TIDMRMDZ
RNS Number : 0957U
RM ZDP PLC
27 March 2019
RM ZDP PLC
LEGAL ENTITY IDENTIFIER ('LEI'): 213800QYQTLY4A32F885
ANNUAL FINANCIAL REPORT ANNOUNCEMENT
For the period ended 31 December 2018
OBJECTIVE AND FINANCIAL INFORMATION
Objective
The objective of RM ZDP Plc (the "Company") is to meet the final
capital entitlement of the ZDP Shares at the ZDP Repayment
Date.
Financial Information
Period ended
31 December 2018
------------------------------------------- ------------------
Accrued capital entitlement per ZDP Share 102.62p
ZDP Share redemption yield 3.5%
CHAIRMAN'S STATEMENT
I am pleased to present the Company's Annual Report and accounts
for the period 21 February 2018 to 31 December 2018 for RM ZDP Plc
(the "Company")
The Company is a wholly owned subsidiary of RM Secured Lending
plc (the "Parent" or "RMDL") and was established for the purpose of
issuing zero dividend preference shares of GBP 0.01 each ("ZDP"
Shares).
On 3 April 2018, 10,869,950 ZDP Shares were issued and admitted
to trading on the standard segment of the Official List of the
London Stock Exchange. The Company has made a loan of the gross
proceeds raised from the issue of the ZDP Shares to RMDL pursuant
to the ZDP Loan Agreement between the Company and RMDL ("Loan
Agreement").
Subject to the Companies Act, on a return of capital, on a
winding--up or otherwise, ZDP Shareholders will be entitled to
receive an amount equal to the Initial Capital Entitlement of 100
pence per ZDP Share, increased at such daily accrual rate as
compounds annually to give a Final Capital Entitlement of 110.91
pence per ZDP Share at the ZDP Repayment Date of 6 April 2021,
which is equivalent to a Redemption Yield of 3.5 per cent. per
annum (compounded annually).
As at 31 December 2018 the accrued capital entitlement per ZDP
Share was 102.62p and the share price per ZDP Share was
102.50p.
As part of the Loan Agreement, the Company and the Parent
entered into the Undertaking. Pursuant to the Undertaking, to the
extent that the Final Capital Entitlement multiplied by the number
of outstanding ZDP Shares as at the Repayment Date (or, if earlier,
the accrued capital entitlement multiplied by the number of
outstanding ZDP Shares following the date on which a Winding-Up
Resolution is approved) exceeds the aggregate principal amount and
accrued interest due from the Parent to the Company pursuant to the
Loan Agreement as at the Repayment Date, the Parent shall: (i)
subscribe an amount equal to or greater than the Additional Funding
Requirement for the Company Ordinary Shares or (ii) make a capital
contribution or gift or otherwise pay an amount equal to or greater
than (where rounding is required) the Additional Funding
Requirement. Where applicable, the Additional Shares may be Company
Ordinary Shares or such other class of shares in the Company as is
agreed between the Parent and the Company.
From the perspective of the Directors, the Company's activities
are integrated with the Parent for which the Annual Report can be
found on the Parent's website.
The Annual General Meeting of the Company will be held at 11
a.m. on 1 May 2019 at the offices of Nplus1 Singer, 1 Bartholomew
Lane, London, EC2N 2AX.
Norman Crighton
Chairman
26 March 2019
STRATEGIC REPORT AND OTHER STATUTORY INFORMATION
Incorporation details
RM ZDP Plc was incorporated and registered in England and Wales
on 21 February 2018 with registered number 11217952 as a public
company limited by shares. The registered office of the Company is
at Mermaid House, 2 Puddle Dock, London EC4V 3DB.
Principal activities
The Company is a wholly owned subsidiary of RM Secured Direct
Lending PLC (the "Parent") and was incorporated by the Parent for
the sole purpose of issuing the ZDP Shares. The Company's only
material financial obligations are in respect of the ZDP Shares.
Its only material assets are its Loan to the Parent pursuant to the
Loan Agreement and the obligation of the Parent pursuant to the
Undertaking to put the Company in a position to meet its
obligations in respect of the ZDP Shares and to pay its operating
expenses.
Objective
The objective of the Company is to meet the final capital
entitlement of the ZDP Shares at the ZDP Repayment Date.
As per the prospectus, subject to the Companies Act, on a return
of capital, on a winding--up or otherwise, ZDP Shareholders will be
entitled to receive an amount equal to the Initial Capital
Entitlement of 100 pence per ZDP Share, increased at such daily
accrual rate as compounds annually to give a Final Capital
Entitlement of 110.91 pence per ZDP Share at the ZDP Repayment Date
of 6 April 2021, which is equivalent to a Redemption Yield of 3.5
per cent. per annum (compounded annually).
Financial performance
The current year loss is GBP200,000.
Key performance indicators
The Board reviews the performance of the Company by reference to
one key performance indicator (KPIs) as follows;
-- Accrued capital entitlement, which represents the Company's
liability per ZDP share. As at 31 December 2018, the total accrued
capital entitlement is GBP11,155,000, equivalent to 102.62p per ZDP
Share.
Further KPIs for the Parent can be found in its Annual Report.
The Company's ZDP Shares market capitalisation as of 31 December
2018 was GBP11.1million based on 10.9 million ZDP Shares and at a
share price of 102.5p per ZDP share.
Current and future developments
The current and future developments of the Company are set out
in the Chairman's statement can also be reviewed as part of the
Group's activities by reference to the Parent's Annual Report.
External service providers
Administrative functions are contracted to external service
providers. However, the Directors retain responsibility for
exercising overall control and supervision of these external
service providers.
Principal risks and uncertainties
Due to the Company's dependence on the Parent to repay the loan
and provide any contribution to meet the final capital entitlement
of the ZDP Shareholders, the principal risk faced by the Company is
the credit risk posed by the Loan Agreement and the Parent's
ability to perform its obligations under the undertaking. The Board
has carried out a robust assessment of this risk. The specific
risks faced by the Parent are described in its annual report, which
include macroeconomic risks, legal and compliance risks, investment
risks, taxation risks, cyber security risks and an update on any
effect of Brexit.
In addition, the Company is also focused on the following
risk;
Final capital entitlement: The Parent's debt to the Company
pursuant to the Loan Agreement and the Parent's obligations under
the undertaking will rank behind any secured creditors of the
Parent, therefore it is not guaranteed that the final capital
entitlement will be paid.
Mitigation: The Parent has granted the Undertaking to the
Company. Pursuant to the Undertaking, the Parent will ensure that
the Company has sufficient assets on the ZDP Repayment Date to
satisfy the ZDP Capital Entitlement then due and to pay any
operational costs or expenses incurred by the Company from time to
time. Dividends and other payments to Shareholders will be
restricted while the ZDP Shares are in issue unless Cover is at
least 3 times immediately following any such payment or if such
payment is required in order for the Parent Company to maintain its
investment trust status.
In addition, under the Investment Policy of the Parent, there is
a limit that gearing represented by borrowings, including any
obligations owed by the Parent in respect of an issue of zero
dividend preference shares (whether issued by RMDL or any other
member of its group) or any third--party borrowings, will not, in
aggregate, exceed 20 per cent. of the net asset value of the Parent
calculated at the time of drawdown. The unaudited Gross Assets of
the Parent at 31 December 2018 were GBP107 million.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable laws and
regulations.
Company law requires the Directors to prepare accounts for each
financial period. Under that law, the Directors have elected to
prepare the financial statements in accordance with International
Financial Reporting Standards as adopted by the European Union
("IFRS") and applicable law. Under company law, the Directors must
not approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the
Company as at the end of the period and of the net return for the
period. In preparing these accounts, the Directors are required
to:
-- select suitable accounting policies and then apply them
consistently;
-- make judgements and estimates, which are reasonable and
prudent;
-- state whether applicable accounting standards have been
followed, subject to any material departures disclosed and
explained in the accounts; and
-- prepare the financial statements on a 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 which disclose with reasonable accuracy at any
time the financial position of the Company and enable them to
ensure that the accounts 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 accounts are published on the Company's website at
https://rmdl.co.uk/ which is maintained by the Company's Investment
Manager. The work carried out by the auditors does not involve
consideration of the maintenance and integrity of these websites
and, accordingly, the auditors accept no responsibility for any
changes that have occurred to the accounts since being initially
presented on the website. Legislation in the United Kingdom
governing the preparation and dissemination of nancial statements
may differ from legislation in other jurisdictions.
Directors' confirmation statement
The Directors each confirm to the best of their knowledge
that:
(a) the accounts, prepared in accordance with applicable
accounting standards, give a true and fair view of the assets,
liabilities, financial position and profit of the Company; and
(b) this Annual Report includes a fair review of the development
and performance of the business and position of the Company,
together with a description of the principal risks and
uncertainties that it faces.
The Directors consider that the Annual Report and financial
statements taken as a whole is fair, balanced and understandable
and provides the information necessary for Shareholders to assess
the Company's performance, business model and strategy.
For and on behalf of the Board
Norman Crighton
Director
26 March 2019
Statement of Comprehensive Income
For the period from incorporation on 21 February 2018 to
31 December 2018
Period ended
31 December
2018
Note GBP'000
------------------------------------------------- ----------- -------------------------------
Income
Investment income 3 163
Administrative expenses (58)
Result from operating activities 105
Finance costs 6 (285)
Loss before taxation (180)
Taxation 4 (20)
Loss after taxation and total comprehensive
loss the for period (200)
------------------------------------------------- ----------- -------------------------------
Return per Ordinary Share (pence) (400.00p)
------------------------------------------------- ----------- -------------------------------
There were no items of other comprehensive income in the
current period therefore the loss
for the period are also the total comprehensive
loss for the period.
Statement of Financial Position
As at 31 December
2018
Note GBP'000
-------------------------------------------------------- ---------- ------------------------------
Non-current assets
Financial assets at amortised cost 3 11,155
Total non-current assets 11,155
-------------------------------------------------------- ---------- ------------------------------
Current assets
Cash and cash equivalents 18
Trade and other receivables 79
Total current assets 97
-------------------------------------------------------- ---------- ------------------------------
Total assets 11,252
-------------------------------------------------------- ---------- ------------------------------
Current liabilities
Trade and other payables (47)
-------------------------------------------------------- ---------- ------------------------------
Total current liabilities (47)
-------------------------------------------------------- ---------- ------------------------------
Non-current liabilities
Zero Dividend Preference Shares 6 (11,155)
Total non-current liabilities (11,155)
-------------------------------------------------------- ---------- ------------------------------
Total liabilities (11,202)
-------------------------------------------------------- ---------- ------------------------------
Net assets 50
-------------------------------------------------------- ---------- ------------------------------
Capital and reserves: equity
Share capital 8 50
Capital contribution 200
Profit and loss reserve (200)
Total Shareholders' funds 50
-------------------------------------------------------- ---------- ------------------------------
NAV per share - Ordinary Shares (pence) 9 100.00p
-------------------------------------------------------- ---------- ------------------------------
Accrued capital entitlement - ZDP Shares (pence) 9 102.62p
-------------------------------------------------------- ---------- ------------------------------
The financial statements of the Company were approved and authorised
for issue by the Board of Directors on 26 March 2019 and signed
on their behalf by:
Norman Crighton
Director
The Company is registered in England and Wales with registered
company number 11217952.
Statement of Changes in Equity
For the period from incorporation on 21
February 2018 to 31 December 2018
Capital Profit
Share capital contribution and loss Total
Note GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ----- -------------- ----------------- ------------------ -----------
Balance as at beginning
of
the period - - - -
Loss after taxation and
total
comprehensive loss the
for
period - - (200) (200)
Capital contribution - 200 - 200
Issue of Ordinary Shares 8 50 - - 50
Balance as at 31 December
2018 50 200 (200) 50
-------------------------- ----- -------------- ----------------- ------------------ -----------
Share capital represents the nominal value of the Company's Ordinary
Shares that have been issued.
The Capital contribution from the Parent is to be utilised on
current and future obligations of the Company.
Statement of Cash Flows
For the period from incorporation on 21 February 2018
to 31 December 2018
Period ended
31 December 2018
Note GBP'000
---------------------------------------- ------ ----------------------------------
Operating activities
Result from operating activities* 105
Increase in capital contribution
receivable (122)
Decrease in receivables 43
Increase in other payables 27
Net cash flow used in operating
activities (32)
---------------------------------------- ------ ----------------------------------
Investing activities
Loans to Parent Company 3 (10,870)
Net cash flow used in investing
activities (10,870)
---------------------------------------- ------ ----------------------------------
Financing activities
Proceeds from issue of ZDP shares 6 10,870
Share issue proceeds 8 50
Net cash flow from financing activities 10,920
---------------------------------------- ------ ----------------------------------
Increase in cash 18
Opening balance at beginning of the
period -
---------------------------------------- ------ ----------------------------------
Balance as at 31 December 2018 18
---------------------------------------- ------ ----------------------------------
* There was no cash inflow from investment income during
the period.
Notes to the financial statements
1. General information
RM ZDP Plc (the "Company") was incorporated in England and Wales
on 21 February 2018, with registered number 11217952 as a public
company limited by shares under the Companies Act. The Company has
a limited life, with a ZDP Shares Repayment Date of 6 April 2021,
unless early terminated or extended, as per provisions in the prospectus
dated 12 March 2018.
The Company commenced its operations on 3 April 2018. The Company's
shares were admitted to the Official List of the UK Listing Authority
with a premium listing on 3 April 2018("Admission"). On the same
day, trading of the Ordinary Shares commenced on the London Stock
Exchange. The registered office is Mermaid House, 2 Puddle Dock,
London, EC4V 3DB.
2. Significant accounting policies
The principal accounting policies applied by the Company are set
out below:
(a) Basis of accounting
The financial statements have been prepared on a going concern basis
in accordance with International Financial Reporting Standard ('IFRS')
as adopted by the European Union and in accordance with Article
4 of the IAS Regulation and the Companies Act 2006 as applicable
to companies using IFRS. The financial statements have been prepared
on a historical cost basis.
(b) Going concern
The Directors have adopted the going concern basis in preparing
the accounts. In order to be able to continue as a going concern,
the Company relies on Parent Company to repay the loan and also
adhere to the Deed of Undertaking as counterparty. As per the undertaking
to the Company, the Parent will contribute (by way of gift, capital
contribution or otherwise pay), funds to the Company to ensure that
the Company has sufficient assets on the ZDP Shares repayment date
to satisfy the ZDP Shares Capital Entitlement due and to pay any
operational costs or expenses incurred by the Company.
The Directors are satisfied that the Company has sufficient resources
to continue in operation for the foreseeable future, a period not
less than 12 months from the date of this report. Accordingly, they
continue to adopt the going concern basis in preparing the financial
statements.
(c) Financial assets and liabilities at amortised cost-Loans made
by the Company and ZDP Shares
Loans made by the Company to its Parent are classified as financial
assets at amortised cost.
Loans made by the Company and ZDP Shares are initially recognised
at cost, being the fair value of the consideration received or paid
associated with the loan or borrowing. Loans and ZDP Shares are
subsequently measured at amortised cost using the effective interest
method, less any impairment (for the loans). Interest income is
recognised by applying the effective interest rate. The loan will
be de-recognised when the company is no longer eligible for the
cash flows from it and the ZDPS will be de-recognised when they
are repaid.
The final capital entitlement to ZDP share holders will rank in
priority to the capital entitlement of the Ordinary Shares as such
ZDP Shares are classified as a liability.
Impairment of assets- Financial assets at amortised cost and Trade
and other receivables are subject to impairment calculated under
the expected credit loss model within IFRS 9.
(d) Income
Interest income is recognised on accrual basis in the Statement
of Comprehensive Income on a time-apportioned basis using the effective
interest rate method.
(e) Expenses
All expenses are accounted for on an accruals basis and recognised
in the Statement of Comprehensive Income.
(f) Taxation
The charge for taxation is based upon the net return for the period
using the applicable UK corporation tax rate for the reporting period.
It takes into account both deductible and non-deductible income
and expenses incurred in the reporting period. Deferred taxation
will be recognised as an asset or a liability if transactions have
occurred at the initial reporting date that give rise to an obligation
to pay more taxation in the future, or a right to pay less taxation
in the future. An asset will not be recognised to the extent that
the transfer of economic benefit is uncertain.
(g) Dividends
Interim dividends to the holders of shares are recorded in the Statement
of Changes in Equity on the date that they are paid. Final dividends
are recorded in the Statement of Changes in Equity when they are
approved by Shareholders.
(h) Judgements, estimates and assumptions
There are there no judgement, estimate and assumptions for the Company.
Critical judgements on interest rate on financial assets and liabilities
-The Company entered into a Loan agreement with its Parent, which
is subject to an interest rate of 2% compounded annually as disclosed
in note 2c. This interest rate compared to the ZDP Shares interest
rate of 3.5% compounded annually could result in a potential mismatch,
which requires significant judgement.
(i) Capital contribution
Capital contribution(s) from the Parent to meet current and future
obligations of the Company are recognised directly in Capital contribution.
(j) Segmental reporting
The Directors perform regular reviews of the operating results of
the Group as a whole and make decisions using financial information
at the Group level. The Board of Directors is of the view that the
Company is only engaged in one business segment.
3. Financial assets at amortised cost
As at 31 December
2018
GBP'000
--------------------------------------------------------------------------- -------------------------
Loans to Parent 10,870
Investment income during the period 163
Capital contribution receivable 122
Closing balance 11,155
--------------------------------------------------------------------------- -------------------------
Intercompany Loan Agreement
On 29 March 2018, the Company entered into a Loan Agreement with
its Parent. Pursuant to the Loan Agreement, the Company lent the
entirety of the gross proceeds of the issue of ZDP Shares to its
Parent, which has been applied towards making investments in accordance
with its Investment Policy and for working capital purposes.
The Loan Agreement provides that, interest will accrue on the Loan
daily at a rate of 2% per annum, compounded annually on each anniversary
of Admission of the ZDP Shares and will be rolled up and paid to
the Company along with repayment of the principal amount of the
ZDP Loan on the date falling 2 Business Days before the ZDP Repayment
Date, provided that the ZDP Loan shall become repayable by the
Parent immediately upon the passing of a Winding-Up Resolution.
Deed of Undertaking
The Company also entered into the Undertaking with the Parent ,
pursuant to which, to the extent that the Final Capital Entitlement
multiplied by the number of outstanding ZDP Shares as at the ZDP
Repayment Date exceeds the aggregate principal amount and accrued
interest due from the Parent to the Company as at the Repayment
Date, the Parent shall: (i) subscribe an amount equal to or greater
than the additional funding Requirement for Subsidiary Ordinary
Shares or (ii) make a capital contribution or gift or otherwise
pay an amount equal to or greater than the additional funding requirement.
4. Taxation
Period ended
31 December 2018
Analysis of tax charge for the period GBP'000
-------------------------------------------------------------- --------------------------------------
Corporation tax 20
Total tax charge for the period (see note 4
(b)) 20
-------------------------------------------------------------- --------------------------------------
(b) Factors affecting the tax charge for the
period:
The effective UK corporation tax rate for the period is 19%. The
tax charge for the period can be reconciled to the return on ordinary
activities in the Statement of Comprehensive Income as follows:
Period ended
31 December 2018
GBP'000
-------------------------------------------------------------- --------------------------------------
Return on ordinary activities before taxation (58)
UK corporation tax at 19% (34)
Effects of:
Non-deductible expenses 54
-------------------------------------------------------------- --------------------------------------
Total tax charge for the period 20
-------------------------------------------------------------- --------------------------------------
5. Basic and diluted loss per Ordinary Share
The calculation of loss per Ordinary Share is based on the net
loss for the period of GBP200,000 and a weighted average number
of 50,000 Ordinary Shares during the period.
6. Financial liabilities at amortised cost-Zero
Dividend Preference ('ZDP') Shares
As at 31
December
2018
GBP'000
-------------------------------------------------------------- -------------
Opening balance -
Issue proceeds of ZDP Shares 10,870
Accrued interest during the period 285
Closing balance 11,155
--------------------------------------------------------------- -------------
Authorised
The maximum number of ZDP Shares to be issued pursuant to the Initial
ZDP Placing, as disclosed in the Prospectus dated 12 March 2018,
has been set at 20 million. At a general meeting of the Company
held on 7 March 2018, a special resolution was passed to issue
up to 60 million ZDP Shares.
On 3 April 2018, the Company issued 10,869,950 ZDP Shares of a
nominal value of 1 pence each at a placing price of 100 pence each
to raise gross proceeds of GBP10,869,950, which were allotted and
fully paid up.
Rights attaching to the ZDP Shares
The ZDP Shares carry no right to receive dividends or other distributions
out of revenue or any other profits of the Company.
The ZDP Shares will have a life of 3 years and, on that basis,
a Final Capital Entitlement of 110.91 pence per ZDP Share on the
ZDP Repayment Date of 6 April 2021, equivalent to a Redemption
Yield of 3.5% per annum (compounded annually) on the Issue Price.
Under the obligations of Loan Agreement, the Ordinary Shares and
the C Shares of the Parent rank behind the ZDP Shares.
Voting rights of ZDP Shares
The ZDP Shareholders shall have the right to receive notice of
all general meetings of the Company for information purposes, but
shall have no right to attend or vote at any such meeting of the
Company. For the avoidance of doubt:
-- any resolution to alter, modify or abrogate the special rights
or privileges attached to the ZDP Shares shall require separate
class consent (by special resolution) at a class meeting of ZDP
Shareholders convened and held in accordance with the ZDP Articles
(a "ZDP Class Consent"); and
-- any ZDP Recommended Resolution or any resolution to approve
a, ZDP Reconstruction Proposal (if required) shall only be approved
by Company Ordinary Shareholders provided they have first been
approved by way of a ZDP Class Consent.
Variation of rights and Distribution on winding
up
Subject to the Companies Act, on a return of capital, on a winding-up
or otherwise, ZDP Shareholders will be entitled to receive an amount
equal to the Initial Capital Entitlement of 100 pence per ZDP Share,
increased at such daily accrual rate as compounds annually to give
a Final Capital Entitlement of 110.91 pence per ZDP Shares at the
ZDP Repayment Date of 6 April 2021, which is equivalent to a Redemption
Yield of 3.5% per annum (compounded annually).
The Final Capital Entitlement will rank behind any liabilities
of the Parent including the liabilities to OakNorth Bank under
the revolving credit facility with OakNorth Bank in priority to
the capital entitlements of the Ordinary Shares and any C Shares.
The ZDP Shares carry no entitlement to income and the whole of
their return accordingly takes the form of capital. The ZDP Shareholders
are not entitled to receive any part of the revenue profits (including
any accumulated revenue reserves) of the Company on a winding-up,
even if the accrued capital entitlement of the ZDP Shares will
not be met in full.
7. Auditor's remuneration
Audit fees of the Company's financial statements for the period
ended 31 December 2018 is GBP7,000 (excludes VAT of GBP2,000).
During the period no non-audit fees were incurred by the
Company.
8. Share capital
Authorised
As at 31 December 2018
Number of Nominal
Allotted, issued and fully paid: shares GBP'000
--------------------------------------------- ------------- -------------
Ordinary Shares of GBP1 each 50,000 50
--------------------------------------------- ------------- -------------
On incorporation, the Company issued 50,000 Ordinary Shares of
a nominal value of GBP1.00 each which were subscribed by the Parent
and fully paid up.
Voting rights
The Company's ordinary shares held by the Parent are the only voting
shares in the Company, subject to certain matters which will require
ZDP Shareholder approval.
Ultimate controlling rights
The voting rights in the Company are wholly owned by Parent, a
company incorporated and registered in England and Wales, and is
therefore the immediate and ultimate controlling party.
9. Net asset value ('NAV') / Capital entitlement per
share
Capital
Attributable entitlement
Shares to Shareholders per share NAV per
As at 31 December 2018 in issue (GBP'000) (p) share (p)
----------- ------------------ -------------- ------------
Ordinary Shares 50,000 50 n/a 100.00
Zero Dividend Preference
Shares 10,869,950 11,155 102.62 n/a
-------------------------- ----------- ------------------ -------------- ------------
10. Related parties
As at the period end, the Parent Company held 50,000 Ordinary
Shares of GBP1 each in the Company.
On 29 March 2018, the Company entered into a Loan Agreement
and Undertaking with its Parent Company which are disclosed
in note 3.
The Directors shall not be entitled to receive remuneration
in respect of their performance of their duties as Company's
Directors nor shall they be entitled to receive any expenses
in relation to their role of Company Directors. As at
the period end, the Directors held no shareholding in
the Company.
11. Financial risk and capital management
The Board of Directors has overall responsibility for the oversight
of the Company's risk management framework. The objective of
the Company is to provide the Final Capital Entitlement of the
ZDP Shares to ZDP holders at the redemption date. Due to the
Company's dependence on the Parent Company to repay the loan
and provide contribution to meet the final capital entitlement
of the ZDP shareholders, the risks faced by the Company are
considered to be the same as Parent Company. The Company has
exposure to the following risk from its use of financial instruments:
* Credit risk
* Liquidity risk
* Interest rate risk
(i) Credit risks
Credit risk is the risk of the financial loss to the Company
if a counterparty to a financial instrument fails to meet its
contractual obligations, and arises principally from the Loan
Agreement and the obligation of Parent Company under the Undertaking
to subscribe for such number of Ordinary Shares or otherwise
ensure that Company is able to pay the Final Capital Entitlement
to ZDP Shareholders on the ZDP Repayment date. Parent Company's
credit risk is the risk of financial loss if counterparty to
a debt instrument fails to meet its contractual obligations.
Parent Company and its investment manager seek to mitigate Parent
Company's credit risk by actively monitoring Parent Company's
portfolio of debt instruments and the credit quality of the
underlying borrowers.
Loans to the Parent Company have low credit risk as the Parent
has a strong capacity to meet its contractual cash flow obligations
in the near term. Adverse changes in economic and business conditions
in the longer term are still unlikely to reduce the ability
of the Parent to fulfil its obligations. Based on the overall
performance the expected credit loss is not material.
(ii) Liquidity risks
Liquidity risk is the risk that the Company will not be able
to meet its financial obligations as they fall due. The most
significant cash outflow consists of the payment of the Final
Capital Entitlement to the ZDP holders at the ZDP Repayment
Date of 6 April 2021. The Company's exposure to liquidity risk
depends upon Parent Company's ability to meet all current and
future obligations of the Company. The Directors consider Parent
Company's compliance with the Undertaking and the capital contributions
received as sufficient.
The contractual undiscounted maturity profile of the Company's
financial assets and liabilities as follows:
As at 31 December
2018
GBP'000
Financial assets at amortised
cost 11,540
------------------------------------------------------------------------ ------------
Capital contribution receivable 515
------------------------------------------------------------------------ ------------
Zero Dividend Preference Shares (12,055)
------------------------------------------------------------------------ ------------
(iii) Interest rate risks
The interest rate applied on the Loan Agreement is fixed at
2% and the interest rate payable on the ZDP shares is fixed
at 3.5% compounded and as such no sensitivity analysis is required.
Fair value estimation
The fair values of cash and cash equivalents, prepayments and
accrued expenses and other liabilities are estimated to be approximately
equal to their carrying values due to their short-term nature.
The fair values for the loan and receivables and ZDP shares
are disclosed in this note for disclosures purposes only under
IFRS 13 "Fair Value Measurement" (IFRS 13).
The Directors based the fair value of the ZDP shares on the
traded price of GBP102.50pence per share which was observed
on the London Stock Exchange on 31 December 2018 being the last
observable traded price before the year end. The Loan Agreement
and Undertaking expire on the same date as the ZDP Repayment
Date. Due to the dependence on the Parent Company to repay the
Loan and provide the support to meet the Company's obligation
to the ZDP share holders, the fair value of the Loan is estimated
to be equal and opposite to the fair value of the ZDP shares.
Fair value hierarchy
IFRS 13 requires the Company to classify its investments in
a fair value hierarchy that reflects the significance of the
inputs used in making the measurements. IFRS 13 establishes
a fair value hierarchy that prioritises the inputs to valuation
techniques used to measure fair value. The three levels of fair
value hierarchy under IFRS 13 are as follows:
Level 1
Inputs are quoted prices in active markets for identical assets
or liabilities that the entity can access at the measurement
date.
Level 2
Inputs other than quoted market prices included within Level
1 that are observable for the asset or liability, either directly
or indirectly.
Level 3
Inputs are unobservable for the asset or liability.
The categorisation of a financial instrument within the hierarchy
is based upon the pricing transparency of the financial instruments
and does not necessarily correspond to the Company's perceived
risk inherent in such financial instruments.
The ZDP shares are classified within Level 1 of the fair value
hierarchy on the basis that the fair value was derived from
an observable traded price. The financial assets is classified
within Level 1 of the fair hierarchy on the basis that the fair
value of the financial assets has been determined directly from
the fair value of the ZDP shares.
The classification of the Company's investments held at fair
value through profit or loss is detailed in the table below:
Level 1 Level 2 Level 3
GBP'000 GBP'000 GBP'000
Fair value
Financial assets at amortised
cost - 11,142 -
--------------------------------------- ------------------- ---------- ------------
Financial liabilities at market
value 11,142 - -
--------------------------------------- ------------------- ---------- ------------
12. Subsequent events
There are no subsequent events that require disclosure in these financial
statements.
13. Financial information
This announcement does not constitute the Company's statutory accounts.
The financial information is derived from the statutory accounts,
which will be delivered to the registrar of companies and will be
put forward for approval at the Company's Annual General Meeting.
The auditors have reported on the accounts for the period ended 31
December 2018, their report was unqualified and did not include a
statement under Section 498(2) or (3) of the Companies Act 2006.
The Annual Report for the period ended 31 December 2018 was approved
on 26 March 2019. It will be made available on the Company's website
at https://rmdl.co.uk/
The Annual Report will be submitted to the National Storage Mechanism
and will shortly be available for inspection at: http://www.morningstar.co.uk/uk/NSM
This announcement contains regulated information under the Disclosure
Rules and Transparency Rules of the FCA.
14. Annual General Meeting
The Annual General Meeting will be held on 1 May 2019 at 11:30 a.m.
at the offices of Nplus1 Singer, 1 Bartholomew Lane, London, EC2N
2AX
Secretary and registered office:
PraxisIFM Fund Services (UK) Limited
Mermaid House
2 Puddle Dock
London
EC4V 3DB
For further information contact:
Anthony Lee / Ciara McKillop
PraxisIFM Fund Services (UK) Limited
Tel: 020 7653 9690
END
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
FR LLFETVVIRFIA
(END) Dow Jones Newswires
March 27, 2019 03:01 ET (07:01 GMT)
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