Interim report and financial statements For the six months ... · PDF fileprimarily of persons...

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Registered no: 07516930 (England & Wales)

Thames Water (Kemble) Finance Plc

Interim report and financial statements

For the six months ended 30 September 2015

Thames Water (Kemble) Finance Plc Interim report and financial statements for the six months ended 30 September 2015

Contents Pages Directors and advisors 1 Interim management report 2 Statement of Directors’ responsibilities 3 Independent auditor’s review report to the members of Thames Water (Kemble) Finance Plc for the six month period ended 30 September 2015 4 Condensed income statement 5 Condensed statement of financial position 6 Condensed statement of changes in equity 7 Condensed statement of cash flows 7 Notes to the financial statements 8


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Directors and advisors Directors A Beaumont S Ledger P Kerr Registered auditor KPMG LLP Chartered Accountants 15 Canada Square London E14 5GL Company Secretary & registered office D Hughes Clearwater Court Vastern Road Reading Berkshire RG1 8DB


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Interim management report

This interim management report for the six months ended 30 September 2015 has been prepared solely to provide additional information to shareholders to assess the future outlook of Thames Water (Kemble) Finance Plc (“the Company”). This report should not be relied on by any other party or for any other purpose.

Operations

The Company was established to make certain financing arrangements on behalf of its immediate parent undertaking Kemble Water Finance Ltd (“KWF”). To 30 September 2015, the Company has raised £575.0m of external debt which it has subsequently on-lent under mirrored terms to KWF along with an additional annual margin of £10,000. During the period, the Company raised £175.0m through the issuance of new listed debt securities. At 30 September 2015, the Company had in issue £575.0m of listed debt (September 2014: £400.0m). Both bonds issued by the Company are rated B1 by Moody’s with stable outlook and BB by Fitch with stable outlook. The Directors consider the ultimate parent undertaking to be Kemble Water Holdings Limited (“the Group”). The Company is not individually managed but rather managed as part of the Group as a whole on an inclusive basis. For this reason, the Company’s Directors believe that analysis using key performance indicators is not necessary or appropriate for an understanding of the development, performance or position of the business of the Company.

Financial results

These interim financial statements are prepared in accordance with EU International Financial Reporting Standards (“IFRS”). Details of how the transition to IFRS has impacted financial results previously reported under UK GAAP are shown in note 10.

The profit for the period of £4,000 (six months ended 30 September 2014: £4,000) arises due to the charge of £5,000 (September 2014: £5,000) for management costs for the current period post deduction of current tax computed at 20% (September 2014: 15%). This is in line with the Company’s activities as described above and with Directors’ expectations. The Company did not pay any dividends during the current period (six months ended 30 September 2014: £nil) and the Directors do not recommend payment of a dividend (six months ended 30 September 2014: £nil).

Principal risks and uncertainties

The Company is a financing subsidiary of KWF and accordingly all financing transactions and obligations have been lent on to KWF by way of intercompany loans. Risk management relating to the financing obligations of KWF are managed as part of the overall financial risk management strategy of the Group. The Directors do not consider that there have been any significant changes to the principal risks and uncertainties of the Company from those contained within the 2014/15 annual report. The Directors consider the Company’s principal risk for the remainder of the financial year to be the Company’s ability to maintain a positive credit rating. This is essential based on KWF’s reliance on the Company to have access to future funding that does not create a detrimental pressure on the Group’s key financial covenants. As stated in note 1 to these condensed financial statements, the Directors are satisfied that the Company has sufficient resources to continue in operational existence for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing these condensed financial statements.

Future outlook

The Company is expected to continue to make certain financing arrangements on behalf of its immediate parent undertaking KWF for the foreseeable future.

Approved by the Board of Directors on 26 November 2015 and signed on its behalf by:

A Beaumont Director


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Statement of Directors’ responsibilities The Directors have complied with the Disclosure and Transparency Rules. However, as the Company does not issue listed shares, DTR 4.2.8R in respect of related party transactions has not been applied. The Directors confirm that to the best of their knowledge:

the condensed set of financial statements has been produced in accordance with IAS34 Interim Financial Reporting; and

the interim management report includes a fair review of the information required by the DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of interim financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year.

The above statement of Directors’ responsibilities was approved by the Board of Directors on 26 November 2015

and signed on its behalf by:

A Beaumont Director 26 November 2015


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Independent auditor’s review report to the members of Thames Water (Kemble) Finance Plc for the six months ended 30 September 2015 1. Introduction We have been engaged by the Company to review the condensed set of financial statements in the interim report for the six months ended 30 September 2015 which comprises the condensed income statement, the condensed statement of financial position, the condensed statement of changes in equity, the condensed statement of cash flows and the related explanatory notes. We have read the other information contained in the interim 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 the terms of our engagement. Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this 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 reached. 2. Directors’ responsibilities The interim report is the responsibility of, and has been approved by, the Directors. As disclosed in the Accounting Policies, the next annual financial statements of the Company will be prepared in accordance with IFRS’s as adopted by the EU. The condensed set of financial statements included in this interim report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU. 3. Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the interim report based on our review. 4. 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 UK. A review of interim financial information consists of making enquiries, 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. 5. 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 interim report for the six months ended 30 September 2015 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU. Robert Brent for and on behalf of KPMG LLP Chartered Accountants 15 Canada Square London E14 5GL 26 November 2015


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Condensed income statement For the six month period ended

Period ended 30 September

2015


2014

Year ended 31 March

2015 Note £’000 £’000 £’000

Finance income 3 17,799 15,912 31,752 Finance expense 4 (17,794) (15,907) (31,742)

Profit on ordinary activities before taxation 5 5 10 Taxation on profit on ordinary activities 5 (1) (1) (2)

Profit for the financial period/year 4 4 8

All of the Company’s activities above are derived from continuing activities. The results stated above for the current and preceding periods are equivalent to the total comprehensive income. The accounting policies and notes on pages 8 to 18 are an integral part of these condensed interim financial statements.


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Condensed statement of financial position As at As at As at 30 September 31 March 31 March 2015 2015 2014 Note £’000 £’000 £’000

Non-current assets Loans receivable from group entities 6 569,759 396,233 395,767 Other financial assets 37 37 37

569,796 396,270 395,804 Current assets Loans receivable from group entities 6 17,288 15,500 15,500 Other financial assets 51 46 38

17,339 15,546 15,538

Total assets 587,135 411,816 411,342

•

Current liabilities Borrowings 7 (17,288) (15,500) (15,500) Corporation tax payable (3) (2) (2)

(17,291) (15,502) (15,502) Non-current liabilities Borrowings 7 (569,759) (396,233) (395,767)

(569,759) (396,233) (395,767)

Total liabilities (587,050) (411,735) (411,269)

•

Net assets 85 81 73

• • •

Equity Share capital 50 50 50 Retained earnings 35 31 23

Total equity 85 81 73

The accounting policies and notes on pages 8 to 18 are an integral part of these condensed interim financial statements.

The financial statements were approved by the Board of Directors on 26 November 2015 and signed on its behalf by:

Andrew Beaumont Director

Company registration number 07516930 (England & Wales)


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Condensed statement of changes in equity For the six month period ended 30 September 2015

Share capital Retained earnings Total equity £’000 £’000 £’000

At 1 April 2014 50 23 73 Total comprehensive income for the period - 4 4

At 30 September 2014 50 27 77 Total comprehensive income for the period - 4 4

At 31 March 2015 50 31 81 Total comprehensive income for the period - 4 4

At 30 September 2015 50 35 85

Condensed statement of cash flows For the six month period ended

Period ended

30 September 2015


2014

Period ended 31 March

2015 £’000 £’000 £’000

Cash flows from investing activities

Interest received 15,534 15,500 31,000

Loans to group companies (173,053) - -

Net cash (outflow)/inflow generated from investing activities

(157,519)

15,500 31,000

Cash flows from financing activities

Proceeds from new loans 173,053 - -

Repayment of borrowings - - - Interest paid (15,534) (15,500) (31,000)

Net cash inflow/(outflow) generated from financing activities

157,519

(15,500) (31,000)

Net decrease in cash and cash equivalents

- - -

Net cash and cash equivalents at the beginning of the period - - -

Net cash and cash equivalents at end of period/year - - -


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Notes to the financial statements

1 Principal accounting policies

The following accounting policies have been adopted in the preparation of these interim financial statements. They have been applied consistently in dealing with items which are considered material except as noted below. (a) General information Thames Water (Kemble) Finance Plc (“the Company”) is incorporated and domiciled in the United Kingdom under the Companies Act 2006. The address of the registered office is Clearwater Court, Vastern Road, Reading, RG1 8DB. The Company’s principal activity is to raise finance on behalf of its immediate parent undertaking KWF. (b) Statement of compliance with International Financial Reporting Standards (“IFRS”) These condensed interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union. These are the Company’s first IFRS condensed interim financial statements for the first six months of the period that will be covered by the first IFRS annual financial statements and IFRS 1 First-time Adoption of International Financial Reporting Standards has been applied. An explanation of how the transition to IFRS has affected the reported financial position and financial performance of the Company is provided in note 10. This note includes reconciliations of equity and total comprehensive income for comparative periods and of equity at the date of transition from previous reported numbers prepared under United Kingdom Generally Accepted Accounting Principles (“UKGAAP”) to IFRS. The condensed interim financial statements do not include all of the information required for full annual financial statements and do not comprise statutory financial statements within the meaning of section 434 of the Companies Act 2006. They should be read in conjunction with the Annual Report and Financial Statements for the year ended 31 March 2015 which have been filed with the Registrar of Companies. Those financial statements were prepared under UK GAAP and the auditor’s report on those financial statements was unqualified and did not contain any statement under section 498(2) (accounting records or returns inadequate or accounts), or section 498(3) (failure to obtain necessary information and explanations). The policies applied in these condensed interim financial statements are based on the IFRS, International Accounting Standards (“IAS”) and IFRIC interpretations issued and effective and ratified by the European Union as of 26 November 2015, the date that the Board of Directors approved the statements. Any subsequent changes to IFRS that become effective and are adopted for the 31 March 2016 could result in revisions to accounting policies applied in these interim financial statements, and if applicable, the opening balance sheet and reconciliations included herein. (c) Basis of preparation

The condensed interim financial statements for the six month period ended 30 September 2015, set out on pages 5 to 18, have been prepared on the going concern basis, under the historical cost convention and the Disclosure and Transparency Rules (“DTR”) issued by the Financial Conduct Authority, however, as the Company does not issue listed shares, DTR 4.2.8R in respect of related party transactions has not been applied. (d) Going concern

The Directors have considered the financial position of the Company and have concluded that it has sufficient resources for its present requirements and is able to meet its liabilities as they fall due for the foreseeable future. This is based upon a review of the Group’s budget, business plan and investment programme together with the cash and committed borrowing facilities available and the ability of KWF to continue to service its intercompany obligations with the Company. For these purposes the foreseeable future is taken to mean a period of at least 12 months from the date of approval of these financial statements. On this basis the Directors consider it appropriate to prepare the interim financial statements on a going concern basis.


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Notes to the financial statements (continued)

1. Principal accounting policies (continued) (e) New accounting policies and future requirements

At the date of approval of these financial statements the following standards and interpretations were in issue but

not yet effective:

IFRS9 Financial Instruments is likely to affect the measurement and disclosure of financial statements. This

standard has not yet been adopted by the EU

(f) Significant accounting judgements and sources of estimation and uncertainty

The preparation of the financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. The Directors do not consider there to be any critical judgements in applying accounting policies that have a significant effect on the amounts recognised in the current and future financial statements. (g) Financial instruments

Non-derivative financial instruments

Financial instruments issued by the Company are treated as a financial liability in accordance with IAS 32: Financial Instruments: Presentation.

Non-derivative financial instruments comprise debt securities, interest receivables, cash, loans and borrowings, and interest payable.

The Company has no derivative financial instruments.

Fair values Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value of a liability reflects its non-performance risk.

The fair values of financial assets and liabilities are measured as prescribed by IFRS 13 Fair Value Measurement. Fair values are determined according to the following hierarchy:

(a) Level 1 – quoted market price: financial instruments with quoted prices for identical instruments in active markets.

(b) Level 2 – valuation technique using observable inputs: financial instruments with quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in inactive markets and financial instruments valued using models where all significant inputs are observable.

(c) Level 3 – valuation technique with significant unobservable inputs: financial instruments valued using models where one or more significant inputs are unobservable.


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1. Principal accounting policies (continued) (g) Financial instruments

Interest payable and receivable

The fair value of interest payable and receivable is estimated as the present value of future cash flows, discounted at the market rate of interest at the balance sheet date if the effect of discounting is material. All interest and debt servicing costs are directly recharged to KWF. Interest costs incurred on the secured bonds are recharged with an additional margin of £10,000 per annum. Fair value movements on assets and liabilities held at fair value through profit and loss are not recharged.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, demand deposits and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. Such investments are normally those with less than three months maturity from the date of acquisition and include cash and bank balances and investments in liquid funds. Interest-bearing borrowings

Fair value is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the balance sheet date. The fair value of listed debt is based on the publicly available quoted prices of the listed debt. (h) Impairment excluding deferred tax assets A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Interest on the impaired asset continues to be recognised through the unwinding of the discount. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss. (i) Taxation

The Company is resident in the UK for tax purposes. The tax credit/expense represents the sum of current tax and deferred tax. Current taxation

Current tax is based on the taxable profit or loss for the period and is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted or substantively enacted at the balance sheet date. Taxable profit can differ from the net profit as reported in the income statement because it may exclude items of income or expense that are taxable or deductible in other periods and it may further exclude items that are never taxable or deductible. Consideration receivable or payable in respect of losses surrendered or claimed by way of group relief is dealt with in the income statement.


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1. Principal accounting policies (continued)

(i) Taxation

Deferred taxation

Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date, where 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 have occurred at the balance sheet date. A net deferred tax asset is regarded as recoverable and therefore recognised only when, on the basis of all available evidence, it can be regarded as more likely than not that there will be suitable taxable profits against which to recover carried forward tax losses and from which the future reversal of underlying timing differences can be deducted.

Deferred taxation is measured at the average tax rates that are expected to apply in the periods in which the timing differences are expected to reverse based on tax rates and laws that have been substantively enacted by the balance sheet date. (j) Derecognition of financial instruments

A financial asset is de-recognised when the rights to receive cash flows from the asset have expired. A financial liability is de-recognised when the obligation under the liability is discharged, cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the income statement. (k) Offsetting financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously. (l) Foreign currency

Transactions in foreign currencies are translated to the Company’s functional currency, Sterling GBP, at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are retranslated to the functional currency at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the income statement. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are retranslated to the functional currency at foreign exchange rates ruling at the dates the fair value was determined.


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Notes to the financial statements (continued) 2. Segmental analysis The Company's income and results arise solely in the United Kingdom and are attributable to one principal activity of the Company, being the raising of finance and subsequent lending of the debt to KWF. Consequently there is no detailed segmental information to present.

3. Finance income Period ended

30 September 2015


2014

Year ended 31 March

2015 £’000 £’000 £’000

Income received on loans to group 17,799 15,912 31,752

Finance income represents interest receivable on external borrowings that are lent on identical terms to KWF with an additional £10,000 annual margin (period ended 30 September 2014: annual margin £10,000).

4. Finance expense Period ended

30 September 2015


2014

Year ended 31 March

2015 £’000 £’000 £’000

Interest paid on loans and borrowings 17,322 15,500 31,000

Amortisation of bond fees 472 407 742

Total finance expense 17,794 15,907 31,742

5. Taxation Period ended

30 September 2015


2014

Year ended 31 March

2015 £’000 £’000 £’000

Current tax: Amounts paid in respect of group relief for the period/year 1 1 2

Tax on loss profit on ordinary activities 1 1 2

The tax assessed for the period is equal to (period ended 30 September 2014: equal) the standard rate of

corporation tax in the UK of 20% (2014: 21%).

Factors affecting the future tax rate A reduction in the UK corporation tax rate from 21% to 20% (effective from 1 April 2015) was substantively enacted on 2 July 2013. In the Budget on 8 July 2015, the Chancellor announced additional planned reductions to 18% by 2020. This will reduce the Company's future current tax charge accordingly.

There are no recognised deferred tax assets or liabilities in the current or prior periods as the Company has no

identified temporary differences.


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6. Loans receivable from group companies

30 September 2015

31 March 2015

31 March 2014

£’000 £’000 £’000

Non-current: Loans receivable from Kemble Water Finance Limited 569,759 396,233 395,767 Current: Interest receivable from Kemble Water Finance Limited 17,288 15,500 15,500

Total loans receivable from group companies 587,047 411,733 411,267

During the period, the Company raised an additional £175.0m 5.875% bond maturing in 2022. This was immediately lent on to KWF. The intercompany loans due from KWF are charged interest equivalent to external borrowing rate with an annual margin of £10,000 (2014: £10,000). There are no amounts past their due by dates. As these assets relate to inter-company debt owed by a regulated water company characterised by relatively stable and predictable cash flows, the credit risk exposure is deemed immaterial and no amounts are considered to be impaired. The fair values of the financial assets approximate their carrying value. All loans and receivables are held at amortised cost.

7. Borrowings 30 September

2015 31 March

2015 31 March

2014 £’000 £’000 £’000

Current liabilities: External interest payable 17,288 15,500 15,500 Non-current liabilities: Fixed rate bonds 569,759 396,233 395,767

Total borrowings 587,047 411,733 411,267

External borrowings consist of two secured bonds with principal values of £400.0m and £175.0m maturing in 2019 and 2022 respectively (amounts above shown net of unamortised fees). The net proceeds were lent to KWF under mirrored terms with the additional margin as stated in note 6.

8. Fair value of financial instruments

Fair value measurements The fair value of financial assets and liabilities represents the price that would be received to sell an asset or paid to transfer a liability between informed and willing parties, other than in a forced or liquidation sale at the measurement date. The techniques for determining the fair value of financial instruments are classified under the hierarchy defined in IFRS 13 Fair Value Measurement which categorises valuation techniques into Levels 1-3 based on the degree to which the fair value is observable. All of the Company’s valuation techniques are Level 2. The Company does not hold any derivative financial instruments.


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8. Fair value of financial instruments (continued) The Company does not hold any derivative financial instruments. Comparison of fair value of financial instruments with their carrying amounts The Directors consider that the carrying amounts of trade receivables and trade payables are not materially different from their fair values. The table below sets out a comparison of the carrying values and fair values of the Company’s other financial assets and financial liabilities.

As at 30 September 2015 £'000

As at 31 March 2015 £'000

As at 31 March 2014 £'000

Carrying Value

Fair Value

Carrying Value

Fair Value

Carrying Value

Fair Value

Financial assets Loans receivable from group entities 569,759 611,644 396,233 437,512 395,767 437,856

Total financial assets 569,759 611,644 396,233 437,512 395,767 437,856

Financial liabilities Fixed rate bond 569,759 611,644 396,233 437,512 395,767 437,856

Total financial liabilities 569,759 611,644 396,233 437,512 395,767 437,856

The fair value of intercompany loans represents the market value of the publically traded underlying bonds. For private placements the fair value is determined by discounting expected future cash flows using a risk-free rate plus the Company’s credit spread.

The financial liabilities of the Company include the primary financial instruments which are bonds that are traded

on a public market. Fair values for these have been calculated using the 30 September 2015 quoted prices. The

book value of the bonds represents the amortised cost in line with the measurement principles of IAS 39 “Financial

instruments: Recognition and Measurement”.

9. Immediate and ultimate parent and controlling party

The immediate parent undertaking is KWF, which owns 100% of the share capital and is also the smallest group to consolidate these financial statements. The Directors consider the ultimate parent company and controlling party is Kemble Water Holdings Ltd, a company incorporated in the United Kingdom and largest group to consolidate these financial statements. Copies of the financial statements of all of the above companies may be obtained from The Company Secretarial Department, Thames Water, Clearwater Court, Vastern Road, Reading, Berkshire, RG1 8DB.


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10. Adoption of International Financial Reporting Standards

This is the first reporting date that the Company has presented its financial statements under IFRS. The policies applied in these condensed interim financial statements are based on the IFRS, IAS and IFRIC interpretations issued and effective and ratified by the European Union as of 26 November 2015, the date that the Board of Directors approved the statements. The Company’s previously reported results for the year ended 31 March 2015 have been restated, the date of transition to IFRS being 1 April 2014. In accordance with IFRS 1 First Time Adoption of International Financial Reporting Standards the Company’s accounting policies under IFRS have been applied retrospectively at the date of transition. No exceptions have been taken in the adoption of IFRS. Based on the nature of the Company and the preparation of previous financial statements in accordance with FRS 26 Financial Instruments: Recognition and Measurement and FRS 29 Financial Instruments Disclosures, the Directors do not consider there to be any transition adjustments in the adoption of IFRS. The only change identified was presentational and comprises of a reclassification between non-current and current financial assets at 30 September 2014 and has a net nil impact as disclosed below: Reconciliation of equity as at 1 April 2014 UK GAAP Reclassification IFRS £’000 £’000 £’000 Non-current assets Loans receivable from group entities 395,767 - 395,767 Other financial assets 37 - 37

395,804 - 395,804 Current assets Loans receivable from group entities 15,500 - 15,500 Other financial assets 38 - 38

15,538 - 15,538

Total assets 411,342 - 411,342

Current liabilities Borrowings (15,500) - (15,500) Corporation tax payable (2) - (2)

(15,502) - (15,502) Non-current liabilities Borrowings (395,767) - (395,767)

(395,767) - (395,767)

Total liabilities (411,269) - (411,269)

Net assets 73 - 73

• • •

Equity Share capital 50 - 50 Retained earnings 23 - 23

Total equity 73 - 73


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10. Adoption of International Financial Reporting Standards (continued) Reconciliation of equity as at 30 September 2014 UK GAAP Reclassification IFRS £’000 £’000 £’000 Non-current assets Loans receivable from group entities 395,898 - 395,898 Other financial assets - 37 37

395,898 37 395,935 Current assets Loans receivable from group entities 15,500 - 15,500 Other financial assets 80 (37) 43

15,580 (37) 15,543

Total assets 411,478 - 411,478



(395,898) - (395,898)


Net assets 77 - 77

• • •




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10. Adoption of International Financial Reporting Standards (continued) Reconciliation of equity as at 31 March 2015 UK GAAP Reclassification IFRS £’000 £’000 £’000 Non-current assets Loans receivable from group entities 396,233 - 396,233 Other financial assets 37 - 37

396,270 - 396,270 Current assets Loans receivable from group entities 15,500 - 15,500 Other financial assets 46 - 46

15,546 - 15,546

Total assets 411,816 - 411,816



(396,233) - (396,233)


Net assets 81 - 81

• • •



Reconciliation of total comprehensive income for the six months ended 30 September 2014 UK GAAP Reclassification IFRS £’000 £’000 £’000

Finance income 15,912 - 15,912 Finance expense (15,907) - (15,907)

Profit on ordinary activities before taxation 5 - 5 Taxation on profit on ordinary activities (1) - (1)

Profit for the financial period/year 4 - 4


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10. Adoption of International Financial Reporting Standards (continued) Reconciliation of total comprehensive income for the year ended 31 March 2015 UK GAAP Reclassification IFRS £’000 £’000 £’000

Finance income 31,752 - 31,752 Finance expense (31,742) - (31,742)

Profit on ordinary activities before taxation 10 - 10 Taxation on profit on ordinary activities (2) - (2)

Profit for the financial period/year 8 - 8

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