TIDMINLZ TIDMINL
RNS Number : 5539E
Inland ZDP PLC
30 June 2023
INLAND ZDP PLC
Half-yearly report
for the six months ended 31 March 2023
The half-yearly report can be accessed via the Inland ZDP PLC
pages on the Inland Homes PLC ('Inland' or 'Group') website at
http://inlandhomesplc.com/investors/inland-zdp/ or by contacting
the Company Secretary on 01494 762450.
COMPANY SUMMARY
Background
Inland ZDP PLC ('INLZ' or the 'Company') was incorporated on 22
November 2012 as a wholly owned subsidiary of Inland.
INLZ was formed especially for the issuing of Zero Dividend
Preference Shares ('ZDP' Shares). It has raised a total of
GBP22.28m through a series of placings of ZDP Shares, which are
listed on the UK Official List and admitted to trading on the
London Stock Exchange. There are 18,101,857 ZDP Shares in issue,
none of which were issued during the half year period to 31 March
2023.
Pursuant to a loan agreement between INLZ and Inland, INLZ has
lent the proceeds received from all the ZDP Share issues to Inland.
The loan is non-interest bearing and is repayable on the ZDP Share
redemption date or, if required in certain circumstances by INLZ,
at any time prior to that date in order to repay the ZDP Share
entitlement. The funds raised form part of the Inland Group's
financing arrangements for its property development business.
A contribution agreement between INLZ and Inland has also been
made whereby Inland undertakes to contribute such funds as would
ensure that INLZ will have in aggregate sufficient assets on the
final redemption date to satisfy the final capital entitlement of
the ZDP Shares.
On 13 August 2018 several changes to the rights of ZDP Shares
and the underlying loan documentation were made extending the ZDP
Shares a Final Redemption Date from 10 April 2019 to 10 April 2024
and increasing the Final Capital Entitlement from 155.9p to 201.4
pence. The annual accrual rate of return from 20 December 2012 to
13 August 2018 was 7.3% and is 5.49% for the period from 13 August
2018 to 10 April 2024, being a rate of return of 6.39% per annum to
10 April 2024 on the original issue price of 100p on 20 December
2012.
INTERIM MANAGEMENT REPORT
The Company was incorporated solely to issue ZDP Shares and has
never traded.
Covenant compliance
I am pleased to report that as at 31 March 2022, Inland had
complied with all its covenants under the Loan Note, Contribution
Agreement and related security documentation. These covenants are
based on asset cover and security.
Asset cover
The Asset cover is the key performance indicator used by the
Board to measure the Company's success. This is calculated on a
Group basis, broadly comprising tangible gross assets at book value
less trade creditors and deferred consideration liabilities for
land purchases up to 60 per cent. of the total consideration -
"Assets"; divided by Financial Indebtedness, which includes the ZDP
Final Redemption Liability, borrowings repayable prior to 10
October 2024 and deferred consideration in excess of 60% of the
total consideration payable for land).
The Group's annual results for the year to 30 September 2022 and
subsequent interim results to 31 March 2023 have been delayed
pending the completion of additional requirements by the
non-executive directors of Inland and the auditors. As the Asset
Cover of the ZDP Shares is derived from the Group's consolidated
financial statements, the figures below are subject to adjustment.
If any such adjustment is material the updated cover ratio will be
announced.
The amounts shown in the cover ratio calculation below are in
accordance with the relevant documentation, which differs in some
respects from the amounts shown in the Inland Consolidated
Financial Statements. For example, unsecured borrowings falling due
more than six months after the redemption date of the ZDP Shares
are excluded from "Net debt" for cover ratio purposes. The Hurdle
Rates are calculated from the Book values as shown in Inland's
interim financial statements, but] excluding intangible assets.
Book values
GBP'000
----- ------------
Assets less creditors (exc cash
and debt) A 213,245
----- ------------
Net debt (exc ZDP Share liability) 68,827
------------
ZDP Final Capital Entitlement 36,457
------------
Financial indebtedness B 105,284
----- ------------
Cover ratio A/B 2.03
----- ------------
Hurdle Rate to pay the Final Capital
Entitlement* -49.6%
------------
Hurdle Rate to recover the market
price of a ZDP Share** -68.7%
------------
Rate of return to maturity based on the
market price of a ZDP Share** 162%
------------
* being the period from 31 March 2023 to 10 April 2024, based on
the Assets and Financial Indebtedness as at 31 March 2023
** being the period from 29 June 2023, being the latest
practicable date prior to the publication of this interim report to
10 April 2024 based on a share price of 95p, being the closing
price of a ZDP Share on 29 June 2023 and based on the Assets and
Financial Indebtedness as at 31 March 2023.
Security cover
Inland ZDP PLC ("ZDPCo") has the benefit of first legal charges
granted by members of the Inland Homes Group over specific pledged
assets and pledged cash. The book value of the Pledged Assets has
to be 120% of the accrued liability to ZDP Shareholders net of any
Pledged Cash.
At 31 March 2023, the accrued value of the ZDP shares was
GBP34,508,684 (190.6 pence per ZDP share) and the balance in the
pledged bank account (the Pledged Cash) was GBP2,226,091, leaving a
net GBP32,282,5938 to be supported by Pledged Assets with a book
value of at least GBP38,739,112. As at 31 March 2023, the Pledged
Assets had a combined book value of GBP42,536,486, satisfying this
requirement.
Pledged Assets
Any assets (other than intangible assets) may be pledged to
ZDPCo by companies in the Inland Homes Group. Inland Homes PLC can
substitute one asset for another at any time, provided the book
value of all Pledged Assets exceeds 120% of the accrued Capital
Entitlement less any Pledged Cash. The security covenant is tested
quarterly and Inland has 90 days to remedy any shortfall (ie pledge
additional assets as security or buy in ZDP shares to reduce the
accrued Capital Entitlement). The values used for the security
covenant are the book values of the Pledged Assets.
The book values represent historical cost less any impairment
provisions. However, as noted in the ZDPCo annual report, the value
of assets (such as a partially completed development project) in a
liquidation scenario could be significantly lower than any book
value based on the Group being a 'going concern'.
The main asset pledged to ZDPCo is the Group's loan to Cheshunt
Lakeside Developments Ltd ("CLDL"). However, with the increase in
the accrued Capital Entitlement over time, 79 modular homes were
pledged to ZDPCo in anticipation of the 31 March 2023 security
covenant. These homes are bespoke, modular housing units which can
be moved from one site to another. Located on dormant land going
through the planning process, the modular homes generate additional
cashflow for the Inland Group while offering a high-quality,
cost-effective solution to local authorities and others in meeting
short-term housing needs.
Cheshunt Lakeside Developments Ltd
CLDL is a joint venture company owned by Inland Group (50%) and
a third party investor (50%). Inland is entitled to performance
fees under a promote agreement as well as its 50% profit share. A
loan account balance due from CLDL to Inland is Pledged to ZDPCo.
As at 31 March 2023 this amounted to GBP35,875,551 (30 September
2022: GBP37,792,479).
The 30 acre Cheshunt Lakeside development site was formerly a
Tesco headquarters and supermarket and is being developed in line
with an approved masterplan. Planning permission took three years
of close consultation with the local Council and community and was
granted in June 2019, with the terms of the Section 106 agreement
agreed promptly and signed in August 2019.
The Cheshunt Lakeside original masterplan and outline planning
consent was for a new "urban village" comprising 1,725 homes,
19,000 sqm of commercial space together with the provision for a
new primary school. Inland Homes, together with its equal joint
venture partner, owned 1,253 residential plots and 4,905 sqm of
commercial and educational space within the masterplan area. Inland
Homes is the lead developer on the broader masterplan, which it is
working with the council to deliver.
Since gaining the original planning consent Inland Homes has
achieved reserved matters consent on three phases of development
selling all 422 plots. On 9 March 2023 Inland announced that CLDL
had received a resolution to grant detailed consent for a further
phase of development at Cheshunt Lakeside, Hertfordshire increasing
the outline consent with a further 51 homes on the site, subject to
the Section 106 Agreement being varied. The resolution to grant
detailed consent for this phase delivers a total of 425 homes
including the 51 extra homes added to the development masterplan,
as such the masterplan will now deliver 1,776 new homes overall, of
which 904 882 are owned by Inland and its joint venture partner,
after the previous phase sales. This next phase of development will
also deliver the new local centre for the development including
2,400 sqm of commercial space, a landscaped public square and key
highways infrastructure.
CLDL has loan facilities from Paragon Bank and Homes England as
well as the loan from Inland Ltd. The land loans are being repaid
as land sales occur. The loan from Inland Ltd fluctuates with
ongoing cash requirements.
The recoverability of Inland's loan to CLDL as at 30 September
2022 has been assessed by reference to forecasted cash flows
regarding the development of the site and no impairment provisions
were found to be required.
Accrued capital entitlement and ZDP Share price
31 Mar 30 Sept 2022
2023
------------------------------------------ -------- -------------
Accrued capital entitlement per ZDP Share 190.6p 176.0p
ZDP Share price as at the accounts date 100.0p 174.0p
------------------------------------------ -------- -------------
Accrued capital entitlement
The asset value and the accrued capital entitlement will
continue to increase as the repayment date approaches. The book
value of ZDP shares in the financial statements is derived from the
various issue prices using the effective interest method, whereas
the accrued capital entitlement shown above is based on the initial
issue price (100p) and its accrual at 7.3% per annum from the
initial issue date (12 December 2012) to 148.8p on 13 August 2013,
when an extension of the redemption date was approved, subsequently
accruing at 5.5% to 10 April 2024. The redemption price is not
affected by the prices of subsequent issues. As at the repayment
date, the book value and accrued capital entitlement will be equal
to one another.
The accrued Capital Entitlement can also be calculated from the
original issue price of 100p per ZDP Share on 20 December 2012 at
an even rate of 6.39% over its life to the Final Capital
Entitlement of 201.4 pence per ZDP Share payable on 10 April 2024.
On this basis the accrued capital entitlement as at 31 March 2023
was 189.0p.
Capital Entitlement, Assets, Financial Indebtedness and Cover
Ratio have been determined as set out in the Prospectus published
by Inland ZDP PLC on 14 December 2012, as amended (in the case of
the Capital Entitlement) as described in the circular dated 19 July
2018, both of which are available at:
http://inlandhomesplc.com/investors/inland-zdp/zdp-reports-and-presentations/
.
ZDP Share price reduction
ZDPCo has lent the proceeds of ZDP share issues to Inland Homes
PLC for use in its Group's business and is reliant on the Inland
Homes Group's ability to transfer cash to fund the redemption of
the ZDP Shares on 10 April 2024. The market price of ZDP shares has
been affected by announcements by Inland Homes of significant
provisions for actual and expected losses on a few development
projects and construction contracts, bank covenant breaches and the
resignations of several directors. The reconstituted board is
reviewing the business of the Inland Group (including certain
related party issues and other relevant matters) and the
non-executive directors of Inland Homes plc have engaged FRP
Advisory Limited to undertake an independent review of these
issues. The foregoing has resulted in delays in finalising the
Group's annual report for the year to 30 September 2022 and the
suspension of dealings in Inland's ordinary shares on AIM.
These factors and concerns about the Group's ability to fund the
redemption of the ZDP shares in April 2024 led to a significant
reduction and increased volatility in the market price of ZDP
shares. On 29 June 2023, the mid market closing price of a ZDP
share was 95 pence, representing an annualised rate of return of
161.6 % to 10 April 2024.
Funding the redemption of ZDP Shares
The Inland Homes Group generates cash from selling sites and
completed residential and commercial units as part of its normal
business activities. It has adopted a less capital intensive
business model over recent years, pursuing major new developments
as either asset management projects (funded by third parties with
Inland receiving fees for services and performance), partnership
housing or joint ventures. Thus much of the cash realised on sales
of development sites and homes owned by Inland Homes Group is not
needed for re-investment in further projects and can be applied to
reduce borrowings and for working capital. This led to a reduction
of net debt from GBP152.3m as at 30 September 2019 to GBP86.8m as
at 30 September 2022. The Inland Group's net debt was GBP103.4m as
at 31 March 2023.
The Inland Homes Group does not seek to time specific asset
sales to match individual loan maturity dates in order to avoid
being pushed into a forced sale position by the buyers of
assets.
The Group's borrowing policy is to have facilities with
compatible covenants from a range of sources, mostly with certain
subsidiaries. The Group can seek new term facilities to refinance
those which mature.
Inland Homes has a business plan for managing its cash flows and
meeting its obligations to ZDP shareholders, retaining flexibility
to adapt to circumstances rather committing to a fixed source of
repayment.
Nishith Malde FCA
Chairman, Inland ZDP PLC
Registered in England No: 8303612 30 June 2023
PRINCIPAL RISKS
The principal risks facing the Company are substantially
unchanged since the date of the Company's Annual Report for the
period ended 30 September 2022 and continue to relate to the risk
of Inland Homes plc being unable to satisfy its obligations to INLZ
under the Loan Agreement and Contribution Agreement.
In addition, and due to the Company's dependence on Inland Homes
plc to repay the loan and provide a contribution to meet the
capital entitlement of the ZDP Shareholders, certain other risks
faced by the Inland Group are considered to apply to INLZ as set
out in the Prospectus published by INLZ on 14 December 2012. These
comprise operational risks (eg planning and environmental) which
may be specific to individual sites and risks associated with the
housebuilding sector (such as falling house prices or variations in
the availability of credit for buyers). The Prospectus may be found
at
http://inlandhomesplc.com/investors/inland-zdp/zdp-reports-and-presentations/
. The risks facing the Inland Group, which evolve over time, are
summarised in the annual and interim reports published by Inland
Homes PLC which are available at
https://www.inlandhomesplc.com/reports-presentations-and-news/reports-and-presentations/.
RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE
HALF-YEARLY REPORT
We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been prepared
in compliance with the IAS34 'Interim Financial Reporting' and
gives a true and fair view of the assets, liabilities and financial
position of the Company; and
-- the interim management report and notes to the half-yearly
report include a fair view of the information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being
an indication of the important events that have occurred during the
first six months of the financial year and their impact on the
condensed set of financial statements; and a description of the
principal risks and uncertainties for the remaining six months of
the year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the first six
months of the current financial year and that have materially
affected the financial position or performance of the Company
during that period; and any changes in the related party
transactions described in the last Annual Report that could do
so.
This half-yearly report was approved by the Board of Directors
on 30 June 2023 and the above responsibility statement was signed
on its behalf by Nishith Malde, Chairman.
STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 31 March 2023
6 months 6 months Year ended
ended ended
31 March 31 March 30 September
2023 2022 2022
(unaudited) (unaudited) (audited)
Continuing operations Note GBP000 GBP000 GBP000
-------------------------------- ------ ------------ ------------ -------------
Revenue
Interest income 876 848 1,689
---------------------------------------- ------------ ------------ -------------
Total income 876 848 1,689
Expenditure
Expenses - - -
-------------------------------- ------ ------------ ------------ -------------
Total expenditure - - -
Profit before finance
costs and taxation 876 848 1,689
Finance costs (876) (848) (1,689)
Profit before tax - - -
Income tax 2 - - -
-------------------------------- ------ ------------ ------------ -------------
Profit and total comprehensive - - -
income
---------------------------------------- ------------ ------------ -------------
The total column of this statement is the statement of
comprehensive income of the Company, prepared in accordance with
International Financial Reporting Standards ('IFRS'), as adopted by
the EU.
All items in the above statement derive from continuing
operations.
STATEMENT OF FINANCIAL POSITION
as at 31 March 2023
As at As at As at
31 March 31 March 30 September
2023 2022 2022
(unaudited) (unaudited) (audited)
Note GBP000 GBP000 GBP000
---------------------------- ------ ------------ ------------ -------------
Non-current assets
Intercompany receivable - - -
---------------------------- ------ ------------ ------------ -------------
- - -
Current assets
Intercompany receivable 34,630 32,914 33,754
------------------------------------ ------------ ------------ -------------
34,630 32,914 33,754
Creditors: amounts falling
due within one year
Zero Dividend Preference (34,580) -
Shares
---------------------------- ------ ------------ ------------ -------------
Net current assets 50 32,914 33,754
------------------------------------ ------------ ------------ -------------
Creditors: amounts falling
due in more than one year
Zero dividend Preference
Shares - (32,864) (33,704)
------------------------------------ ------------ ------------ -------------
Net assets 50 50 50
------------------------------------ ------------ ------------ -------------
Equity
Ordinary share capital 50 50 50
Revenue reserve - - -
---------------------------- ------ ------------ ------------ -------------
Shareholders' funds 50 50 50
------------------------------------ ------------ ------------ -------------
STATEMENT OF CASHFLOWS
for the six months ended 31 March 2023
6 months 6 months Year to
ended ended
31 March 31 March 30 September
2023 2022 2022
(unaudited) (unaudited) (audited)
GBP000 GBP000 GBP000
--------------------------------- ------------ ------------ -------------
Cash flow from operating
activities
Profit for the period before - - -
tax
Adjustments for:
- interest expense 876 848 1,689
- interest and similar income (876) (848) (1,689)
Net cash flow from operating - - -
activities
--------------------------------- ------------ ------------ -------------
Cash flow from investing
activities
Loan to ultimate parent company - - -
--------------------------------- ------------ ------------ -------------
Net cash outflow from investing - - -
activities
--------------------------------- ------------ ------------ -------------
Cash flow from financing
activities
Proceeds on issue of ZDP Shares - - -
--------------------------------- ------------ ------------ -------------
Net cash inflow from financing - - -
activities
--------------------------------- ------------ ------------ -------------
Net increase in cash and - - -
cash equivalents
Net cash and cash equivalents - - -
at beginning of period
--------------------------------- ------------ ------------ -------------
Net cash and cash equivalents - - -
at the end of period
--------------------------------- ------------ ------------ -------------
NOTES TO THE HALF-YEARLY REPORT
for the six months ended 31 March 2023
1. General information
The financial information contained in this half-yearly report
does not constitute statutory financial statements as defined in
Section 434 of the Companies Act 2006. The statutory financial
statements for the year ended 30 September 2022, which contained an
unqualified auditors' report, have been lodged with the Registrar
of Companies and did not contain a statement required under the
Companies Act 2006. These statutory financial statements were
prepared under International Financial Reporting Standards.
The financial information of the Company for the six-month
period ended 31 March 2023 will be consolidated into the results of
Inland for the six months ended 31 March 2023.
This half-yearly report has not been audited or reviewed by the
Company's Auditors.
This half-yearly report has been prepared using accounting
policies set out in note 1 of the Company's audited financial
statements for the year ended 30 September 2022.
2. Taxation
The charge for taxation, if any, is based on the taxable profits
for the period. Taxable profit differs from profit before tax as
reported in the Statement of Comprehensive Income because it
excludes items of income or expenses that are never taxable or
deductible. The Company's liability for tax is calculated using
rates that have been enacted or substantively enacted by the
reporting date.
3. Going concern
The Directors are required to assess the Company's ability to
continue as a going concern up to the date that the ZDP shares fall
due for repayment on 10 April 2024.
The going concern assessment considers the Company's principal
risks and the ability to operate within the financial covenants of
the ZDP shares. The ZDP shares and associated loan documentation
impose a number of covenants that must be complied with which are
discussed within the Chairman's Statement. As at 31 March 2023 the
Company is compliant with all covenants and there are no forecast
covenant breaches in the going concern period.
In addition as Inland Homes plc ("the Group") is responsible for
all the Company's liabilities including its obligations to ZDP
Shareholders, pursuant to the Loan Note and Contribution Agreement,
the Directors have due regard to the financial position of the
Group as at the date of approving these accounts.
The Group has announced significant provisions for actual and
expected losses on a few development projects and construction
contracts. The Directors understand that as part of its normal
course of business the Group has budgeted and forecast completion
of planned land, housing and commercial unit sales in order to
remain a going concern. As the recoverability of the intercompany
receivable in April 2024 and by association the Company's ability
to meet its repayment obligations in April 2024 is dependent on the
Group continuing in operation as a going concern these matters
indicate the existence of a material uncertainty which may cast
significant doubt on the Company's ability to continue as a going
concern. The financial statements do not include the adjustments
that would result if the Company were unable to continue as a going
concern.
At the time of approving these financial statements and after
making the appropriate enquiries, the Directors have a reasonable
expectation that the Company has adequate resources to continue in
operational existence for the foreseeable future. The Directors
therefore consider it appropriate to prepare the financial
statements on the going concern basis.
4. Related party transactions
The loan to Inland Homes PLC is interest free and is repayable
on the ZDP repayment date (see corporate summary above) or
immediately upon an event of default. At 31 March 2023, the loan to
the ultimate parent company was GBP34,629,557 (2022:
GBP32,913,571).
FURTHER INFORMATION
The Company's ZDP Shares are standard listed and are traded on
the Main Market of the London Stock Exchange.
The Company's ZDP Asset Cover is released via the London Stock
Exchange's Regulatory News Service on a quarterly basis.
Information about the Company and Inland can be obtained on the
Inland Group's website: www.inlandhomesplc.com.
REGISTRAR ENQUIRIES
The register for the ZDP Shares is maintained by Link Registrars
Limited. In the event of queries regarding your holding, please
contact the Registrar on 03716 640300. Changes of name and/or
address must be notified in writing to the Registrar.
Neither the contents of Inland's website nor the contents of any
website accessible from hyperlinks on this announcement (or any
other website) is incorporated into, or forms part of, this
announcement.
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END
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June 30, 2023 05:10 ET (09:10 GMT)
Grafico Azioni Inland Homes (LSE:INL)
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Da Nov 2024 a Dic 2024
Grafico Azioni Inland Homes (LSE:INL)
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