RNS Number : 8035N
Inland ZDP PLC
31 October 2016
 

           

INLAND ZDP PLC

 

AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2016

 

Chairman's Statement

 

I am pleased to present the company's annual report and financial statements for the year ended 30 June 2016.

 

The company is a wholly owned subsidiary of Inland Homes 2013 Limited which is a wholly owned subsidiary of Inland Homes plc and was established solely for the purpose of issuing and redeeming ZDP shares.  8,500,000 and 849,900 ZDP shares were issued on 14 December 2012 at 100p per share and 23 January 2013 at 103p per share respectively and 934,900 ZDP shares were placed on 14 March 2014 at 118.5p per share. A further 1,028,400 shares were issued on 20 August 2015 at 131p per share. They will redeem on 10 April 2019 at a price of 155.9p per ZDP share giving a redemption yield of 7.3% per annum on the first placing, 6.92% per annum on the second, 5.57% per annum on the third and 4.90% on the fourth. The proceeds of the ZDP share issues were lent to Inland Homes plc for use in future investment opportunities.

 

As at 30 June 2016 the ZDP share price was 139p (2015: 132.75p), representing a premium of 7.65% (2015: 10.36%) over the net asset value per ZDP share of 129.12p (2015: 120.29p).

 

The loan and contribution agreements between the company and Inland contain certain protections for the company which are intended to benefit its ZDP shareholders.  These include first charges over pledged assets (property) and pledged cash in a charged bank account.  The pledged assets must have a book value of at least 120% of the accrued value of the ZDP shares net of the pledged cash.  As at 30 June 2016, the accrued amount due to ZDP shareholders was £14,607,130 (2015: £12,371,867), the pledged cash was £10,800,000 (2015: £21,000,000) and the pledged assets had a book value of £20,785,430 (2015: £18,769,671), thereby satisfying this requirement.

 

The loan agreement also contained two covenants relating to asset cover and gearing, both of which are shown below as at 30 June 2016.  The definitions of Assets and Financial Indebtedness are set out in the prospectus published in connection with the issue of the ZDP shares which is available at www.inlandhomes.co.uk/inland-zdp-plc.

 

Asset cover:

Assets/Financial Indebtedness plus ZDP Final Redemption Liability = 4.6 times cover (2015: 4.1 times cover)

The Cover Ratio should be in excess of 1.8 times, so this test was satisfied as at 30 June 2016

 

Gearing:

Financial Indebtedness plus ZDP accrued liability / Assets = 20.1%. (2015: 21.5%)

The gearing ratio should not exceed 40% so this covenant was also satisfied at 30 June 2016.

 

  

The board believes that the use of book values is generally conservative, because a substantial proportion of the group's assets are properties for which planning consents are sought.  The planning process takes time and any progress towards reaching the stage when building can commence is not reflected in an increase in the book values beyond the costs attributable to the relevant sites, whereas any diminution in value is reflected by way of impairment provisions, such that planning gains are not generally recognised in Inland's financial statements until sales are contracted.  If the covenant ratios were to be calculated by reference to the market values of the assets, the cover would be higher and the gearing lower.

 

  

Nishith Malde

Chairman

28 October 2016

 

 

 

 

Audited Statement of Comprehensive Income

For the year ended 30 June 2016

 

 

 

 

 

 

Year ended

Year ended

 

 

30 June 2016

 30 June 2015

Continuing operations

Note

£000

£000

Revenue

 

 

 

Interest income

2

889

820

Total income

 

889

820

 

 

 

 

Expenditure

 

 

 

Expenses

3

-

-

Total expenditure

 

-

-

Profit before finance costs and taxation

 

889

820

 

 

 

 

Finance costs

4

(889)

(820)

Profit before tax

 

-

-

Income tax

5

-

-

Profit for the year and total comprehensive income

 

-

-

Earnings per share for profit attributable to the equity holders of the company during the year

6

0.0p

0.0p

 

 

Audited Statement of Financial Position

As at 30 June 2016

 

 

 

2016

2015

 

Note

£000

£000

 

 

 

 

Non-current assets

 

 

 

Intercompany receivable

9,11

14,657

12,422

 

 

14,657

12,422

Non-current liabilities

 

 

 

Zero Dividend Preference Shares

7

(14,607)

(12,372)

 

 

(14,607)

(12,372)

Net assets

 

50

50

 

 

 

 

Equity

 

 

 

Ordinary share capital

8

50

50

Shareholders' funds

 

50

50

 

 

Audited Statement of Changes in Equity

As at 30 June 2016

 

 

 

Share

 

 

capital

Total

 

£000

£000

At 1 July 2014

50

50

Issue of equity

-

-

Result and total comprehensive income for the period from 1 July 2014 to 30 June 2015

-

-

At 30 June 2015

50

50

Result and total comprehensive income for the year

-

-

At 30 June 2016

50

50

 

 

 

 

 

 

Audited Statement of Cashflows

For the year ended 30 June 2016

 

 

Year ended

 

Year ended

 

 

30 June 2016

30 June 2015

 

£000

£000

Cash flow from operating activities

 

 

Profit for the period before tax

-

-

Adjustments for:

 

 

- interest expense

889

820

- interest and similar income

(889)

(820)

Net cash flow from operating activities

-

-

Cash flow from investing activities

 

 

Loan to ultimate parent company

(1,346)

-

Net cash outflow from investing activities

(1,346)

-

Cash flow from financing activities

 

 

Proceeds on issue of ZDP Shares

1,346

-

Net cash inflow from financing activities

1,346

-

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

-

-

 

 

1      Accounting policies

The principal accounting policies adopted in the preparation of the financial statements are set out below.

 

1.1   Basis of preparation

The financial information has been prepared in accordance with the Companies Act 2006 and International Financial Reporting Standards ('IFRS') as adopted by the European Union.  The financial information comprises the Statement of Financial Position as at 30 June 2016 and, for the year ended 30 June 2016, the related Statement of Comprehensive Income, Statement of Changes in Equity, Statement of Cash Flows and related notes hereinafter referred to as 'financial information'.  The principal accounting policies adopted by the company are set out below.

 

The accounting policies that have been applied in the opening Statement of Financial Position have also been applied throughout all periods presented in these financial statements.  These accounting policies comply with each IFRS that is mandatory for accounting periods ending on 30 June 2016.  

 

At the date of approval of these financial statements, certain new standards, amendments and interpretations to existing standards have been published by the IASB but are not yet effective, and have not been adopted early by the company.

 

Management anticipates that all of the relevant pronouncements will be adopted in the company's accounting policies for the first period beginning after the effective date of the pronouncement.  Information on new standards, amendments and interpretations that are expected to be relevant to the company's financial statements is provided below.

 

Certain other new standards and interpretations have been issued but are not expected to have a material impact on the company's financial statements.

 

 

 

Standards in issue but not yet effective

 

-    IFRS 9 Financial Instruments (effective 1 January 2018)

-    IFRS 15 Revenue from Contracts with Customers (effective 1 January 2017)

-    IFRS 16 Leases (EU effective date 1 January 2019)

-    Amendments to IAS 1 Disclosure Initiative (EU effective date 1 January 2016)

 

None of the standards above are expected to have an impact on the company's financial statements

 

Revenue

Interest income is recognised in revenue using the effective interest method on an accruals basis.

 

Expenses

All expenses are borne by the company's parent company, Inland Homes plc.

 

Zero dividend preference shares

Zero dividend preference shares are recognised as liabilities in the Statement of Financial Position in accordance with IAS 32 Financial Instruments: Presentation.  After initial recognition, these liabilities are measured at amortised cost, which represents the initial proceeds of the issuance plus the accrued entitlement to 30 June 2016.

 

Intercompany receivable

Intercompany receivables are recognised as assets in the Statement of Financial Position in accordance with IAS 32 Financial Instruments: Presentation.  After initial recognition they are measured at amortised cost which represents the initial loan plus the accrued interest receivable at the reporting date.

 

Finance costs

Finance costs are calculated as the difference between the proceeds on the issue of zero dividend preference shares and the final liability and are charged as finance costs over the term of the life of these shares using the effective interest method.

 

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.

 

Deferred taxation

Taxation deferred or accelerated can arise due to temporary differences between treatment of certain items for accounting and taxation purposes.  Full provision for deferred taxation is made under the liability method, without discounting, on all temporary differences that have arisen, but not reversed, by the reporting date.

 

Equity

An equity instrument is a contract which evidences a residual interest in the assets after deducting all liabilities.  Equity comprises the following:

-    'Share capital' represents the nominal value of equity shares.

 

 

 

 

 

 

 

Key estimates and assumptions

Estimates and judgements used in preparing the financial statements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed reasonable.  The resulting estimates will, by definition, seldom equal the related actual results.

 

The company does not consider that there have been any significant estimates or assumptions in the current financial year.

 

Segment information

In accordance with IFRS8, information is disclosed to enable the users of financial statements to evaluate the nature and financial effects of the business activities in which the company engages.  The board has identified that the sole operating segment is to provide the final capital entitlement of the company's ZDP shares to the holders of the ZDP shares at the repayment date of 10 April 2019.  Consequently, all information presented in these financial statements relate to that segment.

 

2      Income

 

Year ended

Year ended

 

30 June 2016

30 June 2015

 

£000

£000

Interest from group undertakings

889

820

 

3      Expenses

Administration expenses of £nil were suffered during the period (2015: £nil).  All administration expenses, including auditor's remuneration, during the period were borne by the ultimate parent company, Inland Homes plc. The directors received no remuneration for their services in relation to ZDP. Further disclosures with regards to the auditors remuneration can be found in the group financial statements.

 

4      Finance costs

 

Year ended

Year ended

 

30 June 2016

30 June 2015

 

£000

£000

ZDP share interest costs

889

820

 

5      Taxation

 

Year ended

Year ended

 

30 June 2016

30 June 2015

 

£000

£000

Profit before tax

-

-

Profit on ordinary activities multiplied by the standard rate

 

 

of corporation tax in the UK of 20.00% (2015: 20.75%)

ZDP share interest costs disallowed

Group relief

-

177

(177)

-

170

Tax charge

-

-

 

 

 

 

6      Earnings per ordinary share

The calculation of earnings per share is based on a profit after tax figure for the period of £nil (2015: £nil) and the weighted average number of 50,000 ordinary shares in issue during the period.  The basic and diluted earnings per share are the same.

 

 

 

7      Zero dividend preference shares

 

2016

2016

2015

2015

 

No.

£000

No.

£000

ZDP shares

 

 

 

 

Opening ZDP shares

10,284,800

12,372

10,284,800

11,552

Issued during the period

  1,028,400

1,346

-

-

ZDP share interest cost

-

889

-

820

 

11,313,200

14,607

10,284,800

12,372

Details of the terms of the issue of the ZDP shares can be found in the Chairman's Statement.

 

8      Ordinary share capital

Authorised/called up/allotted/fully paid

 

 

2016

2016

2015

2015

 

No.

£000

No.

£000

Opening ordinary shares

50,000

50

50,000

50

Issued during the period

-

-

-

-

50,000 issued ordinary shares of £1 each

50,000

50

50,000

50

 

All ordinary shares are owned by the company's parent company, Inland Homes 2013 Limited.

 

Each ordinary share is entitled to one vote at a general meeting.

 

In addition to receiving any income distributed by way of dividend, the ordinary shareholders will be entitled to all surplus assets after payment of all debts, including the ZDP shares.

 

9      Financial instruments

The company's financial instruments comprise fixed interest creditors classified as financial liabilities at amortised cost and loans and receivables.

 

The main risks arising from the company's financial instruments are liquidity risk and funding risk and credit risk.

 

Liquidity and funding risk

This is the risk that the company will encounter difficulty in meeting obligations associated with financial liabilities.

 

Liquidity risk is considered to be significant as the company is reliant upon repayment from its ultimate parent company. The parent company manages liquidity risk by maintaining sufficient cash balances and ensuring availability of funding through an adequate amount of credit facilities. The parent company aims to maintain flexibility in funding by keeping credit lines available.

 

  

Contractual maturity analysis for financial liabilities

 

2016

2015

 

£000

£000

 

ZDP shares final redemption figure

ZDP shares final redemption figure

More than one year and less than five

17,637

16,034

Over five years

-

-

 

17,637

16,034

 

Credit risk

This is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered with the company. Credit risk is managed by way of a security over the loan. The security relates to pledged assets (property) and pledged cash in a charged bank account.

 

At the reporting date, the company's financial assets exposed to credit risk amounted to the following:

 

Loans and receivables

 

2016

2015

 

£000

£000

Amounts due from ultimate parent company

14,657

12,422

 

The directors consider the carrying amounts to be a reasonable approximation of fair value.

 

The following table presents the fair value of financial liabilities that are carried at amortised cost in the Statement of Financial Position in accordance with the fair value hierarchy. This hierarchy groups financial liabilities into three levels based on the significance of inputs used in measuring the fair value of the financial liabilities. The fair value hierarchy has the following levels:

-    Level 1: quoted prices (unadjusted) in active markets for identical liabilities;

-    Level 2: inputs other than quoted prices included within Level 1 that are observable for the liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

-    Level 3: inputs for the liability that are not based on observable market data (unobservable inputs).

 

The level within which the financial liability is classified is determined based on the lowest level of significant input to the fair value measurement.

 

If the financial liabilities were measured at fair value in the Group Statement of Financial Position they would be grouped into the fair value hierarchy as follows:

 

 

Level 1

£000

Level 2

£000

Level 3

£000

Total

£000

Net fair value at 1 July 2015

13,653

-

-

13,653

Additions

1,347

-

-

       1,347

Fair value movements during the year

725

-

-

  725

Net fair value at 30 June 2016

15,725

-

-

15,725

 

The ZDP shares are carried at their accrued value of 129.12p per share (2015: 120.29p) however their closing price on the main market of the London Stock Exchange on 30 June 2016 was 139.0p (2015: 132.75p).  During the year 1,028,400 (2015: nil) shares were issued at a price of 131p (2015: 0p) per share.

 

10    Capital management policies and procedures

The company's objectives when managing capital are:

-      to safeguard its ability to continue as a going concern; and

-      to ensure sufficient liquid resources are available to meet the funding requirement of its ZDP shareholders.

The directors consider that the capital management policies and procedures of the ultimate parent company will enable the company to meet its objectives.  Further details of the policies and procedures of Inland Homes plc can be found within its financial statements and include a target capital to overall financing ration of over 50%

 

11    Related party transactions

The loan to Inland Homes plc is interest free and is repayable on the ZDP repayment date or immediately upon an event of default.  At 30 June 2016, the loan to the ultimate parent company was £14,657,000 (2015: £12,422,000).

 

12    Ultimate Controlling Party

         There is no ultimate controlling party.

 

13    Post Balance Sheet Events

 On 23 September 2016 Inland ZDP plc issued 1,131,000 new zero dividend preference shares of 10 pence each at a price of 139 pence each. They were admitted to trading on the London Stock  Exchange plc's main market on 28 September 2016. Net proceeds of this issue were approximately £1.57m.

 

14    Holding Company

The company is a wholly owned subsidiary of Inland Homes 2013 Limited which is a wholly owned subsidiary of Inland Homes plc, a listed company whose shares are traded on the AIM market of the London Stock Exchange.  Copies of its accounts for the year ended 30 June 2016 will shortly be available to view on Inland's website (www.inlandhomes.co.uk).

 

15   Responsibility and audit

       The Directors are the persons responsible for the full annual report and financial statements.

       Each of the Directors confirms that to the best of his knowledge:

·      the financial statements, prepared in accordance with IFRS as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and

·      the Strategic Report and the Report of the Directors includes a fair review of the development and performance of the business and the position of the Company together with a description of the principal risks and uncertainties it faces.

       The statutory financial statements have been audited by BDO LLP and their report was unqualified.

 

16   Publication of non-statutory accounts

       The financial information for the year ended 30 June 2016 and the year ended 30 June 2015 does not constitute the company's statutory accounts for those years.

Statutory accounts for the year ended 30 June 2015 have been delivered to the Registrar of Companies. The statutory accounts for the year ended 30 June 2016 will be delivered to the registrar of companies in due course.

        The auditors' reports on the accounts for 30 June 2016 and 30 June 2015 were unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

       A copy of the annual report will shortly be submitted to the National Storage Mechanism and will be available for inspection at www.morningstar.co.uk/uk/NSM


This information is provided by RNS
The company news service from the London Stock Exchange
 
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