REG - Canary Wharf Fin II - Annual Financial Report
23/04/2025 19:00
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RNS Number : 9348F Canary Wharf Finance II PLC 23 April 2025
CANARY WHARF FINANCE II PLC
23 APRIL 2025
PUBLICATION OF THE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED
31 DECEMBER 2024
Pursuant to sections 4.1 and 6.3.5 of the Disclosure and Transparency Rules,
the board of Canary Wharf Finance II plc (the "Company") is pleased to
announce the publication of its annual financial report for the year ended
31 December 2024, which has been approved by the board and signed on the
date of this announcement and will shortly be available from
www.canarywharf.com/Investor Relations.
The information contained within this announcement does not comprise statutory
accounts within the meaning of the Companies Act 2006 and is provided in
accordance with section 6.3.5 of the Disclosure and Transparency Rules.
In compliance with the Listing Rules a copy of the 31 December 2024 annual
financial report will be submitted to the UK Listing Authority via the
National Storage Mechanism and will shortly be available to the public for
inspection at
https://www.fca.org.uk/markets/primary-markets/regulatory-disclosures/national-storage-mechanism.
Dated: 23 April 2025
Contact for queries:
J J Turner
Company Secretary
Canary Wharf Finance II plc
Telephone: 020 7418 2000
Registered office address:
One Canada Square
London
E14 5AB
United Kingdom
Principal place of business, domicile of entity and country of incorporation:
United Kingdom
STRATEGIC REPORT
for the year ended 31 December 2024
The directors, in preparing this Strategic Report, have complied with section
414C of the Companies Act 2006.
This Strategic Report has been prepared for the company and not for the group
of which it is a member and therefore focuses only on matters which are
significant to the company.
BUSINESS MODEL
The company is a wholly owned subsidiary of Canary Wharf Group plc and its
ultimate parent undertaking is Stork Holdco LP.
The company is a finance vehicle that issues securities which are backed by
commercial mortgages over properties within the Canary Wharf Estate. 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.
BUSINESS REVIEW
At 31 December 2024, the company had notes with a nominal value of
£1,041,472,487 (2023 - £1,326,211,720) listed on the London Stock Exchange
and had lent the proceeds to a fellow subsidiary undertaking, CW Lending II
Limited ('the Borrower'), under a loan agreement ('the Intercompany Loan
Agreement'). The notes are secured on a pool of properties at Canary Wharf,
owned by fellow subsidiary undertakings, and the rental income therefrom.
On 22 January 2024 the company made an early repayment of £71,500,000 of the
A1 and £192,000,000 of the A3 notes.
The securitisation has the benefit of an agreement with AIG which covers the
rent in the event of a default by the tenant of 33 Canada Square over the
entire term of its lease. At 31 December 2024, AIG had posted £34,034,750
(2023 ‑ £52,125,032) as cash collateral in respect of this obligation.
The company also has the benefit of a £300.0m liquidity facility provided by
Lloyds Bank plc, under which drawings may be made in the event of a cash flow
shortage under the securitisation. The liquidity facility matures on
22 October 2037.
The ratings of the notes as of the date of issue of this report are as
follows:
Class Moody's Fitch S&P
A1 Aaa AA A+
A3 Aaa AA A+
A7 Aaa AA A+
B Aa3 A+ A+
B3 Aa3 A+ A+
C2 A3 BBB+ A
D2 Baa3 BBB A‑
KEY PERFORMANCE INDICATORS
2024 2023
£ £
1,326,211,720
Securitised debt - nominal value 1,041,472,487
Securitised debt - fair value 938,849,230 1,146,842,110
Securitised debt - carrying value 935,711,698 1,197,018,834
Financing cost (before adjustment for fair value) 61,633,798 78,550,825
Total comprehensive income 111,474 84,292
Weighted average maturity of debt 8.8 years 7.7 years
Weighted average interest rate 6.1% 6.1%
The above Key Performance Indicators are the most appropriate in assessing
business performance as they are all of high importance in analysing the
movements in and current outlook of the securitised debt, which underpins the
year on year movements throughout the financial statements.
STRATEGY & OBJECTIVES
Exposure Management
The mark-to-market positions of all the company's derivatives are reported to
the Group Treasurer on a monthly basis and to the directors on a quarterly
basis. The Group Treasurer monitors hedging activity on an ongoing basis, in
order to notify the directors of any overhedging that may potentially occur
and proposals to deal with such events.
Hedging Instruments and Transaction Authorisation
Instruments that are used for hedging interest rate exposure include:
· Interest rate swaps
No hedging activity is undertaken without explicit authority of the board.
Transaction Accounting
All derivatives are required to be measured on balance sheet at fair value
(mark-to-market).
Credit Risk
The Group's policies restrict the counterparties with which derivative
transactions can be contracted and cash balances deposited. This ensures
that exposure is spread across a number of approved financial institutions
with high credit ratings.
All other debtors are receivable from other group undertakings.
PRINCIPAL RISKS AND UNCERTAINTIES
The Company has adopted Canary Wharf Group Investment Holdings plc ("The
group" principal risks and uncertainties monitoring and management policies as
principal risks and uncertainties are not managed separately by the company.
The risks and uncertainties facing the business are monitored through
continuous assessment, regular formal reviews and discussion at the group
audit committee and board meetings. The group recognises that effective
management of risk is key to the business success. As the group has grown
and evolved in recent years, diversifying the profile of the Estate and
expanding operations, its risk profile has also evolved. At the same time
the group has needed to navigate the Covid‑19 pandemic, changes in how
people work, as well as an increasingly challenging global economic,
political, and geopolitical environment. The group has responded by focusing
on the creation and protection of value through its Risk Management programme
- for the group's shareholders and investors, its tenants, and for visitors to
the Canary Wharf Estate.
The Board has overall responsibility for Risk Management for the group. In
this role, it is underpinned by the Audit Committee and the Executive Risk
Committee and supported throughout by the Risk Management team.
The group's Risk Management programme was the subject of extensive revision in
2022 and has been the focus of continued investment and development. The
programme is embedded across the group, with department heads and specialist
functions acting as risk managers and risk owners.
The group's Risk Management programme is aligned to ISO 31000 and informed by
best practice across all areas of operation, specifically property
development, construction, facilities management and property and retail
management. The Group is also certified to ISO 45001, ISO 9001 and ISO
22301, reflecting our commitment to best practice.
The Risk Environment
All departments and specialist functions across the group continually monitor
risks in their operating environments and are supported in this by appropriate
external expertise and by the Risk Management team.
Structured horizon scanning is carried out by The Group's Executive Risk
Committee. This has primarily focused on challenges to the UK economy and
the commercial real estate sector, while a change of government, increasing
regulation and other developments across the sociological, technological,
legal, and environmental sectors have also informed the group's risk
identification process.
Principal Risks - External:
1. Macroeconomic
Macroeconomic risks continue to be among the most significant category of
risks on the group's register, reflecting the challenges to the UK and global
economy. While the group has seen positive developments in the reduction of
the UK's inflation and interest rates, it continues to monitor a range of
domestic and global factors that could potentially reverse these gains.
Risks in this area are graded with medium to high likelihoods and impacts.
Management and mitigation: Control measures adopted by the group include
continued engagement and support of shareholders, close monitoring of key
economic indicators in the context of the group's strategy and commitments,
and planning for a range of potential economic outcomes. The group also
assess the financial solvency of potential customers, suppliers, or partners
before proceeding with new projects, ensuring no overreliance on any one
customer or supplier. Regular stress testing of the group's business plan is
undertaken to assess the impact of an economic downturn on operations and to
ensure the group's financial position remains resilient.
2. Office Leasing
At 31 December 2024 the group owned 12 office assets with a net internal area
(NIA) of 6.9m sq ft representing 62.9% of the group's property portfolio.
Risks associated with office leasing have been prominent over the past
twelve months, influenced by changes in work patterns and a shift in tenant
demand towards premium, sustainable solutions. These risks have been
assessed with medium to high likelihoods and impacts.
Management and mitigation: The group has a strong track record of creating
value in the office market. Risk controls will focus on engaging with
current and potential tenants to understand their requirements, ensuring
financial covenant checks are routinely completed for assurance, and enhancing
the Canary Wharf experience with new public spaces, including the launch of
Eden Dock. The Group will also continue to diversify, expand, and modernise
its product offerings, engaging with new sectors such as healthcare and life
sciences.
3. Financing Risk
Key financial risks for the group are influenced by the broader macro-economic
environment and the specific challenges facing the commercial real estate
sector. These risks include the costs and availability of financing and
achieving the group's loan to value metrics. The group has completed a range
of refinancing throughout the year and is currently engaged in the refinancing
of a range of bonds due to mature in coming years. Risks across this sector
are graded medium to high likelihoods and impact.
Management and mitigation: The group continues to explore refinancing
options with new and existing partners, and continues to enjoy significant
support from its shareholders. Financial covenants are regularly monitored
and assessed in conjunction with any new deals or financing and the group
affirms a strict hedging strategy.
4. Political and Regulatory Risk
The group continues to monitor risks related to the UK's political landscape,
in particular around policy initiatives from the new government. In
regulatory terms, the group has identified risks from the implementation of
the Building Safety Act, and its continued and emerging obligations across the
Economic Crime and Corporate Transparency act, anti-bribery and corruption,
tax evasion, anti-money laundering, and modern slavery and human trafficking
regulations. These risks are graded as low to medium in terms of likelihood
and impact.
Management and mitigation: The group controls centre on regulatory
monitoring the development, maintenance and implementation of appropriate
policies, together with staff training and regular reviews of control
effectiveness. On a local scale, The group engages continually with the
London Borough of Tower Hamlets council to ensure awareness of any local
regulatory changes. Mandatory training has been provided to educate all
employees on the responsibilities under the Building Safety Act. Further,
training on anti-facilitation of tax evasion, modern slavery, and GDPR are all
mandatory for the group's employees. The group maintains high standards of
business principles and ethics, with appropriate risk assessments undertaken
periodically.
5. Technology and Cyber Security Risk
The Group recognises that risks from cyber threat actors are evolving in scale
and complexity, while at the same time noting that the rapid evolution of
technology and information systems, particularly around AI, will be a critical
component of its continued success. The group's risks in this context are
graded to be of medium likelihood and impact.
Management and mitigation: The group monitors the evolution of risks and
employs multilayered controls to address these, including the establishment,
implementation and maintenance of appropriate policies, staff education and
appropriate and proportionate cyber defences.
Principal Risks - Internal
6. Sustainability
The group places a strong emphasis on Sustainability, focusing on our four key
areas; Climate Action, Creating Space for Nature, Driving Circularity and
Social Impact.
Key risks across our sustainability programme include the accurate
representation of the group's sustainability progress to regulators and the
public, collaboration with our supply chains and occupiers to ensure our
science-based targets are met and increasing legal requirements for building
performance targets. These risks are graded as medium to high in terms of
likelihood and impact and failure to meet these targets could result in
reputational damage for the group and subsequent damage to The Group's
relationship with its customers, suppliers and other stakeholders. Similarly,
inaccurate claims around sustainable practices could result in the group being
subject to fines under the Green Code, leading to both financial and
reputational harm. A comprehensive overview of the group's Sustainability
programme is available here:
https://Group.canarywharf.com/environmental-social-governance/.
Management and mitigation: Our sustainability policies and targets, allied
with extensive monitoring and reporting are key controls for this group of
risks. These are further enhanced with engagement with our key stakeholders
across regulatory and industry bodies and extensive training and engagement
through our supply chain to ensure that our objectives continue to be
appropriate and on target.
7. Operational
The group's operational risks reflect the complexity and scale of Canary Wharf
and range from facilities management to infrastructure maintenance and
utilities provision. The group benefits from having control over the
infrastructure across Canary Wharf, which facilitates coordination and risk
management. This risk is graded low to medium in terms of likelihood and
impact.
Management and mitigation: Controls in this regard are centred on driving a
positive, inclusive culture and environment, supporting employee engagement
through regular review and updating of key policies, provision of career
development support and training and a comprehensive programme of initiatives
supporting wellbeing, sustainability and equity, diversity and inclusion.
The group operates an employee engagement survey - Your Voice Matters,
ranked in the top 25% of organisations using the Peakon platform survey for
the employee Net Promoter Score. The group also ensures each employee has
access to the Career Development Framework, with Managers receiving training
to support the career development of their team.
8. People, Culture & Customers
The Group recognised that its People, Culture and Customers are central to its
success. Key risks include staff shortages and losses, and shortfalls in
succession planning, which are graded as being low in likelihood and impact.
Management and mitigation: Controls focus on driving a positive, inclusive
culture and environment, supporting employee engagement through regular review
and updating of key policies, provision of career development support and
training and a comprehensive programme of initiatives supporting wellbeing,
sustainability and equity, diversity and inclusion. The group operates an
employee engagement survey - Your Voice Matters - and ranked in the top 25% of
organisations using the Peakon platform survey for the employee Net Promoter
Score. The group also ensures each employee has access to the Career
Development Framework, with Managers receiving training to support the career
development of their team. Regarding the wider community at Canary Wharf,
The Group fosters an inclusive and engaging environment. The group launched
Wharf Connect in 2024, a free membership community tailored for early career
professionals based in Canary Wharf, with the goal of bringing together future
leaders, enhancing office engagement, and creating an environment that fosters
the retention of early career professionals, making them an integral part of
the wider Canary Wharf ecosystem.
9. Health, Safety & Security
The Health, Safety and Security of our colleagues, tenants, and the public are
key priorities for the group. In security terms our key risks range from
terrorism, to crime, to disruptive activity. In terms of Health and Safety,
the Group's activities across construction, facilities management, maintenance
and engineering represent a broad range of risks, including the failures of
equipment, systems or processes, in addition to risks presented by rapidly
growing technologies such as electric vehicles. These risks are graded as low
to medium in terms of likelihood and impact.
Management and mitigation: The Group's commitment to managing Health,
Safety, and Security is reflected in the capability and experience of the
workforce across the business, with all empowered to act to promote a safe
environment. The Group's Security & Resilience department deploys best
practice security personnel and technology to deter, detect and disrupt
hostile actors, and the Health, Safety & Wellbeing department's controls
are founded on appropriate and proportionate policies, safety regimes and
investment in expertise and capability. Employees are required to undertake
training on security and resilience awareness and fire awareness, in addition
to The Group utilising Everbridge, a Critical Event Management platform which
is regularly tested to effectively manage critical events and improve
organisational resilience, ensuring all staff can be contacted and located in
the event of an emergency.
Financing risk
The broader economic cycle inevitably leads to movements in inflation,
interest rates and bond yields.
The company has issued debenture finance in sterling at both fixed and
floating rates and uses interest rate swaps to mitigate its exposure to
interest rate fluctuations. All of the company's borrowings are fixed after
taking account of interest rate hedges. All borrowings are denominated in
sterling and the Company has no intention to borrow amounts in currencies
other than sterling.
The company enters into derivative financial instruments solely for the
purposes of hedging its financial liabilities. No derivatives are entered
into for speculative purposes.
The company is not subject to externally imposed capital requirements.
The company's securitisation is subject to a maximum loan minus cash to value
('LMCTV') ratio covenant.
The maximum LMCTV ratio is 100.0% but there is also a cash trap covenant of
50.0%. Based on the 31 December 2024 valuations of the properties upon which
the company's notes are secured, the LMCTV ratio at the interest payment date
in January 2025 was 48.7%. The securitisation is not subject to a minimum
interest coverage ratio. A breach of financial covenants can be remedied by
depositing eligible investments (including cash). No breach of financial
covenants has taken place in the period.
STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2024
2024 2023
Note £ £
Administrative expenses (30,688) (66,902)
OPERATING LOSS (30,688) (66,902)
Interest receivable from group companies 4 61,777,251 119,472,302
Bank interest receivable 4 28,710 17,388
Loan interest payable 5 (61,663,799) (119,338,496)
Hedge reserve recycling 5 (10,095,584) (10,057,528)
LOSS BEFORE TAX (9,984,110) (9,973,236)
Tax on loss 7 - -
LOSS FOR THE FINANCIAL YEAR (9,984,110) (9,973,236)
OTHER COMPREHENSIVE INCOME FOR THE YEAR
Hedge reserve recycling 14 10,095,584 10,057,528
OTHER COMPREHENSIVE INCOME FOR THE YEAR 10,095,584 10,057,528
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 111,474 84,292
The numbered notes 1 to 16 form part of these financial statements.
STATEMENT OF FINANCIAL POSITION
as at 31 December 2024
2024 2023
Note £ £
CURRENT ASSETS
Debtors:
Amounts falling due after more than one year 8 951,493,272 955,034,884
Amounts falling due within one year 8 33,575,660 356,796,143
Cash at bank and in hand 3,017,545 2,082,013
988,086,477 1,313,913,040
Creditors:
Amounts falling due within one year 9 (30,750,933) (353,147,358)
NET CURRENT ASSETS 957,335,544 960,765,682
TOTAL ASSETS LESS CURRENT LIABILITIES 957,335,544 960,765,682
Creditors:
Amounts falling due after more than one year 10 (951,493,272) (955,034,884)
NET ASSETS 5,842,272 5,730,798
CAPITAL AND RESERVES
Called up share capital 13 50,000 50,000
Hedging reserve 14 (106,899,309) (116,994,893)
Retained earnings 14 112,691,581 122,675,691
5,842,272 5,730,798
The numbered notes 1 to 16 form part of these financial statements.
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2024
Called up Hedging Retained Total
share capital reserve earnings equity
£ £ £ £
At 1 January 2024 50,000 (116,994,893) 122,675,691 5,730,798
Loss for the year - - (9,984,110) (9,984,110)
Hedge reserve recycling (Note 13) - 10,095,584 - 10,095,584
TOTAL COMPREHENSIVE INCOME FOR THE YEAR - 10,095,584 (9,984,110) 111,474
AT 31 DECEMBER 2024 50,000 (106,899,309) 112,691,581 5,842,272
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2023
Called up Hedging Retained Total
share capital reserve earnings equity
£ £ £ £
At 1 January 2023 50,000 (127,052,421) 132,648,927 5,646,506
Loss for the year - - (9,973,236) (9,973,236)
Hedge reserve recycling (Note 13) - 10,057,528 - 10,057,528
TOTAL COMPREHENSIVE INCOME FOR THE YEAR - 10,057,528 (9,973,236) 84,292
AT 31 DECEMBER 2023 50,000 (116,994,893) 122,675,691 5,730,798
The notes numbered 1 to 16 form part of these financial statements.
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2024
1. GENERAL INFORMATION
Canary Wharf Finance II plc is a public company limited by shares incorporated
in the UK under the Companies Act 2006 and registered in England and Wales at
One Canada Square, Canary Wharf, London, E14 5AB.
The nature of the company's operations and its principal activities are set
out in the Strategic Report.
2. ACCOUNTING POLICIES
2.1 Basis of preparation of financial statements
The financial statements have been prepared under the historical cost
convention, modified to include certain items at fair value and in accordance
with United Kingdom Accounting Standards (United Kingdom Generally Accepted
Accounting Practice, including FRS 102 "the Financial Reporting Standard
applicable in the United Kingdom and Republic of Ireland").
The preparation of financial statements in compliance with FRS 102 requires
the use of certain critical accounting estimates. It also requires
management to exercise judgement in applying the company's accounting policies
(see Note 3).
The company has made a policy choice to apply the recognition and measurement
provisions of IFRS 9 Financial Instruments.
The principal accounting policies have been applied consistently throughout
the year and the preceding year and are summarised below:
2.2 Going concern
Having made the requisite enquiries and assessed the resources at the disposal
of the company, the directors have a reasonable expectation that the company
will have adequate resources to continue its operation for the foreseeable
future.
The balance sheet shows a net current asset position of £957,335,544 and the
Company has issued securities which are backed by commercial mortgages over
certain properties within the Canary Wharf Estate. These properties are let
on long term leases to a diverse range of credit worthy tenants.
Accordingly they continue to adopt the going concern basis in preparing the
financial statements.
2.3 Cash flow statement
The company has taken the exemption from preparing the cash flow statement
under Section 1.12(b) as it is a member of a group where the parent of the
group prepares publicly available consolidated financial statements which are
intended to give a true and fair view.
2.4 Segment information
The company has a single operating segment, being the provision of finance to
the Canary Wharf Group, comprising Canary Wharf Group plc and its
subsidiaries. All activities take place within the United Kingdom. Therefore,
no segmental information has been prepared.
2.5 Financial Instruments
Loans receivable
Loans receivable are recognised initially fair value. Subsequent to initial
recognition, loans receivable are stated at amortised cost with any difference
between the amount initially recognised and redemption value being recognised
in the Income Statement over the period of the loan, using the effective
interest method.
Where loans are designated as fair value through profit or loss ('FVTPL') they
are recognised at fair value. The fair value is assessed as the present
value of most likely cash flows. Any movements are recognised in the income
statement.
Trade and other payables
Trade and other creditors are stated at amortised cost.
Borrowings
Loans payable are recognised initially at fair value less attributable
transaction costs. Subsequent to initial recognition, loans payable are
stated at amortised cost with any difference between the amount initially
recognised and redemption value being recognised in the Income Statement over
the period of the loan, using the effective interest method.
Where loans are designated as fair value through profit or loss ('FVTPL') they
are recognised at fair value. The fair value is assessed as the present
value of most likely cash flows. Any movements are recognised in the income
statement.
Derivative instruments
The company uses interest rate derivatives to help manage its risks of changes
in interest rates. The company does not hold or issue derivatives for
trading purposes.
Following the adoption of the IFRS 9 measurement option, the floating rate
securitised notes are measured at fair value and so no hedging relationships
are possible. The changes in the fair value of the derivative instruments
are recognised in the income statement.
Prior to the adoption of IFRS 9, the financial instruments were carried under
the measurement criteria of IAS 39. The B3 and C2 financial instruments were
designated as effective hedges of the corresponding notes and carried at Fair
Value through Other Comprehensive Income. On adoption, the hedging
relationships were terminated and the financial instruments were reclassified
as fair value accounting for the floating rate securitised debt. The balance
in the hedging reserve is being amortised over the remaining life of the
corresponding notes.
3. AUDITORS' REMUNERATION
2024 2023
£ £
Fees payable to the company's auditors and their associates for the interim 30,900 12,600
audit of the company's financial statements
The fees disclosed above are stated inclusive of VAT. Auditors' remuneration
of £78,000 (2023 - £13,860) for the year end audit of the company has been
borne by another group undertaking.
4. INTEREST RECEIVABLE AND SIMILAR INCOME
2024 2023
£ £
Interest receivable from group companies 61,777,251 119,472,302
Bank interest receivable 28,710 17,388
61,805,961 119,489,690
The above table shows the interest receivable on financial instruments
recognised at amortised cost. Refer to Note 6 for the fair value movement on
financial instruments recognised at fair value.
5. INTEREST PAYABLE AND SIMILAR CHARGES
2024 2023
£ £
Interest payable on securitised debt (Note 10) 61,633,799 78,550,825
Debt modification charge - 40,787,671
Hedge reserve recycling 10,095,584 10,057,528
71,759,383 129,396,024
The above table shows the interest payable on financial instruments recognised
at amortised cost. Refer to Note 6 for the fair value movement on financial
instruments recognised at fair value.
On 22 January 2024, the company made a partial repayment of £77.1m of the A1
and a partial repayment of £192m of the A3 securitisation notes.
The repayment released security over 10 Cabot Square following the execution
of the amendment of lease arrangements with Barclays Bank Plc
6. FAIR VALUE ADJUSTMENTS
2024 2023
£ £
Derivative financial instruments (49,217,470) 12,922,303
Securitised debt 67,595,290 (58,783.877)
Loan to fellow subsidiary undertaking 18,377,820 45,861,574
- -
7. TAXATION
2024 2023
£ £
Deferred tax
Taxation on profit on ordinary activities - -
FACTORS AFFECTING TAX CHARGE FOR THE YEAR
In October 2022, the government announced changes to the Corporation Tax rate
from 1 April 2023, increasing the main rate of Corporation Tax to 25%.
The tax assessed for the year is different to the standard rate of corporation
tax in the UK of 25% (2023 - 23.5%). The differences are explained below:
2024 2023
£ £
Loss on ordinary activities before tax (9,984,110) (9,973,236)
Loss on ordinary activities multiplied by standard rate of corporation tax in (2,496,028) (2,345,760)
the UK of 25% (2023 - 23.5%)
EFFECTS OF:
Hedge recycling reserve movements not subject to tax 2,523,897 2,365,586
Group relief (27,869) (19,826)
TOTAL TAX CHARGE FOR THE YEAR - -
FACTORS THAT MAY AFFECT FUTURE TAX CHARGES
There were no factors that affected the tax charge for the year which has been
calculated on the profits on ordinary activities before tax at the standard
rate of corporation tax in the UK of 25% (2023 - 23.5%).
8. DEBTORS
2024 2023
£ £
DUE AFTER MORE THAN ONE YEAR
Loan to fellow subsidiary undertaking due after more than one year 951,493,272 955,034,884
951,493,272 955,034,884
2024 2023
£ £
DUE WITHIN ONE YEAR
Other amounts owed to fellow subsidiaries 2,891,559 15,937,764
Loan to fellow subsidiary undertaking due within one year 18,543,910 325,526,903
Accrued interest on loan to fellow subsidiary undertaking 12,140,191 15,331,476
33,575,660 356,796,143
2024 2023
£ £
The loan to a fellow subsidiary undertaking comprises:
At 1 January 1,280,561,787 1,318,467,636
Repaid in the year (325,526,905) (29,325,200)
Amortisation of issue premium (1,348,326) (1,531,718)
Movement in accrued financing expenses (2,027,194) (1,975,028)
Fair value adjustment 18,377,820 (45,861,574)
Debt modification charge - 40,787,671
At 31 December 970,037,182 1,280,561,787
Comprising:
2024 2023
£ £
Loan to fellow subsidiary undertaking due after more than one year 951,493,272 955,034,884
Loan to fellow subsidiary undertaking due within one year 18,543,910 325,526,903
970,037,182 1,280,561,787
The fair value of the loans to group undertakings at 31 December 2024 was
£973,174,715 (2023 - £1,230,025,065), calculated by reference to the fair
values of the Company's financial liabilities. In the event that the company
were to realise the fair value of the securitised debt and the derivative
financial instruments, it would have the right to recoup its losses as a
repayment premium on its loans to CW Lending II Limited. As such, the fair
value of the loans to group undertakings is calculated to be the sum of the
fair value of the securitised debt and the fair value of the derivative
financial instruments.
Amounts owed to the group undertakings are interest free and repayable on
demand.
The expected credit loss model has been considered and any impairment loss of
the financial assets measured at amortised cost would be immaterial.
The loan to the company's fellow subsidiary undertaking was made in tranches,
the principal terms of which are:
Class Interest Effective interest Repayment 2024 2023
£m £m
A1 6.455% 5.692% By instalment 2009 - 2033 68.7 154.5
A3 5.952% 5.736% By instalment 2024 - 2037 208.0 400.0
A7 5.114% 5.298% January 2035 222.0 222.0
B 6.800% 6.409% By instalment 2005 - 2030 100.2 107.1
B3 5.163% 5.435% January 2035 77.9 77.9
C2 5.442% 6.059% January 2035 239.7 239.7
D2 5.801% 6.743% January 2035 125.0 125.0
1,041.5 1,326.2
Unamortised premium 7.8 9.4
Accrued financing costs 10.9 12.9
1,060.2 1,348.5
The A7, B3, C2 and D2 tranches of the intercompany loan are carried at fair
value. The A1, A3 and B2 tranches are carried at amortised cost. The total
fair value of the intercompany loan was £973,174,715 (2023: £1,230,025,065).
The total carrying value of the loan is £970m. Of the carrying value of
£970m, £385m is carried at amortised cost and £585m is carried at fair
value.
The carrying value of financial assets represents the Company's maximum
exposure to credit risk.
The maturity profile of the Company's contracted undiscounted cash flows is as
follows:
2024 2023
£ £
Within one year 81,890,007 353,257,557
In one to 2 years 77,917,648 81,890,076
In 2 to 5 years 223,856,604 227,576,085
In 5 to 10 years 533,804,465 500,632,089
In 10 to 20 years 690,813,620 798,214,780
At 31 December 1,608,282,344 1,961,570,587
2024 2023
£ £
Comprising:
Principal repayments 1,041,472,486 1,326,211,720
Interest repayments 566,809,858 635,358,867
At 31 December 1,608,282,344 1,961,570,587
The above table contains undiscounted cash flows (including interest) and
therefore results in a higher balance than the carrying values or fair values
of the intercompany debt.
Other amounts owed by the group undertakings are interest free and repayable
on demand.
9. CREDITORS: Amounts falling due within one year
2024 2023
£ £
Securitised debt (Note 11) 18,543,912 325,526,905
Amounts owed to group undertakings - 12,181,686
Trade Creditors 7,500 -
Accruals and deferred income 12,199,521 15,438,767
33,750,933 353,147,358
Amount owed to the group undertakings are interest free and repayable on
demand.
On 22 January 2024, the company made a partial repayment of £77.1m of the A1
and a partial repayment of £192m of the A3 securitisation notes. The
repayment released security over 10 Cabot Square following the execution of
the amendment of lease arrangements within Barclays Bank plc
On the same date, the same amounts have been repaid by a fellow subsidiary
undertaking to the company in order to facilitate the repayments of the loan
notes.
10. CREDITORS: Amounts falling due after more than one year
2024 2023
£ £
Securitised debt (Note 11) 917,167,787 871,491,929
Derivative financial instruments (Note 12) 34,325,485 83,542,955
951,493,272 955,034,884
11. SECURITISED DEBT
The amounts at which borrowings are stated
comprise:
2024 2023
£ £
At 1 January 1,197,018,834 1,247,846,985
Repaid in the year (325,526,905) (29,325,200)
Amortisation of issue premium (1,348,326) (1,531,718)
Movement in accrued financing expenses (2,027,194) (1,975,027)
Fair value adjustment (67,595,290) (58,783,877)
Debt modification - 40,787,671
At 31 December 935,711,699 1,197,018,834
2024 2023
£ £
Payable within one year or on demand 18,543,912 325,526,905
Payable after more than one year 917,167,787 871,491,929
935,711,699 1,197,018,834
The company's securitised debt was issued in tranches, with notes of classes
A1, A3, A7, B, B3, C2 and D2 remaining outstanding. The A1, A3 and B notes
were issued at a premium which is being amortised to the income statement over
the life of the relevant notes. At 31 December 2024 £7,765,728 (2023 -
£9,444,792) remained unamortised.
At 31 December 2024 there were accrued financing costs of £10,875,858 (2023 -
£12,903,052) relating to previous contractual increases in margins.
The notes are secured on five properties at Canary Wharf, owned by fellow
subsidiary undertakings, and the rental income stream therefrom. The five
properties are 1 Canada Square, 33 Canada Square, 20 Bank Street, 40 Bank
Street and 20 Cabot Square/South Colonnade. On 22 January 2024, the company
made a partial repayment of £77.1m of A1 and a partial repayment of £192m of
A3 securitisation notes. The repayment released security over 10 Cabot
Square following the execution of the amendment of lease arrangements with
Barclays Bank plc.
The securitisation continues to have the benefit of an arrangement with AIG
which covers the rent in the event of a default by the tenant of 33 Canada
Square over the entire term of the lease. At 31 December 2023, AIG had
posted £34,034,750 as cash collateral in respect of this obligation.
The company also has the benefit of a £300.0m liquidity facility provided by
Lloyds Bank plc, under which drawings may be made in the event of a cash flow
shortage under the securitisation.
At 31 December 2024 the principal terms and fair value of the securitised debt
is as follows:
Tranche Principal Fair value Interest Effective interest Repayment
£m £m
A1 68.7 71.4 6.455% 5.692% By instalment 2009 - 2033
A3 208.0 214.7 5.952% 5.736% By instalment 2024 - 2037
A7 222.0 190.9 Floating 5.298% January 2035
B 100.2 101.6 6.800% 6.409% By instalment 2005 - 2030
B3 77.9 63.7 Floating 5.435% January 2035
C2 239.7 196.5 Floating 6.059% January 2035
D2 125.0 99.9 Floating 6.743% January 2035
1,041.5 938.7
At 31 December 2023 the securitised debt comprised the following:
Tranche Principal Fair value Interest Effective interest Repayment
£m £m
A1 154.5 162.2 6.455% 6.151% By instalment 2009 - 2033
A3 400.0 392.0 5.952% 5.814% By instalment 2032 - 2037
A7 222.0 170.9 Floating 5.298% January 2035
B 107.1 107.1 6.800% 6.409% By instalment 2005 - 2030
B3 77.9 56.9 Floating 5.435% January 2035
C2 239.7 170.2 Floating 6.059% January 2035
D2 125.0 87.5 Floating 6.743% January 2035
1,326.2 1,146.8
Interest on the A1 notes, A3 notes and B notes is fixed until maturity.
Interest on the floating notes is repriced every three months.
Interest on the floating rate notes is at three month SONIA plus a credit
adjustment spread. The margins on the notes are: A7 notes - 0.19% per annum;
B3 notes - 0.28% per annum; C2 notes - 0.55% per annum; and D2 notes - 0.84%
per annum.
The floating rate notes are hedged by means of interest rate swaps and the
hedged rates plus the margins are: A7 notes - 5.3984%; B3 notes - 5.5825%; C2
notes - 6.2666%; and D2 notes - 7.0605%.
The effective interest rates include adjustments for the hedges and the issue
premium.
The floating rate notes are carried at FVTPL. The fixed rate notes are
carried at amortised cost. The total fair value of the debt is £939m. Of
the carrying value of £936m, £388m is carried at amortised cost and £551m
is carried at fair value. The fair value movement is due to changes in
market interest rates rather than credit risk.
The fair values of the sterling denominated notes have been determined by
reference to prices available on the markets on which they are traded.
The maturity profile of the company's contracted undiscounted cash flows is as
follows:
2024 2023
£ £
Within one year 79,319,448 351,826,786
In one to two years 72,657,249 71,494,093
In two to five years 204,690,975 189,299,008
In five to ten years 480,747,721 440,456,869
In ten to twenty years 682,869,270 786,634,554
At 31 December 1,520,284,663 1,839,711,310
2024 2023
£ £
Comprising:
Principal repayments 1,041,472,487 1,326,211,720
Interest repayments 478,812,176 513,499,590
At 31 December 1,520,284,663 1,839,711,310
The above table contains undiscounted cash flows (including interest) and
therefore results in a higher balance than the carrying values or fair values
of the borrowings.
The weighted average maturity of the debentures at 31 December 2024 was 8.77
years (2023 - 7.69 years). The debentures may be redeemed at the option of
the company subject to terms and conditions being met.
After taking into account the interest rate hedging arrangements, the weighted
average interest rate of the company at 31 December 2024 was 6.1% (2023 -
6.1%).
Details of the derivative financial instruments are set out in Note 12.
Details of the company's risk management policy are set out in the Strategic
Report.
12. DERIVATIVE FINANCIAL INSTRUMENTS
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. At 31 December 2024 the fair value of these derivatives resulted
in the recognition of a net liability of £34,325,483 (2023 - £83,542,955).
13. SHARE CAPITAL
2024 2023
£ £
Allotted, called up and fully paid
50,000 (2023 - 50,000) Ordinary shares of £1.00 each 50,000 50,000
14. RESERVES
Hedging Reserve
The company holds swaps for the B3, C2, A7 and D2 notes. From July 2019, the
company has adopted IFRS 9 for the measurement and classification of financial
instruments, replacing the previous IAS39 criteria, the company carries the
B3, C2, A7 and D2 notes and the associated tranches of its intercompany loans
at fair value through profit and loss. There is no continuing hedge
accounting.
The hedging reserve balance comprises the unamortised balance of the
discontinued hedge accounting on for the B2, C1, B3 and C2 notes.
Hedge accounting was applied for swaps on the B2 and C1 notes between 2005 and
2007, when the B2 and C1 notes were replaced by B3 and C2 notes. The
combined balance in the hedging reserve at that time was a debit of
£14,680,000, which is being amortised to October 2027, the remaining life of
the B2 and C1 notes. At the year end, the unamortised balance was £805,826
(2023: £1,157,129).
Hedge accounting was applied for swaps on the B3 and C2 notes between 2007 and
2019. The balance of the hedge reserve associated with these notes was a
debit within capital and reserves of £165,163,014, which is being amortised
until January 2035, the remaining life of the B3 and C2 notes. At the year
end, the unamortised balance was £107,705,135 (2023: £118,152,022).
Distributable reserves
The distributable reserves of the company differ from its retained earnings as
follows:
2024 2023
£ £
Retained earnings 112,691,581 122,675,691
Hedging reserve (106,889,309) (116,994,893)
Distributable reserves 5,792,272 5,680,798
15. OTHER FINANCIAL COMMITMENTS
As at 31 December 2024 and 31 December 2023 the company had given security
over all its assets, including security expressed as a first fixed charge over
its bank accounts, to secure the notes referred to in Note 11.
16. CONTROLLING PARTY
The company's immediate parent undertaking is Canary Wharf Finance Holdings
Limited.
As at 31 December 2024, the smallest group of which the company is a member
and for which group financial statements are drawn up is the consolidated
financial statements of Canary Wharf Group Investment Holdings plc. Copies
of the financial statements may be obtained from the Company Secretary, One
Canada Square, Canary Wharf, London E14 5AB.
The largest group of which the company is a member for which group financial
statements are drawn up is the consolidated financial statements of Stork
HoldCo LP, an entity registered in Bermuda and the ultimate parent undertaking
and controlling party. Stork HoldCo LP is registered at 73 Front Street, 5th
Floor, Hamilton, HM12, Bermuda.
Stork HoldCo LP is controlled as to 50% by Brookfield and as to 50% by Qatar
Investment Authority.
The directors have taken advantage of the exemption in paragraph 33.1A of FRS
102 allowing the Company not to disclose related party transactions with
respect to other wholly owned group companies.
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