ELLENBROOK DEVELOPMENTS PLC

COMPANY INFORMATION

Registered Office                               8 White Oak Square

London Road

Swanley

Kent

BR8 7AG

Directors                                              N M Anand

M Dardi

Company Secretary                        Vercity Management Services Limited

Auditor                                                  RSM UK Audit LP

Chartered Accountants

Central Square

5^th Floor

29 Wellington Street

Leeds

LS1 4DL

ELLENBROOK DEVELOPMENTS PLC

INTERIM MANAGEMENT REPORT

The Directors have pleasure in submitting their Interim Management Report and Condensed Unaudited Interim Financial Statements for the six-month period ended 30 June 2022.

Principal Activities and Business Review

There have not been any significant changes in the Company's principal activities in the period under review and there have been no important events to disclose. The interim service fee and scope of service remain materially unchanged.

Principal Risks and Uncertainties

The company has exposures to a variety of financial risks which are managed with the purpose of minimising any potential adverse effect on the company's performance. The directors have policies for managing each of these risks and they are summarised below:

Major Maintenance

The principal risk borne by the company is that maintenance costs exceed those forecast in the financial model agreed at financial close. This risk is mitigated by regular management review of actual expenditure against budget and technical evaluations of the physical condition of the facilities.

Availability

Investment in the project is funded primarily by the Bond and subordinated unsecured loan stock. During the operational phase the principal source of funds available to meet its liabilities under the Bond will be the unitary charge received from the University under the Project Agreement. Failure to achieve the forecast levels of availability would result in lower than forecast revenues and this may adversely affect the company's ability to make payments to Bondholders. In order to minimise deductions against revenue for unavailability, the Management Service Provider agree annual lifecycle plans to ensure the asset stays in a good condition so unavailability is prevented from occurring. Deductions incurred to 30 June 2022 were recovered from the service provider, resulting in a net deduction of £nil (2021: £nil).

Service performance

Performance risk under the Project Agreement and related contracts are passed on to the service providers. The obligations of these subcontractors are underwritten by parent company guarantees. Ultimately, poor performance may result in the University having the right to terminate the Project Agreement. The company has outsourced the financial and operational reporting functions to Vercity Management Services Limited (Vercity). Services and deductions are monitored by Vercity and there are monthly strategic meetings between the University, service provider and Vercity to create and discuss actions to minimise performance failures. As noted in the discussion of the company's KPI's, the levels of deductions levied in the year were low and are not considered to pose a risk to the project.

COVID-19

The company is exposed to risks around the COVID-19 outbreak which the World Health Organisation declared as a health emergency on 30 January 2020 and a global pandemic on 11 March 2020. Whilst the company itself is not considered to be significantly exposed, due to performance risk being passed on to the service provider, subcontractors who it engages with are considered to have exposure in relation to staff being unavailable and therefore not providing the services they are contracted to carry out.

ELLENBROOK DEVELOPMENTS PLC

INTERIM MANAGEMENT REPORT (CONTINUED)

COVID-19 (continued)

There is a risk to the company of not being paid in line with the Project Agreement by our customers, the University of Hertfordshire and Polyfield Properties Ltd. The company has been in constant and close dialogue with the University and facilities management ("FM") service provider since the beginning of the COVID-19 pandemic to ensure critical services are maintained, albeit through a reduced service, and to devise a revised schedule of works to ensure deferred lifecycle activities are undertaken and completed. The directors have also considered the impact of the pandemic on the company's customers and do not believe there to be any further risk to the project as a result of this. The company's insurance policy will cover loss of revenue following interruption by an occurrence of a notifiable disease. As of 5 March 2020, COVID-19 was added to the Governments list of notifiable diseases.

There is a risk to the company that the service provider, Pinnacle, could liquidate and therefore not be able to provide any services. Pinnacle's 2020 financial statements were published in December on a going concern basis and looks to have a strong balance sheet so this risk is low. If Pinnacle did liquidate there is a business continuity plan that would be put into effect to mitigate risks.

Due to the evolving nature of the risk, the board will continue to actively monitor developments, however, to date there have been no changes to the contractual cash flows in connection with the project, nor are there any such revisions expected or planned.

Brexit

The company is exposed to Brexit risk as a result of the inherent uncertainty around the UK's exit from the European Union. Whilst the company itself is not considered to be significantly exposed, due to performance risk being passed on to the service providers, the subcontractors who it engages with are considered to have exposure in relation to labour and the cost of supplies.

Dividends   

During the period the Company paid £428,642 dividends on the issued ordinary share capital of the Company (2021: nil).

Financial Reporting, Risk and Internal Controls

The Company has outsourced the financial reporting function to Vercity. The Board receives regular reports from Vercity which address specific risks to the Company in a Risk Register, which contains a summary of all material and possible risks which the Company is exposed to and is pertinent to the industry in which the Company operates and the Company's customer and sub-contractor environment. The Board also receives quarterly management accounts with explanations of variances from annual budgets and forecasts, which are in turn compared to the Financial Model, which represents the long-term business plan of the Company.

On behalf of the Board

M Dardi

___________________________

M Dardi

Director

26 September 2022

Company Registration No. 04318115

ELLENBROOK DEVELOPMENTS PLC

RESPONSIBILITY STATEMENT OF DIRECTORS IN RESPECT OF THE INTERIM MANAGEMENT REPORT

The Directors are responsible for preparing the Condensed Unaudited Interim Financial Statements in accordance with applicable law and regulations.  They are also responsible for ensuring that the Interim Management Report includes information required by the Listing Rules of the Financial Conduct Authority.

The Directors have elected to prepare the Condensed Unaudited Interim Financial Statements in accordance with United Kingdom Accounting Standards and applicable law (UK Generally Accepted Accounting Practice), including FRS104 The Financial Reporting Standard covering interim financial reporting applicable in the UK and Republic of Ireland.

In preparing these financial statements the Directors are required to:

·    select suitable accounting policies and then apply them consistently;

·    make judgments and estimates that are reasonable and prudent;

·    state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;

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

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors confirm, to the best of their knowledge:

·    that the condensed unaudited interim financial statements, which have been prepared in accordance with UK Generally Accepted Accounting Practice including Financial Reporting Standard 102, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company;

·    that the Interim Management Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it is exposed to;

·    that the appropriate disclosure under DTR 4.2.7R of the Disclosure and Transparency Rules has been made in the Interim Management Report as to any significant events that have occurred during the first six months of the financial year that have had a material impact on the Condensed Unaudited Interim Financial Statements; and

·    that the appropriate disclosure under DTR 4.2.7R of the Disclosure and Transparency Rules has been made in the Interim Management Report as to a description of the principal risks and uncertainties for the remaining six months of the financial year.

The financial information contained in the Condensed Unaudited Interim Financial Statements is pro-forma and does not constitute full statutory accounts within the meaning of section 435 of the Companies Act 2006.  The information has been extracted from the records of the Company for the six-month periods ended 30 June 2022 and 30 June 2021 and for the year ended 31 December 2021.

ELLENBROOK DEVELOPMENTS PLC

CONDENSED UNAUDITED INTERIM STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2022

ELLENBROOK DEVELOPMENTS PLC

CONDENSED UNAUDITED INTERIM STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2022

The financial statements were approved by the board of directors and authorised for issue on 26 September 2022 and are signed on its behalf by:

M Dardi

___________________________

M Dardi

Director

Company Registration No. 04318115

ELLENBROOK DEVELOPMENTS PLC

CONDENSED UNAUDITED STATEMENT OF CHANGES IN EQUITY FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2022

As at 30 June 2022 there were no dividends either proposed or declared.

ELLENBROOK DEVELOPMENTS PLC

NOTES TO THE CONDENSED UNAUDITED INTERIM ACCOUNTS FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2022

1.         Accounting policies

The principal accounting policies of the Company are detailed in the annual audited financial statements. The same accounting policies and methods of computation are followed in the Interim financial statements as compared with the latest audited financial statements.

Basis of preparation

These financial statements have been prepared in accordance with FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" ("FRS 102") and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £000.

The financial statements have been prepared under the historical cost convention.

Going concern

The Directors have reviewed the Company's projected profit and cash flows by reference to a financial model covering accounting periods up to July 2033. Having examined the current status of the Company's principal contracts and likely developments in the foreseeable future, the Directors consider that the Company will be able to settle its liabilities as they fall due and accordingly the financial statements have been prepared on a going concern basis.

Please see the Interim Management Report for details of the risks relating to COVID-19. The risk is deemed to be low and so does not affect the financial statements being prepared on a going concern basis.

2.         Employees

There were no employees during the 6-month period (2021: none). The directors have no contract of services with the company (2021: none).

3.         Directors' remuneration

4.         Interest receivable and similar income

ELLENBROOK DEVELOPMENTS PLC

NOTES TO THE CONDENSED UNAUDITED INTERIM ACCOUNTS FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2022 (CONTINUED)

5.         Interest payable and similar charges

6.         Tax on profits on ordinary activities

7.         Debtors

8.         Creditors falling due within one year

ELLENBROOK DEVELOPMENTS PLC

NOTES TO THE CONDENSED UNAUDITED INTERIM ACCOUNTS FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2022 (CONTINUED)

9.         Creditors falling due after more than one year

The amounts due to parent company of £2,687,032 (31 December 2021: £3,290,891) is comprised of an unsecured loan and relates to funds advanced to Ellenbrook Holdings Limited.

The unsecured loans carry interest at 13% per annum. The unsecured loan is repayable by the 31 January

2033 in line with the Contracts the company has entered into, there is no strict repayment schedule. The

Contracts allow the company to pay as much as it is able to in line with the waterfall payments and does

not allow prepayment of the loan. The repayment forecast is agreed with the Lender through approval of

the financial model updates and is as follows:

10.       Index linked bonds

ELLENBROOK DEVELOPMENTS PLC

NOTES TO THE CONDENSED UNAUDITED INTERIM ACCOUNTS FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2022 (CONTINUED)

10.      Index-Linked Bonds (continued)

The carrying value of the bond includes indexation to date.

The index-linked guaranteed secured bond was created on 1 February 2002 and £59,965,000 was issued on 6 February 2002 at 100% nominal value. The bond bears interest at 3.3894% per annum payable in six monthly intervals which, together with the principal repayment, is subject to indexation in accordance with the Bond Trust Deed. This interest rate is not due to be re-priced or mature before the bond is repaid.

The bond is repayable in instalments which commenced on 31 July 2004 and end in July 2032. The bond is listed on the London Stock Exchange.

The bond is secured by first fixed and floating charges over the company's assets and its holding company's respective assets.

11.       Share capital

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the company.

12.       Related party transactions

As at 30 June 2022 the company owed £2,687,032 (31 December 2021: £3,290,891) under a subordinated loan agreement, to the company's shareholders.

During the six-month period the company had transactions with DIF Infra Yield 1 UK Limited for Directors fees at a total of £39,576 (6-month period to 30 June 2021: £32,500).

13.       Ultimate parent company and parent company of larger group

The Company is a wholly owned subsidiary undertaking of Ellenbrook Holdings Limited incorporated in the United Kingdom.

The smallest group in which the Company's results are consolidated is Ellenbrook Holding Limited. The largest group in which its results are consolidated is DIF Infrastructure Yield 1 Cooperatief U.A, a company incorporated in the Netherlands. Copies of the consolidated accounts of Ellenbrook Holdings Limited are available from 8 White Oak Square, Swanley, Kent, BR8 7AG.

The ultimate parent and controlling entity is DIF Infrastructure Yield 1 Cooperatief U.A. a company incorporated in the Netherlands, whose United Kingdom investments are managed by DIF Infra Yield 1 UK Limited.