TIDMINLZ
RNS Number : 4003R
Inland ZDP PLC
30 June 2020
INLAND ZDP PLC
Half-yearly report
for the six months ended 31 March 2020
The half-yearly report can be accessed via the Inland ZDP PLC
pages on the Inland Homes PLC ('Inland') 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 raised GBP8,500,000 before
expenses on 20 December 2012 by a placing of 8,500,000 ZDP shares,
which are listed on the UK Official List and admitted to trading on
the London Stock Exchange. Further issues in subsequent years
increased the number of ZDP Shares in issue to 16,430,790 as at 30
September 2019, the beginning of the six month period covered by
this interim report.
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 three business
days before the ZDP share redemption date or, if required 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 was effected giving the ZDP
Shares a Final Redemption Date of 10 April 2024 and a Final Capital
Entitlement of 201.4 pence.
Last year, Inland Homes plc and the Company changed their
financial year end from 30 June to 30 September, so the comparative
figures shown below for the previous interim results are for the
six months ended 31 December 2018 and the comparative figures for
the most recent audited accounts are for the fifteen months ended
30 September 2019.
INTERIM MANAGEMENT REPORT
The Company was incorporated solely to issue ZDP Shares and has
never traded.
1,671,067 new ZDP Shares were issued at a price of 161.5 pence
on 12 November 2019, giving the investors an annual rate of return
to redemption of 5.13%. This increased the number of ZDP Shares in
issue to 18,101,857.
The accrued Capital Entitlement is based on the original issue
price of 100p per ZDP Share as increased over its life to the Final
Capital Entitlement of 201.4 pence per ZDP Share payable on 10
April 2024.
The accounting book value of the ZDP Shares differs from the
accrued Capital Entitlement, because ZDP Shares have been issued at
various prices and redemption yields and each tranche is booked at
its individual issue price and the liability accrued using the
effective interest method over its life to the Final Capital
Entitlement. As at 31 March 2020, the accounting book value was
163.48p per ZDP Share. The accrued capital entitlement is based on
the initial issue price (100p) and its accrual over time to the
redemption price and 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.
I am pleased to report that as at 31 March 2020, Inland had
complied with all its covenants under the Loan Note, Contribution
Agreement and related security documentation.
The key performance indicators used by the board to measure the
Company's success are the cover ratio (which is described in detail
in the chairman's statement), the accrued capital entitlement and
the price of the ZDP shares. As shown in the table below, the
market price of a ZDP share has fallen below its accrued value as
at 31 March 2020, being at a time when the economy and share prices
were adversely affected by the Coronavirus pandemic.
31 Mar 2020 30 Sept 2019
------------------------------------------ ------------ -------------
Accrued capital entitlement per ZDP Share 162.4p 158.1p
ZDP share price as at the accounts date 137.5p 161.5p
------------------------------------------ ------------ -------------
The asset value and the accrued capital entitlement will
continue to increase as the repayment date approaches.
The Cover Ratio as at 31 March 2020 has been calculated as
follows:
Cover Ratio (Assets / Financial Indebtedness) 1.97 times
Financial Indebtedness is stated net of cash balances and
excludes liabilities falling due after 10 October 2024, being six
months after the redemption date of the ZDP Shares.
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/
.
Nishith Malde FCA
Chairman, Inland ZDP PLC
Registered in England No: 8303612 29 June 2020
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 2019 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. These comprise
liquidity risk, and credit risk as set out in note 9 of the Inland
ZDP PLC's Annual Report.
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 Inland Group's business has been affected by Covid-19, which
represents a continuing risk. T he Group has moved quickly to
manage the immediate consequences of the pandemic with its priority
objective being the health, safety and wellbeing of its staff,
customers and sub-contractors.
Particular actions taken by the Group have included:
-- Ensuring full compliance with the Government's Covid-19 Secure Guidance;
-- Stringent new procedures regarding hygiene, social
distancing, travel and self-isolation and these measures are
subject to continual review by the Group's health and safety
personnel;
-- Maintaining good communication with our staff and other
stakeholders during these uncertain times and the transition of
office-based staff to home working with minimum disruption to the
business;
-- Furloughing 73 of all employees from 1 April 2020 and making
a claim under the Government's Job Retention Scheme;
-- Undertaking a restructure, resulting in a 11% reduction in headcount to-date;
-- Implementing measures to allow all staff to work effectively
from home in line with the Government's policy;
-- Instituting a number of measures to reduce the Group's cost
base, preserve its assets and to conserve cash including
significant salary reductions for the Board, Operating Board and
staff members earning over GBP40,000 per annum;
-- Negotiating deferrals of certain land payments and
successfully renegotiating the terms for some loan repayments;
-- In order to improve our financial flexibility, increasing our
development facility from Homes England for our Chapel Riverside
development in Southampton from GBP11.3m to GBP15.3m; and
-- Successfully raising GBP9.4m (net of expenses) through a
placing and subscription of 20,750,000 new ordinary shares.
The Board is mindful that there are no certain forecasts about
how the COVID-19 global pandemic will play out and how this may
affect the Group, the industry in which it operates and the wider
economy for the foreseeable future. In particular, a significant
worsening of the situation and a return to a strict lockdown for a
prolonged period would have implications for us as it would for
many other businesses. As such, there is significant uncertainty as
to what foreseen or unforeseen action or actions, the Group may be
required to take in order to respond to any circumstances that may
arise in the future.
In May 2020, the Bank of England warned that the COVID-19
pandemic is likely to push the UK towards its deepest recession in
history. As a result, it is likely that this will have a dramatic
effect on employment and thus on incomes in the UK. It is also
likely that in a recession, the availability of credit, and in
particular mortgages, will be reduced which will adversely affect
the ability of home buyers to complete their purchases.
The Company's directors recognise that the above risks to Inland
Homes plc could have an adverse impact on its ability to fulfill
its obligations to the Company including funding the Final Capital
Entitlement of the ZDP Shares on 10 April 2024. The risk of any
loss to ZDP Shareholders in such circumstances is mitigated by cash
and tangible assets legally pledged to the Company with no prior
charges over the pledged assets.
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 29 June 2020 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 2020
6 months 6 months 15 months
ended ended ended
31 March 31 December 30 September
2020 2018 2019
(unaudited) (unaudited) (audited)
Continuing operations Note GBP000 GBP000 GBP000
-------------------------------- ------ ------------ ------------ -------------
Revenue
Interest income 750 583 1,523
---------------------------------------- ------------ ------------ -------------
Total income 750 583 1,523
Expenditure
Expenses - - -
-------------------------------- ------ ------------ ------------ -------------
Total expenditure - - -
Profit before finance costs
and taxation 750 583 1,523
Finance costs (750) (583) (1,523)
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 2020
As at As at As at
31 March 31 December 30 September
2020 2018 2019
(unaudited) (unaudited) (audited)
Note GBP000 GBP000 GBP000
---------------------------- ------ ------------ ------------ -------------
Non-current assets
Intercompany receivable - - -
---------------------------- ------ ------------ ------------ -------------
- - -
Current assets
Intercompany receivable 29,643 22,853 26,194
------------------------------------ ------------ ------------ -------------
29,643 22,853 26,194
Creditors: amounts falling
due after more than one
year
Zero Dividend Preference
Shares (29,593) (22,803) (26,144)
------------------------------------ ------------ ------------ -------------
(29,593) (22,803) (26,144)
----------------------------------- ------------ ------------ -------------
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 2020
6 months 6 months 15 Months
ended ended to
31 March 31 December 30 September
2020 2018 2019
(unaudited) (unaudited) (audited)
GBP000 GBP000 GBP000
------------------------------------- ------------ ------------ -------------
Cash flow from operating activities
Profit for the period before - - -
tax
Adjustments for:
- interest expense 750 583 1,523
- interest and similar income (750) (583) (1,523)
Net cash flow from operating - - -
activities
------------------------------------- ------------ ------------ -------------
Cash flow from investing activities
Loan to ultimate parent company (2,699) - -
------------------------------------- ------------ ------------ -------------
Net cash outflow from investing (2,699) - -
activities
------------------------------------- ------------ ------------ -------------
Cash flow from financing activities
Proceeds on issue of ZDP Shares 2,699 - -
------------------------------------- ------------ ------------ -------------
Net cash inflow from financing 2,699 - -
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 2020
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 fifteen-month period ended 30 September 2019,
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 2020 has also been consolidated into the
results of Inland for the six months ended 31 March 2020.
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 fifteen-month period ended 30 September
2019.
2. Taxation
The charge for taxation 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 Company will fulfil its obligations to ZDP Shareholders
through the Contribution Agreement it has with Inland. The
contribution from Inland will provide the funds to pay the Capital
Entitlement of the ZDP Shareholders when it falls due. The main
risk the Company faces is, therefore, that Inland would not have
sufficient assets to repay the loan and to make a contribution to
fulfil the amount of the Capital Entitlement due to ZDP
Shareholders. Covenants are in place between Inland and the
Company, which ensure that Inland will not undertake certain
actions in relation to both itself and the Company.
All operating expenses of the Company are borne by Inland.
Due to the Company's dependence on Inland to repay the loan and
provide a contribution to meet the Capital Entitlement of the ZDP
Shareholders, other risks faced by the Company are considered to be
the same as for Inland. Please see the paragraph headed Principal
Risks above for further information.
Inland has adequate financial resources and therefore the
directors believe that the Company is well placed to manage its
business risks and also believe that Inland will have sufficient
resources to continue in operational existence for the foreseeable
future. Accordingly, they have prepared this half-yearly report 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 2020, the loan to
the ultimate parent company was GBP29,642,629 (2018:
GBP22,852,831).
Sources of 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 now 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.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR FLMBTMTITBFM
(END) Dow Jones Newswires
June 30, 2020 02:00 ET (06:00 GMT)
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