RNS Number : 6998B
Canary Wharf Finance II PLC
20 August 2008
CANARY WHARF FINANCE II PLC
19 AUGUST 2008
30 JUNE 2008 HALF YEARLY FINANCIAL REPORT
Pursuant to sections 4.2 and 6.3.5 of the Disclosure and Transparency Rules the board of Canary Wharf Finance II plc is pleased to
publish its half yearly financial report for the period ended 30 June 2008, which will shortly be available from www.
canarywharf.com/Investor Relations.
Two copies of the 30 June 2008 Half Yearly Financial Report will be submitted to the UK Listing Authority ("UKLA") in accordance with
Paragraph 9.6.1. The documents will shortly be available for inspection at the UKLA's Document Viewing Facility, which is situated at 25
North Colonnade, Canary Wharf, London E14 5HS.
INTERIM MANAGEMENT REPORT
BUSINESS REVIEW
The company is a wholly owned subsidiary of Canary Wharf Group plc and its ultimate parent undertaking is Songbird Estates plc.
The principal activity of the company is to act as a finance company. The company is engaged in the provision of finance to the Canary
Wharf group, comprising Canary Wharf Group plc and its subsidiaries ('the group'). All activities take place within the United Kingdom.
At 30 June 2008, the company had �2,555,267,362 (31 December 2007: �2,558,722,801) of notes listed on the London Stock Exchange and had
lent the proceeds to a fellow subsidiary undertaking, CW Lending II Limited. The notes are secured on the rental stream from certain
property interests at Canary Wharf held by fellow subsidiary undertakings.
As shown in the company's profit and loss account, the company's profit after tax for the six month period was �10,724,786 (period ended
30 June 2007: �19,668,905).
The balance sheet shows the company's financial position at the period end and indicates that net assets were �3,827,454 (31 December
2007: liabilities of �18,201,329).
The financial position of the company as indicated by its balance sheet is impacted by the application of Financial Reporting Standard
26 (Financial Instruments: Recognition and Measurement) ('FRS 26') and its impact on other financial reporting standards. Adjusting for the
effects of FRS 26 the net asset value of the company at 30 June 2008 was as follows:
31 December 30 June 30 June
2007 2008 2007
� � �
(18,201,329) Net assets/(liabilities) per balance 3,827,454 37,891,973
sheet
20,989,000 Effects of FRS 26 (843,000) (35,218,000)
----------- ----------- --------------
2,787,671 Adjusted net assets 2,984,454 2,673,973
======= ======= =======
There have been no significant events since the balance sheet date.
KEY PERFORMANCE INDICATORS
31 December 30 June 30 June
2007 2008 2007
� � �
2,558,722,801 Securitised debt 2,555,267,362 2,562,178,240
151,516,295 Financing cost (before 76,985,149 74,117,105
adjustments for FRS 26)
359,523 Adjusted profit before tax 196,783 245,824
and FRS 26
18.8 years Weighted average maturity 18.4 years 19.3 years
of debt
6.2% Weighted average interest 6.2% 6.2%
rate
The adjusted profit before tax comprises the profit on ordinary activities before tax of �10,724,786 (period ended 30 June 2007:
�19,668,905) adjusted for the FRS 26 items listed in Note 3, totalling �10,528,003 (period ended 30 June 2007: �19,423,081).
PRINCIPAL RISKS AND UNCERTAINTIES
The risks and uncertainties facing the business are monitored through continuing assessment by management and formal quarterly review
and discussion at audit committee and board level for the group. Board and audit committee discussion focuses on the risks identified as
part of the system of internal control which highlights key risks faced by the company and allocates specific day to day monitoring and
control responsibilities to management. As a provider of finance to the group, these key risks include the cyclical nature of the property
market, concentration risk and financing risk.
These risks, which are summarised below, relate both to the first six months and the second six months of the year and are unchanged
from the risks and uncertainties disclosed in the directors' report to the financial statements for the year ended 31 December 2007.
The cyclical nature of the property market
The property market is subject to factors such as the oversupply of available space in the office market or a decline in tenant demand
for space. Such factors are monitored in order to ensure that the company can react promptly should the need arise.
Concentration risk
The properties on which the company's debt is secured are currently located on or adjacent to the Canary Wharf Estate. Wherever
possible steps are taken to mitigate or avoid the material consequences arising from this concentration.
Financing risk
The broader economic cycle inevitably leads to movement in inflation, interest rates and bond yields. The company holds debenture
finance, principally in sterling at both fixed and floating rates and uses interest rate swaps to modify its exposure to interest rate
fluctuations.
DIRECTORS' RESPONSIBILITY STATEMENT
The board of directors, comprising G Iacobescu, A P Anderson II and B Niles, confirm to the best of their knowledge that:
a) the condensed set of financial statements on pages 6 to 12, which has been prepared in accordance with the applicable set of
accounting standards, gives a true and fair view of the assets, liabilities, financial position and profit or loss of the Company as
required by Rule 4.2.4 of the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority ('the DTRs'); and
b) the interim management report includes a fair review of the information required by Rule 4.2.7 of the DTRs (indication of important
events during the first six months and description of principal risks and uncertainties for the remaining six months of the year).
Signed on behalf of the board by:
A P Anderson II
Director
19 August 2008
INDEPENDENT REVIEW REPORT TO CANARY WHARF FINANCE II PLC
We have been engaged by the company to review the condensed set of financial statements in the half yearly financial report for the six
months ended 30 June 2008 which comprises the profit and loss account, the statement of total recognised gains and losses, the balance
sheet, and related notes 1 to 9. We have read the other information contained in the half-yearly financial report and considered whether it
contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the company in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review
of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the
United Kingdom. Our work has been undertaken so that we might state to the company those matters we are required to state to them in an
independent review 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, for our review work, for this report, or for the conclusions we have formed.
Directors' responsibilities
The half yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for
preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial
Services Authority.
As disclosed in note 1, the annual financial statements of the company are prepared in accordance with United Kingdom Generally Accepted
Accounting Practice. The condensed set of financial statements included in this half-yearly financial report have been prepared in
accordance with the accounting policies the group intends to use in preparing its next annual financial statements.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial
report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim
Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United
Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the
half yearly financial report for the six months ended 30 June 2008 is not prepared, in all material respects, in accordance with the
Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
Deloitte & Touche LLP
Chartered Accountants and Registered Auditors
19 August 2008
London, United Kingdom
UNAUDITED PROFIT AND LOSS ACCOUNT
FOR THE SIX MONTHS ENDED 30 JUNE 2008
Unaudited Unaudited
Audited Six months Six months
Year ended ended ended
31 December2007 30 June 2008 30 June 2007
� Note � �
(7,050) Administrative expenses (7,050) -
-------- -------- -------
(7,050) OPERATING LOSS (7,050) -
151,882,868 Interest receivable and 2 77,188,982 74,362,929
similar income
(157,536,978) Interest payable and 3 (66,457,146) (54,694,024)
similar charges
--------------- -------------- --------------
(5,661,160) (LOSS)/PROFIT ON 10,724,786 19,668,905
ORDINARY ACTIVITIES
BEFORE TAXATION
- Tax on (loss)/profit on 4 - -
ordinary activities
------------ ------------ -----------
(5,661,160) (LOSS)/PROFIT ON 8 10,724,786 19,668,905
ORDINARY ACTIVITIES
AFTER TAXATION FOR THE
YEAR
======== ========
========
All amounts relate to continuing activities in the United Kingdom.
The Notes on pages 9 to 12 form an integral part of this Half Yearly Financial Report.
The interim results for the six months ended 30 June 2008 were approved by the Board of Directors on 19 August 2008.
UNAUDITED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
FOR THE SIX MONTHS ENDED 30 JUNE 2008
Audited Unaudited Unaudited
Year ended Six months Six months
31 December ended ended
2007 30 June 2008 30 June 2007
� � �
(5,661,160) (Loss)/profit for the financial year 10,724,786 19,668,905
(4,553,178) Fair value adjustment on effective 13,777,756 29,762,042
hedging instruments
2,967,178 Receipts from effective hedging (1,927,756) (1,140,042)
instruments
9,152,705 Termination of hedge reserve recycling - 9,152,705
(646,657) Hedge reserve recycling (546,003) (91,420)
------------ ------------ ------------
1,258,888 Total recognised gains relating to the 22,028,783 57,352,190
year
======== ======== ========
The Notes on pages 9 to 12 form an integral part of this Half Yearly Financial Report.
UNAUDITED BALANCE SHEET AS AT 30 JUNE 2008
Audited Unaudited Unaudited
31 December2007 30 June2008 30 June2007
� Note � �
CURRENT ASSETS
Debtors: 5
2,625,079,707 Amounts falling due after one year 2,620,527,116 2,666,278,515
41,254,638 Amounts falling due within one year 42,795,911 39,394,575
617,394 Cash at bank 820,885 456,206
------------- ------------ ------------
2,666,951,739 2,664,143,912 2,706,129,296
(39,084,360) CREDITORS: Amounts falling due within one year 6 (40,632,340) (37,176,808)
---------------- ---------------- ----------------
2,627,867,379 NET CURRENT ASSETS 2,623,511,572 2,668,952,488
---------------- ---------------- ----------------
2,627,867,379 TOTAL ASSETS LESS CURRENT LIABILITIES 2,623,511,572 2,668,952,488
(2,646,068,708) CREDITORS: Amounts falling due after more than one year 7 (2,619,684,118) (2,631,060,515)
----------------- ----------------- -----------------
(18,201,329) NET ASSETS/(LIABILITIES) 3,827,454 37,891,973
========= ======= ========
CAPITAL AND RESERVES
50,000 Called-up share capital 50,000 50,000
3,300,321 Hedging reserve 8 14,604,318 34,063,557
(21,551,650) Profit and loss account 8 (10,826,864) 3,778,416
-------------- -------------- ------------
(18,201,329) SHAREHOLDER'S FUNDS/(DEFICIT) 3,827,454 37,891,973
========= ======== ========
The Notes on pages 9 to 12 form an integral part of this Half Yearly Financial Report.
NOTES TO THE HALF YEARLY FINANCIAL REPORT
FOR THE SIX MONTHS ENDED 30 JUNE 2008
1. PRINCIPAL ACCOUNTING POLICIES
The half yearly financial report has been prepared in accordance with pronouncements on interim reporting issued by the Accounting
Standards Board, and on the basis of the accounting policies set out in the company's financial statements for the year ended 31 December
2007, which are prepared in accordance with UK GAAP.
The financial information relating to the six months periods ended 30 June 2008 and 30 June 2007 is unaudited.
The results for the year ended 31 December 2007 are not statutory accounts as defined in Section 240 of the Companies Act 1985. A copy
of the statutory accounts for the year has been delivered to the Registrar of Companies. The audit report on those accounts was not
qualified, did not contain a reference to any matters which the auditors drew attention by way of emphasis without qualifying the report and
did not contain statements under Section 237(2) or (3) of the Companies Act 1985.
In accordance with the provisions of FRS 1 (Revised) the company is exempt from the requirements to prepare a cash flow statement, as it
is a wholly-owned subsidiary of Canary Wharf Group plc, which has prepared a consolidated cash flow statement.
2. INTEREST RECEIVABLE AND SIMILAR INCOME
Audited Unaudited Unaudited
Year ended Six months Six months
31 December ended ended
2007 30 June 2008 30 June 2007
� � �
101,667 Bank interest receivable 67,866 46,378
151,781,201 Interest receivable from 77,121,116 74,316,551
group undertakings
------------- ------------- --------------
151,882,868 77,188,982 74,362,929
========= ======== =========
3. INTEREST PAYABLE AND SIMILAR CHARGES
Unaudited Unaudited
Audited Six months Six months
Year ended ended ended
31 December2007 30 June 2008 30 June 2007
� � �
151,516,295 Interest payable on 76,985,149 74,117,105
securitised debt (Note 6)
945,688 Fair value adjustments on (9,982,000) (25,053,312)
derivative financial
instruments
(3,431,053) Foreign exchange movements - (3,431,053)
(646,657) Hedge reserve recycling (546,003) (91,421)
(Note 8)
9,152,705 Termination of hedge - 9,152,705
reserve recycling
--------------- -------------- --------------
157,536,978 66,457,146 54,694,024
========== ========= =========
4. TAXATION
No provision for corporation tax has been made since the tax profit for the year will be covered by the group relief expected to be made
available to the company by other companies in the group. No charge will be made by other group companies for the surrender of group relief.
It is anticipated that group relief and other tax reliefs will impact on future tax charges. There is no unprovided deferred taxation.
5. DEBTORS
Audited Unaudited Unaudited
31 December 30 June 30 June
2007 2008 2007
� � �
Due within one year:
39,131,220 Loans to fellow subsidiary undertaking 40,677,267 37,292,641
2,116,306 Amount owed by fellow subsidiary undertaking 2,109,256 2,096,181
7,112 Accrued interest receivable 9,388 5,753
------------- ------------ -------------
41,254,638 42,795,911 39,394,575
======== ======== ========
Due in more than one year:
- Derivative financial instruments 1,415,000 35,218,000
2,625,079,707 Loans to fellow subsidiary undertaking 2,619,112,116 2,631,060,515
---------------- ---------------- ----------------
2,625,079,707 2,620,527,116 2,666,278,515
=========== ========== ===========
The loans to a fellow subsidiary undertaking bear fixed rates of interest between 5.12% and 6.81% and are repayable in instalments
between 2005 and 2035. At 30 June 2008 the fair value of the loan was �2,355,076,000 (31 December 2007: �2,606,215,000), calculated by
reference to the fair values of the company's financial liabilities.
Other amounts owed by group undertakings are non-interest bearing.
6. CREDITORS: Amounts falling due within one year
Audited Unaudited Unaudited
31 December 30 June 30 June
2007 2008 2007
� � �
39,077,310 Securitised debt (Note 7) 40,625,290 37,176,808
7,050 Accruals and deferred income 7,050 -
------------- ------------- -------------
39,084,360 40,632,340 37,176,808
======== ========= =========
The amount of the securitised debt due within one year comprises �33,714,410 (31 December 2007: �32,166,430) of interest and �6,910,880
(31 December 2007: �6,910,880) of capital.
7. CREDITORS: Amounts falling due after more than one year
Audited Unaudited U
n
a
u
d
i
t
e
d
31 December 30 June 3
0
J
u
n
e
2007 2008 2
0
0
7
� � �
2,625,079,708 Securitised debt 2,619,112,118 2
,
6
3
1
,
0
6
0
,
5
1
5
20,989,000 Derivative financial instruments 572,000 -
------------- ---------------- -
--- -
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,646,068,708 2,619,684,118 2
,
6
3
1
,
0
6
0
,
5
1
5
========== =========== =
=
=
=
=
=
=
=
=
=
=
The securitised debt has a face value of �2,555,267,362 (31 December 2007: �2,558,722,801), of which �1,829,267,362 (31 December 2007:
�1,832,722,801) carries fixed rates of interest between 5.95% and 6.80%. The other �726,000,000 (31 December 2007: �726,000,000) of the
securitised debt carries floating rates of interest at LIBOR plus a margin. The company uses interest rate swaps to hedge exposure to the
variability in cash flows on floating rate debt caused by movements in market rates of interest. The hedged rates of the floating notes,
including the margins, are between 5.12% and 5.80%.
The market value of the securitised debt at 30 June 2008 was �2,354,233,000 (31 December 2007: �2,585,226,000). At 30 June 2008 the
fair value of the interest rate derivatives resulted in the recognition of a net asset of �843,000 (31 December 2007: liability of
�20,989,000). Of this amount, assets totalling �1,239,000 were in respect of interest rate swaps which qualify for hedge accounting (31
December 2007: liabilities totalling �10,611,000) and net liabilities of �396,000 was in respect of interest rate swaps which do not qualify
for hedge accounting (31 December 2007: liabilities of �10,378,000).
The amounts at which the securitised debt is stated comprise:
Audited Unaudited Unaudited
31 December 30 June 30 June
2007 2008 2007
� � �
2,431,843,021 Brought forward 2,631,990,588 2,431,843,021
(581,447,372) Repaid in period (3,455,440) (577,991,932)
726,000,000 Drawn down in period - 726,000,000
(5,050,696) Deferred financing (2,512,150) (2,525,329)
expenses
60,645,635 Cross currency - 60,645,635
translation
--------------- ---------------- ----------------
2,631,990,588 Carried forward 2,626,022,998 2,637,971,395
========== =========== ===========
6,910,880 Payable within one year 6,910,880 6,910,880
or ondemand
2,625,079,708 Payable after more than 2,619,112,118 2,631,060,515
oneyear
--------------- --------------- ------------------
2,631,990,588 2,626,022,998 2,637,971,395
========== ========== ============
Certain of the A1, A3 and B notes were issued at a premium which is being amortised to the profit and loss account on a straight-line
basis over the life of the relevant notes. At 30 June 2008 �70,755,636 (31 December 2007: �73,267,787) remained unamortised.
The notes are secured on certain property interests in fellow subsidiary undertakings and the rental income stream therefrom.
8. RESERVES
Hedging reserve Profit and loss Total
account
� � �
At 1 January 2008 3,300,321 (21,551,650) (18,251,329)
Profit for the period * 10,724,786 10,724,786
Fair value adjustment on effective hedging instruments 13,777,756 * 13,777,756
Receipts from effective hedging instruments (1,927,756) * (1,927,756)
Movements on discontinued hedge accounting transferred to (546,003) * (546,003)
the profit and loss account
-------------- --------------- ------------
At 30 June 2008 14,604,318 (10,826,864) 3,777,454
========= ========= =======
9. CAPITAL COMMITMENTS
As at 30 June 2008 the company had given a fixed charge over all its assets, including first fixed charges over its bank accounts, to
secure the notes referred to in Note 7.
Contact for queries: J R Garwood, Company Secretary, Canary Wharf Finance II plc
Telephone: 020 7418 2000
This information is provided by RNS
The company news service from the London Stock Exchange
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