TIDM57UT
RNS Number : 1373Y
Grand Union Group Fundings PLC
04 September 2020
Grand Union Group Funding PLC
Annual report and financial statements
For the year ended 31 March 2020
Company Number: 08757850
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Grand Union Group Funding PLC
Annual report and financial statements
Contents
Company information 2
Strategic report 3 - 4
Directors' report 5 - 7
Independent auditor's report to the members of
Grand Union Group Funding PLC 8 - 12
Statement of Comprehensive Income 13
Statement of Financial Position 14
Statement of Changes in Equity 15
Notes to the financial statements 16 - 22
Grand Union Group Funding PLC
Annual report and financial statements
Company Information
Directors
Aileen Evans
John Edwards
Nicola Ewen
Peter Fielder
Mona Shah
Company Secretary
Chris Bellamy
Registered Office K2
Timbold Drive
Kents Hill
Milton Keynes
Bucks
MK7 6BZ
Company Number 08757850
Auditors Beever and Struthers
St Georges House
215-219 Chester Road
Manchester, M15 4JE
Bankers U.S. Bank
125 Old Broad Street
London
EC2N 1AR
Grand Union Group Funding PLC
Annual report and financial statements
Strategic Report
The directors present their strategic report for Grand Union
Group Funding PLC (the "Company") for the year ended 31 March
2020.
Principal activities
The principal activity of the Company is to act as the funding
vehicle for Grand Union Housing Group (the Group).
Review of the business
On 4 December 2013, the Company successfully issued a GBP150m
bond, which included a retained element of GBP35m, at a coupon of
4.625% with repayment after 30 years (4 December 2043). The bond
was issued at a discount, so funds received totalled GBP114.3m.
The keen pricing demonstrated the Group's strong financial
position which had been reflected in the A2 (Stable) credit rating
issued by Moody's Investor Services in December 2014. The rating
outlook was changed to A2 (Negative) on 29 June 2016 following the
result of the UK's referendum to leave the European Union. This
change applied across all sub sovereign organisations and reflected
the uncertain future for the UK Government and closely related
businesses. This rating was changed by Moody's Investor Services to
A3 (Stable) in October 2018 and reaffirmed in October 2019
following their annual review.
The cost of issuing the bond was GBP1.4m leaving a balance of
GBP112.9m which was immediately on-lent to Grand Union Housing
Group Limited under a facility arrangement between the Company (as
lender) and Grand Union Housing Group Limited (as borrower),
following this the effective interest rate on the GBP112.9m is
4.7948%. The bond is listed on the London Stock Exchange.
The bond is for a period of 30 years and secured on assets owned
by Grand Union Housing Group Limited, with a covenant that requires
a minimum level of asset cover of 105% on an Existing Use Value -
Social Housing basis or 115% on a Market Value subject to Tenancies
basis. Grand Union Housing Group Limited pays 4.625% interest on
its borrowing from the Company.
Since incorporation the Company has not carried out any business
or activities other than incidental to the financing of Grand Union
Housing Group Limited.
A trust deed, entered into at the time of the bond issue,
required that the retained bond (GBP35m) be cancelled if not sold
by the Company within three years of the issue date i.e. by 4
December 2016. The Company reviewed the funding requirements at
that date in line with the Group's strategic objectives and
cancelled the retained bond.
As the Company's activities are limited to the raising and
management of private finance for Grand Union Housing Group Limited
(GUHG), it employs no staff and all administration functions are
carried out by the finance team of GUHG. As a result, there is no
significant information to report on regarding environmental
matters, employees or social and community issues.
Future Outlook
The directors do not anticipate any change in the Company's
principal activity and expect future financial performance to
continue on the same basis.
Grand Union Group Funding PLC
Annual report and financial statements
Principal risks and uncertainties
The Company on-lent all the proceeds from the bond issue to
members of the Group. The main risk facing the Company is that GUHG
is unable to make interest or principal payments when they fall
due. GUHG is financially strong, with a long-term business plan
that shows capacity to repay interest and principal when due. This
plan has been fully risk assessed and stress tested with any
potential mitigation activities clearly identified. Processes are
in place for forward monitoring lead indicators and early warning
triggers.
Key performance indicators
The Company operates as the Group funding vehicle and as such
has no specific key performance indicators.
Future developments, performance and position
The directors do not anticipate any change in the Company's
principal activity and expect future financial performance to
continue on the same basis.
The directors do not recommend a dividend for the year ended 31
March 2020 (2019: GBPnil).
Directors' indemnity provision
The board confirms that Company has in place directors' and
officers' insurance.
Other information
The Company has no direct employees and it exists solely to
on-lend the proceeds of capital market transactions. The Company
had five directors as at 31 March 2020.
Approved by the board on 28 July 2020 and signed on its behalf
by:
John Edwards
Chair
Grand Union Group Funding PLC
Annual report and financial statements
Directors' Report
The directors present their report and the financial statements
for the Company for the year ended 31 March 2020.
Directors
The Company's directors are listed on page 2.
Financial risk management
Risk management objectives and policies
The directors acknowledge their responsibility for establishing
and maintaining a sound system of internal control and for
reviewing its effectiveness. The directors have delegated the
on-going review of controls to the Grand Union Housing Group Audit
and Risk Committee. The directors receive regular updates from the
Committee on the risk register and control framework.
The system of internal control is designed to manage, rather
than eliminate the risk of failure to achieve business objectives,
and to provide reasonable and not absolute assurance against
material misstatement or loss.
The process for identifying, evaluating and managing the
significant risks faced by the Group was on-going throughout the
year and to the date of approval of these financial statements.
The Group has a formal Treasury Management Policy ensuring that
the member companies have sufficient resources to meet on-going
capital and revenue commitments and to protect against adverse
movement in interest rates. The Group acknowledges that effective
treasury management will support the delivery of the business and
service objectives. The Group is committed to the principles of
achieving value for money in treasury management within the context
of effective risk management.
Interest rate risk and hedging
As at 31 March 2020, 100% of the Company's debt was on fixed
rate terms. There is no intention to repay any debt prior to
maturity, therefore any movement in the market value of debt due to
changes in interest rates is deemed immaterial to the ongoing
operations of the Company.
Liquidity risk
The Company actively lends the full amount it has borrowed, thus
the assets fully offset its liabilities and GUHG pays to the
Company the interest on the due dates. There is considered to be no
net exposure to either liquidity risk from repayment or interest
risk. Further quantitative information and sensitivity analysis is
not provided as these risks are considered to be immaterial.
Grand Union Group Funding PLC
Annual report and financial statements
Directors' Report
Credit risk
As at 31 March 2020 the Company had lent all its funds to GUHG
and therefore the main risk is that GUHG will be unable to pay
interest or principal when they fall due. The underlying assets of
issuance belong to GUHG through a security trust arrangement with
the Prudential Trustee Company Limited. The loan to GUHG is made
under the terms of an agreement between the Company and GUHG.
The maximum exposure to credit risk is represented by the total
carrying amount of the Company's assets at the reporting date.
All amounts loaned to other members of the Group are considered
recoverable, and therefore no impairment of these assets is
considered necessary.
Statement of directors' responsibilities
The directors are responsible for preparing the strategic
report, the 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 the financial statements in accordance with
United Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards, including FRS 102 "The Financial
Reporting Standard applicable in the UK and Republic of Ireland"
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 judgments 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
-- 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.
Grand Union Group Funding PLC
Annual report and financial statements
Directors' Report
Going concern
After making all reasonable enquiries, the directors have a
reasonable expectation that Grand Union Group Funding PLC has
adequate resources to continue in operational existence for the
foreseeable future. For this reason, they have adopted the going
concern basis in preparing the accounts.
Annual general meeting
The annual general meeting will be held on 28 July 2020.
Matters presented in the strategic report
As permitted by paragraph 1A of Schedule 7 to the Large and
Medium-sized Companies and Groups (Accounts and Reports)
Regulations 2008 certain matters which are required to be disclosed
in the directors' report have been omitted as they are included in
the strategic report. These matters relate to:
-- information regarding the future developments of the Company
-- information regarding directors' indemnity provisions.
Statement as to disclosure of information to the auditor
So far as each person who is a director is aware, there is no
relevant audit information of which the Company's auditor is
unaware. Each director has taken all steps that they ought to have
taken in their duty as a director in order to make themselves aware
of any relevant audit information and to establish that the
Company's auditor is aware of that information.
Auditor
Following a successful tender exercise, Beever and Struthers
were appointed as Auditors for GUHG.
Approved by the board on 28 July 2020 and signed on its behalf
by:
John Edwards
Chair
Grand Union Group Funding PLC
Annual report and financial statements
Independent Auditor's Report to the Members of Grand Union Group
Funding plc
Our opinion is unmodified
We have audited the financial statements of Grand Union Group
Funding plc ("the Company") for the year ended 31 March 2020 which
comprise the Statement of Comprehensive Income, the Statement of
Financial Position, and the related notes, including a summary of
significant accounting policies. The financial reporting framework
that has been applied in their preparation is applicable law and
United Kingdom Accounting Standards, including FRS 102 "The
Financial Reporting Standard applicable in the UK and Republic of
Ireland" (United Kingdom Generally Accepted Accounting
Practice).
In our opinion, the financial statements:
-- give a true and fair view of the state of the Company's
affairs as at 31 March 2020 and of its result for the year then
ended;
-- have been properly prepared in accordance with UK accounting
standards, including FRS 102 The Financial Reporting Standard
applicable in the UK and Republic of Ireland.
-- have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We believe that the audit
evidence we have obtained is a sufficient and appropriate basis for
our opinion. Our audit opinion is consistent with our report to the
Audit and Risk Committee.
We were first appointed as auditor of Grand Union Group Funding
plc by the Board for the period ending 31 March 2020. The period of
total uninterrupted engagement for the Company is one financial
year, ending 31 March 2020. We have fulfilled our ethical
responsibilities under, and we remain independent of the Company in
accordance with, UK ethical requirements including the FRC Ethical
Standard as applied to listed public interest entities. No
non-audit services prohibited by that standard were provided.
Conclusions relating to going concern
We have nothing to report to you in respect of the following
matters in relation to which the ISAs (UK) require us to report to
you where:
-- the Board's use of the going concern basis of accounting in
the preparation of the financial statements is not appropriate;
or
-- the Board has not disclosed in the financial statements any
identified material uncertainties that may cast significant doubt
about the Company's ability to continue to adopt the going concern
basis of accounting for a period of at least twelve months from the
date when the financial statements are authorised for issue.
Key Audit Matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most
Grand Union Group Funding PLC
Annual report and financial statements
significant assessed risks of material misstatement (whether or
not due to fraud) we identified, including those which had the
greatest effect on: the overall audit strategy, the allocation of
resources in the audit and directing the efforts of the engagement
team. We summarise below the key audit matters in arriving at our
audit opinion above, together with our key audit procedures to
address these matters and, as required for public interest
entities, our results from those procedures. These matters were
addressed, and our results are based on procedures undertaken, in
the context of, and solely for the purpose of, our audit of the
financial statements as a whole, and in forming our opinion
thereon, and consequently are incidental to that opinion, and we do
not provide a separate opinion on these matters.
i. Recoverability of long term debtors
The risk - significant risk high value
Grand Union Group Funding plc is a special purpose vehicle
formed for the purpose of receiving the proceeds of a bond issue in
November 2013. The Company on-lent the entire bond issue proceeds
to Grand Union Housing Group. The financial statements of the
Company show the following balances in relation to the bond
issue:
-- Long term debtor due from Grand Union Housing Group: GBP114.8m (2019: GBP114.8m)
-- Long term creditor due to bondholders: GBP114.8m (2019: GBP114.8m)
Refer to pages 16-18 (accounting policy) and pages 20 - 21
(financial disclosures).
The ability of Grand Union Housing Group to service and repay
the debt due to the Company is a key audit matter. During the year
ended 31 March 2020, COVID-19 had a significant impact on the UK
economy and on the activities of housing associations. As auditors
to the Company, we are required to consider the impact of COVID-19
on the financial outlook for Grand Union Housing Group and assess
its impact on the going concern status of the Company, and on the
accounting treatments and disclosures within the Company's
financial statements.
Our response
Our procedures included:
-- Assessment of recoverability: Assessing 100% of intercompany long term debtors
by considering the financial viability of Grand Union Housing
Group, in particular whether the Group has sufficient liquidity to
meet interest payments as they fall due, and sufficient longer term
future cash flows to repay the debt. We have reviewed Grand Union
Housing Group's internal assessment of the implications of
COVID-19, and management information relating to actual and
forecast financial performance after the year end. We have reviewed
the Group's long term financial plans, revised in the light of
COVID-19, and the stress testing of those plans. We have considered
the potential impact of these matters on the Group's financial
viability into the foreseeable future, and on its status as a going
concern
-- Test of detail : Agreeing the debtor balance to the
accounting records of the Company and Grand Union Housing
Group.
-- Test of detail : Agreeing interest receipts and payments, and
capital repayments, between the accounting records of Company and
Grand Union Housing Group, and payments to the bondholder.
Our results
We identified a number of areas where COVID-19 and the resulting
impact on the economy could potentially impact significantly on
Grand Union Housing Group, including:
Grand Union Group Funding PLC
Annual report and financial statements
-- Impairment
-- Rent collection and bad debts
-- Sales risk and exposure to the property market
-- Investment properties
-- Pension scheme valuation
Based on the audit work performed we performed, we are satisfied
that the above matters do not cause material uncertainty in the
ability of Grand Union Housing Group to repay its debt to the
Company, and we are satisfied with the assessment of the Company's
Board that the Company remains a going concern.
We have nothing to report in this regard.
Our Application of Materiality and an Overview of the Scope of
the Audit
The materiality for the audit of the Company, regarding the
Statement of Financial Position, for the year ended 31 March 2020
was GBP306.5k) determined with reference to the average of the
following benchmarks:
-- 1% of turnover
-- 5% of result before tax
-- 4% of net assets
-- 1% of gross assets
Materiality for the audit of the Statement of Comprehensive
Income is an average of the first two benchmarks only at
GBP37.5k).
We agreed to report to the Audit and Risk Committee any
corrected or uncorrected identified misstatements exceeding GBP15k,
in addition to other identified misstatements that warranted
reporting on qualitative grounds.
Other information
The other information comprises the information included in the
Report of the Board including Strategic Report, other than the
financial statements and our auditor's report thereon. The Board is
responsible for the other information. Our opinion on the financial
statements does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do not express
any form of assurance conclusion thereon.
In connection with our audit of the financial statements our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact. We
have nothing to report in this regard.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 or the Housing and
Regeneration Act 2008 requires us to report to you if, in our
opinion:
Grand Union Group Funding PLC
Annual report and financial statements
-- the information given in the Report of the Board including
Strategic Report for the financial year for which the financial
statements are prepared is not consistent with the financial
statements; or
-- a satisfactory system of control over transactions has not been maintained; or
-- the Company has not kept adequate accounting records; or
-- the Company's financial statements are not in agreement with
accounting records and returns; or
-- we have not received all the information and explanations we require for our audit.
Responsibilities of the directors
As explained more fully in the Statement of directors'
Responsibilities set out on page 6, the directors are responsible
for the preparation of the financial statements and for being
satisfied that they give a true and fair view, and for such
internal control as the directors determine is necessary to enable
the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the Company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the Company to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's web-site at www.frc.org.uk/auditorsresponsibilities .
This description forms part of our auditor's report.
Irregularities - ability to detect
We identified areas of laws and regulations that could
reasonably be expected to have a material effect on the financial
statements from our sector experience and through discussion with
the Board and other management (as required by auditing
standards).
We had regard to laws and regulations in areas that directly
affect the financial statements including financial reporting
(including related company legislation) and taxation legislation.
We considered the extent of compliance with those laws and
regulations as part of our procedures on the related financial
statement items.
We communicated identified laws and regulations throughout out
team and remained alert to any indications of non-compliance
throughout the audit.
Grand Union Group Funding PLC
Annual report and financial statements
As with any audit, there remained a higher risk of non-detection
of irregularities, as these may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of
internal controls.
Use of our Report
This report is made solely to the Company's members, as a body,
in 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.
Lee Cartwright, Senior Statutory Auditor
For and on behalf of
Beever and Struthers
St George's House
215-219 Chester Road
Manchester
M15 4JE
Date:
Grand Union Group Funding PLC
Annual report and financial statements
Statement of Comprehensive Income
For the year ended 31 March 2020
2020 2019
Note GBP'000 GBP'000
Interest receivable and similar charges 3 5,360 5,358
Interest payable and similar charges 4 (5,360) (5,358)
Operating profit 5 - -
Profit on ordinary activities before
taxation - -
Taxation - -
Profit for the year - -
Other comprehensive income - -
Total comprehensive income for the
year - -
======= =======
The notes on pages 16 to 22 are an integral part of these
financial statements.
Grand Union Group Funding PLC
Annual report and financial statements
Statement of Financial Position
As at 31 March 2020
Company number 08757850
Note 2020 2019
GBP'000 GBP'000
Current assets
Debtors: amounts falling due within
one year 8 38 38
Debtors: amounts falling due after
one year 8 114,831 114,790
Cash and cash equivalents 12 12
114,881 114,840
Creditors: amounts falling due within
one year 9 - -
Net current assets 114,881 114,840
Creditors: amounts falling due after
one year 9 (114,831) (114,790)
Net assets 50 50
========= =========
Share Capital and reserves
Called up share capital 50 50
Revenue reserve - -
Total equity 50 50
========= =========
These financial statements were approved by the board on 28 July
2020 and signed on its behalf by:
John Edwards Chris Bellamy
Chair Secretary
The notes on pages 16 to 22 are an integral part of these
financial statements .
Grand Union Group Funding PLC
Annual report and financial statements
Statement of Changes in Equity
For the year ended 31 March 2020
Called up share
Note capital Revenue Reserve Total equity
GBP'000 GBP'000 GBP'000
At 1 April 2018 50 - 50
Profit for the year - - -
Other comprehensive income - - -
Total comprehensive income - - -
At 31 March 2019 50 - 50
================ ================ =============
Profit for the year - - -
Other comprehensive income - - -
Total comprehensive income - - -
At 31 March 2020 50 - 50
================ ================ =============
Reserves
Revenue Reserve
The revenue reserve represents cumulative profits and losses and
gains and losses of the Company.
The notes on pages 16 to 22 are an integral part of these
financial statements.
Grand Union Group Funding PLC
Annual report and financial statements
Notes to the financial statements
For the year ended 31 March 2020
1. Accounting policies
1.1 General information
Grand Union Group Funding PLC (the Company) is a public limited
company incorporated in the United Kingdom. The address of its
registered office and principal place of business is K2, Timbold
Drive, Kents Hill, Milton Keynes, Bucks, MK7 6BZ
These financial statements have been presented in Pound Sterling
as this is the Company's functional currency, being the currency of
the primary economic environment in which the Company operates.
1.2 Basis of preparation
These financial statements have been prepared in accordance with
FRS 102 "The Financial Reporting Standard Applicable in the UK and
Republic of Ireland" (FRS 102) and applicable legislation, as set
out in the Companies Act 2006 and The Large and Medium-sized
Companies and Groups (Accounts and Reports) Regulations 2008. These
financial statements have been prepared under the historical cost
convention.
FRS 102 allows a qualifying entity certain disclosure
exemptions, subject to certain conditions, which have been complied
with, including notification of and no objection to, the use of
exemptions by the Company's shareholders. The Company is included
in the consolidated financial statements of its parent undertaking
Grand Union Housing Group Limited. Note 11 provides details of
where those consolidated financial statements may be obtained
from.
In preparing the financial statements, the Company has taken
advantage of the following exemptions:
-- from disclosing key management personnel compensation, as
required by paragraph 7 of Section 33 Related Party Disclosures
-- from presenting a reconciliation of the number of shares
outstanding at the beginning and end of the year, as required by
paragraph 12 of Section 4 Statement of Financial Position
-- from presenting a statement of cash flows, as required by
Section 7 Statement of Cash Flows.
On the basis that equivalent disclosures are given in the
consolidated accounts of the parent company, the Company has also
taken advantage of the exemption not to provide certain disclosures
as required by Section 11 Basic Financial Instruments and Section
12 Other Financial Instrument Issues.
1.3 Interest receivable
Interest receivable and similar income is recognised as interest
accrued using the effective interest rate method.
Grand Union Group Funding PLC
Annual report and financial statements
Notes to the financial statements
For the year ended 31 March 2020
1.4 Taxation
The tax expense for the year comprises current and deferred tax.
Tax currently payable, relating to UK corporation tax, is
calculated based on the tax rates and laws that have been enacted
or substantively enacted as at the reporting date.
Deferred tax is recognised on all timing differences that have
originated but not reversed at the reporting date. Transactions or
events that result in an obligation to pay more tax in the future
or a right to pay less tax in the future give rise to a deferred
tax liability or asset. Timing differences are differences between
taxable profits and total comprehensive income as stated in the
financial statements that arise from the inclusion of income and
expenses in tax assessments in years different from those in which
they are recognised in the financial statements.
Deferred tax is measured using the tax rates and laws that have
been enacted or substantively enacted as at the reporting date,
that is expected to apply to the reversal of the timing difference.
The tax expense is recognised in the same component of
comprehensive income or equity as the transaction or other event
that resulted in the tax expense.
Deferred income tax assets are recognised only to the extent
that, based on all available evidence, it is deemed probable that
there will be suitable taxable profits from which the future
reversal of the underlying timing differences can be deducted.
Current and deferred tax assets and liabilities are offset only
when there is a legally enforceable right to set off the amounts
and there is the intention either to settle on a net basis or to
realise the asset and settle the liability simultaneously.
1.5 Financial instruments
Financial assets and liabilities are recognised when the Company
becomes party to the contractual provisions of the financial
instrument. The Company holds only basic financial instruments,
which comprise cash and cash equivalents, debtors and creditors.
The Company has chosen to apply the measurement and recognition
provisions of Section 11 Basic Financial Instruments and Section 12
Other Financial Instrument Issues in full.
Financial assets - classified as basic financial instruments
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held
with banks, other short-term highly liquid investments with
original maturities of three months or less.
Debtors
Debtors are initially recognised at the transaction price,
including any transaction costs, and are subsequently measured at
amortised cost using the effective interest method, less any
provision for impairment.
Amounts that are receivable within one year are measured at the
undiscounted amount expected to be receivable, net of any
impairment.
Grand Union Group Funding PLC
Annual report and financial statements
Notes to the financial statements
For the year ended 31 March 2020
Where a financial asset constitutes a financing transaction it
is initially and subsequently measured at the present value of the
future payments, discounted at a market rate of interest.
At each reporting date, the Company assesses whether there is
objective evidence that any financial asset may be impaired. A
provision for impairment is established when there is objective
evidence that the Company will not be able to collect all amounts
due according to the original terms of the financial assets. The
amount of the provision is the difference between the asset's
carrying amount and the present value of the estimated future cash
flows. The amount of the provision is recognised immediately in
profit or loss.
Financial liabilities - classified as basic financial
instruments
Creditors
Creditors are initially measured at the transaction price,
including any transaction costs, and are subsequently measured at
amortised cost using the effective interest method.
Amounts that are payable within one year are measured at the
undiscounted amount expected to be payable.
Where a financial liability constitutes a financing transaction
it is initially and subsequently measured at the present value of
the future payments, discounted at a market rate of interest.
2. Critical accounting judgements and key sources of estimation uncertainty
In applying the Company's accounting policies, the directors are
required to make judgements, estimates and assumptions in
determining the carrying amounts of assets and liabilities. The
directors' judgements, estimates and assumptions are based on the
best and most reliable evidence available at the time when the
decisions are made and are based on historical experience and other
factors that are considered to be applicable. Due to the inherent
subjectivity involved in making such judgements, estimates and
assumptions, the actual results and outcomes may differ.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the year in which the estimate is revised, if the revision affects
only that year, or in the year of the revision and future years, if
the revision affects both current and future years.
2.1 Critical judgements in applying the Company's accounting policies
The critical judgements that the directors have made in the
process of applying the Company's accounting policies and that have
the most significant effect on the amounts recognised in the
financial statements are discussed below.
Assessing whether the Company meets the definition of a
financial institution
The directors have performed an assessment to conclude whether
the Company meets the definition of a financial institution as set
out by FRS 102. Entities that meet this definition are
Grand Union Group Funding PLC
Annual report and financial statements
Notes to the financial statements
For the year ended 31 March 2020
required to present additional disclosures as required by FRS
102 Section 34 Specialised Activities.
A financial institution includes entities "whose principal
activity is to generate wealth or manage risk through financial
instruments". The principal activity of the Company is deemed by
the directors to be the sourcing of funding directly from the
capital markets to on-lend to other Group members. Funding obtained
is secured on the assets of other group members, and interest
charges are passed to other Group members, hence the Company itself
does not generate profit from the arrangement.
As such, the directors do not regard the Company falls within
the definition of a financial institution; this being on the basis
that the Company's use of financial instruments is not primarily
for the generation of wealth or for the management of risk, but
rather for the purpose of raising finance on behalf of the parent
company.
2.2 Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources
of estimation uncertainty, that have a significant risk of causing
a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are discussed below.
The directors have not identified any such sources of estimation
uncertainty.
3. Interest receivable and similar income
2020 2019
GBP'000 GBP'000
Interest receivable from fellow group subsidiary 5,360 5,358
5,360 5,358
======= =======
4. Interest payable and similar charges
2020 2019
GBP'000 GBP'000
Interest payable to bond holders 5,360 5,358
5,360 5,358
======= =======
Grand Union Group Funding PLC
Annual report and financial statements
Notes to the financial statements
For the year ended 31 March 2020
5. Operating profit
During the period, the Company recharged interest paid on loans
to Grand Union Housing Group Limited, to whom the proceeds of the
capital market issue were on-lent. The Company's operating costs
are also met by its ultimate parent undertaking Grand Union Housing
Group Limited. Consequently, during the current and prior year, the
Company made neither a profit nor a loss.
Audit and non-audit fees charged by Beever and Struthers
relating to Grand Union Group Funding PLC are expensed by Grand
Union Housing Group Limited in accordance with the loan agreement
and disclosed within its consolidated accounts. The proportion of
the audit fee attributable to the Grand Union Group Funding PLC is
GBP7,125. All figures are net of VAT.
6. Employee benefits
The Company does not have any employees. All employees acting on
behalf of the Company are employed by Grand Union Housing Group
Limited, whose costs are disclosed in the Group financial
statements.
7. Directors' emoluments
The directors of Grand Union Group Funding PLC did not receive
any emoluments for their duties as directors of the Company for the
year ended 31 March 2020 (2019: GBPnil). Aileen Evans, and Mona
Shah are directors, employed and remunerated by Grand Union Housing
Group. Full accounting disclosures on directors' remuneration are
therefore included within the Group financial statements.
8. Debtors
2020 2019
GBP'000 GBP'000
Amounts due within one year:
Interest due from the parent company - -
Unpaid share capital 38 38
38 38
======= =======
Amounts due after one year:
Loan due from fellow Group subsidiary 114,831 114,790
114,831 114,790
======= =======
Grand Union Group Funding PLC
Annual report and financial statements
Notes to the financial statements
For the year ended 31 March 2020
The terms of the on-lending agreement underlying the intra-group
debtor mirror those of the Company's bond liability shown within
creditors. Further information in respect of these instruments are
set out in note 9.
9. Creditors
2020 2019
GBP'000 GBP'000
Amounts due within one year:
Interest due to bondholders - -
Amounts due to fellow Group subsidiary - -
- -
======= =======
Amounts falling due in more than one year:
Issue 4/12/43 (Semi-annual coupon) 114,831 114,790
114,831 114,790
======= =======
On 4 December 2013 Grand Union Group Funding PLC successfully
issued a GBP150m bond this included GBP115.0m immediately issued at
a coupon of 4.625% with repayment after 30 years in 2043 and a
GBP35m retained element. The bond was issued at a discount of
0.578% so that funds of GBP114.3m were received.
The bond discount and costs of issue are amortised over the term
of the bond, 30 years, with Grand Union Housing Group Limited being
liable to Grand Union Group Funding PLC for both.
The cost of issuing the bond was GBP1.4m leaving a net balance
of GBP112.9m; this was on-lent to Grand Union Housing Group Limited
to enable it to repay some of its existing loans and to fund future
development. The effective interest rate, and actual interest rate,
associated with the listed bond and on-lent funds is 4.7948% and
4.625% respectively. The underlying assets of the issuance belong
to Grand Union Housing Group Limited through a security trust
arrangement with the Prudential Trustee Company Ltd.
10. Called up share capital
Number Number 2020 2019
2020 2019 GBP'000 GBP'000
Issued share capital:
Ordinary shares of GBP1
each 50,000 50,000 50 50
====== ====== ======= =======
Grand Union Group Funding PLC
Annual report and financial statements
Notes to the financial statements
For the year ended 31 March 2020
Grand Union Housing Group Limited is the registered holder of
50,000 shares of GBP1, of which GBP12,500 has been paid. The shares
were issued on incorporation of the Company on 1 November 2013.
Grand Union Housing Group Limited acquired its 50,000 ordinary
shares on 1 November 2013 and paid GBP12,500. The remaining balance
of unpaid share capital (GBP37,500) is shown within debtors (note
8).
The holders of the ordinary shares are each entitled to one vote
per share. The shares carry no right to fixed income and are
non-redeemable.
11. Parent undertaking and ultimate controlling party
The immediate and ultimate parent undertaking and controlling
party is Grand Union Housing Group Limited, a registered provider
and a registered society under the Co-operative and Community
Benefit Societies Act 2014 with registration number 7853 and
registered with the Regulator for Social Housing pursuant to
sections 111 and 112 of the Housing and Regeneration Act 2008
(Registration No. 5060). Copies of Group accounts can be obtained
at www.grandunionhousing.co.uk.
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END
FR KKQBKABKDDCK
(END) Dow Jones Newswires
September 04, 2020 12:13 ET (16:13 GMT)
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