TIDMINLZ TIDMINL
RNS Number : 4849O
Inland ZDP PLC
31 January 2023
Inland ZDP PLC
31 January 2023
INLAND ZDP PLC
AUDITED RESULTS FOR YEARED 30 SEPTEMBER 2022
KEY POINTS
The board of Inland ZDP PLC (the "Company") announces the
results for the year ended 30 September 2023 and the publication of
its annual report.
The Company is a specialist funding vehicle only and has no
business, operations or employees of its own. It has issued
18,101,857 zero dividend shares ("ZDP shares") at various prices
between 20 December 2012 and 19 November 2019, raising GBP22.28m
cash which has been lent to its holding company, Inland Homes plc
("Inland").
ZDP shares are Listed and traded on the Main Market of the
London Stock Exchange and are due to be redeemed for 201.4p cash
per ZDP share (GBP36.45m in total) on 10 April 2024, when the
Company will be liquidated unless proposals to extend its life have
been approved by holders of all its classes of shares.
The Inland Homes group (the "Group") has an extensive network of
relationships which enable it to identify potentially attractive,
primarily brownfield, residential and mixed-use property
development opportunities and has an outstanding 100% track record
in successfully achieving planning consents on its brownfield
sites.
Initially the Group sold most of its consented plots to major
housebuilders, but in recent years, its business model has changed
to include construction activity, selling completed homes or
selling plots to BTR (Build to Rent) operators and housing
associations with construction contracts.
The Group has relationships with investors with whom it can
develop sites through separately funded joint ventures or source or
generate fees for managing developments funded by the investors.
During recent years, a higher proportion of its projects have been
pursued on an asset management basis resulting in significant
reductions in the Group's borrowing requirements as owned sites and
completed homes are sold.
The Company is reliant on Inland's ability to finance the
redemption of the ZDP shares on 10 April 2024. Although the Group
announced anticipated losses of approximately GBP91m for the year
to 30 September 2022, it continues (with some short term
fluctuations) to realise cash and reduce debt as a result of
adopting a less cash intensive business model whereby developments
are promoted and managed by the Group on behalf of others who fund
them (asset management projects) or developed in joint ventures
with their own financing arrangements.
On 25 January 2023, Inland Homes PLC announced that it is
seeking waivers of covenant breaches from two lenders owed a
combined GBP49.3m; stating that: Whilst the board believes that
these waivers will be forthcoming, they consider that if required,
these borrowings can be refinanced. Positive discussions are
progressing with the lenders to procure the waivers. The financial
statements do not include the adjustments that would result if the
Company were unable to continue as a going concern. At the time of
approving the financial statements and after making the appropriate
enquiries, the Directors have a reasonable expectation that the
Company has adequate resources to continue in operational existence
for the foreseeable future.
As the recoverability of the intercompany receivable in April
2024 and by association the Company's ability to meet its repayment
obligations in April 2024 is dependent on the Group continuing in
operation as a going concern these matters indicate the existence
of a material uncertainty which may cast significant doubt on the
Company's ability to continue as a going concern. The Directors
therefore consider it appropriate to prepare the financial
statements on the going concern basis. The auditors' report on the
accounts for the year ended 30 September 2022, which contains a
statement of material uncertainty relating to the going concern
basis of preparation, is unqualified.
Additionally, the Group has budgeted and forecast completion of
both planned land sales in the course of the next twelve months as
part of its normal course of business alongside forecasting
expected legal completions of house sales and commercial units
which underpin it to continue trading as a going concern. The
payment of the Final Capital Entitlement to ZDP Shareholders is
expected to be funded through a combination of surplus operating
cash and refinancing. If the former is available prior to 10 April
2024, it could be used to buy ZDP Shares in the market.
The Company's constitution and arrangements with Inland contain
commitments to pledge Assets with a book value of at least 120% of
the accrued amount due to ZDP Shareholders, less any Pledged Cash
(which was satisfied at 30 September 2022); and to satisfy an Asset
Cover covenant whereby Assets (broadly tangible assets less trade
creditors) divided by Financial Indebtedness (including the Final
Capital Entitlement of the ZDP Shares) exceed 1.8. The Group's
annual results for the year to 30 September 2022 are expected to be
announced at the end of February 2023 following completion of the
audit. As the Asset Cover of the ZDP Shares is derived from the
Group's consolidated financial statements, the following cover
ratio is subject to adjustment. If any such adjustment is material
the updated cover ratio will be announced. As at 30 September 2022
the Cover Ratio was 2.44 (30 September 2021 2.54).
Enquiries:
Inland ZDP PLC
Nishith Malde FCA Tel: 01494 762450
INLAND ZDP PLC
AUDITED RESULTS FOR YEARED 30 SEPTEMBER 2022
Strategic report
The Company and the Group
The Company is a specialist funding vehicle only and has no
business, operations or employees of its own. It has issued
18,101,857 zero dividend shares ("ZDP shares") at various prices
between 20 December 2012 and 19 November 2019, raising GBP22.28m
cash which has been lent to its holding company, Inland Homes plc
("Inland").
ZDP shares are Listed and traded on the Main Market of the
London Stock Exchange and are due to be redeemed for 201.4p cash
per ZDP share (GBP36.45m in total) on 10 April 2024, when the
Company will be liquidated unless proposals to extend its life have
been approved by holders of all its classes of shares.
The Inland Homes group (the "Group") has an extensive network of
relationships which enable it to identify potentially attractive,
primarily brownfield, residential and mixed-use property
development opportunities and has an outstanding 100% track record
in successfully achieving planning consents on its brownfield
sites.
Initially the Group sold most of its consented plots to major
housebuilders, but in recent years, its business model has changed
to include construction activity, selling completed homes or
selling plots to BTR (Build to Rent) operators and housing
associations with construction contracts.
The Group has relationships with investors with whom it can
develop sites through separately funded joint ventures or source or
generate fees for managing developments funded by the investors.
During recent years, a higher proportion of its projects have been
pursued on an asset management basis resulting in significant
reductions in the Group's borrowing requirements as owned sites and
completed homes are sold.
The Company's participation in the Group's funding
arrangements
The Group has a range of borrowing arrangements, including the
loan from the Company, with the following aims:
-- spreading maturity dates over time, reducing the impact of
refinancings falling due when fluctuating credit market conditions
are difficult;
-- avoiding excessive dependence on any single lender;
-- achieving a balance between fixed and floating interest rates;
-- ensuring that the security arrangements and covenants
applicable to individual loans are mutually compatible.
Inland Homes plc has entered into contractual commitments to the
Company and is obliged to meet all the Company's costs and
expenses, grant and maintain first charge security to the Company
over tangible assets with a book value of 120% of the accrued value
of the ZDP shares, less Pledged Cash; and abide by asset cover
covenants which are tested quarterly. Under the Contribution
Agreement, Inland is obliged to ensure that the Company has
sufficient cash to pay the Final Capital Entitlement (201.4p per
ZDP share) on the redemption date.
Principal risks and uncertainty and risk management
The Board believes that the principal risk faced by the Company
is the credit risk associated with the loan made to Inland.
The specific risks faced by Inland, which may impact the credit
risk the Company has with the loan made to Inland, are included
within its financial statements. These principally comprise:
adverse economic conditions affecting the housing market and the
propensity of people to buy homes; adverse changes to government
policy and planning regulations; failure to effectively manage
major projects to industry standard margins; the inability to
retain or source high calibre and experienced staff; solvency and
difficulty in procuring borrowing facilities at competitive rates
and maintain sufficient cash headroom; access to site labour and
materials; inability to source and develop suitable land at the
appropriate cost and quantity; health and safety risks; cyber and
business continuity risks; climate-related risk and the risk of a
major incident impacting the UK (e.g. pandemic).
The Directors of the Company are also directors of other
companies in the Inland Group and are therefore in a position to
assess the recoverability of amounts due from Inland.
The Company is also exposed to risks in relation to its
financial instruments. Further details of these risks and the way
in which they are managed are contained in note 9 of the financial
statements.
The Company is reliant on Inland's ability to finance the
redemption of the ZDP shares on 10 April 2024. Although the Group
announced significant expected losses for the year to 30 September
2022, it continues (with some short term fluctuations) to realise
cash and reduce debt as a result of adopting a less cash intensive
business model whereby developments are promoted and managed by the
Group on behalf of others who fund them (asset management projects)
or developed in joint ventures with their own financing
arrangements.
On 25 January 2023, Inland Homes PLC announced that it is
seeking waivers of covenant breaches from two lenders owed a
combined GBP49.3m; stating that: Whilst the board believes that
these waivers will be forthcoming, they consider that if required,
these borrowings can be refinanced. Positive discussions are
progressing with the lenders to procure the waivers. This material
uncertainty is reflected in the basis of preparation of the
financial statements and the audit report. See the Chairman's
statement for further comment about this risk.
Risk and Consequences of risk Existing mitigations
description and internal controls
Counterparty -- Severe impact on -- Regular review
loan cash flow at Board level of
risk detailed cash flow
A decline in the * Fees and penalty interest rates may become payable to forecasts which are
creditworthiness lenders in respect of any breach and, if breaches are subject to sensitivity
of Inland could not waived, a need to refinance the relevant analysis
lead borrowings may arise
to an inability * Inland seeks to maintain good relationships with its
to lenders and seeks to obtain waivers of any
repay the loan anticipated or actual covenant breaches at the
made earliest opportunity.
by the Company.
------------------------------------------------------------ ------------------------------------------------------------
Asset value risk
The realisable * Potential delays in recovering value for the Company * If any other party institutes insolvency proceedings
value if Inland becomes insolvent and potential shortfall against any Inland Group company holding a Pledged
of the Group's in the amounts recovered Asset or gives notice of an intention to do so, the
assets, Company has the right to enforce its security over
including assets certain Pledged Assets and take steps to realise them
pledged in an orderly manner over time to maximise recovery.
to the Company, * In the case of Pledged Assets which comprise amounts The recoverability of amounts due from joint venture
could due from property joint ventures, there could be companies may be subject to satisfying claims of that
be difficult to delays while the relevant joint venture company company's other lenders.
realise realises cash from its property development activity
rapidly in a or is able to refinance its borrowings to repay the
forced Company, with a risk of a potential shortfall in the
sale situation amounts recovered.
and
achieve prices
which
are
significantly
below the prices
achievable
in the ordinary
course
of business.
------------------------------------------------------------ ------------------------------------------------------------
Key performance indicators
The key performance indicators used by the Board to measure the
Company's success are the asset cover (which is calculated on a
Group basis, described in more detail in the chairman's statement,
but broadly comprises tangible gross assets at book value less
trade creditors and deferred consideration liabilities for land
purchases up to 60 per cent. of the total consideration; divided by
Financial Indebtedness, which includes the ZDP Final Redemption
Liability, borrowings repayable prior to 10 October 2024 and
deferred consideration in excess of 60% of the total consideration
payable for land), the asset value per ZDP share, the accrued
capital entitlement and the price of the ZDP shares.
The Group's annual results for the year to 30 September 2022 are
expected to be announced at the end of February 2023 following
completion of the audit. As the Asset Cover of the ZDP Shares is
derived from the Group's consolidated financial statements, the
figures below are subject to adjustment. If any such adjustment is
material the updated cover ratio will be announced.
30 September 30 September
2022 2021
Asset cover 2.44 2.54
Asset value per ZDP share 186.19p 176.86p
Accrued capital entitlement per 185.62p 175.96p
ZDP share 174.00p 168.50p
ZDP share price
-------------------------------- ------------- -------------
The asset value and the accrued capital entitlement will
continue to increase as the repayment date approaches. The book
value of ZDP shares in the financial statements is derived from the
various issue prices using the effective interest method, whereas
the accrued capital entitlement is based on the initial issue price
(100p) and its accrual at 7.3% per annum from the initial issue
date (12 December 2012) to 148.8p on 13 August 2013, when an
extension of the redemption date was approved, subsequently
accruing at 5.5% to 10 April 2024. The redemption price is not
affected by the prices of subsequent issues. As at the repayment
date, the book value and accrued capital entitlement will be equal
to one another.
The ZDP share price increased by 4% to 181p during the first
half of the financial year and remained at that level for the
following five months. During September 2022 the ZDP share price
dropped to a low point of 171.5p in the context of an announcement
by Inland of poorer performance than the market had been expecting
for the year to 30 September 2022 and a possible breach of a
banking covenant. Having recovered a little in the interim, the ZDP
Share price dropped to a closing price of 121p when Inland
announced losses and breaches of loan covenants on 25 January
2023.
Chairman's statement
I am pleased to present the Company's annual report and
financial statements for the year ended 30 September 2022.
The Company is a wholly owned subsidiary of Inland Homes 2013
Limited which is a wholly owned subsidiary of Inland Homes plc
("Inland") and was established solely for the purpose of issuing
ZDP shares and lending the proceeds to Inland.
The financial statements have been produced on a going concern
basis, on the assumption that the breaches by the Group of loan
covenants can be remedied by agreeing the terms of waivers with the
relevant lenders or refinancing their debt. If neither is achieved,
the going concern basis would no longer be appropriate and many of
the Group's asset values could be seriously impaired, including the
value of the Pledged Assets, the most significant of which is a
loan to a property joint venture the value of which could be
significantly reduced if Inland became insolvent.
Accordingly the ZDP Share price is likely to be influenced by
Inland's announcements relating to the above, whether upwards on
remedying the covenant breaches or downwards if that is not
achieved.
The original 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 and pledged cash in a charged
bank account. The pledged assets (currently primarily interests in
a property development joint venture) 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 September 2022, the accrued amount due to
ZDP shareholders was GBP33,601,021 (30 September 2021:
GBP31,852,736), the pledged cash was GBP4,245,826 (30 September
2021: GBP7,327,479) and the pledged assets had a book value of
GBP38,994,874 (30 September 2021: GBP36,962,175), thereby
satisfying this requirement.
The loan agreement also contains a covenant relating to asset
cover, which is shown below as at 30 September 2022. The
definitions of Assets and Financial Indebtedness, which apply to
the Group as a whole, are set out in the prospectus published in
connection with the issue of the ZDP shares amended as shown in the
Continuation Circular dated 19 July 2018 which is available at
https://www.inlandhomesplc.com/media/2014/inland-zdp-plc-continuation-circular.pdf
. The definition of Financial Indebtedness excludes indebtedness
which falls due more than 6 months after the final ZDP Repayment
Date of 10 April 2024.
Asset cover:
As explained in the Strategic Report above, the Asset cover
ratio as at 30 September 2022 is subject to adjustment:
Assets / Financial Indebtedness plus ZDP Final Redemption
Liability = 2.4 times cover (30 September 2021: 2.5 times
cover).
The asset cover should be at least 1.8 times, so this covenant,
which is tested quarterly, was satisfied at 30 September 2022. It
has been satisfied on all testing dates since the initial issue of
ZDP Shares.
The return to maturity of a ZDP Share based on the mid market
closing price as at 30 January 2023 (132p) was 42.5 per cent.
The Board believes that the use of book values for security and
asset cover covenants is generally conservative on a going concern
basis, because a 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. However, forced sale values
could be significantly lower.
The Hurdle Rate by which the consolidated values of the Group's
Assets would need to decrease before 10 April 2024, if Inland's
Assets are to remain sufficient to cover the Final Capital
Entitlement and its net debt (calculated from book values as at 30
September 2022, but excluding intangible assets) is -46.3%.
The Group has adopted a less capital intensive business model
over recent years. New developments are primarily funded by asset
management clients (who buy the sites and pay fees to the Group for
managing their planning and development) or by independently
financed joint ventures. This business model has resulted in
significant repayment of debt as the Group's owned development
sites and completed homes were sold. This process is ongoing and,
notwithstanding the losses incurred by the Group in the year to 3 0
September 2022, the Group's plan is to continue to generate cash as
the redemption date of the ZDP shares in April 2024 draws nearer.
The payment of the Final Capital Entitlement to ZDP Shareholders is
expected to be funded through a combination of surplus operating
cash and refinancing. If the former is available prior to 10 April
2024, it could be used to buy ZDP Shares in the market.
Stephen Wicks and Gary Skinner resigned from the Company's Board
when they left the Group and Desmond Wicks has been appointed as a
director. Stephen Wicks was a joint founder of Inland and had been
chief executive of the Group since its inception. He remains a
consultant to the Group until 30 September 2023. Gary Skinner was
managing director of the Group. I thank them for their service to
the Company and welcome Desmond Wicks to the Board.
Nishith Malde
Chairman
31 January 2023
Financial statements
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 30 SEPTEMBER 2022
Year Year
ended ended
30 September 30 September
2022 2021
Continuing operations Note GBP000 GBP000
--------------------------------------------- ----- ------------- --------------
Revenue
Interest income 2 1,689 1,635
--------------------------------------------- ----- ------------- --------------
Total income 1,689 1,635
Expenditure
Expenses 3 - -
--------------------------------------------- ----- ------------- --------------
Total expenditure - -
Profit before finance costs and
taxation 1,689 1,635
Finance costs 4 (1,689) (1,635)
Profit before tax -
Income tax 5 - -
--------------------------------------------- ----- ------------- --------------
Result for the year and total comprehensive - -
income
--------------------------------------------- ----- ------------- --------------
Earnings per share for result attributable
to the equity holders of the company
during the year 6 0.0p 0.0p
--------------------------------------------- ----- ------------- --------------
The accompanying accounting policies and notes form an integral
part of these financial statements.
STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2022
30 September 30 September
2022 2021
Notes GBP000 GBP000
--------------------------------- ------ ------------- --------------
Non-current assets
Intercompany receivable 9,11 33,754 32,065
33,754 32,065
Non-current liabilities
Zero Dividend Preference Shares 7 (33,704) (32,015)
--------------------------------- ------ ------------- --------------
(33,704) (32,015)
--------------------------------- ------ ------------- --------------
Net assets 50 50
--------------------------------- ------ ------------- --------------
Equity
Ordinary share capital 8 50 50
--------------------------------- ------ ------------- --------------
Total equity 50 50
--------------------------------- ------ ------------- --------------
The accompanying accounting policies and notes form an integral
part of these financial statements.
STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 SEPTEMBER 2022
Share
capital Total
GBP000 GBP000
----------------------------------------------- -------- -------
At 1 October 2020 50 50
Result and total comprehensive income for the
year - -
At 30 September 2021 50 50
----------------------------------------------- -------- -------
Result and total comprehensive income for the - -
year
----------------------------------------------- -------- -------
At 30 September 2022 50 50
----------------------------------------------- -------- -------
The accompanying accounting policies and notes form an integral
part of these financial statements.
STATEMENT OF CASH FLOWS
FOR THE YEARED 30 SEPTEMBER 2022
Year ended Year ended
30 September 30 September
2022 2021
GBP000 GBP000
-------------------------------------------- ------------- -------------
Cash flow from operating activities
Profit for the year / period before tax - -
Adjustments for:
- interest expense 1,689 1,635
- interest and similar income (1,689) (1,635)
Net cash flow from operating activities - -
-------------------------------------------- ------------- -------------
Net increase in cash and cash equivalents - -
Net cash and cash equivalents at beginning
of the year - -
-------------------------------------------- ------------- -------------
Net cash and cash equivalents at the
end of the year - -
-------------------------------------------- ------------- -------------
The accompanying accounting policies and notes form an integral
part of these financial statements.
NOTES TO THE FINANCIAL STATEMENTS
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 statements have been prepared in accordance with
the Companies Act 2006 and UK adopted International Accounting
Standards in conformity with the requirements of the Companies Act
2006. The principal accounting policies adopted by the Company are
set out below.
The financial statements are prepared in sterling, which is the
functional currency of the Company. Monetary amounts in these
financial statements are rounded to the nearest GBP'000.
These accounting policies comply with each accounting standard
that is mandatory for accounting year ended 30 September 2022.
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.
The Company's business activities principal risks and
uncertainty, and risk management are set out in the strategic
report. The Company is reliant on the ability of Inland Homes plc
to continue as a going concern as detailed in the strategic report.
Further disclosures regarding the Company's financial instruments
and exposure to credit and liquidity risk are set out in note 9 of
the Financial Statements.
Given the dependency on Inland Homes plc, details regarding
their going concern assumptions are given below.
Going concern
The Directors are required to assess the Company's ability to
continue as a going concern for a period of at least the next
twelve months however, having regard to the fact that the Company
has 18,101,857 ZDP shares in issue as at 30 September 2022 which
are due for repayment on 10 April 2024, the assessment considers
the ability of the Company to remain a going concern up to the date
that the shares fall due for repayment.
The going concern assessment considers the Company's principal
risks and the ability to operate within the financial covenants of
the ZDP shares. The ZDP shares and associated loan documentation
impose a number of covenants that must be complied with which are
discussed within the Chairman's Statement. As at 30 September 2022
the Company is compliant with all covenants and there are no
forecast covenant breaches in the going concern period.
In addition as Inland Homes plc ("the Group") is responsible for
all the Company's liabilities including its obligations to ZDP
Shareholders, pursuant to the Loan Note and Contribution Agreement,
the Directors have due regard to the financial position of the
Group as at the date of approving these accounts. The Group has
recently announced anticipated losses of approximately GBP91m for
the financial year ended 30 September 2022 and that it is in breach
of certain borrowing covenants with two separate lenders. The
Group's Board believes that these waivers will be forthcoming, and
the Group has received written notification that one of the
lenders' credit teams have approved the waivers. However, at the
date of this report neither lender has contractually waived these
covenant breaches. Should the waivers not be obtained, the
Directors understand the Group would aim to refinance the GBP49.3m
debt. As the recoverability of the intercompany receivable in April
2024 and by association the Company's ability to meet its repayment
obligations in April 2024 is dependent on the Group continuing in
operation as a going concern these matters indicate the existence
of a material uncertainty which may cast significant doubt on the
Company's ability to continue as a going concern. The financial
statements do not include the adjustments that would result if the
Company were unable to continue as a going concern. At the time of
approving these financial statements and after making the
appropriate enquiries, the Directors have a reasonable expectation
that the Company has adequate resources to continue in operational
existence for the foreseeable future. The Directors therefore
consider it appropriate to prepare the financial statements on the
going concern basis.
1.2 Income
Finance income is calculated on the amount lent to Inland and
represents the difference between the amounts advanced (which was
equal to the proceeds on the issue of zero dividend preference
shares) and the final amounts due (which is equal to the liability
payable on redemption of the zero dividend preference shares). It
is recognised as revenue as interest income over the term of the
zero dividend preference shares using the effective interest
method.
1.3 Expenses
All expenses are borne by the Company's parent company, Inland
Homes 2013 Limited.
1.4 Zero dividend preference shares
Zero dividend preference shares are recognised as liabilities in
the Statement of Financial Position in accordance with IFRS 9:
Financial Instruments. After initial recognition, these liabilities
are measured at amortised cost, which represents the initial
proceeds of the issuance plus the accrued interest based on the
effective interest method to 30 September 2022.
1.5 Intercompany receivable
Intercompany receivables are recognised as assets in the
Statement of Financial Position in accordance with IFRS 9:
Financial Instruments. After initial recognition they are measured
at amortised cost which represents the initial loan plus the
accrued interest receivable at the reporting date. Directors have
assessed intercompany receivables to meet the requirements under
the business model test and SPPI test. The objective of the
business model is to hold financial assets to collect their
contractual cash flows. The cash flows are solely payments of
principal and interest on the principal amounts outstanding.
The Company applies the general approach to providing for
expected credit losses prescribed by IFRS 9 for intercompany
receivables. The expected credit loss provision in the current year
and prior period have been assessed as GBPnil.
Pursuant to a loan agreement between the Company and Inland, the
Company has lent Inland the gross proceeds of its placings. This
loan is on terms requiring its repayment by Inland to the Company
on the ZDP shares repayment date when the company must be wound
up.
1.6 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.
1.7 Taxation
The charge for taxation is based on the taxable profits for the
year. 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.
1.8 Equity
An equity instrument is a contract which evidences a residual
interest in the assets after deducting all liabilities. Equity
comprises 'Share capital', which represents the nominal value of
equity shares.
1.9 Key assumptions
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.
Judgement is required in assessing the recoverability of the
intercompany receivable. Recoverability is underpinned by the
profitability of Inland's development and strategic land sites,
notwithstanding the losses incurred in relation to construction
activity in addition to which the guarantee from Inland in the
Contribution Agreement and the first charge security over Pledged
Assets enhance the prospect of recovery in the event of Inland
becoming insolvent.
1.10 Segment information
In accordance with IFRS 8, 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 lend the proceeds of share issues to Inland and provide the
final capital entitlement of the Company's ZDP shares to the
holders of the ZDP shares at the final repayment date of 10 April
2024. Consequently, all information presented in these financial
statements relate to that segment.
2 Interest income
Year ended 30 September 30 September
2022 2021
GBP000 GBP000
----------------------------------------- ------------- -------------
Interest income from group undertakings 1,689 1,635
----------------------------------------- ------------- -------------
3 Expenses
Administration expenses of GBPnil were suffered during the year
(period ended 30 September 2021: GBPnil). All administration
expenses during the year, including auditors' remuneration of
GBP30,000 (2021 GBP25,000), were borne by the ultimate parent
Company, Inland Homes plc and have not been recharged to the
Company. The directors received no remuneration for their services
in relation to Inland ZDP PLC. Further disclosures with regards to
the auditors' remuneration can be found in the group financial
statements.
There were no employees other than directors in the current year
or the prior year.
4 Finance costs
Year ended 30 September 30 September
2022 2021
GBP000 GBP000
----------------------------------- --------------- ---------------
ZDP share finance costs 1,689 1,635
----------------------------------- --------------- ---------------
5 Taxation
Year ended 30 September 30 September
2022 2021
GBP000 GBP000
------------------------------------------ --------------- ---------------
Result before tax - -
------------------------------------------ --------------- ---------------
Result on ordinary activities multiplied
by the standard
rate of corporation tax in the UK
of 25.00% (2021: 19.00%)
ZDP share interest costs disallowed - -
Group relief 422 310
(422) (310)
------------------------------------------ --------------- ---------------
Tax charge - -
------------------------------------------ --------------- ---------------
6 Earnings per ordinary share
The calculation of earnings per share is based on a result after
tax figure for the year of GBPnil (year ended 30 September 2021:
GBPnil) and the weighted average number of 50,000 ordinary shares
in issue during the year. The basic and diluted earnings per share
are the same.
7 Zero dividend preference shares
Year ended 30 September 30 September 30 30
2022 2022 September September
2021 2021
No. GBP000 No. GBP000
----------------------- ------------------ ------------- ------------------ -------------
ZDP shares
Opening ZDP shares 18,101,857 32,015 18,101,857 30,235
Issue costs adjustment - - - 145
ZDP share interest
cost - 1,689 - 1,635
----------------------- ------------------ ------------- ------------------ -------------
18,101,857 33,704 18,101,857 32,015
----------------------- ------------------ ------------- ------------------ -------------
During the year ended 30 September 2021 certain ZDP Share issue
costs included in the book value brought forward were charged to
the intercompany account between the Company and Inland because
they were borne by Inland under the Contribution Agreement.
8 Ordinary share capital
Authorised/called up/allotted/fully paid
At 30 At 30 At 30 September At 30
September September 2021 September
2022 2022 2021
No. GBP000 No. GBP000
------------------------- ----------- ----------- ---------------- -----------
Opening ordinary shares 50,000 50 50,000 50
Issued during the year - - - -
------------------------- ----------- ----------- ---------------- -----------
50,000 issued ordinary
shares of GBP1 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
financial assets classified as amortised cost.
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
At 30 September At 30 September
2022 2021
GBP000 GBP000
------------------------ ------------------- -------------------
ZDP shares final ZDP shares final
redemption figure redemption figure
Less than one year - -
More than one year and
less than five years 36,457 36,457
Over five years - -
------------------------ ------------------- -------------------
36,457 36,457
------------------------ ------------------- -------------------
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 tangible
assets (such as property and interests in property development
joint ventures) 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:
Amortised Cost
At 30 September 2022 2021
GBP000 GBP000
---------------------------------- ------- ----------------
Amounts due from ultimate parent
company 33,754 32,065
---------------------------------- ------- ----------------
The directors consider the carrying amounts to be a reasonable
approximation of fair value.
The Company applies the general approach to providing for
expected credit losses prescribed by IFRS 9 for amounts due from
ultimate parent Company. There were no expected credit loss
provisions in the current year and prior period. The security that
is pledged is more than sufficient to cover the amounts due. The
Directors have assessed a possible downturn in the value of the
pledged assets by 10% (being a reduction of GBP4.21m) and following
that assessment no credit loss, as defined by IFRS 9, would
arise.
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 Level Level
1 2 3 Total
GBP000 GBP000 GBP000 GBP000
------------------------------- ------- ------- ------- -------
Net fair value at 1 October
2021 30,502 - - 30,502
Fair value movements during
the year 995 - - 995
------------------------------- ------- ------- ------- -------
Net fair value at 30 September
2022 31,497 - - 30,502
------------------------------- ------- ------- ------- -------
Level Level Level
1 2 3 Total
GBP000 GBP000 GBP000 GBP000
------------------------------- ------- ------- ------- -------
Net fair value at 1 October
2020 28,239 - - 28,239
Fair value movements during
the year 2,263 - - 2,263
------------------------------- ------- ------- ------- -------
Net fair value at 30 September
2021 30,502 - - 30,502
------------------------------- ------- ------- ------- -------
The ZDP shares are carried at their accrued value using the
effective interest method of 186.19p per share (30 September 2021:
176.86p) however their closing price on the main market of the
London Stock Exchange on 30 September 2022 was 174.0p (30 September
2021: 168.5p).
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 can be found within its financial statements
and include a target capital to overall financing ratio of over
40%.
The capital of the Company comprises 1,860,186 (ordinary shares
and ZDP preference shares) and the nominal value of these amounted
to GBP50,000 and GBP1,810,186 respectively.
11 Related party transactions
The loan to Inland is repayable along with all accrued interest,
together with a contribution for such amount that will result in
the Company having sufficient cash funds to satisfy the then
current, or as the case may be, final capital entitlement of the
ZDP shares on the ZDP repayment date or immediately upon an event
of default. At 30 September 2022, the total amount due from the
ultimate parent Company was GBP 33,754 ,000 (30 September 2021:
GBP32,065,000).
12 Ultimate controlling party
The directors regard Inland Homes plc as the ultimate parent and
controlling party.
13 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
quoted company whose shares are traded on the AIM market of the
London Stock Exchange. Copies of its annual report for the year
ended 30 September 2022 will be available to view on Inland's
website ( www.inlandhomesplc.com ) following their publication at
the end of February 2023.
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
PricewaterhouseCoopers LLP and their report was unqualified,
containing a statement of material uncertainty relating to the
going concern basis of preparation.
Publication of non-statutory accounts
The financial information for the years ended 30 September 2021
and 2022 in this announcement does not constitute the company's
statutory accounts for those years.
Statutory accounts for the year ended 30 September 2021 have
been delivered to the Registrar of Companies. The statutory
accounts for the year ended 30 September 2022 will be delivered to
the registrar of companies in due course.
The auditors' reports on the accounts for 30 September 2022 and
30 September 2021 were unqualified, and did not contain a statement
under 498(2) or 498(3) of the Companies Act 2006. The auditors'
report on the accounts for the year ended 30 September 2022
contains a statement of material uncertainty relating to the going
concern basis of preparation. The auditors' report for the year
ended 30 September 2021 did not draw attention to any matters by
way of emphasis.
A copy of the annual report will shortly be submitted to the
National Storage Mechanism and will be available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism and at the
Company's website:
http://www.inlandhomesplc.com/investors/inland-zdp/zdp-documents-and-accounts/
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END
FR WPUUUGUPWGRG
(END) Dow Jones Newswires
January 31, 2023 13:04 ET (18:04 GMT)
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