bl superstores finance plc report and financial ......2019/07/25 · bl supires finance plc...

Registration number: 05564432

BL Superstores Finance PLCAnnual Report and Financial Statements

for the Year Ended 31 March 2019

BL Superstores Finance PLC

Contents

Strategic Report 1 to 2

Directors Report 3 to 4

Independent Auditors’ Report 5 to 8

Profit and Loss Account 9

Statement of Comprehensive Income 10

Balance Sheet 11

Statement of Changes in Equity 12

Notes to the Financial Statements 13 to 20

BL Sup toj.e.sFinance PLC

Strategic Report for the Year Ended 31 March 2019

The directors present their Strategic Report for the year ended 31 March 2019.

Business review and principal activitiesBL Superstores Finance PLC (‘the company’) is a wholly owned subsidiary of BLSSP Property Holdings Limitedand operates as a constituent of BL Sainsbury Superstores Limited group of companies (“the group”).

BL Sainsbury Superstores Limited operates as a joint venture between Linestair Limited, a subsidiary of TheBritish Land Company PLC and Sainsbury Property Investments Limited, a subsidiary of J Sainsbury PLC.

The company’s principal activity is to provide funding to fellow subsidiaries of BL Sainsbury Superstores Limited.

As shown in the company’s Profit and Loss Account on page 9, the company’s turnover has remained consistentwith the prior year.

Loss on ordinary activities before taxation is £12,636 compared to a loss on ordinary activities before taxation of£19,721 in the prior year.

Dividends ofniI (2018: £nil) were paid in the year.

The Balance Sheet on page 11 shows that the company’s financial position at the year end has, in net assetsterms, decreased compared with the prior year.

On 4 March 2019 two properties of the group were sold to third parties. The proceeds were used to repay thesubordinated loan on the interest payment date being 4 April 2019.

The directors measure how the group, of which the company is a member, is delivering its strategy through thekey performance indicators. The directors consider the primary measures of performance of the group to beturnover and net asset value. These are discussed above.

The expected future developments of the company are determined by the strategy of the group. There are nofi ti !r .,!rrmPntc nt ,fr nf fhc’ nmnnv’ ri irrnt nnrtirn nlnnr

For more information also see BL Sainsbury Superstores Limited group annual report.

The performance of the group, which includes the company, is discussed in the group’s annual report which doesnot form part of this report.

Principal risks and uncertaintiesThis company is part of a large property investment group. As such, the fundamental underlying risks for thiscompany are those of the property group as discussed below.

The group generates returns to shareholders through long-term investment decisions requiring the evaluation ofopportunities arising in the following areas:

• demand for space from occupiers against available supply;

• identification and execution of investment and development strategies which are value enhancing;

• availability of financing or refinancing at an acceptable cost;

• economic cycles, including their impact on tenant covenant quality, interest rates, inflation and propertyvalues;

• legislative changes, including planning consents and taxation;

• engagement of development contractors with strong covenants;

• key staff changes; and

• environmental and health and safety policies.

These opportunities also represent risks, the most significant being change to the value of the property portfolio.This risk has high visibility to directors and is considered and managed on a continuous basis. Directors use theirknowledge and experience to knowingly accept a measured degree of market risk.

Page 1

BL Supires Finance PLC

Strategic Report for the Year Ended 31 March 2019 (continued)

The group’s preference for prime assets and their secure long term contracted rental income, primarily withupward only rent review clauses, presents lower risks than many other property portfolios.

The financial and political risks for the company are managed in accordance with the group financial riskmanagement policy, as disclosed in the consolidated group financial statements. The general risk environment inwhich the group operates has heightened over the course of the year, which is largely due to the continued levelof uncertainty associated with the future impact of the UK’s exit from the EU, the significant deterioration in theUK retail market and weaker investment markets.

British Land Company Secretarial LimitedCompany secretary

and signed on its behalf by:

Page 2

BLSiiperstor FhimiPi-C

Directors’ Report for the Year Ended 31 March 2019

The directors present their report and the audited financial statements for the year ended 31 March 2019.

Directors of the companyThe directors, who held office during the year, and up to the date of signing the financial statements, were asfollows:

M Burke

D Clegg

G Cowen

S Nelson (resigned 14 January 2019)

H Shah

WAtkinson (resigned 3 July 2018)

C Cohen (appointed 3 July 2018 and resigned 16 July 2018)

J Honeyman

J Pinkstone

J Watson (appointed 18 July 2018)

D Wheeler (appointed 14 January 2019 and resigned 14 June 2019)

The following director was appointed after the year end:

B Richardson (appointed 14 June 2019)

Director& responsibilities statementTF,m rjiraninrc nknninlndna fhojr racnnneihiliticc fnr nrcnorinn tho Annito! Pnnnrt nnri tho finnnrinl cttnrnantc in

accordance with applicable law and regulations.-—

—

Company law requires the directors to prepare financial statements for each financial year. Under that law thedirectors have prepared the financial statements in accordance with United Kingdom Generally AcceptedAccounting Practice (United Kingdom Accounting Standards, comprising FRS 101 “Reduced DisclosureFramework”, and applicable law). Under company law the directors must not approve the financial statementsunless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profitor loss of the company for that period. In preparing these financial statements, the directors are required to:

• select suitable accounting policies and apply them consistently;

• state whether applicable United Kingdom Accounting Standards, comprising FRS 101, have been followed,subject to any material departures disclosed and explained in the financial statements,

• make judgements and accounting estimates that are reasonable and prudent; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that thecompany will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain thecompany’s transactions and disclose with reasonable accuracy at any time the financial position of the companyand enable them to ensure that the financial statements comply with the Companies Act 2006.

The directors are also responsible for safeguarding the assets of the company and hence for taking reasonablesteps for the prevention and detection of fraud and other irregularities.

Page 3

B1 rsws FinncFk

Directors’ Report for the Year Ended 31 March 2019 (continued)

Environmental mattersThe company recognises the importance of its environmental responsibilities, monitors its impact on theenvironment, and designs and implements policies to reduce any damage that might be caused by thecompany’s activities. The company operates in accordance with best practice policies and initiatives designed tominimise the company’s impact on the environment including the safe disposal of manufacturing waste, recyclingand reducing energy consumption.

Going concernThe directors consider the company to be a going concern and the financial statements are prepared on thisbasis. Details of this are shown in note 2 of the financial statements.

Subsequent EventsDetails of significant events since the Balance Sheet date, if any, are contained in note 17.

Disclosure of information to the auditorsEach director has taken steps that they ought to have taken as a director in order to make themselves aware ofany relevant audit information and to establish that the company’s auditors are aware of that information. Thedirectors confirm that there is no relevant information that they know of and of which they know the auditors areunaware.

Reappointment of independent auditorsThe auditors, Pricewaterhouse000pers LLP, have indicated their willingness to continue in office and a resolutionconcerning their re-appointment will be proposed at the next Board Meeting.

Approved by the Board ‘-7’ and signed on its behalf by:

Britis Land Company Secretarial LimitedCompany secretary

Page 4


Independent Auditors’ Report to the Members of BL Superstores Finance PLC

Report on the audit of the financial statements

OpinionIn our opinion, BL Superstores Finance PLC’s financial statements:

• give a true and fair view of the state of the Company’s affairs as at 31 March 2019 and of its loss for the yearthen ended;

• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice(United Kingdom Accounting Standards, comprising FRS 101 Reduced Disclosure Framework”, andapplicable law); and

• have been prepared in accordance with the requirements of the Companies Act 2006.

We have audited the financial statements, included within the Annual Report and Financial Statements (the“Annual Report”), which comprise: the Balance Sheet as at 31 March 2019; the Profit and Loss Account, theStatement of Comprehensive Income, and the Statement of Changes in Equity for the year then ended; and theNotes to the Financial Statements, which include a description of the significant accounting policies.

Our opinion is consistent with our reporting to those charged with governance.

Basis for opinionWe conducted our audit in accordance with International Standards on Auditing (UK) (“ISA5 (UK)”) and applicablelaw. Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of thefinancial statements section of our report. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion.

IndependenceWe remained independent of the Company in accordance with the ethical requirements that are relevant to ouraudit of the financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listedpublic interest entities, and we have fulfilled our other ethical responsibilities in accordance with theserequirements.

To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s EthicalStandard were not provided to the Company.

We have provided no non-audit services to the Company in the period from 1 April 2016 to 31 March 2019.

Our audit approach

Ove,viewMateriality

• Overall materiality: £2,016,000 (2018: £2,610,000), based on 1% of total assets.

Audit scope

• Our 2019 audit was planned and executed having regard to the fact that during the year the Company hadpartially redeemed its bonds. This obligation arose from the sale of properties to third parties. In light ofthis, our approach to the audit in terms of scoping and areas of focus was the redemption of bonds and itseffect on interest expenses.

Key audit matters

• Bond redemptions have been identified as a key audit matter.

The scope of our auditAs part of designing our audit, we determined materiality and assessed the risks of material misstatement in thefinancial statements.

Page 5


Independent Auditors’ Report to the Members of BL Superstores Finance PLC(continued)

Capability of the audit in detecting irregularities, including fraudBased on our understanding of the Company and industry, we identified that the principal risks of non-compliancewith laws and regulations related to the Companies Act 2006 and the Listing Rules, and we considered the extentto which non-compliance might have a material effect on the financial statements. We also considered those lawsand regulations that have a direct impact on the preparation of the financial statements such as the CompaniesAct 2006, and the Listing Rules. We evaluated management’s incentives and opportunities for fraudulentmanipulation of the financial statements (including the risk of override of controls), and determined that theprincipal risks were related to the Companies Act 2006 and the Listing Rules. Audit procedures performed by theengagement team included:

• Discussions with management, including consideration of known or suspected instances of non-compliancewith laws and regulations and fraud, and review of the reports made by management and internal audit;

• Understanding of management’s internal controls designed to prevent and detect irregularities, risk-basedmonitoring of customer processes;

• Reviewing relevant meeting minutes.

There are inherent limitations in the audit procedures described above and the further removed non-compliancewith laws and regulations is from the events and transactions reflected in the financial statements, the less likelywe would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher thanthe risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example,forgery or intentional misrepresentations, or through collusion.

Key audit mattersKey audit matters are those matters that, in the auditors’ professional judgement, were of most significance in theaudit of the financial statements of the current period and include the most significant assessed risks of materialmisstatement (whether or not due to fraud) identified by the auditors, including those which had the greatesteffect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of theengagement team. These matters, and any comments we make on the results of our procedures thereon, wereaddressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon,and we do not provide a separate opinion on these matters. This is not a complete list of all risks identified by ouraudit.

Key audit matter How our audit addressed the key audit matter

Bonds We recalculated the year-end balance of the bondsRefer to page 13 (Accounting policies) and page 17 by testing movements in the year. We tested the total(Notes to the Financial Statements) redemption against the schedule set out in the

bonds’ offering circular. We also tested theDuring the year, the group disposed of two properties redemption by agreeing the total redemption toand pursuant to the provisions of the Intercompany supporting documents as well as the notice served toLoan Agreement, this gives rise to obligations for the bondholders. No issues were identified in ourfellow subsidiaries to repay an amount of the testingintercompany loan to the Company. The Company . 1

therefore redeemed some of its bonds from theproceeds of such repayment.

How we tailored the audit scopeWe tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on thefinancial statements as a whole, taking into account the structure of the Company, the accounting processes andcontrols, and the industry in which it operates.

MaterialityThe scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds formateriality. These, together with qualitative considerations, helped us to determine the scope of our audit and thenature, timing and extent of our audit procedures on the individual financial statement line items and disclosuresand in evaluating the effect of misstatements, both individually and in aggregate on the financial statements as awhole.

Page 6



Based on our professional judgement, we determined materiality for the financial statements as a whole asfollows:

Overall materiality £201 6,000 (2018: £2610000).

How we determined it 1% of total assets.

We believe that. total assets is the primary measure used byRationale for benchmark applied shareholders in assessing the performance of the entity, and is a

generally accepted auditing benchmark.

We agreed with those charged with governance that we would report to them misstatements identified during ouraudit above £100800 (2018: £130000) as well as misstatements below that amount that, in our view, warrantedreporting for qualitative reasons.

Conclusions relating to going concernlSAs (UK) require us to report to you when:

• the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is notappropriate; or

• the Directors have not disclosed in the financial statements any identified material uncertainties that may castsignificant doubt about the Company’s ability to continue to adopt the going concern basis of accounting for aperiod of at least twelve months from the date when the financial statements are authorised for issue.

We have nothing to report in respect of the above matters.

However, because not all future events or conditions can be predicted, this statement is not a guarantee as to theCompany’s ability to continue as a going concern. For example, the terms on which the United Kingdom maywithdraw from the European Union are not clear, and it is difficult to evaluate all of the potential implications onthe Company’s trade, customers, suppliers and the wider economy.

Reporting on other informationThe other information comprises all of the information in the Annual Report other than the financial statementsand our auditors’ report thereon. The directors are responsible for the other information. Our opinion on thefinancial statements does not cover the other information and, accordingly, we do not express an audit opinion or,except to the extent otherwise explicitly stated in this report, any form of assurance thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, indoing so, consider whether the other information is materially inconsistent with the financial statements or ourknowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparentmaterial inconsistency or material misstatement, we are required to perform procedures to conclude whetherthere is a material misstatement of 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 otherinformation, we are required to report that fact. We have nothing to report based on these responsibilities.

With respect to the Strategic Report and the Directors’ Report. we also considered whether the disclosuresrequired by the UK Companies Act 2006 have been included.

Based on the responsibilities described above and our work undertaken in the course of the audit, ISAs (UK)require us also to report certain opinions and matters as described below.

Strategic Report and Directors’ ReportIn our opinion, based on the work undertaken in the course of the audit, the information given in the StrategicReport and Directors’ Report for the year ended 31 March 2019 is consistent with the financial statements andhas been prepared in accordance with applicable legal requirements.

In light of the knowledge and understanding of the Company and its environment obtained in the course of theaudit, we did not identify any material misstatements in the Strategic Report and Directors’ Report.

Page 7



Responsibilities for the financial statements and the auditResponsibilities of directors for the financial statements

As explained more fully in the Directors’ Responsibilities Statement set out on page 3, the Directors areresponsible for the preparation of the financial statements in accordance with the applicable framework and forbeing satisfied that they give a true and fair view. The directors are also responsible for such internal control asthey determine is necessary to enable the preparation of financial statements that are free from materialmisstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Company’s ability tocontinue as a going concern, disclosing as applicable, matters related to going concern and using the goingconcern basis of accounting unless the Directors either intend to liquidate the Company or to cease operations,or have no realistic alternative but to do so.

Auditors’ responsibilities for the audit of the financial statementsOur objectives are to obtain reasonable assurance about whether the financial statements as a whole are freefrom material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes ouropinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted inaccordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arisefrom fraud or error and are considered material if, individually or in the aggregate, they could reasonably beexpected 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 FRC’swebsite at www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.

Use of this reportThis report, including the opinions, has been prepared for and only for the Company’s members as a body inaccordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in givingthese opinions, accept or assume responsibility for any other purpose or to any other person to whom this reportis shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Other required reporting

Companies Act 2006 exception reportingUnder the Companies Act 2006 we are required to report to you if, in our opinion:

• we have not received all the information and explanations we require for our audit; or

• adequate accounting records have not been kept by the Company, or returns adequate for our audit have notbeen received from branches not visited by us; or

• certain disclosures of Directors’ remuneration specified by law are not made; or

• the financial statements are not in agreement with the accounting records and returns.

We have no exceptions to report arising from this responsibility.

AppointmentFollowing the recommendation of those charged with governance, we were appointed by the directors on 21 July2015 to audit the financial statements for the year ended 31 March 2015 and subsequent financial periods. Theperiod of total uninterrupted engagement is 5 years, covering the years ended 31 March 2015 to 31 March 2019.

John,IvVaters (Senior Statutory Auditor)Fbnd on behalf of PricewaterhouseCoopers LLP,Chartered Accountants and Statutory AuditorsLondon

Date:....*i’

Page 8


Profit and Loss Account for the Year Ended 31 March 2019

2019 2018Note £ £

Turnover - -

Administrative expenses (13,977) (21,341)

Operating loss (13,977) (21,341)

Loss on ordinary activities before interest and taxation (13,977) (21,341)

Interest receivable and similar income 4 13,051,651 41,174,766

Interest payable and similar expenses 5 (13,050,310) (41,173,146)

Loss on ordinary activities before taxation (12,636) (19,721)

Taxation 8 - -

Lossfortheyear (12,636) (19,721)

Turnover and results were derived from continuing operations within the United Kingdom.

The notes on pages 13 to 20 form an integral part of these financial statements.

Page 9

L prrFnPi,

Statement of Comprehensive Income for the Year Ended 31 March 2019

2019 2018£ £

Loss for the year (12,636) (19,721)

Total comprehensive expense for the year (12,636) (19,721)


Page 10

jperstoresFmmice PLC

(Registration number: 05564432)

Balance Sheet as at 31 March 2019

31 March 31 March2019 2018

Note £ £

Current assets

Debtors due within one year g 34,699,093 64,697,730

Debtors due after more than one year g 166,868,744 196,314,226

Cash and cash equivalents 10 35,885 34,478

201,603,722 261,046,434

Creditors due within one year 11 (34,431,810) (64,426,404)

Total assets less current liabilities 167,171,912 196,620,030

Creditors due after more than one year 12 (166,868,744) (196,304,226)

Net assets 303,168 315,804

Capital and reserves

Called up share capital 14 12,500 12,500

Profit and loss account 290,668 303,304

Tc-L! rhI-Ir’ 303.168 315,804

Approved by the Board on and signed on its behalf by:


Page 11

BLSuperstores Finance PLC

Statement of Changes in Equity for the Year Ended 31 March 2019

Profit and lossShare capital account Total

£ £ £

Balance at 1 April 2017 12,500 323,025 335,525

Loss for the year - (19,721) (19,721)

Total comprehensive expense for the year - (19,721) (19,721)

Balance at 31 March 2018 12,500 303,304 315,804

At 1 April 2018 12,500 303,304 315,804

Loss for the year - (12,636) (12,636)

Total comprehensive expense for the year - (12,636) (12,636)

Balance at 31 March 2019 12,500 290,668 303,168


Page 12

BLprtcres Fnf

Notes to the Financial Statements for the Year Ended 31 March 2019

I General information

The company is a private company limited by share capital, incorporated and domiciled in England, UnitedKingdom.

The address of its registered office is;York House45 Seymour StreetLondonW1H 7LX

2 Accounting policies

Summary of significant accounting policies and key accounting estimatesThe principal accounting policies applied in the preparation of these financial statements are set out below.These policies have been consistently applied to all the years presented, unless otherwise stated.

Basis of preparationThese financial statements were prepared in accordance with Financial Reporting Standard 101 ReducedDisclosure Framework (“FRS 101”).

In preparing these financial statements, the company applies the recognition, measurement and disclosurerequirements of International Financial Reporting Standards as adopted by the EU (“Adopted IFRSs”), but makesamendments where necessary in order to comply with Companies Act 2006 and has set out below whereadvantage of the FRS 101 disclosure exemptions has been taken.

The finar ciei steter erit heve beeti prepered Under the hitüricei ot oonvention. HitOridai Ot i eiiereiiybased on the fair value of the consideration given in exchange for the assets.

Summary of disclosure exemptionsThe company has taken advantage of the following disclosure exemptions under FRS 101;

(a) The requirements of lAS 1 to provide a Balance Sheet at the beginning of the year in the event of a prioryear adjustment:

(b) The requirements of lAS 1 to provide a Statement of Cash flows for the year;

(c) The requirements of lAS 1 to provide a statement of compliance with IFRS;

(d) The requirements of lAS 1 to disclose information on the management of capital;

(e) The requirements of paragraphs 30 and 31 of lAS 8 Accounting Policies, Changes in AccountingEstimates and Errors to disclose new IFRS’s that have been issued but are not yet effective;

(f) The requirements in lAS 24 Related Party Disclosures to disclose related party transactions entered intobetween two or more members of a group, provided that any subsidiary which is a party to the transactionis wholly owned by such a member;

(g) The requirements of paragraph 17 of lAS 24 Related Party Disclosures to disclose key managementpersonnel compensation;

(h) The requirements of IFRS 7 to disclose financial instruments; and

(i) The requirements of paragraphs 91-99 of IFRS 13 Fair Value Measurement to disclose information of fairvalue valuation techniques and inputs.

Page 13

L rrEmnce PLC

Notes to the Financial Statements for the Year Ended 31 March 2019(continued)

2 Accounting policies (continued)

Disclosure exemptions for subsidiaries are permitted where the relevant disclosure requirements are met in theconsolidated financial statements. Where required, equivalent disclosures are given in the group accounts of BLSainsbury Superstores Limited. The group accounts of BL Sainsbury Superstores Limited are available to thepubhc and can be obtained as set out in note 18.

Adoption status of relevant new financial reporting standards and interpretations

During the period the company adopted the following standards:

IFRS 9 — Financial instrumentsThe new standard addresses the classification, measurement and recognition of financial assets and financialliabilities. It simplifies the existing categories of financial instruments, redefines the criteria required for hedgeeffectiveness and introduces an expected credit loss model requiring expected credit loss to be recognised on allfinancial assets held at amortised cost. Adoption of IFRS 9 has not had a material impact on the financialstatements of the company. The standard was applied using the modified retrospective approach.

IFRS 15— Revenue from contracts with customersThe new standard sets out a five-step model for the recognition of revenue and establishes principles forreporting useful information to users of financial statements about the nature, timing and uncertainty of revenuesand cash flows arising from an entity’s contracts with customers. The new standard does not apply to rentalincome which is in the scope of lAS 17, but does apply to service charge income, management and performancefees and trading property disposals. Adoption of IFRS 15 has not had a material impact on the financialstatements of the company. The standard was applied using the full retrospective approach.A4 1k +h, hrrtfrr.rrsrrrLrr. rrr t,r- r,ss ,sLE,t, tLnrtst.art2, ,,rL_,jj,,.tLiL,cnr,a cj(rtrcs,,,_,,,.4,,,,._,rtJ

effective for the first time from 1 April 2018 have had a material effect on the financial statements.

Going concernHaving reviewed the company’s forecast working capital and cash flow requirements, in addition to makingenquiries and examining areas which could give risk to financial exposure, the directors have a reasonableexpectation that the company has adequate resources to continue its operations for the foreseeable future. As aresult they continue to adopt the going concern basis in preparing the financial statements.

TaxationCurrent tax is based on taxable loss for the year and is calculated using tax rates that have been enacted orsubstantively enacted. Taxable loss differs from net loss as reported in the Profit and Loss Account because itexcludes items of income or expense that are not taxable (or tax deductible). In particular the group (includingthis company) became a REIT on 1 January 2007 where income and gains on qualifying assets are exempt fromtaxation. On 26 March 2008, the sale of 50% of the group to a non-REIT entity resulted in now only 50% of theincome and gains on qualifying assets being exempt from taxation.

Deferred tax is provided on items that may become taxable at a later date, on the difference between the balancesheet value and tax base value, on an undiscounted basis.

Cash and cash equivalentsCash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquidinvestments that are readily convertible to a known amount of cash and are subject to an insignificant risk ofchanges in value.

DebtorsTrade and other debtors are initially recognised at fair value and subsequently measured at amortised cost anddiscounted as appropriate. The Company calculates the expected credit loss for debtors based on lifetimeexpected credit losses under the IFRS 9 simplified approach.

Page 14



2 Accounting policies (continued)

CreditorsTrade and other creditors are initially recognised at fair value and subsequently measured at amortised cost anddiscounted as appropriate.

Interest payable and receivableInterest payable and receivable is recognised as incurred under the accruals concept. Interest payable includesfinancing charges which are spread over the period to redemption, using the effective interest method.Commitment fees on non-utilised facilities are also included within interest payable.

Premiums payable and receivable on early redemption are recognised as finance charges and income whenincurred.

BorrowingsOther financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. Otherfinancial liabilities are subsequently measured at amortised cost using the effective interest method, with interestexpense recognised on an effective yield basis. The effective interest method is a method of calculating theamortised cost of a financial liability and of allocating interest expense over the relevant period. The effectiveinterest rate is the rate that exactly discounts estimated future cash payments through the expected life of thefinancial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

3 Significant accounting judgements and key sources of estimation uncertainty

There re n uh riev tjudmrts rfimtes.

4 Interest receivable and similar income

2019 2018£ £

Interest income on bank deposits 86 21

Interest receivable on amounts owed by group 10,644,851 15,270,567

Premium income on early repayment 2,506,714 25,904,178

13,051,651 41,174,766

5 Interest payable and similar expenses

2019 2018£ £

Interest on bank overdrafts and borrowings 10,024,141 14,360,693

Premium costs on early repayment 2,506,714 25,904,178

Other finance costs 519,455 908,275

13,050,310 41,173,146

Page 15

BL Superstores Finance PLQ


6 Auditors’ remuneration

A notional charge of £1,870 (2018: £1,810) is deemed payable to PricewaterhouseCoopers LLP in respect of theaudit of the financial statements for the year ended 31 March 2019. Actual amounts payable toPricewaterhouseCoopers LLP are paid at group level by BL Sainsbury Superstores Limited.

No non-audit fees (2018: £nil) were paid to Pricewaterhouse000pers LLP.

7 Staff costs

No director (2018: £nil) received any remuneration for services to the company in either year. The remunerationof the directors was borne by another company, for which no apportionment or recharges were made. The valueof this service was negligible.

Average number of employees, excluding directors, of the company during the year was nil (2018: nil)

8 Tax on loss on ordinary activities

2019 2018£ £

Tax reconciliation

Loss on ordinary activities before taxation (12,636) (19,721)

(2018:19%).ç:tlYti at UK corporation, tx 12-to of 19%

(2,401) (3,747)

Effects of:

Tax losses and other timing differences 2,401 3,747

Total tax charge - -

A reduction in the UK corporation tax rate from 19% to 17% (effective from 1 April 2020) was substantiallyenacted on 6 September 2016. This rate reduction has been reflected in the calculation of deferred tax on theBalance Sheet date, where relevant.

9 Debtors

31 March 31 March2019 2018

£ £

Debtors due within one year

Amounts due from related parties 29,790,622 55,032,521

Accrued income 4,902,335 9,627,266

Prepayments 6,136 35,674

VAT - 2,269

34,699,093 64,697,730

Page 16

Liperstores Finance PLC


9 Debtors (continued)

31 March 31 March2019 2018

£ £

Debtors due after more than one year

Amounts owed by related parties - Long term loans 166,868,744 196,314,226

166,868,744 196,314,226

10 Cash and cash equivalents

31 March 31 March2019 2018

£ £

Cash at bank 35,885 34,478

35,885 34,478

11 Creditors due within one year

i iviaicth 3; ivich2019 2018

£ £

Accrued expenses 4,901,970 9,626,835

Amounts due to related parties 87,224 90,684

VAT 7,135 -

Bonds 29,435,481 54,708,885

34,431,810 64,426,404

12 Creditors due after more than one year

31 March 31 March2019 2018

£ £

Bonds

due within one to two years 12,201,919 13,155,152

due within two to five years 41,302,090 45,526,765

due after five years 113,364,735 137,622,309

166,868,744 196,304,226

Page 17

perstorefiiiancPJ


12 Creditors due after more than one year (continued)

31 March 31 March9fllø 9fl1R

£ £

Borrowings repayment analysis

Repayments due:

Within one year 29,435,481 54,708,885

1-2 years 12,201,919 13,155,152

2-5 years 41,302,090 45,526,765

82,939,490 113,390,802

After 5 years 113,364,735 137,622,309

Total borrowings 196,304,225 251,013,111

31 March 31 March2019 2018

Secured bonds on the assets of the group

Class A2 4.482% Bonds due 2030 94,113,601 119,453,638

Class B2 5.270% Bonds due 2030 53,190,624 82,559,473

Class B3 5.578% Bonds due 2030 49,000,000 49,000,000

Netdebt 196,304,225 251,013,111

The bonds amortise between 2008 to 2025, and are secured on the properties of group valued at £480.90m(2018: £515.25rn). The weighted average interest rate of the bonds is 4.97% (2018: 496%). The weightedaverage maturity of the bonds is 4.95 years (2018: 4.12 years).

On 4 March 2019 two properties of the group were sold to third parties. This resulted in bond repaymentobligations of £8,482,060 nominal of the class A2 bonds and £9,207,360 nominal of the class B2 bonds at apremium of £1,336,906 and £1,169,808 respectively on the IPD (interest payment date) of 4 April 2019.

At 31 March 2019 the group was financed by £196.3m bonds (2018: £251 .Om).

The fair values of the bonds have been established by obtaining quoted market prices from brokers.

Except as detailed below, the carry amounts of financial assets and financial liabilities recorded at amortised costin the financial statements are approximately equal to their fair values:

Fair value Fair value2019 2018

£ £

Bonds 221,305,761 284,524,815

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BL Superstores Frnance PLC


13 Risk management

Capital risk managementThe group finances its operations by a mixture of equity and public debt issues to ensure that sufficientcompetitively priced finance is available to support its strateQy,

The approach adopted has been to engage in debt financing with long term maturity dates and as such the bondsissued are due between 2025 and 2030. Including debt amortisation 58% (2018: 55%) of the total borrowings isdue for payment after 5 years. There are no immediate debt refinancing requirements.

The company maintains an undrawn revolving liquidity facility which provides financial liquidity. At 31 March 2019this facility was £47m (2018: £115m). On 4 April 2019 this facility was reduced to £41.2m.

The company aims to ensure that potential debt providers understand the business and a transparent approachis adopted with lenders so they can understand the level of their exposure within the overall context of the BLSainsbury Superstores Limited.

Details of bond covenants are outlined in The Bonds Offering Circular, accessible viahttp://www. britishland .com/investors/strategic-partnerships/bI-superstores-finance.aspx.

Credit riskCredit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause theother party to incur a financial loss. The carrying amount of financial assets recorded in the financial statementsrepresents the company’s maximum exposure to credit risk without taking account of the value of any collateralobtained.

Cash and deposits at 31 March 2019 amounted to £35,885 (2018: £34,478) and were placed with a UK Financialintit,tinn with n A nrdit rtinn At 1 Mmh 2fllfl nrinr tr tkinn rrnIIr)t of nv nfft rrn rnnt th

largest combined credit exposure to a single counterparty arising from money market deposits and derivativeswas £nil (2018: £nil).

In order to manage this risk, management regularly monitors all amounts that are owed to the group to ensurethat amounts are paid in full and on time.

Liquidity riskLiquidity risk is the risk that the entity will encounter difficulty in raising funds to meet commitments associatedwith financial liabilities. This risk is managed through day to day monitoring of future cash flow requirements toensure that the group has enough resources to repay all future amounts outstanding.

14 Called up share capital

Allotted, called up and fully paid shares

31 March 31 March2019 2018

No. £ No. £

Ordinary shares of1 each partly paidupto £0.25 per share 12,500 12,500 12,500 12,500

15 Capital commitments

The total amount contracted for but not provided in the financial statements was £nil (2018: £nil)

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16 Contingent liabilities

The company is part of the same VAT group as BL Superstores (Funding) Limited, BLSSP (Lending) Limited,BLSSP (Cash Management) Limited and the Property Holding Companies and is jointly liable for all moniesfalling due under this registration.

17 Subsequent events

On 23 May 2019 twelve properties of the group were sold to a third party. This resulted in bond repaymentobligations on the 4 July 2019 (IPD) of £82,979,405 nominal of the class A2 bonds, £40,605,888 nominal of theclass B2 bonds and £43,084,230 nominal of the class B3 bonds in addition to the bonds due within one year asat 31 March 2019, at a premium of £13,451,810, £5,1 85,392 and £11,741,743 respectively. Following these bondrepayments, the undrawn revolving liquidity facility was reduced to £660,000 on 4 July 2019.

18 Parent and ultimate parent undertaking

The immediate parent company is BLSSP Property Holdings Limited.

The ultimate holding company is BL Sainsbury Superstores Limited, a joint venture between Linestair Limited,which is a wholly owned subsidiary of The British Land Company PLC and Sainsbury Property InvestmentsLimited, which is a wholly owned subsidiary of J Sainsbury PLC.

BL Sainsbury Superstores Limited is the smallest and largest group for which group accounts are available andwiJi iiuiud Ur uuriijiiy. dUWi uI iL wiiury Su rui Liim dH L1 (.BJLdiF1U IFUIII iUiF

House, 45 Seymour Street, London, W1H 7LX.

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