RMDZ.L Regulatory News (RMDZ)

Financial Information

Statement of Comprehensive Income

For the period from incorporation on 21 February 2018 to 31 December 2018

Period ended31 December 2018

Note

£'000

Income

Investment income

3 

163

Administrative expenses

(58)

Result from operating activities

105

Finance costs

6 

(285)

Loss before taxation

(180)

Taxation

 4

(20)

Loss after taxation and total comprehensive loss the for period

(200)

Return per Ordinary Share (pence)

(400.00p)

There were no items of other comprehensive income in the current period therefore the loss

for the period are also the total comprehensive loss for the period.

Statement of Financial Position

As at 31 December 2018

Note

£'000

Non-current assets

Financial assets at amortised cost

 3

11,155

Total non-current assets

11,155

Current assets

Cash and cash equivalents

18

Trade and other receivables

79

Total current assets

97

Total assets

11,252

Current liabilities

Trade and other payables

(47)

Total current liabilities

(47)

Non-current liabilities

Zero Dividend Preference Shares

6 

(11,155)

Total non-current liabilities

(11,155)

Total liabilities

(11,202)

Net assets

50

Capital and reserves: equity

Share capital

8 

50

Capital contribution

200

Profit and loss reserve

(200)

Total Shareholders' funds

50

NAV per share - Ordinary Shares (pence)

 9

100.00p

Accrued capital entitlement - ZDP Shares (pence)

 9

102.62p

The financial statements of the Company were approved and authorised for issue by the Board of Directors on 26 March 2019 and signed on their behalf by:

Norman Crighton

Director

The Company is registered in England and Wales with registered company number 11217952.

Statement of Changes in Equity

For the period from incorporation on 21 February 2018 to 31 December 2018

Share capital

Capital contribution

Profit and loss

Total

Note

£'000

£'000

£'000

£'000

Balance as at beginning of the period

-

-

-

-

Loss after taxation and total comprehensive loss the for period

-

-

(200)

(200)

Capital contribution

-

200

-

200

Issue of Ordinary Shares

8 

50

-

-

50

Balance as at 31 December 2018

50

200

(200)

50

Share capital represents the nominal value of the Company's Ordinary Shares that have been issued.

The Capital contribution from the Parent is to be utilised on current and future obligations of the Company.

Statement of Cash Flows

For the period from incorporation on 21 February 2018 to 31 December 2018

Period ended31 December 2018

Note

£'000

Operating activities

Result from operating activities*

105

Increase in capital contribution receivable

(122)

Decrease in receivables

43

Increase in other payables

27

Net cash flow used in operating activities

(32)

Investing activities

Loans to Parent Company

 3

(10,870)

Net cash flow used in investing activities

(10,870)

Financing activities

Proceeds from issue of ZDP shares

 6

10,870

Share issue proceeds

 8

50

Net cash flow from financing activities

10,920

Increase in cash

18

Opening balance at beginning of the period

-

Balance as at 31 December 2018

18

* There was no cash inflow from investment income during the period.

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 shares were admitted to the Official List of the UK Listing Authority with a premium 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 Mermaid House, 2 Puddle Dock, London, EC4V 3DB.

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 on a going concern basis in accordance with International Financial Reporting Standard ('IFRS') as adopted by the European Union and in accordance with Article 4 of the IAS Regulation and the Companies Act 2006 as applicable to companies using IFRS. The financial statements have been prepared on a historical cost basis.

(b) Going concern

The Directors have adopted the going concern basis in preparing the accounts. In order to be able to continue as a going concern, the Company relies on Parent Company to repay the loan and also adhere to the Deed of Undertaking as counterparty. As per the undertaking to the Company, the Parent will contribute (by way of gift, capital contribution or otherwise pay), funds to the Company to ensure that the Company has sufficient assets on the ZDP Shares repayment date to satisfy the ZDP Shares Capital Entitlement due and to pay any operational costs or expenses incurred by the Company.

The Directors are satisfied that the Company has sufficient resources to continue in operation for the foreseeable future, a period not less than 12 months from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

(c) Financial assets and liabilities at amortised cost-Loans made by the Company and ZDP SharesLoans made by the Company to its Parent are classified as financial assets 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 share holders will rank in priority to the capital entitlement of the Ordinary Shares as such ZDP Shares are classified as a liability.

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 in the Statement of Comprehensive Income on a time-apportioned 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) Judgements, estimates and assumptions

There are there no judgement, estimate and assumptions for the Company.

Critical judgements on interest rate on financial assets and liabilities -The Company entered into a Loan agreement with its Parent, which is subject to an interest rate of 2% compounded annually as disclosed in note 2c. This interest rate compared to the ZDP Shares interest rate of 3.5% compounded annually could result in a potential mismatch, which requires significant judgement.

(i) Capital contribution

Capital contribution(s) from the Parent to meet current and future obligations of the Company are recognised directly in Capital contribution.

(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.

3. Financial assets at amortised cost

 As at 31 December 2018

 £'000

Loans to Parent

10,870

Investment income during the period

163

Capital contribution receivable

122

Closing balance

11,155

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 ZDP Loan on the date falling 2 Business Days before the ZDP Repayment Date, provided that the ZDP Loan 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

 Period ended31 December 2018

Analysis of tax charge for the period

 £'000

Corporation tax

20

Total tax charge for the period (see note 4 (b))

20

(b) Factors affecting the tax charge for the period:

The effective UK corporation tax rate for the period is 19%. The tax charge for the period can be reconciled to the return on ordinary activities in the Statement of Comprehensive Income as follows:

 Period ended31 December 2018

 £'000

Return on ordinary activities before taxation

(58)

UK corporation tax at 19%

(34)

Effects of:

Non-deductible expenses

54

Total tax charge for the period

20

5. Basic and diluted loss per Ordinary Share

The calculation of loss per Ordinary Share is based on the net loss for the period of £200,000 and a weighted average number of 50,000 Ordinary Shares during the period.

6. Financial liabilities at amortised cost-Zero Dividend Preference ('ZDP') Shares

 As at 31 December 2018

 £'000

Opening balance

-

Issue proceeds of ZDP Shares

10,870

Accrued interest during the period

285

Closing balance

11,155

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 £10,869,950, which were allotted and fully paid up.

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 Bank under the revolving credit facility with OakNorth Bank 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.

8. Share capital

Authorised

 As at 31 December 2018

Allotted, issued and fully paid:

Number ofshares

 Nominal£'000

Ordinary Shares of £1 each

50,000

50

On incorporation, the Company issued 50,000 Ordinary Shares of a nominal value of £1.00 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 Parent, 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

As at 31 December 2018

Shares in issue

 Attributable to Shareholders (£'000)

 Capital entitlement per share (p)

 NAV per share (p)

Ordinary Shares

50,000

50

n/a

100.00

Zero Dividend Preference Shares

10,869,950

11,155

102.62

n/a

10. Related parties

As at the period end, the Parent Company held 50,000 Ordinary Shares of £1 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 period 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 the 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 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.

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. 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. Based on the overall performance 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 Undertaking and the capital contributions received as sufficient.

The contractual undiscounted maturity profile of the Company's financial assets and liabilities as follows:

As at 31 December 2018

 £'000

Financial assets at amortised cost

11,540

Capital contribution receivable

515

Zero Dividend Preference Shares

(12,055)

(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, prepayments and accrued expenses and other liabilities are estimated to be approximately equal to their carrying values due to their short-term nature. The fair values for the loan and receivables and 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 £102.50pence per share which was observed on the London Stock Exchange on 31 December 2018 being the last observable traded price before the year end. The Loan Agreement and Undertaking expire on the same date as the ZDP Repayment Date. Due to the dependence on the Parent Company to repay the Loan and provide the support to meet the Company's obligation to the ZDP share holders, the fair value of the Loan is estimated to be equal and opposite to the fair value of the ZDP shares.

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 financial assets is classified within Level 1 of the fair hierarchy on the basis that the fair value of the financial assets has been determined directly from the fair value of the ZDP shares.

The classification of the Company's investments held at fair value through profit or loss is detailed in the table below:

Level 1

Level 2

Level 3

£'000

£'000

£'000

Fair value

Financial assets at amortised cost

-

11,142

-

Financial liabilities at market value

11,142

-

-

12. Subsequent events

There are no subsequent events that require disclosure in these financial statements.

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 period ended 31 December 2018, 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 period ended 31 December 2018 was approved on 26 March 2019. It will be made available on the Company's website at https://rmdl.co.uk/

The Annual Report will be submitted to the National Storage Mechanism and will shortly be available for inspection at: http://www.morningstar.co.uk/uk/NSM

This announcement contains regulated information under the Disclosure Rules and Transparency Rules of the FCA.

14. Annual General Meeting

The Annual General Meeting will be held on 1 May 2019 at 11:30 a.m. at the offices of Nplus1 Singer, 1 Bartholomew Lane, London, EC2N 2AX