                      105,575        18,622           -        124,197 
 Debt due after 
  one year 
     Bond liabilities      810,417,139             -     495,045    810,912,184 
 Debt due within 
  one year 
     Bond liabilities        9,212,500   (9,212,500)   9,212,500      9,212,500 
 
 Net debt at 30 
  September                819,735,214   (9,193,878)   9,707,545    820,248,881 
-----------------------  -------------  ------------  ----------  ------------- 
 

Wellcome Trust Finance plc

Notes to the Financial Statements

for the year ended 30 September 2011

1. ACCOUNTING POLICIES

(a) Basis of preparation of the Financial Statements

The Financial Statements have been prepared on a going concern basis in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). The Company has adopted fair value accounting rules and applies the related suite of Financial Reporting Standards (FRS):

-- FRS 23 "The Effects of Changes in Foreign Exchange Rates";

-- FRS 25 "Financial Instruments Presentation";

-- FRS 26 "Financial Instruments Measurement"; and

-- FRS 29 "Financial Instruments Disclosures", including the amendment issued by the Accounting Standards Board in May 2009.

Accounting policies have been reviewed in accordance with FRS 18 "Accounting Policies".

All income and expenditure is recognised in the Financial Statements on an accruals basis. A summary of the more important accounting policies, which have been consistently applied, is set out below:

(b) Turnover

Turnover is interest derived from loans to Wellcome Trust Investment Limited Partnership, an undertaking in the Group, and Wellcome Trust. Turnover is calculated using the effective interest rate method and is recognised on an accruals basis.

(c) Cost of sales

Cost of sales is the effective interest on the Bond liabilities (as described in note 1(f)) and is recognised on an accruals basis.

(d) Gift Aid donation

The Gift Aid donation recognised is equal to estimated taxable profits of the Company at the time of the approval of the Financial Statements. The Gift Aid paid within nine months of the balance sheet date is equal to the estimated taxable profits of the Company at time of payment. Any difference between the Gift Aid donation accrued and the Gift Aid donation paid is recognised at the time of payment.

(e) Loans to Group undertakings

The loans to group undertakings are to Wellcome Trust Investment Limited Partnership and Wellcome Trust, with fixed redemption value and fixed interest payments. The loans are not quoted in an active market. The loans were recognised initially at fair value and after initial recognition are measured at amortised cost using the effective interest method.

(f) Bond Liabilities

The Bond liabilities relate to the 30-year corporate bonds issued by the Company in July 2006 and the 12-year corporate bonds issued by the Company in May 2009, listed on the London Stock Exchange (the "Bonds"). The initial measurement of the liability is equal to the proceeds of issue less all transaction costs directly attributable to the issue for each Bond. After initial recognition the liability is measured at amortised cost using the effective interest method. The fair value of the Bond liabilities disclosed within the notes to the Financial Statements is the market value of the Bonds at the year end date. The Company is not required to, and therefore does not, recognise any adjustment to fair value in the Balance Sheet and Profit and Loss Account.

(g) Foreign Currencies

Transactions in currencies other than Sterling are recorded at the rate of exchange prevailing on the dates of the transactions. At each balance sheet date, recorded monetary assets and liabilities and balances carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. All realised and unrealised profits and losses arising on exchange are included in net profit or loss for the period.

2. TURNOVER

 
                                             Year ended     Year ended 
                                           30 September   30 September 
                                                   2011           2010 
                                                    GBP            GBP 
 
 Interest receivable on loans to Group 
 undertakings                                45,609,174     45,594,967 
 
                                             45,609,174     45,594,967 
 ---------------------------------------  -------------  ------------- 
 

Interest receivable on loans to Group undertakings (see note 8) is the effective interest on:

-- loans A and B to Wellcome Trust Investment Limited Partnership at a fixed rate of 4.75%; and

   --      loan to Wellcome Trust at fixed rate of 4.80%. 

3. ADMINISTRATIVE EXPENSES

 
                                                                         Year ended     Year ended 
                                                                       30 September   30 September 
                                                                               2011           2010 
                                                                                GBP            GBP 
 
 Legal fees                                                                       -          (205) 
 Auditors' remuneration                                                       8,400          7,873 
 UK Listing Authority fees                                                        -        (2,900) 
 Rating agency fees                                                          60,740         57,921 
 Other                                                                       10,443            785 
 
                                                                             79,583         63,474 
   --------------  --------------     ------------------------------  -------------  ------------- 
 
 

Auditors' remuneration is solely in relation to the statutory audit of the Financial Statements.

4. EMPLOYEE INFORMATION

The Company has no employees. Personnel from the Wellcome Trust undertake the management and administration of the Company at no incremental cost to the Wellcome Trust.

5. REMUNERATION OF DIRECTORS

The Directors of the Company received no remuneration from the Company for their services. There were no Directors for whom retirement benefits are accruing under a money purchase or defined benefit scheme. The Company does not issue share options or offer any long-term incentive schemes, so there were no Directors who exercised share options during the year or became entitled to shares under a long-term incentive scheme.

6. TAXATION

The profits of the Company for the year will be paid under Gift Aid to the Wellcome Trust, a charity registered in England under the UK Charities Act 1993 (as amended by the Charities Act 2006) (registered charity number 210183). There is no difference between accounting and taxable profits, so there is no provision required for deferred tax.

7. INVESTMENTS IN SUBSIDIARIES

The Company had an investment in a subsidiary, Wellcome Trust Finance No. 2 Limited. The subsidiary was dissolved during the year ended 30 September 2011.

The Company has not prepared Consolidated Financial Statements because the subsidiary was not material and so meets the exemption requirements of FRS 2 "Accounting for Subsidiary Undertakings".

8. LOANS TO GROUP UNDERTAKINGS

 
                         Principal          Interest     Loan anniversary   Amortised cost   Amortised cost 
                            amount              rate                 date       Year ended       Year ended 
                                           per annum                          30 September     30 September 
                                                                                      2011             2010 
                               GBP         %                                           GBP              GBP 
 
 Loan 
  A                    550,000,000      4.75                 25 July           550,000,000      550,000,000 
 Loan 
  B                    126,000,000      4.75            25 September           126,000,000      126,000,000 
 Loan (new 
  bond)                275,000,000      4.80                  28 May           271,080,095      270,780,921 
 
                                                                               947,080,095      946,780,921 
   -----------------  ------------  --------      ------------------  ---  ---------------  --------------- 
 
 

Loans to Group undertakings are loans (the "Loans") to Wellcome Trust Investment Limited Partnership (Loan A and Loan B) and Wellcome Trust (Loan (new bond)). The principal under Loan A and Loan B is repayable on demand by the Company and the principal under Loan (new bond) is repayable on agreement between the Company and Wellcome Trust, but the Loans are expected to be outstanding for 28 years (Loan A and Loan B) and 12 years (Loan (new bond)). Each Loan has a fixed redemption value equal to the principal amount and a fixed interest rate.

9. CREDITORS

 
                                            Year ended     Year ended 
                                          30 September   30 September 
                                                  2011           2010 
                                                   GBP            GBP 
 
 Accruals and deferred 
  income                                        15,400         14,873 
 Amounts due to Group undertakings                   -              1 
 Gift Aid due to the 
  Wellcome Trust                               534,546        519,405 
 Bond liabilities                            9,212,500      9,212,500 
 Total creditors: amounts falling due 
  within one year                            9,762,446      9,746,779 
---------------------------------------  -------------  ------------- 
 
 
 Falling due between one                             -              - 
  and five years 
---------------------------------------  -------------  ------------- 
 
 
 Bond liabilities                          810,912,184    810,417,139 
 Falling due after 
  five years                               810,912,184    810,417,139 
---------------------------------------  -------------  ------------- 
 
 Total creditors: amounts falling due 
  after one year                           810,912,184    810,417,139 
---------------------------------------  -------------  ------------- 
 

The Bond liabilities are stated at the amortised cost using the effective interest method for the GBP550 million 4.625% Guaranteed Bonds due July 2036 ("GBP550 million Bonds"), issued by the Company on 25 July 2006, and the GBP275 million 4.750% Guaranteed Bonds due May 2021 ("GBP275 million Bonds"), issued by the Company on 28 May 2009. The Bond liabilities falling due within one year are the unpaid coupon interest accrued for the year to 30 September 2011 for each Bond. The interest payment to the Bond holders is at a fixed rate of 4.625% per annum (GBP550 million Bonds) and 4.750% per annum (GBP275 million Bonds) and is paid in arrears on 25 July or 28 May respectively each year until repayment of the Bond principals. No amounts fall due between one and five years because the remainder of the Bond liabilities at the balance sheet date is the amortised cost of the amount due to be repaid upon expiry of the 30-year term on 25 July 2036 (GBP550 million Bonds) or upon the expiry of the 12-year term on 28 May 2021 (GBP275 million Bonds) and therefore falls due after five years.

The obligation of the Company on the Bonds is governed by a Trust Deed dated 25 July 2006 (GBP550 million Bonds) or 28 May 2009 (GBP275 million Bonds) between the Company, The Wellcome Trust Limited, as trustee of the Wellcome Trust, and Citicorp Trustee Company Limited, as the trustee for the holders of the Bonds (the "Trust Deed" and the "new Trust Deed" respectively). The payment of all amounts due in respect of the Bonds is unconditionally and irrevocably guaranteed pursuant to the terms of a guarantee given by The Wellcome Trust Limited, as trustee of the Wellcome Trust; the guarantee is part of the Trust Deed and the new Trust Deed.

10. RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS

 
                                           Year ended                      Year ended 
                                         30 September                    30 September 
                                                 2011                            2010 
                                                  GBP                             GBP 
 
 As at 1 October                          137,500,000                     137,500,000 
 
 As at 30 September                       137,500,000                     137,500,000 
---------------------  ------------------------------  ------------------------------ 
 

11. SHARE CAPITAL

 
                                                    Year ended     Year ended 
                                                  30 September   30 September 
                                                          2011           2010 
                                         Number            GBP            GBP 
 
 Authorised ordinary shares 
 of GBP1 each                       137,500,000    137,500,000    137,500,000 
---------------------------------  ------------  -------------  ------------- 
 
 Issued and fully paid ordinary 
  shares of GBP1 each               137,500,000    137,500,000    137,500,000 
---------------------------------  ------------  -------------  ------------- 
 

12. RELATED PARTY TRANSACTIONS

The Company, a wholly owned subsidiary undertaking of the Wellcome Trust, has taken the exemption available from the related party disclosure requirements of FRS 8 "Related Party Disclosures", because the Financial Statements of the parent company are available to the public (note 15).

13. FINANCIAL INSTRUMENTS

The Company's financial instruments comprise the loans to Group undertakings and the liability arising from the issue of the Bonds. The Company's loans are non-derivative financial assets with fixed payments which are not available for sale. The Bond liability is a non-derivative financial liability with a fixed redemption value, fixed interest rate and fixed maturity date. The Company has not undertaken any trading in financial instruments during the year.

The financial instruments issued by, or held by, the Company are Sterling denominated and carry no foreign exchange risk.

The financial instruments issued by, or held by, the Company are at fixed interest rates and therefore do not have any related interest rate risk.

The key risks relating to the financial instruments held by the Company are the credit risk and liquidity risk of the counterparties Wellcome Trust Investment Limited Partnershipand the Wellcome Trust in relation to the loans to Group undertakings. These risks are in respect of the Wellcome Trust Investment Limited Partnership's and Wellcome Trust's ability to meet the interest and principal payments as they fall due. The total value exposed to credit risk as at 30 September 2011 is GBP958.1 million (2010: GBP957.6 million), which comprises the value of the loans to Group undertakings, amounts due from Group undertakings, accrued interest on loans and cash at bank and in hand.

The following tables detail the maturity of the Company's undiscounted contractual payments as at 30 September:

Contractual payments falling due within one year

 
                           Year ended                                  Year ended 
                       30 September 2011                           30 September 2010 
 
                  Three months         Between        Total   Three months         Between        Total 
                       or less    three months                     or less    three months 
                                       and one                                     and one 
                                          year                                        year 
 
                           GBP             GBP          GBP            GBP             GBP          GBP 
---------------  -------------  --------------  -----------  -------------  --------------  ----------- 
 
 Accruals 
  and 
  deferred 
  income                15,400               -       15,400         14,873               -       14,873 
 Amounts 
  due 
  to Group 
  undertakings               -               -            -              1               -            1 
 Gift Aid 
  due to 
  the Wellcome 
  Trust                      -         534,546      534,546              -         519,405      519,405 
 Bond 
  liabilities*               -      38,500,000   38,500,000              -      38,500,000   38,500,000 
 
 Contractual 
  payments 
  falling 
  due within 
  one year              15,400      39,034,546   39,049,946         14,874      39,019,405   39,034,279 
---------------  -------------  --------------  -----------  -------------  --------------  ----------- 
 

Contractual payments falling due after one year

 
                          Year ended                                    Year ended 
                       30 September 2011                             30 September 2010 
 
                      Between      After five           Total       Between      After five           Total 
                      two and           years                       two and           years 
                   five years                                    five years 
 
                          GBP             GBP             GBP           GBP             GBP             GBP 
---------------  ------------  --------------  --------------  ------------  --------------  -------------- 
 
 Bond 
  liabilities*    154,000,000   1,399,062,500   1,553,062,500   154,000,000   1,437,562,500   1,591,562,500 
 
 Contractual 
  payments 
  falling 
  due after 
  one year        154,000,000   1,399,062,500   1,553,062,500   154,000,000   1,437,562,500   1,591,562,500 
---------------  ------------  --------------  --------------  ------------  --------------  -------------- 
 

* as restated to include the contractual interest payable on the bonds

Gift Aid payments are made under a Deed of Covenant dated 11 September 2008 which can be terminated by the Company at any time.

FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES

The following table is a comparison of fair values and book values of all financial assets and liabilities as at the end of the year:

 
                                            Fair value      Book value 
                                            Year ended      Year ended 
                                          30 September    30 September 
                                                  2011            2011 
                                                   GBP             GBP 
 
 Financial 
  assets 
 Loans to Group undertakings             1,006,971,370     947,080,095 
 Amounts due from Group undertakings         1,541,131       1,541,131 
 Accrued interest                            9,387,671       9,387,671 
 Cash at bank and in 
  hand                                         124,197         124,197 
 
 Financial 
  liabilities 
 Accrued interest on 
  Bond liabilities                         (9,212,500)     (9,212,500) 
 Bond liabilities                        (876,609,250)   (810,912,184) 
 

The fair value of the Bond liabilities as at 30 September 2011 was GBP876.6 million (2010: GBP850.3 million) and is based on the market value of the Bonds at that date. The fair value of the loans to Group undertakings as at 30 September 2011 was GBP1,007.0 million (2010: GBP976.6 million); this is calculated using a valuation model for which the key input is the market value of the Bonds, instruments that are substantially the same as the loans in term, interest rate and magnitude. The book value of cash at bank and in hand represents its fair value.

14. COMMITMENTS

The Company has no outstanding commitments at 30 September 2011.

15. ULTIMATE PARENT UNDERTAKING AND CONTROLLING PARTY

The Company's shares are held by The Wellcome Trust Limited, as trustee of the Wellcome Trust. The Company is a wholly owned subsidiary undertaking of the Wellcome Trust for accounting purposes, and its assets, liabilities and results have been consolidated with those of the Wellcome Trust as required by FRS 2 "Accounting for Subsidiary Undertakings".

The ultimate parent undertaking and controlling party is the Wellcome Trust, which is the parent undertaking of the smallest and largest group to consolidate these Financial Statements.

Copies of the Wellcome Trust Annual Report and Financial Statements 2011 are available from the Trust's website (www.wellcome.ac.uk) or, without charge, from:

Publishing Department

Wellcome Trust

FREEPOST

RLYJ-UJHU-EKHJ

Slough

SL3 0EN

Wellcome Trust Finance plc

Administrative Details

for the year ended 30 September 2011

Directors

Mr Simon Jeffreys

Mr Nicholas Moakes

Mr Peter Pereira Gray

Mr Daniel Truell

Company Secretary

Mr John Stewart

Audit Committee

Mr Roderick Kent

Mr Philip Johnson

Baroness Manningham-Buller

Tim Clark (Appointed 13 December 2011)

Registered Company Number

5857955

Registered Office

215 Euston Road

London

NW1 2BE

Auditors

PricewaterhouseCoopers LLP

7 More London Riverside

London

SE1 2RT

Bankers

HSBC Bank plc

31 Holborn Circus

Holborn

London

EC1N 2HR

This information is provided by RNS

The company news service from the London Stock Exchange

END

FR URUNRARAUUAA

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