TIDMRGLZ
RNS Number : 3323A
Regional REIT ZDP PLC
11 September 2018
Regional REIT ZDP PLC
Interim Report
for the six months ended 30 June 2018 (Unaudited)
MANAGEMENT REPORT
Regional REIT ZDP PLC (the "Company"), is registered in England
and Wales. The Company is a wholly-owned subsidiary of Regional
Commercial Midco Limited ("Midco"), a company incorporated in
Jersey, which in turn is a wholly-owned subsidiary of Regional REIT
Limited (the "Group") a Guernsey incorporated company.
The Company is a public limited company with the sole purpose of
issuing zero dividend preference (ZDP) shares and has been engaged
in the single economic activity of raising funds in order to
provide financing to the Group.
The Company is managed by an independent board of non-executive
directors. The Company's entire ordinary share capital is owned by
Midco while the ZDP shares have a standard listing on the London
Stock Exchange. The Company's principal investment objective is to
provide the holders of the ZDP shares with a predetermined final
capital entitlement ("ZDP Capital Entitlement").
On the scheduled repayment date, 9 January 2019, the ZDP
shareholders are entitled to receive a final capital entitlement of
132.9 pence per ZDP share. This is an amount equal to 100 pence per
share, increased daily at an equivalent annual rate of 5.5% for the
period 10 January 2014 to 23 March 2017; for the period 24 March
2017 until 9 January 2019, the ZDP share equivalent annual rate is
6.5% per annum. At the time of maturity, it is expected that the
ZDPs will have a liability of GBP39.9m.
A Contribution Agreement between the Company and Midco provides
an undertaking to the Company that Midco will pay any costs and
expenses incurred by the Company and to enable the Company to
ensure that it will have in aggregate sufficient assets to satisfy
the final ZDP Capital Entitlement.
All of the directors are also serving directors of the Group and
therefore have an indirect interest in the undertaking entered into
by the Company and Midco.
Due to the Company's dependency on the Group, the principal risk
the Company faces is that Midco will not have sufficient resources
to meet the capital entitlement due to the ZDP shareholders. The
Directors are satisfied that this risk is mitigated by the
contribution agreement that was entered into by the Company and The
Conygar Investment Company PLC on 7 January 2014 (the "Contribution
Agreement"), and subsequently novated to Midco on 24 March 2017.
This agreement includes a guarantee by Regional REIT of all present
and future obligations of Midco under the Contribution
Agreement.
The principal risks and uncertainties the Group faces are
described in detail on pages 46 to 48 of the 2017 Annual Report,
which is available on the Group's website at www.regionalreit.com
and in the Group's recent prospectus issued on 19 July 2018. These
risks remain unchanged. The Board acknowledges its ultimate
responsibility for managing the risks associated with the
Company.
There was no change in the number of ZDP shares in issue during
the six months to 30 June 2018.
Position of the Company as at 30 June 2018
As at 30 June 2018, the Company maintained a good position and
the financing arrangements were performing as envisaged in the
listing prospectus of January 2014. The Group comfortably met all
of the conditions and obligations under the various arrangements.
These conditions are tested quarterly and no breaches have occurred
at any point since incorporation. The definitions and conditions of
issue are set out in the listing prospectus, a copy of which is
available on the Group's website at www.regionalreit.com.
As at 30 June 2018, the two primary covenants were:
1. Cover Test (not less than 3.5x) - Test Met at relevant times
in accordance with the Articles
Cover Test: Means the ratio of the Group Net Asset Value plus
the accrued Capital Entitlement to the ZDP Capital Entitlement must
not be less than 3.5 times.
2. Investment Property Cover Test (not less than 2.5x) - Test
Met at relevant times in accordance with the Articles
Investment Property Cover Test: Means the ratio of the aggregate
value of the Group's investment properties plus cash and cash
equivalents of any marketable securities to the ZDP Capital
Entitlement must not be less than 2.5 times.
Non-Going Concern basis
The Board is aware of the finite life of the Company which, in
accordance with its Articles of Association, will be wound up
following a general meeting to be held on 9 January 2019. As a
result of its finite life these accounts are prepared on a
non-going concern basis, however the Company is expected to
continue until the scheduled settlement of the final capital
entitlement of the ZDP shares, being 9 January 2019.
RESPONSIBILITY STATEMENT
The Directors confirm to the best of their knowledge that:
-- this condensed set of financial statements has been prepared
in accordance with International Accounting Standard 34, 'Interim
Financial Reporting', as adopted by the European Union, as required
by Disclosure Guidance and Transparency Rule DTR 4.2.4R, and gives
a true and fair view of the assets, liabilities, financial position
and loss of the Company; and
-- this Interim Report includes a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure Guidance and Transparency
Rules; being an indication of important events that have occurred
during the first six months of the financial year and their impact
on the condensed set of financial statements; and a description of
the principal risks and uncertainties for the remaining six months
of the financial year; and
(b) DTR 4.2.8R of the Disclosure Guidance and Transparency
Rules; being related party transactions that have taken place in
the first six months of the current financial year that have
materially affected the financial position or performance of the
Company during that period; and any changes in the related party
transactions described in the last annual report that could do
so.
This Interim Report was approved and authorised for issue by the
Board of Directors on 10 September 2018 and the above
responsibility statement was signed on its behalf by Mr William D
Eason, Chairman.
Unaudited Condensed Statement of Comprehensive Income
For the six months ended 30 June 2018
30 June 30 June Period to
31 December
2017
2018 2017 (audited)
(unaudited) (unaudited)
Note GBP'000 GBP'000 GBP'000
Administrative expenses 3 (34) (32) (71)
Operating loss (34) (32) (71)
Finance costs 4 (1,270) (1,119) (2,837)
-------------- -------------- --------------
Loss before taxation (1,304) (1,151) (2,908)
Taxation - - -
-------------- -------------- --------------
Total comprehensive loss for the
period (1,304) (1,151) (2,908)
============== ============== ==============
Basic and diluted earnings
per share 7 (2,608)p (2,302)p (5,815)p
============== =================== ==============
All of the activities of the Company are classed as
continuing.
The notes below form an integral part of these unaudited
condensed financial statements.
Unaudited Condensed Statement of Financial Position
As at 30 June 2018
30 June 30 June 31 December
2018 2017 2017
(unaudited) (unaudited) (audited)
Note GBP'000 GBP'000 GBP'000
Non-current assets
Amounts due from Midco 5 38,588 36,099 37,324
Prepayments 2 - -
Total assets 38,590 36,099 37,324
Current liabilities
Accrued administrative costs (18) (19) (22)
Non-current liabilities
Zero dividend preference shares 6 (38,522) (36,030) (37,252)
Total liabilities (38,540) (36,049) (37,274)
Net assets 50 50 50
=============== ================= ====================
Equity
Share capital 8 50 50 50
Capital contribution 9,345 6,790 8,041
Retained earnings (9,345) (6,790) (8,041)
Total equity 50 50 50
=============== ================= ====================
The notes below form an integral part of these unaudited
condensed financial statements.
The unaudited condensed financial statements were approved by
the Board and authorised for issue on 10 September 2018 and signed
on its behalf by Mr William D Eason, Chairman.
Unaudited Condensed Statement of Changes in Equity
For the six months ended 30 June 2018 (unaudited)
Share Capital Contribution Retained
Capital Earnings Total
GBP'000 GBP'000 GBP'000 GBP'000
Balance as at 1 January
2018 50 8,041 (8,041) 50
Total comprehensive loss for
the period - - (1,304) (1,304)
Contribution by Midco - 1,304 - 1,304
Balance as at 30 June 2018 50 9,345 (9,345) 50
==== ======== ============== ==========
For the six months ended 30 June 2017 (unaudited)
Balance as at 1 January
2017 50 5,639 (5,639) 50
Total comprehensive loss for
the period - - (1,151) (1,151)
Contribution by Midco - 1,151 - 1,151
Balance as at 30 June 2017 50 6,790 (6,790) 50
==== ======== ================ =========
For the period ended 31 December 2017 (audited)
Balance as at 1 October
2016 50 5,133 (5,133) 50
Total comprehensive loss for
the period - - (2,908) (2,908)
Contribution by Midco - 2,908 - 2,908
Balance as at 31 December
2017 50 8,041 (8,041) 50
==== ===================== ======== =========
The notes below form an integral part of these unaudited
condensed financial statements.
Notes to the Unaudited Condensed Financial Statements
For the six months ended 30 June 2018
1. General information
The Company was incorporated on 28 November 2013 and is
registered in England and Wales. The Company is a wholly-owned
subsidiary of Midco (the "Parent").
The financial information contained in this Interim Report does
not constitute statutory financial statements as defined in Section
434 of the Companies Act 2006.
The unaudited condensed financial statements are prepared for
the six-month period from 1 January 2018 to 30 June 2018. This
Interim Report has not been reviewed by the Company's Auditors.
The Company extended its accounting date in the previous
reporting period, from 30 September to 31 December, to match the
reporting dates of the Group. Comparative figures for June 2017
have therefore been adjusted from those in the June 2017 interim
report, to give comparatives in line with the current reporting
period.
2. Significant accounting policies
Basis of preparation
The financial statements have been prepared in accordance with
IAS 34, 'Interim Financial Reporting'. They do not include all of
the information required for full annual financial statements and
should be read in conjunction with the Company's 2017 Annual
Report. The accounting policies applied by the Company in the
Interim Report are the same as those that have been applied to the
2017 annual financial statements.
The annual financial statements of the Company are prepared in
accordance with International Financial Reporting Standards
('IFRS') as issued by the IASB.
The comparative figures for the financial year ended 31 December
2017 are not the Company's statutory accounts for that financial
year in accordance with section 434 of the Companies Act 2006. A
copy of the statutory accounts for that year has been delivered to
the Register of Companies. Those accounts have been reported on by
the company's auditors and delivered to the registrar of companies.
The report of the auditors was (i) unqualified, (ii) contained a
paragraph concerning the preparation of the financial statements on
a non-going concern basis, whereby the auditors drew attention to
this issue by way of emphasis without qualifying their report, and
(iii) did not contain a statement under section 498(2) or (3) of
the Companies Act 2006.
Non -going concern
The Board is aware of the finite life of the Company which, in
accordance with its Articles of Association, will be wound up
following a general meeting to be held on 9 January 2019. As a
result of its finite life these accounts are prepared on a
non-going concern basis. The Company is expected to continue until
the scheduled settlement of the final capital entitlement of the
ZDP shares, being 9 January 2019.
Key Estimates and Assumptions
Estimates and judgements used in preparing the financial
statements are continually evaluated and are based on historical
experience and other factors, including expectations of future
events that are believed reasonable. The resulting estimates will,
by definition, seldom equal the related actual results. There are
no estimates made in the preparation of these financial statements.
The Company relies upon the continuing support of the Group in
accordance with the Contribution Agreement.
Segmental reporting
The Directors are of the opinion that the Company is engaged in
a single economic and geographic segment of business primarily
being the raising of funds in order to provide financing to the
Parent.
Statement of cash flows
No cash flow statement is presented as all funding activities
are provided by the Parent.
3. Administrative expenses
Period to
31 December
2017
30 June 30 June (audited)
2018 2017
(unaudited) (unaudited)
GBP'000 GBP'000 GBP'000
Costs of meeting regulatory
obligations 34 32 71
=================== ============== ==============
4. Finance costs
Period to
31 December
2017
30 June 30 June (audited)
2018 2017
(unaudited) (unaudited)
GBP'000 GBP'000 GBP'000
Interest on ZDP shares 1,203 1,053 2,670
Amortisation of issue
costs 67 66 167
------------------- ----------------- -----------------
1,270 1,119 2,837
=================== ================= =================
5. Amounts due from Midco
30 June 30 June 31 December
2018 2017 2017
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Balance at start of period 37,324 34,970 34,465
Loan repaid by Midco (40) (22) (49)
Additions under contribution
agreements 1,304 1,151 2,908
------------- ------------- ------------
Balance at end of period 38,588 36,099 37,324
============= ============= ============
Funds raised through the ZDP share issue, after the deduction of
issue costs of GBP668,286, totalled GBP29,331,714. The funds were
transferred to The Conygar Investment Company PLC as a non-interest
bearing loan repayable on demand in accordance with the Loan
Agreement dated 7 January 2014. The Loan Agreement was novated to
Midco on 24 March 2017.
The Contribution Agreement entered into by the Company and The
Conygar Investment Company PLC on 7 January 2014, was novated to
Midco on 24 March 2017. The agreement includes an undertaking by
Regional REIT to enable the Company to meet its payment obligations
in respect of the ZDP shares.
6. Zero dividend preference shares
30 June 30 June 31 December
2018 2017 2017
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Balance at start of period 37,252 34,911 34,415
Amortisation of issue costs 67 66 167
Accrued capital 1,203 1,053 2,670
------------- ------------- ------------
Balance at end of period 38,522 36,030 37,252
============= ============= ============
On 10 January 2014, the Company issued 30,000,000 ZDP shares at
GBP0.01 each per share. The ZDP shares have an entitlement to
receive a fixed cash amount on the maturity date of 9 January 2019,
but do not receive any dividends or income distributions.
Additional capital accrues to the ZDP shares on a daily basis at a
rate equivalent to 6.5% per annum post acquisition, 5.5% per annum
pre-acquisition, resulting in a final capital entitlement of 132.9
pence per share. The ZDP shares were listed on the London Stock
Exchange on 10 January 2014.
During the six months, the Company has accrued for GBP1,203,000
(six months to 30 June 2017: GBP1,053,000; 15 months ended 31
December 2017: GBP2,670,000) of additional capital. The total
amount repayable at maturity will be GBP39,879,269.
The ZDP shares do not carry the right to vote at general
meetings of the Company, although they carry the right to vote as a
class on certain proposals which would be likely to materially
affect their position. In the event of a winding-up of the Company,
the capital entitlement of the ZDP shares (except for any
undistributed revenue profits) will rank ahead of ordinary shares
but behind other creditors of the Company.
7. Earnings per share
The calculation of earnings per share is based on a loss after
tax figure for the period of GBP1,304,000 (30 June 2017:
GBP1,151,000; 31 December 2017: GBP2,908,000) and the weighted
average number of 50,000 ordinary shares (30 June 2017: 50,000; 31
December 2017: 50,000) in issue during the period. The basic and
diluted earnings per share are the same.
8. Share capital
The Company has 50,000 ordinary shares in issue of GBP1.00 each
and 30,000,000 zero dividend preference shares of GBP0.01 each.
9. Controlling and related parties
The Company is a wholly-owned subsidiary of Midco, which itself
is a wholly-owned subsidiary of Regional REIT Limited, which is the
ultimate controlling party.
The Company entered into a non-interest-bearing loan agreement
with The Conygar Investment Company PLC on 7 January 2014. The
obligations under that agreement were novated to Midco on 24 March
2017. As at 30 June 2018, the Group owed GBP38,522,000 (30 June
2017: GBP36,030,000; 31 December 2017: GBP37,252,000) to the
Company under the loan agreement.
As at 30 June 2018, the ZDP shareholders were owed
GBP38,592,000, including issue costs to be amortised amounting to
GBP70,000 (30 June 2017: GBP36,235,000 and GBP205,000; 31 December
2017: GBP37,389,000 and GBP137,000).
The Directors received no remuneration for their services to the
Company during the period.
DIRECTORS AND ADVISERS
Directors William Eason (Chairman)
Stephen Inglis (Non-Executive Director)
Tim Bee (Non-Executive Director)
Company Secretary Link Company Matters Limited
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
Registered Office Beaufort House
51 New North Road
Exeter
EX4 4EP
Registrar Share Registrars Limited
The Courtyard
17 West Street
Farnham
Surrey
GU9 7DR
Administrator Link Alternative Fund Administrators Limited
Beaufort House
51 New North Road
Exeter
EX4 4EP
Financial Adviser Peel Hunt LLP
& Broker Moor House
120 London Wall
London
EC2Y 5ET
Legal Adviser Macfarlanes LLP
20 Cursitor Street
London
EC4A 1LT
Auditor RSM UK Audit LLP
25 Farringdon Street
London
EC4A 4AB
COMPANY INFORMATION
ESMA Legal Entity 5493008P27MNKQPREM26
Identifier ("LEI")
Zero Dividend Preference Shares
The Company's ZDP shares are listed on the London Stock
Exchange. Information about the Company can be obtained on the
Group's website: www.regionalreit.com.
ISIN GB00BH4TCL65
Sedol BH4TCL6
Ticker RGLZ
Company Registration No: 08794437
Share registrar enquires:
The register for the ZDP shares is maintained by Share
Registrars Limited. In the event of queries regarding your holding,
please contact the Registrar on 01252 821390. Changes of name
and/or address must be notified in writing to the Registrar.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR SFDFMSFASELU
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