TIDM62ZW
RNS Number : 5895Y
RHP Finance PLC
09 September 2015
RHP FINANCE PLC
Report and Financial Statements
For the period ended 31 March 2015
Contents
Statutory Information 2
Strategic Report 3 - 4
Report of the Directors 5 - 6
Corporate governance statement 7 - 8
Report of the independent auditor 9 - 10
Profit and loss account 11
Balance sheet 12
Notes to the financial statements 13 - 20
Statutory Information
Company registration
number 9331195
Directors Philip Day
David Done
John Newbury
Catriona Simons
Stephen Speak
Secretary Philip Day
Registered Office 8 Waldegrave
Road,
Teddington.
London
TW11 8GT
Independent Auditor Grant Thornton
UK LLP
Grant Thornton
House
202 Silbury Boulevard
Central Milton
Keynes
MK9 1LW
Bankers Lloyds Bank Plc
City Office Po
Box 72 Bailey
Drive Gillingham
Business Park
Kent
ME8 0LS
Solicitors Trowers & Hamlins
LLP
3 Bunhill Row
London
EC1Y 8YZ
STRATEGIC REPORT
The Directors submit their Strategic Report, Report from the
Directors and the Audited Financial Statements for the period ended
31 March 2015.
Report of the Directors
RHP Finance plc. (the "Company") was incorporated on 27 November
2014. The company is wholly owned subsidiary of Richmond Housing
Partnership Limited (RHP).
Business review and principal activity
The Company's principal activity is to provide finance for the
growth and development activities of Richmond Housing Partnership
(RHP) and its subsidiaries.
On 5 February 2015, the Company issued a fixed rate secured
bond, denominated in Sterling and maturing 5(th) February 2048
("2048 Bond"), of GBP175,000,000 to the Debt Capital Markets paying
a fixed coupon of 3.25% payable in bi-annual instalments.
Of the GBP175,000,000 raised, GBP140,000,000 was issued to
external investors realising proceeds of GBP138.6m. The entire
proceeds were then lent to RHP under a loan agreement whose terms
mirror those of the bond. The remaining GBP35,000,000 were held by
the company themselves and treated as unissued.
The Bond Loan Agreement contains a provision for the Company to
recover from RHP the difference between the interest payable to
2048 Bond investors and the interest receivable from amounts
on-lent to RHP under the bond loan agreement, investment income
accrued from permitted investments and bank deposits. This
represents an embedded derivative which is not closely related to
the host loan agreement, however the value of the embedded
derivative is not material.
The Company has not carried on any business or activities other
than that which is incidental to the financing of RHP since
incorporation.
Principal risks and uncertainties
The principal risk facing the Company is the inability to meet
its obligations in respect of the 2048 Bond Trust Deed.
Various security and contractual arrangements, as described in
note 11 to these financial statements, are in place to mitigate
these risks.
The risks facing the RHP Group could also have a material effect
on the performance of RHP Finance PLC. These include:
-- risk that the operating surplus of RHP does not perform in line with its business plan
-- the risk that the loan covenants are breached
Management of these risks is controlled by:
-- monitoring the operating surplus of RHP and how they have
performed against the business plan
-- regular review of factors that may impact operating
surplus(es) and taking corrective action to ensure there is no
impact on covenants
-- monitoring the covenants
Further analysis of the key strategic risks faced by RHP and
associated risk mitigants are provided in the RHP Group financial
statements which can be found at www.RHP.org.uk.
Summary of key performance indicators
The Directors have monitored the progress of the overall
strategy and the individual strategic elements by reference to the
following non-financial indicators described below:
The Board of Directors ensure that the Company fulfils its
obligations under the Bond Trust Deed which in turn ensures it is
compliant with Listing Regulations and under the Bond Loan
Agreement its commitments to Bond investors.
The Company is primarily a conduit for accessing the Debt
Capital Markets therefore the Board of Directors monitor the
availability of cashflows to and from RHP as the financial key
performance indicators.
During the financial period all cash flow was readily available
to and from RHP and therefore met this objective.
Financial risk management objectives
The Directors' approach to financial risk management objectives
and exposures have been set out in Note 10 of these financial
statements.
This report was approved by the Board on 7 July 2015 and signed
on its behalf by
John Newbury
Director
REPORT OF THE DIRECTORS
Future developments
The Directors do not anticipate any change in the Company's
principal activity.
Results and dividends
The profit for the period amounted to GBPnil.
The Directors do not recommend payment of a dividend in respect
of the period ending 31 March 2015.
Directors and their interests
The Directors of the Company who held office during the period
are as follows:
Philip Day
David Done
John Newbury
Catriona Simons
Stephen Speak
In accordance with the Company's Articles of Association, none
of its Directors are required to retire. None of the Directors who
held office at the beginning or end of the period had any interest
in the shares of the Company.
Statement of Directors' responsibilities
The Directors are responsible for preparing the Strategic Report
and Directors' 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 elected to prepare financial statements in accordance with
United Kingdom Accounting Standards (United Kingdom Generally
Accepted Accounting Practice). 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 and profit
or loss of the Company for that year. In preparing these financial
statements, the Directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgments and estimates that are reasonable and prudent;
-- state whether applicable UK Accounting Standards and have
been followed, subject to any material departures disclosed and
explained in the financial statements; 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 confirm that so far as each of the directors is
aware:
-- there is no relevant audit information of which the Company's auditor is unaware; and
-- the Directors have taken all steps that they ought to have
taken as directors in order to make themselves aware of any
relevant audit information and to establish that the auditors are
aware of that information.
To the best of our knowledge
-- the Financial Statements, prepared in accordance with United
Kingdom Generally Accepted Accounting Practice (United Kingdom
Accounting Standards and applicable laws), give a true and fair
view of the assets, liabilities, financial position and profit or
loss of the Company; and
-- the annual report, including the Strategic 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 the Company faces.
Going Concern
The company's business activities, its principal risks and
uncertainties and factors likely to affect its future position are
set out within the Strategic Report. There are no material
uncertainties.
The support available to the company from the RHP Group gives
reasonable expectation that the company has adequate resources to
continue in operational existence for the foreseeable future. For
this reason, it continues to adopt the going concern basis in the
financial statements.
Signed on behalf of the Board of Directors
John Newbury
Director
7 July 2015
Registered in England - No 9331195
8 Waldegrave Road,
Teddington
London
TW11 8GT
Corporate Governance Statement
The Company has a listed security in issue and complies with the
applicable sections DTR 7.1 and DTR 7.2 of the Financial Conduct
Authority ("FCA") handbook.
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The Company does not have a Premium Listing and is not required
to comply with the UK Corporate Governance Code (formerly the
Combined Code). However, we have reported on our Corporate
Governance arrangements by drawing upon best practice available,
including those aspects of the UK Corporate Governance Code we
consider to be relevant to the company and best practice.
The Board and its Directors
The Company is led by a Board of Directors ("Board"). The
appointment of the Directors is pursuant to the Articles of
Association dated 27 November 2014.
Each Director is of equal standing. Owing to the size and nature
of the Company, there is no appointed Chairman or Chief Executive.
There is also no distinction drawn between executive and
non-executive Directors.
As the Board all have considerable experience within the Social
Housing sector, and also act as board members or executive
directors of RHP, the Company does not arrange any separate formal
induction or training for new RHP Finance PLC Directors. This
arrangement is reviewed on an on-going basis to consider its
appropriateness when new directors are appointed.
The Directors are covered by the RHP Group's directors' and
officers' indemnity insurance policy.
The Board acknowledges that it is collectively responsible for
the success of the Company by providing leadership, setting the
Company's strategic aims, ensuring that the necessary financial and
human resources are in place and reviewing management
performance.
The table below indicates the number of meetings held and the
number of meetings attended by each Director since incorporation in
November 2014.
Board
Number of meetings held in the year
(11(th) December 2014) 1
Philip Day 1
David Done 1
John Newbury 1
Catriona Simons 1
Stephen Speak 1
All Directors receive appropriate and timely information and
briefing papers in advance of the Management and Board Meetings.
Whilst day-to-day management of the Company is delegated to the RHP
executive group, there is a formal schedule of matters reserved for
decisions by the Board. These include such matters as the provision
of guarantees or indemnities in respect of any liability or
engagement in any other activity.
Appointments and re-appointments to the Board are made in line
with the Articles of Association. RHP has a Governance and
Remuneration committee that provides oversight for the entire RHP
Group of companies which includes RHP Finance PLC. The Company does
not have a separate and dedicated Governance and Remuneration
committee as the size and nature of the Company does not warrant a
dedicated committee.
The Group Board undertakes a formal annual evaluation of its
performance and that of its subsidiaries which includes RHP Finance
PLC. The Directors, however, ensure that the Board
Corporate Governance Statement (continued)
The Board and its Directors (continued)
is structured in such a way that each member of the Board is
able to bring different experiences and skills to the operation of
the Company and encourages and supports each Director to regularly
update and refresh their skills and knowledge. This is reviewed by
the Group Governance and Remuneration Committee.
Internal control and risk management systems
The Board has established processes for identifying, evaluating
and managing the significant risks the Company faces. The Board
annually reviews these processes, which have been in place from the
commencement of trading to the date of approval of this report. The
risks are also reviewed quarterly during the RHP Group Audit
Committee meetings.
The Board is responsible for the Company's system of internal
control and for reviewing its effectiveness. Such a system is
designed to manage rather than eliminate the risk of failure to
achieve business objectives, and can only provide reasonable and
not absolute assurance against material misstatement or loss.
The Board's monitoring covers all controls, including financial,
operational and compliance controls and risk management to ensure
it meets the minimum requirements of DTR 7.1.3. It is based
principally on reviewing financial and operational reports from
management to consider whether significant risks are identified,
evaluated, managed and controlled and whether any significant
weaknesses are promptly remedied or indicate a need for more
extensive monitoring.
As part of the requirements of DTR 7.1.3 the Board specifically
monitors the financial reporting process and the statutory audit of
the annual accounts through reports provided by management.
Furthermore, the Board reviews and monitors the independence of the
statutory auditor and considers the relationship with RHP as part
of its assessment. This is monitored as part the RHP Group Board
meetings which consider the relationship with the statutory auditor
and all group subsidiaries.
The Board regularly reviews whether the existing internal
controls to monitor the requirements of DTR 7.1.3 are sufficient
and take appropriate action as necessary.
The Board has not identified nor been advised of any failings or
weaknesses which it has determined to be significant during the
course of its review of the systems of internal control.
Currently, the internal audit arrangement in place covers the
entire RHP Group which RHP Finance Plc. is part.
Independent auditor's report to the members of RHP Finance
PLC
We have audited the financial statements of RHP Finance PLC for
the period ended 31 March 2015 which comprise the profit and loss
account, the balance sheet and the related notes. 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).
This report is made solely to the company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the company and the company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Respective responsibilities of directors and auditor
As explained more fully in the Statement of Directors'
Responsibilities set out on pages 5 to 6, 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 (APB's) Ethical
Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements
is provided on the Financial Reporting Council's website at
www.frc.org.uk/apb/scope/private.cfm.
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 31 March 2015 and of its result for the period 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 matters prescribed by the Companies Act
2006
In our opinion:
-- the information given in the Strategic Report and Directors'
Report for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
-- the information given in the Corporate Governance Statement
set out on pages 7 to 8 with respect to internal control and risk
management systems in relation to financial reporting processes is
consistent with the financial statements.
Independent auditor's report to the members of RHP Finance PLC
(continued)
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; or
-- a Corporate Governance statement has not been prepared by the company
Jennifer Brown
Grant Thornton UK LLP
Statutory Auditor,
Chartered Accountants
London
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Profit and Loss Account for period to 31 March 2015
2015
Notes GBP'000
Administrative expenses 2
-
--------
Operating income before -
financing costs
Interest receivable
and similar income 3 677
Interest payable and
similar charges 4 (677)
Profit on ordinary activities -
before taxation
Taxation 5 -
Results for the period -
========
The above relates wholly to continuing operations.
There is no difference between the result on ordinary activities
before taxation and the result for the period stated above and
their historic cost equivalent.
The company has no recognised gains and losses other than the
result stated above and therefore no separate statement of total
recognised gains and losses has been presented.
Balance Sheet for Period ended 31 March 2015
2015
Notes GBP'000
Fixed asset investment 6 137,736
Current assets
Debtors - amount falling
due within one year 7 677
Cash at bank and in hand 13
-----------------
690
Creditors - amounts falling
due within one year 8 (677)
Net Current assets 13
Total assets less current
liabilities 137,749
=================
Non-current liabilities
Creditors - amounts falling
due after more than one
year 9 137,736
Called-up share capital 12 13
Equity shareholders' funds 13 137,749
=================
These financial statements were approved and authorised by the
Directors for issue on 7 July 2015
Signed on behalf of the Board of Directors
...................................
John Newbury
Director
Notes to the Financial Statements
1. Principal Accounting Policies
1.1 Basis of preparation
The financial statements are prepared on the going concern
basis, under the historical cost convention and in accordance with
the Companies Act 2006 and applicable accounting standards (United
Kingdom Generally Accepted Accounting Practice).
The financial statements are presented in Sterling rounded to
the nearest thousand.
1.2 Cash flow statement
The Company is exempt from the requirements of FRS1 (Revised) to
prepare a cash flow statement as its results are included in the
consolidated financial statements of the RHP group which includes a
cash flow statement.
1.3 Interest receivable and similar income
Interest payable is charged to the income and expenditure
account in the year
1.4 Taxation
The current tax charge is based on the results for the period
and is measured at the amounts expected to be paid based on the tax
rates and laws substantially enacted by the balance sheet date.
Current tax is recognised in the profit and loss account for the
period.
1.5 Financial assets
Financial assets are recognised when the Company becomes a party
to the contractual provisions of the instrument. Financial assets
are initially recognised at fair value adjusted by transaction
costs. Amounts classed by the Company as financial assets are loans
and receivables and cash.
1.6 Loans and Other Financial Instruments
Loans and other financial instruments are stated in the balance
sheet at the amount of the gross proceeds, less the initial cost of
raising the finance which is amortised over the period of the loan
using the effective interest rate.
Where loans and other financial instruments are redeemed during
the year, any redemption penalty is recognised in the income and
expenditure account of the year in which redemption takes
place.
Financial assets and liabilities are recognised when the Group
becomes a party to the contractual provisions of the financial
instrument and are measured initially at fair value adjusted by
transaction costs.
Issue costs and discount on the issue of the bond are recognised
in the profit and loss over the life of the bond.
Notes to the Financial Statements (continued)
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. Intercompany debtors are classified as loans and
receivables. Loans and receivables are measured subsequent to
initial recognition at amortised cost, discounted at a rate equal
to the original effective rate, less provision for impairment. Any
change in their value through impairment or reversal of impairment
is recognised in the profit and loss account.
Provision against intercompany debtors is made when there is
objective evidence that the Company will not be able to collect all
amounts due to it in accordance with the original terms of those
receivables. The amount of the write-down is determined as the
difference between the asset's carrying amount and the present
value of estimated future cash flows discounted at the original
effective rate. An assessment for impairment is undertaken at least
at each balance sheet date.
1.7 Financial liabilities
Financial liabilities are obligations to pay cash or other
financial assets and are recognised when the Company becomes a
party to the contractual provisions of the instrument. Financial
liabilities are recorded initially at fair value, net of direct
issue costs.
Financial liabilities are measured subsequent to initial
recognition at amortised cost discounted at the original effective
rate, with interest-related charges recognised as an expense in
finance cost in the profit and loss account. Finance charges,
including premiums payable on settlement or redemption and direct
issue costs, are charged to the profit and loss account on an
accrual basis using the effective interest method and are added to
the carrying amount of the instrument to the extent that they are
not settled in the period in which they arise.
Financial liabilities are derecognised only when the obligation
is extinguished, that is, when the obligation is discharged or
cancelled or expires.
2. Administrative Expenses
None of the Directors received any remuneration as Directors
from the Company during the period. The Company has no directly
employed personnel. Remuneration paid to RHP's Executive Group
officers is disclosed in the RHP Group financial statements.
Audit fees of GBP7,500 and other administrative expenses are
borne by RHP, the immediate and ultimate parent undertaking.
3. Interest receivable and similar income
2015
GBP'000
Interest receivable from RHP 677
Bank interest receivable -
677
=======
Notes to the Financial Statements (continued)
4. Interest payable and similar charges
2015
GBP'000
Interest payable on the 2048
Bond 677
=======
5. Taxation
The results for the period do not give rise to a tax charge.
6. Fixed asset investment
2015
GBP'000
Amounts owed by RHP through
intercompany account 138,601
Unamortised Transaction costs (865)
137,736
=======
On 5(th) February 2014, the Company issued a fixed rate secured
bond, denominated in Sterling, maturing 5th February 2048 ("2048
Bond") of GBP175,000,000 to the Debt Capital Markets paying a fixed
coupon bi-annually of 3.25%.
Of the GBP175,000,000 raised, GBP140,000,000 was issued to
external investors. The remaining GBP35,000,000 was initially
issued to the Company's external treasury advisors for nil
consideration. All funds raised were on-lent to RHP under the Bond
Loan Agreement. The GBP138,601,000 above reflects the discount on
issue.
Loans to RHP are considered to be fixed asset investments as
they are intended for use on a continuing basis in the Company's
activities. The Directors consider such loans to be held for the
long term over the life of the related debt.
The amounts stated above are all due in more than one year
(refer to Note 8 for amounts due within one year).
7. Debtors - amount falling due within one year
2015
GBP'000
Interest receivable -
Amounts owed by RHP through
intercompany account 677
677
=======
Notes to the Financial Statements (continued)
8. Creditors - amount falling due within one year
2015
GBP'000
Amounts due to 2048 Bond investors -
=======
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The maturity profile of anticipated future cashflows including
interest in relation to the company's financial liabilities is
shown in the table below:-
2015
GBP'000
Financial assets:
classed as loans and receivables
(amortised cost)
Within One Year 4,589,698
In one to two years 4,578,070
In two to three years 4,579,011
In three to four years 4,579,983
In four to five years 4,593,541
In more than five years 256,747,498
------------
In more than five years 279,667,801
------------
9. Creditors - amounts falling due after more than one year
2015
GBP'000
Amounts owed to 2048 Bond investors 138,601
Unamortised Transaction costs (865)
137,736
=======
The above includes the discount on issue; the nominal value is
GBP140,000,000.
Under the terms of the Bond Loan Agreement RHP is committed to
repay the 2048 Bond in full by maturity date in 10 bi-annual
instalments starting on the 28(th) anniversary of the Bond to
enable the Company to reimburse the bond holders.
All amounts are due for repayment in more than 5 years.
Notes to the Financial Statements (continued)
10. Financial instruments
The Company's financial instruments comprise borrowings and
loans receivable. The sole purpose of these financial instruments
is to raise finance for the growth and development activities of
RHP and its subsidiaries.
The Company does not actively engage in the trading of financial
assets for speculative purposes. The Company has not entered into
any derivative contracts.
The most significant financial risks to which the Company is
exposed are credit risk and liquidity risk. The Board's policy for
managing the risks is summarised below:
The Company's financial instruments are summarised as
follows:
2015
GBP'000
Financial assets:
classed as loans and receivables
(amortised cost)
Loans to ultimate parent undertaking 137,736
Debtors 677
Cash and cash equivalents 13
-------
138,426
=======
2015
GBP'000
Financial liabilities:
classed as other financial
liabilities (amortised cost)
Other creditors (accrued 2048
bond coupon - see Note 6) 677
Other liabilities 137,736
-------
138,413
=======
Credit risk
The Company is dependent on receipt of funds from RHP in order
to meet its contractual obligations under the Bond Loan Agreement
in relation to the 2048 Bond. The credit risk is that RHP, as the
main counterparty, fails to reimburse the Company. The Directors
consider the credit risk to be very low owing to the fact that RHP
is a strong business, with a strong asset base, that consistently
generates surpluses.
The credit risk for bank deposits and money market funds is
considered low, since the counterparties are reputable banks with
high quality external credit ratings.
The maximum credit risk currently faced by the Company is
GBP138.6m being the total amount of funds raised from external
investors by the 2048 Bond issuance, and on lent to RHP.
No impairment loss has been recorded in relation to the fixed
asset investment.
Notes to the Financial Statements (continued)
10. Financial instruments (continued)
Liquidity risk
Liquidity risk is the risk that the Group might be unable to
meet its obligations. Expected cash flows from financial assets, in
particular its cash resources and trade receivables, are used by
the Directors in assessing and managing liquidity risk. The Group
has in place a number of risk mitigation activities. The risk is
managed via the Bond Loan Agreement into which the Company has
entered with RHP.
The repayment profile of the Company's gross undiscounted
liabilities is as follows:
Less
than More
On 12 1 to than
demand months 5 years 5 years Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
2015
Amounts due to 2048
Bond investors - 4,562 18,212 256,830 279,604
Amounts due to RHP 13 - - - 13
------- ------- -------- -------- -------
13 4,562 18,212 256,830 279,617
======= ======= ======== ======== =======
Amounts due to 2048 Bond Investors reflects the gross payments
due on the amount of 2048 Bond that was issued to external
investors.
Interest rate risk
The Company has no exposure to interest rate risk as all amounts
owed to external 2048 Bond investors are at a fixed rate of
interest as are the interest receivable amount due from RHP on
amounts lent under the Bond Loan Agreement.
There are no other interest bearing assets or liabilities.
The interest rate profile of the Company's financial liabilities
is as follows:
2015
GBP'000
Fixed rate borrowings 137,736
=======
The 2048 Bond pays a fixed coupon of 3.25%
Only GBP140,000,000 of the GBP175,000,000 2048 Bond has been
issued.
Notes to the Financial Statements (continued)
10. Financial instruments (continued)
Fair values
Set out below is a comparison of book values and fair values of
the Company's financial instruments:
At Fair Book
Value Value
2015 2015
GBP'000 GBP'000
Financial asset
Loans to ultimate
parent undertaking 134,134 137,736
Cash and cash
equivalents 13 13
At 31 March 134,147 137,749
======= =======
At Fair Book
Value Value
2015 2015
GBP'000 GBP'000
Financial liabilities
Other creditors 13 13
Fixed rate secured
Bonds 136,710 137,736
At 31 March 136,723 137,749
======= =======
The fair value of the loans to RHP is based on the market value
of similar debt instruments at 31 March 2015. Fair values of the
financial liabilities are stated at Ask price of 97.65p and
financial assets are stated at Bid price of 95.81p.
The terms of the loan to RHP are fixed therefore no adjustment
has been made to align the book value to fair value.
Foreign currency risk
The Company has no foreign currency transactions. All of the
Company's borrowings and coupon payments are denominated in
Sterling.
Notes to the Financial Statements (continued)
11. Capital risk management
The Company's objective when managing capital is to safeguard
its ability to continue as a going concern in order to provide
returns for the 2048 Bond investors and benefits for other
stakeholders. The risk of interruption of cash inflows to the
Company (which are required to service and repay the debt) is low
owing to these ultimately being receivable from RHP which receives
a significant proportion of its rents from the public sector and
continues to generate a positive cashflow.
In order to maintain or adjust the capital structure, the
Company may issue new shares, or sell assets to reduce debt.
The Group monitors capital on the basis of the carrying amount
of equity, fixed asset investment plus its cash and cash
equivalents as presented on the face of the balance sheet. Capital
for the reporting period under review is summarised as follows:
2015
GBP'000
Fixed asset investment 137,762
Cash and cash equivalents 13
Equity 13
-------
Total capital 137,788
-------
The Company has honoured all its covenant obligations since the
2048 Bond issuance to the Debt Capital Markets on 5 February 2015.
The Company's covenants are outlined in the Bond Loan Agreement and
relate to the permitted business activities of the Company and
asset cover. Failure to comply with any covenant would lead to a
default and security for the loan becoming immediately enforceable
and the Loan becoming immediately due and repayable.
The Company has complied with all externally imposed capital
requirements during the year.
12. Called up share capital
2015
GBP'000
Authorised
50,000 ordinary shares of GBP1
each 50
=======
2015
GBP'000
Allocated, issued and paid
50,000 ordinary shares of GBP0.25
each 13
=======
Upon incorporation the Company issued 50,000 shares to provide
working capital to establish the business.
All shares rank pari passu in all regards.
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