TIDMINLZ
RNS Number : 7310Q
Inland ZDP PLC
30 June 2022
INLAND ZDP PLC
Half-yearly report
for the six months ended 31 March 2022
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 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
2022.
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 were effected 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 2020.
INTERIM MANAGEMENT REPORT
The Company was incorporated solely to issue ZDP Shares and has
never traded.
Certain earlier results statements showed the accrued value
calculated at 7.3% on the initial issue price to 13 August 2018 and
subsequently accruing at 5.49%. The accrued Capital Entitlement
shown below based on the original issue price of 100p per ZDP Share
on 20 December 2012 as increased over its life to the Final Capital
Entitlement of 201.4 pence per ZDP Share payable on 10 April 2024.
This represents an accrual rate of 6.39% per annum.
31 Mar 30 Sept 2021
2022
------------------------------------------ --------- -------------
Accrued capital entitlement per ZDP Share 177.6p 172.2
ZDP Share price as at the accounts date 181.0p 168.5p
------------------------------------------ --------- -------------
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 2022 the accounting book value was
181.6p per ZDP Share. T he 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 2022, 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 accrued capital entitlement, the market
price of the ZDP Shares (shown above) and the cover ratio.
The asset value and the accrued capital entitlement will
continue to increase as the repayment date approaches.
The Cover Ratio as at 31 March 2022 was 2.77 times, calculated
from book values as set out below.
Financial Indebtedness for cover ratio purposes 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/
.
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 and EPRA values as shown
in Inland's interim financial statements, but excluding intangible
assets.
Book values EPRA values
GBP'000 GBP'000
----- ------------ ------------
Assets less creditors (exc cash
and debt) A 281,174 343,374
----- ------------ ------------
Net debt (exc ZDP Share liability) 62,406 62,406
------------ ------------
ZDP Final Capital Entitlement 36,457 36,457
------------ ------------
Financial indebtedness B 98,863 98,863
----- ------------ ------------
Cover ratio A/B 2.8 3.5
----- ------------ ------------
Hurdle Rate to pay the Final Capital
Entitlement* -38.9% -44.8%
------------ ------------
Hurdle Rate to recover the market
price of a ZDP Share** -44.1% -50.2%
------------ ------------
Rate of return to maturity based on the
market price of a ZDP Share** 6.18%
------------ ------------
* being the period from 31 March 2022 to 10 April 2024, based on
the Assets and Financial Indebtedness as at 31 March 2022
** being the period from 29 June 2022, being the latest
practicable date prior to the publication of this interim report to
10 April 2024 based on a share price of 181p, being the closing
price of a ZDP Share on 29 June 2022.
Nishith Malde FCA
Chairman, Inland ZDP PLC
Registered in England No: 8303612 29 June 2022
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 2021 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 for the year ended 30 September 2021.
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/.
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.
The Inland board has given priority to reducing the Inland
Group's borrowings, reducing net debt by 19% between 30 September
2021 and 31 March 2022. This enables the Inland Group to take
advantage of opportunities to refinance its ongoing indebtedness on
improved terms and enhances its ability to finance the redemption
of ZDP Shares when due on 10 April 2024, if no extension is
proposed and approved at the relevant general and class
meetings.
DIRECTORATE
Gary Skinner stepped down from the Company's Board following the
termination of his employment with Inland Homes PLC on 5 April
2022.
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 2022 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 2022
6 months 6 months Year ended
ended ended
31 March 31 March 30 September
2022 2021 2021
(unaudited) (unaudited) (audited)
Continuing operations Note GBP000 GBP000 GBP000
-------------------------------- ------ ------------ ------------ -------------
Revenue
Interest income 848 805 1,635
---------------------------------------- ------------ ------------ -------------
Total income 848 805 1,635
Expenditure
Expenses - - -
-------------------------------- ------ ------------ ------------ -------------
Total expenditure - - -
Profit before finance
costs and taxation 848 805 1,635
Finance costs (848) (805) (1,635)
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 2022
As at As at As at
31 March 31 March 30 September
2022 2021 2021
(unaudited) (unaudited) (audited)
Note GBP000 GBP000 GBP000
---------------------------- ------ ------------ ------------ -------------
Non-current assets
Intercompany receivable - - -
---------------------------- ------ ------------ ------------ -------------
- - -
Current assets
Intercompany receivable 32,914 31,235 32.065
------------------------------------ ------------ ------------ -------------
32,914 31,235 32,065
Creditors: amounts falling
due after more than one
year
Zero Dividend Preference
Shares (32,864) (31,185) (32,015)
------------------------------------ ------------ ------------ -------------
(32,864) (31,185) (32,015)
----------------------------------- ------------ ------------ -------------
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 2021
6 months ended 6 months ended Year to
31 March 2022 31 March 2021 30 September 2021
(unaudited) (unaudited) (audited)
GBP000 GBP000 GBP000
--------------------------------- --------------- ---------------- ------------------
Cash flow from operating
activities
Profit for the period before - - -
tax
Adjustments for:
- interest expense 848 805 1,635
- interest and similar income (848) (805) (1,635)
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 2022
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 2022 has also been consolidated into the
results of Inland for the six months ended 31 March 2022.
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 2021.
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.
During what is a period of geopolitical and economic uncertainty
principally due to the ongoing conflict in Ukraine, the Inland
Board is also mindful that no one can forecast exactly how changing
macroeconomic circumstances post the COVID-19 pandemic will play
out and how this may affect the Group, industry and the wider
economy for the foreseeable future. In particular, future changes
to government policy relating to the housing market could have
implications for the Group as it would for many other businesses.
Such a situation would require the Board to re-examine the Group's
financial position at the time and if necessary, report any
significant adverse changes.
The Inland Homes plc Board has reviewed the performance of the
Group for the current reporting period and have performed a
detailed sensitivity analysis to test the Group's liquidity and
forecast banking covenants based on several scenarios. The
Directors have also considered a severe, but plausible downside
scenario. Under this scenario, the Group may have to consider using
capital markets to raise additional debt or equity to generate
additional liquidity for the Group to meet its obligations as they
contractually fall due.
The Directors of the Company have considered the financial
resources of the Inland Group and 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. The Inland Homes plc
interim statement for the six months to 31 March 2022 contains
further information.
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 2022, the loan to
the ultimate parent company was GBP32,913,571 (2021:
GBP31,235,166).
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 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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