TIDMRMDZ TIDMRMDL
RNS Number : 7003T
RM ZDP PLC
29 March 2021
RM ZDP PLC
LEGAL ENTITY IDENTIFIER ('LEI'): 213800QYQTLY4A32F885
ANNUAL FINANCIAL REPORT ANNOUNCEMENT
For the year ended 31 December 2020
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
Year ended Year ended
31 December 31 December
2020 2019
------------------------------------------- ------------- -------------
Accrued capital entitlement per ZDP Share 109.86p 106.18p
ZDP Share redemption yield 3.5% 3.5%
CHAIR'S STATEMENT
I am pleased to present the Company's Annual Report and accounts
for the year ended 31 December 2020 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 2020 the accrued capital entitlement per ZDP
Share was 109.86p and the share price per ZDP Share was
107.50p.
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.
The key performance indicator against which the Board has
reviewed the Company's performance is set out on page 4.
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.
Norman Crighton
Chair
26 March 2021
BOARD OF DIRECTORS
Composition
At the date of this report, the Board consists of three
non-executive Directors including the Chair, two of whom are male
and one female. All the Directors have served during the entire
year since their appointment on 21 February 2018.
The Board believes that during the year ended 31 December 2020
its composition was appropriate for the Company's purpose.
The Directors have a broad range of relevant experience to meet
the Company's requirements and their biographies are given
below:
Norman Crighton (Non-executive Chair)
Norman is the Chair of Weiss Korea Opportunity Fund and AVI
Japan Opportunity Trust. Norman was, until May 2011, an Investment
Manager at Metage Capital Limited where he was responsible for the
management of a portfolio of closed-ended funds and has 30 years'
experience in closed-ended funds having worked at Olliff and
Partners, LCF Edmond de Rothschild, Merrill Lynch, Jefferies
International Limited and latterly Metage Capital Limited. His
experience in investment banking covers analysis and research as
well as sales, market making, proprietary trading and corporate
finance.
Guy Heald (Non-executive Director)
Guy has spent most of his career in banking, not only
specialising in markets, but also in general management positions
overseeing all aspects of banking, including lending. He worked in
London, New York and Tokyo and has an extensive knowledge of
companies needs for financing and managing interest rate, liquidity
and foreign exchange risks. During his career he worked for Brown
Shipley, Chemical Bank and HSBC where he held senior positions
including Head of Global Markets and Chief Executive Officer at
HSBC Japan. After leaving banking in 2003 he has served as an
adviser, non-executive director and trustee of several charities as
well as starting a number of successful family companies of his
own. The SME market is of particular interest to Guy, specifically
the challenges facing companies in their pursuit for growth, as he
invests venture and growth capital himself.
Marlene Wood (Non-executive Director and Chair of the Audit
Committee)
Marlene is a chartered accountant with a broad range of
experience in both the private and public sector and is currently a
Non-executive Director and Chair of the Audit Committee of GCP
Student Living plc and Home REIT plc.
Marlene has 20 years' experience in the commercial property
sector having been finance director for Miller Developments raising
finance for major property transactions both in the UK and Europe.
Her experience covers governance and risk management as well as
financial oversight and debt raising.
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 1st Floor, Senator House, 85 Queen Victoria Street, London, EC4V
4AB.
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 GBP274,000 (2019: loss of
GBP269,000).
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 2020, the total accrued
capital entitlement is GBP11,541,000, equivalent to 109.86p 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
2020 was GBP11.7 million based on 10.9 million ZDP Shares and at a
share price of 107.50p per ZDP share.
Current and future developments
The current and future developments of the Company are set out
in the Chair's statement on page 2 and 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 2020 were GBP132 million.
DIRECTORS' REPORT
The Directors present their report and accounts for the year
ended 31 December 2020. The Company commenced its operations on 3
April 2018 when its ZDP Shares were admitted to trading on the
London Stock Exchange.
Strategic report
The Directors' Report should be read in conjunction with the
Strategic Report on pages 4 to 5.
Directors and Share Interests
The Directors who served during the year, all of whom are
non-executive and were appointed with effect from incorporation on
21 February 2018 were as follows;
-- Norman Crighton (Chair)
-- Guy Heald
-- Marlene Wood
Since the Directors of the Company are also Directors of the
Parent, they are considered to be non-independent Directors of the
Company; however, in their capacity as Directors of the Parent,
each is considered to be independent. Biographies of each Director
are set out on page 3 and demonstrate the wide range of skills and
experience each brings to the Board.
A formal performance evaluation of the Parent Board and its
committees has been carried out and the Parent Board considers that
all of the Directors contribute effectively and have the skills and
experience relevant to the future leadership and direction of the
Parent.
The appointment and replacement of Directors are governed by the
Articles of association ("Articles"), the Companies Act 2006 and
related legislation. The Articles themselves may be amended by a
special resolution in a general meeting and at a class meeting of
the Company's shareholders.
Corporate governance
As set out in the Company's prospectus dated 12 March 2018, the
Company has a standard listing on the London Stock Exchange, so is
not obliged to comply with UK Corporate Governance Code, nor does
the Company intend to comply with it on a voluntary basis. In the
opinion of the Board, the interests of the Company and the
Shareholders are protected by the governance procedures adopted by
the Parent as set out in its Annual Report.
Legal status and listing rules requirements
The Company was incorporated in England and Wales as a public
company limited by shares under the Companies Act. The principal
legislation under which the Company operates is the Companies
Act.
The Company is admitted to the standard segment of the Official
Listing as such the Company is not subject to the ongoing
requirements applicable to premium-listed companies under the
Listing Rules.
Alternative Investment Fund Manager ("AIFM")
Pursuant to the AIFM Agreement, a summary of which is set out in
the Prospectus, the Company has appointed International Fund
Management Limited to act as the external non-EEA AIFM.
The AIFM acts as the Company's alternative investment fund
manager for the purposes of AIFMD and maintains responsibility for
implementing appropriate risk measurement and management standards
and procedures for the Company.
Under the terms of the AIFM Agreement, the AIFM is entitled to
receive a fixed fee of GBP3,000 plus reimbursement of all
out-of-pocket costs, expenses and charges reasonably and properly
incurred and documented on behalf of the Company.
Share issues
On incorporation, the issued share capital of the Company was
50,000 Ordinary Shares of a nominal value of GBP1.00 each which
were subscribed by the Parent and fully paid up.
The Company's sole purpose is to issue ZDP Shares, which were
issued at the Issue Price of 100 pence. The number of ZDP Shares to
be issued pursuant to the Initial ZDP Placing was limited to 20
million ZDP Shares. However, at a general meeting of the Company
held on 7 March 2018, a special resolution was proposed to, inter
alia, provide the Directors with authority to allot ZDP Shares and
authority to issue up to 60 million ZDP Shares. The Parent was the
only shareholder entitled to vote at the general meeting and, as a
result, such authority to issue up to 60 million ZDP Shares was
granted prior to the issue and allotment of ZDP Shares pursuant to
the Initial ZDP Placing and the ZDP Placing Programme.
Significant Agreements
The Company is not party to any significant agreements which
take effect after or terminate upon a change of control of the
Company, nor has the Company entered into any agreements with its
Directors to provide for compensation for loss of office.
Company Secretary & Administrator
PraxisIFM Fund Services (UK) Limited has been appointed as the
Company Secretary of the Company and in addition, as Administrator,
to provide administration services to the Company.
Capital structure and voting rights
At the year end, the Company's issued ordinary share capital
comprised 50,000 Ordinary Shares of GBP1.00 nominal value.
There were 10,869,950 ZDP Shares in issue at the year end.
The Company's Ordinary Shares to be held by the Parent are the
only voting shares in the Company, subject to certain matters which
require ZDP Shareholder approval. 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.
Anti-bribery and corruption
It is the Company's policy to conduct all of its business in an
honest and ethical manner. The Company takes a zero-tolerance
approach to bribery and corruption and is committed to acting
professionally, fairly and with integrity in all its business
dealings and relationships wherever it operates. The Company's
policy and the procedures that implement it are designed to support
that commitment.
Notice of general meetings
At least twenty-one days' notice shall be given to all the
members and to the auditors. All other general meetings shall also
be convened by not less than twenty-one days' notice to all those
members and to the auditors unless the Company offers members an
electronic voting facility and a special resolution reducing the
period of notice to not less than fourteen days has been passed, in
which case a general meeting may be convened by not less than
fourteen days' notice in writing. A special resolution will be
proposed at the Annual General Meeting to reduce the period of
notice for general meetings other than the Annual General Meeting
to not less than fourteen days.
Going concern
Given that the Company is due to pay its final capital
entitlement to the ZDP Shareholders (110.91 pence per ZDP Share) on
the ZDP Repayment Date of 6 April 2021 and the Company will be
placed into voluntary liquidation and wound up thereafter, the
Directors believe that it would not be reasonable to adopt the
going concern basis in preparing the financial statements.
Therefore, the financial statements have been prepared under a
basis other than going concern. The cost of liquidation will be
borne by the Parent Company and as such provision for the estimated
liquidation costs has not been provided for. Please refer to note 1
on page 23 of the accounting policies.
Auditor information
Each of the Directors at the date of the approval of this report
confirms that:
(i) so far as the Director is aware, there is no relevant audit
information of which the Company's auditors are unaware; and
(ii) the Director has taken all steps that he ought to have
taken as Director to make himself aware of any relevant information
and to establish that the Company's auditors are aware of that
information.
This confirmation is given and should be interpreted in
accordance with the provisions of Section 418 of the Companies Act
2006.
In accordance with Section 489 of the Companies Act 2006, an
ordinary resolution to re-appoint Ernst & Young LLP as the
Company's auditors will be put forward at the forthcoming Annual
General Meeting.
Dividends
The Directors do not recommend the payment of a final dividend
in respect of the year ended 31 December 2020.
Environmental matters
The Company has no greenhouse gas emissions to report from its
operations, nor does it have responsibility for any other emissions
producing sources under the Companies Act 2006 (Strategic Report
and Directors' Reports) Regulations 2013.
Employees
The Company has no employees. As at 31 December 2020 the Company
had three Directors of whom one is female and two are male.
Social, community and human rights issues
Having no employees, the Company, as an investment company, has
no direct impact on social, community, environmental or human
rights matters.
By order of the Board
Brian Smith
For and on behalf of
PraxisIFM Fund Services (UK) Limited
Company Secretary
26 March 2021
DIRECTORS' REMUNERATION POLICY AND REPORT
Remuneration Policy
None of the Directors will receive any remuneration from the
Company for their services. No Director has a service contract with
the Company and no Director is eligible for bonuses, pension
benefits, share options, long-term incentive scheme or other
benefits.
Remuneration in year
In line with the above policy, the directors did not receive any
remuneration or other benefits from the Company in the year ended
31 December 2020.
Norman Crighton
Chair
26 March 2021
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 financial
statements for each financial year. Under that law the directors
have elected to prepare the group and parent company financial
statements in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006.
Under the Financial Conduct Authority's Disclosure Guidance and
Transparency Rules, group financial statements are required to be
prepared in accordance with international financial reporting
standards (IFRSs) adopted pursuant to Regulation (EC) No 1606/2002
as it applies in the European Union.
-- 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.
For reasons stated in the Directors' Report and note 2, the
financial statements of the Company have been prepared on a basis
other than going concern.
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 2021
Statement of Comprehensive Income
For the year ended 31 December 2020
Year ended Year ended
31 December 31 December
2020 2019
Note GBP'000 GBP'000
----------------------------------------------- ----- ------------- -------------
Income
Investment income 3 229 220
Administrative expenses (73) (79)
Result from operating activities 156 141
Finance costs 6 (401) (386)
Loss before taxation (245) (245)
Taxation 4 (29) (24)
Loss after taxation (274) (269)
----------------------------------------------- ----- ------------- -------------
Return per Ordinary Share (pence) (5.48p) (5.38p)
----------------------------------------------- ----- ------------- -------------
There were no items of other comprehensive income in the current year
therefore the loss
for the year are also the total comprehensive
loss for the year.
The notes form an integral part of these financial statements.
Statement of Financial Position
As at 31 December As at 31 December
2020 2019
Note GBP'000 GBP'000
---------------------------------- ----- ------------------ ----------------------
Current assets
Financial assets at amortised
cost 3 11,942 11,541
Cash and cash equivalents 18 18
Trade and other receivables 172 105
Total current assets 12,132 11,664
---------------------------------- ----- ------------------ ----------------------
Total assets 12,132 11,664
---------------------------------- ----- ------------------ ----------------------
Current liabilities
Trade and other payables (140) (73)
Zero Dividend Preference Shares 6 (11,942) (11,541)
----- ----------------------
Total current liabilities (12,082) (11,614)
---------------------------------- ----- ------------------ ----------------------
Total liabilities (12,082) (11,614)
---------------------------------- ----- ------------------ ----------------------
Net assets 50 50
---------------------------------- ----- ------------------ ----------------------
Capital and reserves: equity
Share capital 8 50 50
Capital contribution 743 469
Profit and loss reserve (743) (469)
Total Shareholders' funds 50 50
---------------------------------- ----- ------------------ ----------------------
NAV per share - Ordinary Shares
(pence) 9 100.00p 100.00p
Capital Entitlement - ZDP Shares
(pence) 9 109.86p 106.18p
---------------------------------- ----- ------------------ ----------------------
The financial statements of the Company were approved and authorised
for issue by the Board of Directors on 26 March 2021 and signed on their
behalf by:
Norman Crighton
Director
The Company is registered in England and Wales with registered company
number 11217952.
The notes form an integral part of these financial statements.
Statement of Changes in Equity
For the year ended 31 December
2020
Capital Profit and
Share capital contribution loss Total
Note GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ------ -------------- -------------- ----------- --------
Balance as at beginning of
the year 50 469 (469) 50
Loss after taxation - - (274) (274)
Capital contribution - 274 - 274
Balance as at 31 December
2020 50 743 (743) 50
---------------------------------------- -------------- -------------- ----------- --------
For the year ended 31 December
2019
Capital Profit and
Share capital contribution loss Total
Note GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ------ -------------- -------------- ----------- --------
Balance as at beginning of
the year 50 200 (200) 50
Loss after taxation - - (269) (269)
Capital contribution - 269 - 269
Balance as at 31 December
2020 50 469 (469) 50
---------------------------------------- -------------- -------------- ----------- --------
Share capital represents the nominal value of the Company's Ordinary
Shares that have been issued.
The Capital contribution from Parent is to be utilised on current
and future obligations of the Company and may be not distributable
unless if required for the Company.
The notes form an integral part of these financial statements.
Statement of Cash Flows
For the year ended 31 December
2020
Year ended Year ended
31 December 31 December
2020 2019
Note
-------------------------------------- ------- ------------- ----------------
Operating activities
Result from operating activities 156 141
Increase in capital contribution
relating to operating expenses (156) (141)
Increase in receivables (67) (26)
Increase in other payables 67 26
Net cash flow from operating
activities - -
-------------------------------------- ------- ------------- ----------------
Increase in cash - -
Opening balance 18 18
-------------------------------------- ------- ------------- ----------------
Closing Balance 18 18
-------------------------------------- ------- ------------- ----------------
* There was no cash inflow from investment income during
the year.
The notes form an integral part of these financial statements.
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 ZDP Shares were admitted to the Official List of the
UK Listing Authority with a standard 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 1st Floor, Senator
House, 85 Queen Victoria Street, London, EC4V 4AB.
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 in accordance with international
accounting standards in conformity with the requirements of the
Companies Act 2006 ("IFRS") and the applicable legal requirements
of the Companies Act 2006.
(b) Going concern
Given that the Company is due to pay its final capital entitlement
to the ZDP Shareholders (110.91 pence per ZDP Share) on the ZDP
Repayment Date of 6 April 2021 and the Company will be placed into
voluntary liquidation and wound up thereafter, the Directors believe
that it would not be reasonable to adopt the going concern basis
in preparing the financial statements. The cost of liquidation will
be borne by the Parent Company as such provision for the estimated
liquidation costs has not been provided for. The accounts have been
prepared on a basis other than a going concern but the ZDP's shown
in the financial statements continue to be presented on an amortised
basis rather than a settlement basis. This is deemed appropriate
given the purpose of the Company being limited to the issuance of
ZDP shares. The capital entitlement attached to the ZDPs will continue
to be recognised until their maturity in April 2021. All other receivables
and cash are recognized at an equivalent to the realizable value
and payables at an equivalent to settlement value.
(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 financial
assets at amortised cost. ZDP Shares have been classified as financial
liabilities 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 Shareholders will rank in priority
to the capital entitlement of the Ordinary Shares as such ZDP Shares
are classified as a liability.
The accounts have been prepared on a breakup basis but the figures
shown in the financial statements continue to be presented on an
amortised basis rather than a settlement basis given the purpose
of the Company being limited to the issuance of ZDP shares.
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 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) Judgement, estimates and assumptions
There are no judgement, estimate and assumptions for the Company
that would have a significant impact on the financial statements.
(i) Capital contribution
Capital contribution(s) from the Parent to meet current and future
obligations of the Company are recognised directly in equity.
(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.
k) Adoption of new IFRS standards
A number of new standards, amendments to standards and
interpretations are effective for the annual periods beginning
after 1 January 2020. None of these are expected to have a
significant effect on the measurement of the amounts recognised in
the financial statements of the Company.
IFRS 9 Financial Instruments - Fees in the '10 per cent' test
for derecognition of financial liabilities
As part of its 2018-2020 Annual Improvements to IFRS standards
process, the IASB issued an amendment to IFRS 9. The amendment
clarifies the fees that an entity includes when assessing whether
the terms of a new or modified financial liability are
substantially different from the terms of the original financial
liability. The amendment is effective for annual reporting periods
beginning on or after 1 January 2022 with earlier adoption
permitted. This amendment is unlikely to have any impact on the
financial statements of the Company.
Amendments to IFRS 7, IFRS 9 and IAS 39 Interest Rate Benchmark
Reform
The amendments to IFRS7, IFRS 9 and IAS 39 Financial
Instruments: Recognition and Measurement provide a number of
reliefs, which apply to all hedging relationships that are directly
affected by interest rate benchmark reform. These amendments have
no impact on the financial statements of the Company.
A number of new standards, amendments to standards and
interpretations are not effective for the annual periods beginning
after 1 January 2020 and have not been applied in preparing these
financial statements and not expected to have a significant effect
on the financial statements of the Company.
3 Financial assets at amortised cost
As at 31 December As at 31
2020 December 2019
GBP'000 GBP'000
--------------------------------------------------- --------------------- ------------------
Loan to Parent 10,870 10,870
Investment income receivable 613 383
Capital contribution receivable 459 288
Closing balance 11,942 11,541
--------------------------------------------------- --------------------- ------------------
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 Loan
to parent on the date falling 2 Business Days before the ZDP Repayment
Date, provided that the Loan to Parent 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
Year ended Period ended
31 December 31 December
2020 2019
Analysis of tax charge for the year GBP'000 GBP'000
-------------------------------------------------- ------------------ ----------------
Corporation tax 29 24
Total tax charge for the year (see below
note) 29 24
-------------------------------------------------- ------------------ ----------------
Factors affecting the tax charge for
the year:
The effective UK corporation tax rate for the year is 19% (2019:19%).
The tax charge for the year can be reconciled to the return on ordinary
activities in the Statement of Comprehensive Income as follows:
Year ended Period ended
31 December 31 December
2019 2018
GBP'000 GBP'000
-------------------------------------------------- ------------------ ----------------
Return on ordinary activities before
taxation (245) (245)
UK corporation tax at 19% (47) (47)
Non-deductible expense 76 71
-------------------------------------------------- ------------------ ----------------
Total tax charge for the year 29 24
-------------------------------------------------- ------------------ ----------------
5. Basic and diluted loss per Ordinary Share
The calculation of loss per Ordinary Share is based on the net loss
for the year GBP274,000 (2019: GBP269,000) and a weighted average
number of 50,000 (2019:50,000) Ordinary Shares during the year.
6. Financial liabilities at amortised cost-Zero Dividend Preference
('ZDP') Shares
As at 31 December As at 31 December
2020 2019
GBP'000 GBP'000
------------------------------------------ --------------------- ------------------------
Opening balance 11,541 11,155
Accrued interest during the year 401 386
Closing balance 11,942 11,541
------------------------------------------ --------------------- ------------------------
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. The Parent Company incurred ZDP Shares issue cost of GBP129,000,
which has been amortised over the life of ZDP shares.
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 under the RCF and 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 in respect of the Company's financial statements for
the year ended 31 December 2020 are GBP7,000 (2019: GBP7,000)
(excludes VAT of GBP2,000).
8. Share capital
Authorised
As at 31 December 2020 As at 31 December 2019
Allotted, issued and fully Number of Nominal Number of Nominal
paid: shares GBP'000 shares GBP'000
-------------------------------- ------------ ------------ ------------ ------------
Ordinary Shares of GBP1
each 50,000 50 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 RM Secured Direct
Lending Plc, 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
Attributable
Shares in to Shareholders Capital entitlement NAV per
As at 31 December 2020 issue (GBP'000) per share (p) share (p)
----------- ------------------ --------------------- ------------
Ordinary Shares 50,000 50 n/a 100.00
Zero Dividend Preference
Shares 10,869,950 11,942 109.86 n/a
-------------------------- ----------- ------------------ --------------------- ------------
Attributable
Shares in to Shareholders Capital entitlement NAV per
As at 31 December 2019 issue (GBP'000) per share (p) share (p)
----------- ------------------ --------------------- ------------
Ordinary Shares 50,000 50 n/a 100.00
Zero Dividend Preference
Shares 10,869,950 11,541 106.18 n/a
-------------------------- ----------- ------------------ --------------------- ------------
10. Related parties
As at the year 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 year 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 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 a 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.
The total value of balances subject to credit risk is GBP11,942,000(2019:
GBP11,541,000) being the receivables due to the parent Company. 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. This has been assessed considering the net assets and revenue
forecasts of the Parent Company. 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. Having assessed
these factors and the credit-worthiness of the Parent Company, 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 Deed
of Undertaking (described in note 2 (b) above) and the capital contributions
received as sufficient in providing liquidity to the Company when
required.
The ZDP Shares capital entitlement amount of GBP12,055,000 will
be repayable on 6 April 2021.
(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 and short-term debtors
and creditors are estimated to be approximately equal to their carrying
values due to their short-term nature. The fair values of the financial
assets at amortised cost due from the parent under the loan agreement
and undertaking are also estimated to be approximately equal to their
carrying values. The 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 107.50 pence per share (2019: 105.50 pence per share) which
was observed on the London Stock Exchange on 31 December 2020 being
the last observable traded price before the year end.
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 classification of the Company's investments held at fair value
through profit or loss is detailed in the table below:
As at 31 December 2020 Level 1 Level 2 Level 3
GBP'000 GBP'000 GBP'000
Fair value
Financial liabilities at market value 11,685 -
=========== ========== ==============
Level 1 Level 2 Level 3
As at 31 December 2019 GBP'000 GBP'000 GBP'000
Fair value
Financial liabilities at market value 11,468 -
=========== ========== ==============
12. Subsequent events
There are no post balance sheet events since the year end.
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 year ended 31 December 2020, 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 year ended 31 December 2020 was
approved on 26 March 2020. It will be made available on the
Company's website at https://rmdl.co.uk/investor-centre/investor-relations/
The Annual Report will be submitted to the National Storage
Mechanism and will shortly be available for inspection at:
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
This announcement contains regulated information under the
Disclosure Rules and Transparency Rules of the FCA.
Secretary and registered office:
PraxisIFM Fund Services (UK) Limited
1st Floor, Senator House,
85 Queen Victoria Street,
London,
EC4V 4AB
For further information contact:
Brian Smith / Ciara McKillop
0204 513 9260
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END
FR SEAFMAEFSELD
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March 29, 2021 02:00 ET (06:00 GMT)
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