TIDMRDLZ
RNS Number : 7643R
Ranger Direct Lending ZDP PLC
26 September 2017
In fulfilment of its obligations under section 6.3.5(1) of the
Disclosure Guidance and Transparency Rules, Ranger Direct Lending
ZDP Plc hereby releases the unedited full text of its 2017
Unaudited Half-Yearly Financial Report.
This information is extracted, in full unedited text, from the
Company's printer-friendly version of the half-yearly financial
report available on the Company's website:
http://www.rangerdirectlending.uk/ranger-direct-lending-zdp-plc/
The full text of the of the report follows:
RANGER DIRECT LING ZDP PLC
(Registered No. 10247619)
half-yearly financial report (unaudited)
FOR THE PERIOD FROM 1 JANUARY 2017 TO 30 JUNE 2017
CHAIRMAN'S STATEMENT
I am pleased to present the Company's Half Year Report for the
period from 1 January 2017 to 30 June 2017.
The Company is a wholly owned subsidiary of Ranger Direct
Lending Fund Plc ("RDLF") and was established solely for the
purpose of issuing zero dividend preference shares of GBP 0.01 each
in the capital of the Company ("ZDP Shares").
Since incorporation, the Company has carried out two placings of
ZDP Shares, issuing a total of 53 million ZDP Shares for aggregate
gross proceeds of GBP 53.8 million. The entirety of these gross
proceeds were lent to RDLF pursuant to the terms of a loan
agreement between the Company and RDLF dated 25 July 2016 (the
"Loan" and the "Loan Agreement"). The proceeds of the Loan are
required to be utilised in accordance with RDLF's investment policy
and for working capital purposes.
As a condition of the Loan Agreement, RDLF was required to grant
an undertaking in favour of the Company dated 25 July 2016 (the
"Undertaking") pursuant to which RDLF undertook to subscribe for
such number of ordinary shares of GBP 1.00 each in the capital of
the Company ("Ordinary Shares") as would be necessary (or to
otherwise ensure) that the Company has sufficient funds to pay the
final capital entitlement of GBP 1.2763 per ZDP Share (the "Final
Capital Entitlement") to the ZDP Shareholders on 31 July 2021 (the
"ZDP Repayment Date"), giving a redemption yield of 5%, on an issue
price of GBP1.00 per ZDP Shares (the "Redemption Yield")(1) .
The key performance indicators against which the Board has
reviewed the Company's performance are set out below. Most
significantly, the Cover (defined below as at 30 June 2017 was 3.55
times).
From the perspective of the Directors, the Company's activities
are integrated with the RDLF Group (the "Group"), for which the
Half Year Report can be found on the Company's website
http://www.rangerdirectlending.uk.
(1) The Redemption Yield is not and should not be taken as a
forecast of profits and there can be no assurance that the Final
Capital Entitlement of the ZDP Shares will be repaid in full on the
ZDP Repayment Date.
Christopher Waldron
Chairman
25 September 2017
OVERVIEW
The Company was incorporated and registered in England and Wales
on 23 June 2016 as a wholly owned subsidiary of RDLF. On 1 August
2016, the Company placed 30 million ZDP Shares at a placing price
of GBP 1.00 per ZDP Share. The Company was admitted to the standard
segment of the Official List of the UK Listing Authority and the
entirety of the Company's issued ZDP Share capital was admitted to
trading on the London Stock Exchange's main market for listed
securities (the "Admission").
A further 23 million ZDP Shares were issued at a placing price
of GBP 1.035 per Share and admitted to trading on 4 November 2016
("Subsequent Admission").
Pursuant to the terms of the Loan Agreement, the Company loaned
the entirety of the gross proceeds of the issue of ZDP Shares to
RDLF upon Admission and Subsequent Admission (as applicable). As a
condition of entering into the Loan Agreement, RDLF was required to
grant the Company the Undertaking. In accordance with the terms of
the Undertaking, RDLF is required to (among other things) subscribe
for such number of Ordinary Shares in the Company as may be
necessary to ensure (or to otherwise ensure) that the Company has
sufficient assets to pay the Final Capital Entitlement to the ZDP
Shareholders on the ZDP Repayment Date and to pay any operational
costs incurred by the Company.
From the perspective of the Directors, the Company's activities
are integrated with the RDLF Group (the "Group").
Principal activities
The Company is a wholly owned subsidiary of RDLF and was
incorporated by RDLF for the sole purpose of issuing the ZDP
Shares. The Company's only material financial obligations are in
respect of the ZDP Shares. The proceeds from the issuance of the
ZDP Shares were on-lent to RDLF pursuant to the Loan Agreement.
These proceeds along with the obligation of RDLF, pursuant to an
undertaking granted in favour of the Company to put the Company in
a position to meet its obligations in respect of the ZDP Shares,
form the Company's only material assets.
Objective
The objective of the Company is to provide the final capital
entitlement of the ZDP Shares to the ZDP holders at the ZDP
Repayment Date of 31 July 2021. The funds are managed in accordance
with the investment policy of RDLF.
BOARD OF DIRECTORS
Christopher Waldron (Chairman) (independent) appointed on 23
June 2016
Mr Waldron has more than thirty years' experience as an asset
manager and is a director of a number of listed and unlisted
companies, including JZ Capital Partners Limited and Crystal Amber
Fund Limited. He is Chairman of UK Mortgages Limited, which is also
on the Main Market of the London Stock Exchange. He began his
career with James Capel and subsequently held investment management
positions with Bank of Bermuda, the Jardine Matheson Group and
Fortis prior to joining the Edmond de Rothschild Group in Guernsey
as Investment Director in 1999. He was appointed Managing Director
of the Edmond de Rothschild companies in Guernsey in 2008, a
position he held until 2013, when he stepped down to concentrate on
non-executive work and investment consultancy. He is a member of
the States of Guernsey's Investment and Bond Management
Sub-Committee and a Fellow of the Chartered Institute for
Securities and Investment. Mr Waldron has no other significant
commitments for the purposes of the UK Corporate Governance
Code.
Dr Matthew Mulford (independent) appointed on 23 June 2016
Dr Mulford is a Senior Research Fellow at the London School of
Economics, an Adjunct Professor at école des Hautes Etudes
Commerciales de Paris (HEC-Paris) and a Visiting Faculty at the
European School of Management and Technology (ESMT) in Berlin. He
is formerly a founding Dean of the TRIUM Global Executive MBA
programme which is currently ranked as one the top EMBA programmes
in the world. Dr Mulford has extensive research and senior
executive training experience in negotiation analysis, psychology
of judgement and decision making, quantitative methods and game
theory. Dr Mulford has designed, directed and/or taught executive
training courses in 20 countries for a variety of clients,
including: Boehringer Ingelheim, Bosch, Deutsche Bank, EADS,
Ericsson, Gallup, Gold Fields, Indian National Railroad, King
Faisal Specialist Hospital, Linklaters, Munich Re, Siemens,
Standard Chartered Bank, Syngenta, ThyssenKrupp, Total, the UK's
National Audit Office and Home Office and the United Nations
Development Programme.
Jonathan Schneider (independent) appointed on 23 June 2016
Mr Schneider is a Chartered Accountant and an active
entrepreneur and investor. From 2006 to 2012, he was the co-founder
and managing partner of the Novator Credit Opportunities Fund, a UK
based special situations hedge fund. Mr Schneider currently has a
portfolio of alternative lending interests which he actively
supports and manages, the majority of which he conceived and
co-founded. Some of these include Jumo.world, a pan African
consumer finance business, Iwoca.com, a business to business
working capital lender and Mode, an emerging market airtime credit
provider. Mr Schneider has held numerous previous directorships,
including serving on the Board of publicly listed Talon Metals Inc.
and Aqua Online Limited.
INTERIM MANAGEMENT REPORT AND DIRECTORS' RESPONSIBILITY
STATEMENT
For the period from 1 January 2017 to 30 June 2017
Cautionary Statement
This interim management report has been prepared solely to
provide additional information to Shareholders to assess the
strategies of the Company. The interim management report should not
be relied upon by any other party or for any other purpose.
The interim management report contains certain forward looking
statements. These statements are made by the Directors in good
faith based on the information available to them up to the time of
their approval of this report but such statements should be treated
with caution due to the inherent uncertainties, including both
economic and business risk factors, underlying any such
forward-looking information.
Going concern
In order to be able to continue as a going concern, the Company
relies on RDLF in its capacity: as the parent company; to repay the
Loan; and as counterparty to the Deed of Undertaking dated 25 July
2016 as described in note 3 to the financial statements. 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.
Principal risks and uncertainties
Due to the Company's dependence on RDLF 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 RDLF's ability to
perform its obligations under the Undertaking. The specific risks
faced by RDLF are described in its annual report, which include:
macroeconomic risks, operational, 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
principal risks:
Principal risk Mitigation Link to KPI
-------------------------------- ------------------------------------------------------------ ----------------
Final capital entitlement
RDLF's debt to the Company To protect the interests Cover
pursuant to the Loan Agreement of ZDP Shareholders, the
and RDLF's obligations Undertaking contains the
under the Undertaking following restrictions:
will rank behind any secured * Group incurring any bank borrowings which would
creditors of RDLF therefore exceed an amount equal to the sum of:
it is not guaranteed that
the final capital entitlement
will be paid. (a) 20% of the prevailing
Net Asset Value attributable
to the RDLF Ordinary Shares
in issue as at 1 August
2016; plus
(b) an amount equal to 50%
of the net proceeds of any
issue of RDLF C Shares.
* RDLF making any distribution of capital or income,
other than any such distribution which:
(a) is required to maintain
RDLF's status as an investment
trust; or
(b) would not reduce the
Cover of the ZDP Shares
below 2.75 times immediately
after the distribution has
been made.
-------------------------------- ------------------------------------------------------------ ----------------
Important events and Financial performance
The Board reviews performance of the Company by reference to a
number of key performance indicators ("KPIs") and considers that
the most relevant KPIs in assessing the Company's success towards
achieving its objective are as follows:
-- Cover(2)
-- Accrued capital entitlement
-- Share Price of ZDP Shares(3)
The ZDP Shares' Cover as at 30 June 2017 was 3.55 times (31
December 2016: 3.70 times).
As at 30 June 2017, the capital entitlement which had accrued on
the ZDP Shares was GBP 1.0365 per ZDP Share (31 December 2016: GBP
1.0106 per ZDP Share). The Final Capital Entitlement is GBP 1.2763
per ZDP Share (payable on the ZDP Repayment Date).(4)
The ZDP Shares carry no right to income and the whole of their
return, therefore takes the form of capital. The Redemption Yield
of the ZDP Shares is 5% per annum based on an issue price of GBP
1.00 per ZDP Share and is deemed to accrue daily and is compounded
annually from 1 August 2016 up to (but excluding) the ZDP Repayment
Date. The Final Capital Entitlement will rank in priority to the
capital entitlement of RDLF's ordinary shares, however, the Loan
made by the Company to RDLF is unsecured and therefore the Company
will rank behind any secured creditors of RDLF. As such, there can
be no guarantee that the Final Capital Entitlement will be
paid.
(2) Cover represents a fraction where the numerator is equal to
the Net Asset Value of the Group on a consolidated basis adjusted
to: (i) add back any liability to ZDP Shareholders; and (ii) deduct
the estimated liquidation costs of the Company, and the denominator
is equal to the amount which would be paid on the ZDP Shares as a
class.
(3) Share Price taken from Bloomberg Professional.
(4) There can be no assurance that the Final Capital Entitlement
of the ZDP Shares will be repaid in full on the ZDP Repayment
Date.
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
NAV per
share
(cum income
- GBP 2016 1.06 1.07 1.07 1.07 1.05
2017 1.06 1.05 1.04 1.04 1.01 1.01
Further KPIs for the parent company can be found in RDLF's
annual report.
The Company's market capitalisation as of 30 June 2017 was GBP
53.265 million (31 December 2016: GBP 55.385 million) based on
53,000,000 ZDP Shares at a Share Price of 100.5 pence (31 December
2016: 104.5 pence) per ZDP share.
Related party transactions
Related party transactions are disclosed in note 11 to the
condensed financial statements.
Directors and Share Interests
The Directors who served during the period, all of whom are
non-executive and were appointed with effect from incorporation on
23 June 2016 were as follows:
-- Christopher Waldron (Chairman)
-- Dr Matthew Mulford
-- Jonathan Schneider
Each Director is non-executive and were all appointed on the
date of incorporation of the Company, 23 June 2016. Since the
Directors of the Company are also RDLF Directors, they are
considered to be non-independent Directors of the Company; however
in their capacity as Directors of RDLF, each is considered to be
independent. Biographies of each Director are set out above, and
demonstrate the wide range of skills and experience each brings to
the Board.
A formal performance evaluation of the RDLF Board and its
committees has been carried out and the RDLF Board considers that
all of the Directors contribute effectively and have the skills and
experience relevant to the future leadership and direction of RDLF.
The Board has not undertaken a separate formal appraisal process of
its own operations as these processes were covered by the
appraisals carried out by the RDLF board.
The appointment and replacement of Directors is 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 ZDP Shareholders.
During the period, no Director had a material interest in a
contract to which the Company was a party (other than their own
letter of appointment), requiring disclosure under the Act. There
have been no loans or guarantees from the Company to any Director
at any time during the period or thereafter.
No Directors have any interests in the Company's Ordinary or ZDP
Shares. There have been no changes to this since 30 June 2017.
DIRECTORS' RESPONSIBILITY STATEMENT
We confirm that to the best of our knowledge:
a) the condensed financial statements ("condensed financial
statements") have been prepared in accordance with IAS 34 'Interim
Financial Reporting' as adopted by the European Union;
b) the interim management report includes a fair review of the
information required by the Disclosure Guidance and Transparency
Rules ("DTR") 4.2.7R (indication of important events during the
first six months of the current financial year and their impact on
the condensed financial statements; and a description of principal
risks and uncertainties for the remaining six months of the year);
and
c) the interim management report includes a fair review of the
information required by DTR 4.2.8R (disclosure of related parties'
transactions and any changes in the related party transactions
described in the last annual report that could do so).
On behalf of the Board
Christopher Waldron
Chairman
25 September 2017
CONDENSED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2017
(Unaudited) (Audited)
30 Jun 2017 31 Dec 2016
Notes (GBP) (GBP)
ASSETS
Non-current assets
Loan and receivables 3 54,053,252 53,525,047
-------------------------- -------------------------
Total non-current assets 54,053,252 53,525,047
-------------------------- -------------------------
Current assets
Prepayments - 1,758
Cash and cash equivalents 50,000 50,000
Total current assets 50,000 51,758
-------------------------- -------------------------
TOTAL ASSETS 54,103,252 53,576,805
-------------------------- -------------------------
Non-current liabilities
Zero Dividend Preference Shares 4 54,932,506 53,563,069
-------------------------- -------------------------
Total non-current liabilities 54,932,506 53,563,069
-------------------------- -------------------------
Current liabilities
Income tax liability 139,076 44,026
Accrued expenses and other liabilities 11,627 45,744
-------------------------- -------------------------
Total current liabilities 150,703 89,770
-------------------------- -------------------------
TOTAL LIABILITIES 55,083,209 53,652,839
-------------------------- -------------------------
NET LIABILITIES (979,957) (76,034)
========================== =========================
SHAREHOLDER'S EQUITY
Capital and reserves
Called-up share capital 5 50,000 50,000
Capital contribution 3 614,718 529,407
Accumulated losses (1,644,675) (655,441)
-------------------------- -------------------------
TOTAL SHAREHOLDER'S DEFICIT (979,957) (76,034)
========================== =========================
The accompanying notes are an integral part of these financial
statements.
The financial statements for the period from 1 January 2017 to
30 June 2017 of Ranger Direct Lending ZDP Plc, a public company
limited by shares and incorporated in England and Wales with
registered number 10247619, were approved and authorised for issue
by the Board of Directors on 25 September 2017.
Signed on behalf of the Board of Directors
Christopher Waldron
Chairman
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD FROM 1 JANUARY 2017 TO 30 JUNE 2017
(Unaudited) (Audited)
1 Jan to 23 Jun to
30 Jun 2017 31 Dec 2016
(GBP) (GBP)
Notes
Income
Investment income 3 528,205 318,599
528,205 318,599
------------------------- -------------------------
Expenses
Company secretarial, administration and
registrar (33,953) (52,204)
Audit fees 12 (12,800) (24,000)
Legal fees (1,500) (19,148)
Other operating expenses (4,699) (3,118)
------------------------- -------------------------
Total expenses (52,952) (98,470)
------------------------- -------------------------
Result from operating activities 475,253 220,129
------------------------- -------------------------
Financing
Finance costs (1,369,437) (831,544)
------------------------- -------------------------
Total finance costs (1,369,437) (831,544)
------------------------- -------------------------
Loss before tax (894,184) (611,415)
Tax 6 (95,050) (44,026)
------------------------- -------------------------
Total comprehensive loss for the period (989,234) (655,441)
========================= =========================
Basic and Diluted Loss Per ordinary
Share 9 (19.78) (13.11)
========================= =========================
The accompanying notes are an integral part of these financial
statements.
Other comprehensive income
There were no items of other comprehensive income in the current
period and prior period therefore the loss for the period is also
the total comprehensive loss for the period.
CONDENSED STATEMENT OF CHANGES IN SHAREHOLDER'S deficit
FOR THE PERIOD FROM 1 JANUARY 2017 TO 30 JUNE 2017
Notes Called-up Capital Accumulated Total
Share capital contribution losses
(GBP) (GBP) (GBP) (GBP)
---------------- ------------------- --------------------- -------------------
Balance at 23 - - - -
June 2016
Issue of
ordinary
shares 5 50,000 - - 50,000
Capital
contribution
during the
period 3 - 529,407 - 529,407
Loss after tax
and total
comprehensive
loss for the
period - - (655,441) (655,411)
---------------- -------------------
Balance at 31
December 2016 50,000 529,407 (655,441) (76,034)
================ =================== ===================== ===================
Notes Called-up Share Capital Accumulated losses Total
capital contribution
(GBP) (GBP) (GBP) (GBP)
---------------- ------------------- --------------------- -----------------
Balance at 1
January 2017 50,000 529,407 (655,441) (76,034)
Capital
contribution
during the
period 3 - 85,311 - 85,311
Loss after tax
and total
comprehensive
income for
the period - - (989,234) (989,234)
---------------- -------------------
Balance at 30
June 2017 50,000 614,718 (1,644,675) (979,957)
================ =================== ===================== =================
The accompanying notes are an integral part of these financial
statements.
CONDENSED STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM 1 JANUARY 2017 TO 30 JUNE 2017
(Unaudited) (Audited)
1 Jan to 30 Jun 2017 23 Jun to 31 Dec 2016
Notes (GBP) (GBP)
Loss before tax (894,184) (611,415)
Adjustments for:
Investment income (528,205) (318,599)
Finance costs 1,369,437 831,544
-------------------------- --------------------------
Operating cash flows before movements
in working capital (52,952) (98,470)
Decrease/(Increase) in prepayments 1,758 (1,758)
(Decrease)/Increase in accrued
expenses and other liabilities (34,117) 45,744
-------------------------- --------------------------
Net cash flows used in operating
activities (85,311) (54,484)
-------------------------- --------------------------
Financing activities
Expenses paid by the parent company 3 85,311 54,484
Proceeds on issue of Ordinary Shares 5 - 50,000
-------------------------- --------------------------
Net cash flows from financing
activities 85,311 104,484
-------------------------- --------------------------
Net change in cash and cash
equivalents - 50,000
Cash and cash equivalents at the 50,000 -
beginning of the period
-------------------------- --------------------------
Cash and cash equivalents at the end
of the period 50,000 50,000
========================== ==========================
The proceeds from the ZDP Shares issued by the Company during
the prior period (see note 4) and capital contribution by RDLF were
credited directly to RDLF under the Loan Agreement (see note 3) and
as a result neither transaction resulted in cash flows within the
Company.
The accompanying notes are an integral part of these financial
statements.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
FOR THE PERIOD FROM 1 JANUARY 2017 TO 30 JUNE 2017
1. GENERAL INFORMATION
Ranger Direct Lending ZDP plc ("ZDP" or the "Company") was
incorporated and registered in England and Wales on 23 June 2016 as
a wholly owned subsidiary of Ranger Direct Lending Fund Plc
("RDLF") and with a limited life of up to 31 July 2021, unless
extended by the passing of a special resolution of the Company. On
1 August 2016, the Company was subsequently admitted to the
standard segment of the Official List of the UK Listing Authority
and its zero dividend preference shares of GBP 0.01 each (the "ZDP
Shares") were admitted to trading on the London Stock Exchange's
main market for listed securities.
The half year results for the six months ended 30 June 2017 has
neither been audited nor reviewed by the Company's auditor. The
comparative figures for the period from 23 June 2016 to 31 December
2016 have been extracted from the Company's 31 December 2016
financial statements and do not constitute statutory accounts as
defined in section 434 of the Companies Act 2006. Those financial
statements have been delivered to the Registrar of Companies and
included the report of the auditor which was unqualified and did
not note attention to any matters by way of emphasis. The auditor's
report did not contain a statement under either section 498(2) or
498(3) of the Companies Act 2006.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of accounting and preparation
These condensed financial statements have been prepared in
compliance with IAS 34 "Interim Financial Reporting" as adopted by
the European Union ("EU"). The annual financial statements were
prepared in accordance with International Financial Reporting
Standards ("IFRS") as adopted by the EU.
As required by the Disclosure Guidance and Transparency Rules of
the Financial Conduct Authority, the condensed financial statements
have been prepared applying the accounting policies and
presentation that were applied in the preparation of the Company's
published annual financial statements for the period ended 31
December 2016.
New Accounting Standards, amendments to existing Accounting
Standards and/or interpretations of existing Accounting Standards
(separately or together, "New Accounting Requirements") not yet
adopted
In the Directors' opinion, except for the application of the New
Accounting Requirements referred to below, all non-mandatory New
Accounting Requirements are either not yet permitted to be adopted,
or would have no material effect on the reported performance,
financial position or disclosures of the Company and consequently
have neither been adopted nor listed.
New Accounting Requirements not yet effective
IFRS 9 - "Financial Instruments" (Replacement of IAS 39 -
"Financial Instruments: Recognition and Measurement")
IFRS 9 addresses the recognition, classification and measurement
of financial assets and financial liabilities and may be adopted to
replace IAS 39.
IFRS 9 requires financial assets to be classified into the
following measurement categories: (i) those measured at fair value
through profit or loss; (ii) those measured at fair value through
other comprehensive income; and, (iii) those measured at amortised
cost.
The determination is made at initial recognition. Unless the
option to designate a financial asset as measured at fair value
through profit or loss is applicable, the classification depends on
the entity's business model for managing its financial instruments
and the contractual cash flow characteristics of the instrument.
IFRS 9 also replaces the "incurred loss" model in IAS 39 with an
"expected credit loss" model for the measurement of impairment
loss. The new model applies to financial assets that are not
measured at fair value through profit or loss. IFRS 9 also
introduces a new hedge accounting model.
For financial liabilities, the standard retains most of the IAS
39 requirements. The main change is that, in cases where the fair
value option is taken for financial liabilities, the part of a fair
value change due to an entity's own credit risk is recorded in
other comprehensive income rather than the income statement, unless
this creates an accounting mismatch.
The mandatory effective date for application of IFRS 9 is for
accounting periods beginning on or after 1 January 2018. The
Company is currently evaluating the impact that adoption of IFRS 9
will have.
Going concern
In order to be able to continue as a going concern, the Company
relies on RDLF in its capacity: as the parent company; to repay the
Loan; and as counterparty to the Deed of Undertaking
("Undertaking") dated 25 July 2016 as disclosed in more detail in
note 3. 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.
Use of estimates, judgements and assumptions
The following are areas of particular significance to the
Company's financial statements and include the use of estimates and
the application of judgement, which is fundamental to the
preparation of these financial statements. Actual results could
differ from those estimates.
Critical judgements in applying the accounting policies - loan
and borrowings at amortised cost
The Company accounts for the Loan and Zero Dividend Preference
Shares at amortised cost on the basis that they have fixed or
determinable payments. The effective interest rate method has been
applied in calculating the income and expense during the
period.
Critical judgements in applying the accounting policies -
interest rate on Intercompany Loan
The Company entered into a Loan Agreement with its parent
company which is subject to an interest rate of 2% compounded
annually as disclosed in note 3. This interest rate compared to the
ZDP Shares' interest rate of 5% compounded annually could result in
a potential transfer pricing issue which is often complex and
requires significant judgement.
RDLF has engaged a third party advisor to provide transfer
pricing advice concerning the arm's length interest rate payable on
the Loan Agreement between the Company and RDLF. The 2% interest
rate has been determined to be reasonable by demonstrating the
commercial effect for the RDLF group over the 5-year period;
identifying comparable transactions; performing interest rate
benchmarking analysis; and reviewing third party commitment lending
interest at a rate lower than the 5%. Therefore in preparing these
financial statements, the Directors considered using a 2% interest
rate on the intercompany loan to be a reasonable estimate of an
arm's length rate of interest.
Functional and presentation currency
The financial statements are presented in Sterling Pounds
("GBP"), the currency of the primary economic environment in which
the Company operates, the Company's functional currency.
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Monetary assets and liabilities denominated in
foreign currencies are translated into the functional currency
using the exchange rate prevailing at the reporting date.
Financial instruments at amortised cost - Loan and receivables
and Zero Dividend Preference Shares
These are initially recognised at cost, being the fair value of
the consideration received or paid associated with the loan or
borrowing net of direct issue costs. Loan and receivables and ZDP
Shares are subsequently measured at amortised cost using the
effective interest method. The effective interest method calculates
the amortised cost by allocating interest over the relevant period.
The effective interest rate is the rate that exactly discounts
estimated future cash receipts or payments (including all fees paid
or received that form an integral part of the effective interest
rate) through the expected life of the loan or borrowing to the net
carrying amount on initial recognition.
Direct issue costs are deducted from the carrying amount and
amortised using the effective interest method.
Impairment of assets
Financial assets are assessed for indicators of impairment at
each reporting date. Financial assets are impaired where objective
evidence exists that, as a result of one or more events that
occurred after the initial recognition of the financial asset, the
estimated future cash flows of the financial assets have been
negatively impacted.
Taxation
The current tax payable is based on the taxable profit for the
period. Taxable profit differs from net profit or loss as reported
in the Statement of Comprehensive Income because it excludes items
of income or expense that are taxable or deductible in other
periods and it further excludes items that are never taxable or
deductible. The Company's liability for current tax is calculated
using tax rates that have been enacted or substantively enacted at
the reporting date.
Deferred tax is the tax expected to be payable or recoverable on
temporary differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding tax
bases used in the computation of taxable profit, and is accounted
for using the liability method. Deferred tax liabilities are
recognised for all taxable temporary differences and deferred tax
assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible
temporary differences can be utilised.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled or the asset is
realised based on tax rates that have been enacted or substantively
enacted at the reporting date. The carrying amount of deferred tax
assets is reviewed at each reporting date and reduced to the extent
that it is no longer probable that sufficient taxable profits will
be available to allow all or part of the asset to be recovered.
Organisation costs
Organisation costs are expensed as incurred.
Capital contribution
Capital contributions from the parent company to meet current
and future obligations of the Company are recognised directly in
equity based on the value of expenses paid for by the parent
company, in accordance with the Undertaking.
Investment income
Investment income is recognised when it is probable that the
economic benefits will flow to the Company and the amount of
revenue can be measured reliably. Income for interest bearing
financial instruments is recognised on an accruals basis, by
reference to the principal outstanding and at the effective
interest rate applicable, which is the rate that exactly discounts
estimated future cash receipts through the expected life of the
financial asset to that asset's net carrying amount on initial
recognition.
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.
Expenses
All operating expenses of the Company are borne by RDLF pursuant
to the Undertaking.
Cash and cash equivalents
Cash and cash equivalents include cash at bank and in hand and
highly liquid interest-bearing securities with maturities of three
months or less.
Earnings per share
The Company presents basic and diluted earnings per share
("EPS") data for its Ordinary Shares. Basic EPS is calculated by
dividing the profit or loss attributable to Ordinary Shareholders
by the weighted average number of ordinary shares outstanding
during the period. The diluted EPS is the same as the Basic EPS as
there is currently no arrangement which could have a dilutive
effect on the Company's Ordinary Shares.
3. LOAN AND RECEIVABLES
(Unaudited) (Audited)
30 Jun 2017 31 Dec 2016
(GBP) (GBP)
Beginning balance 53,525,047 -
Amount advanced to Ranger Direct Lending Fund plc - 53,206,448
Investment income during the period 528,205 318,599
-------------------------- ----------------------
Closing balance 54,053,252 53,525,047
========================== ======================
Intercompany Loan Agreement
On 25 July 2016, the Company has entered into a Loan Agreement
with its parent company. Pursuant to the Loan Agreement, the
Company immediately following the Admission and Subsequent
Admission lent the entirety of the gross proceeds of each issue of
ZDP Shares to its parent company, RDLF, which RDLF has applied
towards making investments in accordance with its investment policy
and working capital purposes. The costs associated with the issue
of the ZDP Shares amounted to GBP 598,552, and were borne by
RDLF.
The loan is subject to an interest rate of 2% per annum,
compounding on each anniversary of the date of Admission on 1
August 2016 and repayable on the earlier of: the date falling three
business days before the ZDP Repayment Date (see note 4); or in an
event of default; or on demand by the Company. The Directors of the
Company have no intention to demand repayment of the Loan in the
next 12 months.
Deed of Undertaking
The Company also entered into the Undertaking on 25 July 2016
pursuant to which RDLF undertook to (among other things) subscribe
for such number of Ordinary Shares in the capital of the Company as
may be necessary or to otherwise ensure that the Company has
sufficient assets to pay the Final Capital Entitlement to the ZDP
Shareholders on the ZDP Repayment Date and to pay any operational
costs incurred by the Company.
During the period, the parent company contributed GBP 85,311 (23
June 2016 to 31 December 2016: GBP 529,407) to the Company. The
total capital contribution by the parent company as at 30 June 2017
amounted to GBP 614,718 (31 December 2016: GBP 529,407).
4. ZERO DIVID PREFERENCE SHARES
(Unaudited) (Audited)
30 Jun 2017 31 Dec 2016
(GBP) (GBP)
Opening balance 53,563,069 -
Issuance of ZDP Shares - 53,805,000
Issue costs - (1,073,474)
Amortisation of issue costs during the period 115,617 45,482
Amortisation of premium during the period (66,609) (20,175)
Accrued interest during the period 1,320,429 806,236
----------------------
Closing balance 54,932,506 53,563,069
========================== ======================
Under the Company's Articles of Association, the Directors are
authorised to issue up to 55,000,000 ZDP Shares for a period of 5
years from 25 July 2016. On 1 November 2016, the Company passed a
resolution to authorise Directors to issue up to 75,000,000 ZDP
Shares, such authority to expire on 26 July 2021, unless revoked
sooner or varied by the Company in a general meeting.
On 1 August 2016, the Company issued 30,000,000 ZDP Shares at
GBP 0.01 each at a placing price of GBP 1.00 per ZDP Share.
Subsequently on 4 November 2016, the Company issued further
23,000,000 ZDP Shares at a placing price of GBP 1.035 each.
The ZDP Shares will have a final capital entitlement of GBP
1.2763 per ZDP share on 31 July 2021, being the ZDP Repayment Date.
Accordingly, the aggregate Final Capital Entitlement payable to the
holders of all the ZDP Shares currently in issue on the ZDP
Repayment Date is GBP 67,643,900.(5)
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 carry the right to vote as a class on certain
proposals which would be likely to materially affect their
position. Further ZDP Shares (or any shares or securities which
rank in priority to or pari passu with the ZDP Shares) may be
issued without the separate class approval of the ZDP Shareholders
provided that the Directors determine that the ZDP Shares would
have a Cover(6) of not less than 2.75 times immediately following
such issue.
Voting Rights of ZDP Shares
The ZDP Shares carry no right to attend or vote at General
Meetings of the Company.
5 There can be no assurance that the Final Capital Entitlement
of the ZDP Shares will be repaid in full on the ZDP Repayment
Date.
6 Cover of the ZDP Shares shall represent a fraction where the
numerator is equal to the Net Asset Value of RDLF and its Group on
a consolidated basis adjusted to: (i) add back any liability to ZDP
Shareholders; and (ii) deduct the estimated liquidation costs of
the Company, and the denominator is equal to the amount which would
be paid on the ZDP Shares as a class (and on all ZDP Shares ranking
as to capital in priority thereto or pari passu therewith, save to
the extent already taken into account in the calculation of the Net
Asset Value) in a winding up of the Company on the ZDP Repayment
Date.
Voting Rights of ZDP Shares continued
On a vote on a resolution on a show of hands at a class meeting
of the holders of ZDP Shares (other than in respect of a ZDP
Recommended Resolution or a ZDP Reconstruction Resolution (in each
case as defined in the Company's Articles of Association), each
member present in person (and every proxy present who has been duly
appointed by one or more members entitled to vote on the
resolution) has one vote. A proxy has one vote for and one vote
against the resolution if the proxy has been duly appointed by more
than one member entitled to vote on the resolution, and the proxy
has been instructed by one or more of those members to vote for the
resolution and by one or more other of those members to vote
against. On a vote on a resolution on a poll taken at a class
meeting, every member has one vote in respect of each share held by
him. All or any of the voting rights of a member may be exercised
by one or more duly appointed proxies but where a member appoints
more than one proxy, this does not authorise the exercise by the
proxies taken together of more extensive voting rights than could
be exercised by the member in person.
Any vote on any ZDP Reconstruction Resolution or ZDP Recommended
Resolution shall be by means of a poll. At a class meeting of the
holders of the ZDP Shares in respect of a ZDP Recommended
Resolution or a ZDP Reconstruction Resolution, each holder of ZDP
Shares present in person or by proxy shall, on a poll, have such
number of votes in respect of each ZDP Share held by him (including
fractions of a vote) that the aggregate number of votes cast in
favour of the resolution is four times the aggregate number of
votes cast against the resolution. Each member present in person or
by proxy and entitled to vote, who votes against such resolution
shall on a poll have one vote for each ZDP Share held by him;
provided that, if any term of any offer or arrangement to which the
resolution relates shall (as regards any one or more members) have
been breached in any material respect of which the chairman of the
relevant meeting has written notice prior to the commencement of
such meeting then, notwithstanding anything in the Articles to the
contrary, each member shall, at any such meeting at which such
shareholder is present in person or by proxy, and entitled to vote,
on a poll have one vote for every such ZDP Share held by him.
Variation of Rights and Distribution on Winding Up
On a return of capital, whether on a winding up or otherwise,
the holders of ZDP Shares shall be entitled to receive, in priority
to any amounts paid to the holders of Ordinary Shares, an amount
equal to the initial capital entitlement of GBP 100 pence per share
as increased at such rate as accrues daily and compounds annually
to give an entitlement to GBP 1.2763 on 31 July 2021, the first
such increase to be deemed to have occurred on 1 August 2016 and
the last to occur on 30 July 2021.
5. SHARE CAPITAL
AUTHORISED:
Limited number of Ordinary Shares 10,000,000 Ordinary
Shares
====================
ISSUED AND FULLY PAID:
(Unaudited) (Audited)
30 Jun 2017 31 Dec 2016
(GBP) (GBP)
50,000 Ordinary Shares at GBP 1.00 each 50,000 50,000
======================== ===================
The Company's 50,000 Ordinary Shares were issued to its parent
company on 23 June 2016.
It is not intended that any dividend will be paid to the holders
of Ordinary Shares prior to the ZDP Repayment Date.
Voting Rights of Ordinary Shares
Subject to any rights or restrictions attached to any shares, on
a show of hands every ordinary shareholder present in person has
one vote and every proxy present who has been duly appointed by a
shareholder entitled to vote has one vote, and on a poll every
shareholder (whether present in person or by proxy) has one vote
for every share of which he is the holder. A shareholder entitled
to more than one vote need not, if he votes, use all his votes or
cast all the votes he uses the same way. In the case of joint
holders, the vote of the senior holder who tenders a vote, whether
in person or by proxy, shall be accepted to the exclusion of the
vote of the other joint holders, and seniority shall be determined
by the order in which the names of the holders stand in the
Register.
Variation of Rights and Distribution on Winding Up for Ordinary
Shares
On a return of capital, whether on a winding up or otherwise,
after the amounts payable to the holders of ZDP Shares have been
satisfied in full, each Ordinary Share carries the right to a
repayment of capital of up to GBP 1.00 paid up capital and the
Ordinary Shares all rank pari passu as respects distributions of
any surplus remaining after all such capital has been repaid.
6. TAX
(Unaudited) (Audited)
1 Jan to 23 Jun to
30 Jun 2017 31 Dec 2016
(GBP) (GBP)
Corporation tax:
Current 95,050 44,026
Deferred tax - -
-------------------------- ---------------------
Total tax expense for the period 95,050 44,026
========================== =====================
The Company's tax charge for the period can be reconciled to the
loss in the condensed statement of comprehensive income as
follows:
(Unaudited) (Audited)
1 Jan to 23 Jun to
30 Jun 2017 31 Dec 2016
(GBP) (GBP)
Loss before tax on continuing operations (894,184) (611,415)
------------------------ -------------------
Tax effect at the UK corporation tax rate of 20% (178,837) (122,283)
Tax effect of expenses that are not deductible in
determining taxable profit 273,887 166,309
------------------------ -------------------
Tax expense for the period 95,050 44,026
======================== ===================
7. CAPITAL MANAGEMENT
The Board's policy is to maintain a strong capital base so as to
maintain investor, creditor and market confidence. The Company's
capital is represented by the ordinary shares and capital
contribution from the parent company. Pursuant to the Undertaking
granted by RLDF in favour of the Company, RDLF undertook to (among
other things) subscribe for such number of Ordinary Shares in the
capital of the Company as may be necessary or to otherwise ensure
that the Company has sufficient assets to pay the total amount
repayable to the ZDP Shareholders and pay any operational costs
incurred by the Company.
The Company is not subject to externally imposed capital
requirements.
8. FINANCIAL RISK 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 the ZDP holders at the redemption date. Due to the
Company's dependence on RDLF 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 for RDLF.
The Company has exposure to the following risks from its use of
financial instruments:
- Credit risk
- Liquidity risk
- Interest rate risk
All short-term financial instruments have been excluded from the
following disclosures.
Credit risk
Credit risk is the risk of 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 RDLF under the Undertaking to
subscribe for such number of Ordinary Shares or otherwise ensure
that the Company is able to pay the Final Capital Entitlement to
ZDP Shareholders on the ZDP Repayment Date. RDLF's credit risk is
the risk of financial loss if a counterparty to a debt instrument
fails to meet its contractual obligations. RDLF and its investment
manager seek to mitigate RDLF's credit risk by actively monitoring
RDLF's portfolio of debt instruments and the credit quality of the
underlying borrowers. RDLF's investment strategy allows it to
potentially reduce risk through investment diversification while
also potentially achieving higher returns by investing in high
yielding direct lending asset classes.
Liquidity risk
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
31 July 2021. The Company's exposure to liquidity risk depends upon
RDLF's ability to meet all current and future obligations of the
Company. The Directors consider RDLF'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 is as follows:
(Unaudited) (Audited)
30 Jun 2017 31 Dec 2016
(GBP) (GBP)
In more than one year but not more than five years:
Loan and receivables 58,610,638 58,610,638
===================== ================
Zero Dividend Preference Shares 67,643,347 67,643,347
===================== ================
Interest rate risk
Interest rate risk occurs when there is a mismatch between the
interest rates of the Company's assets and liabilities. The
interest rate applied on the Loan Agreement is fixed at 2% whereas
the interest rate applied on the ZDP Shares is fixed at 5%. The net
exposure to interest risk is reduced as a result of the Undertaking
by RDLF whereby at any time up to or immediately prior to the ZDP
Repayment Date, RDLF will subscribe for such number of ordinary
shares in the Company as is necessary to provide the Company (after
taking into account the repayment of the loan) with sufficient
funds to meet the repayment obligations in respect of the ZDP
Shares. Assuming the interest rate applied on the Loan Agreement is
5%, the investment income for the period would have been higher by
GBP 898,163 (31 December 2016: GBP 554,125).
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 disclosure 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 GBP 100.5 pence (31 December 2016: GBP 104.5 pence)
per share which was observed on the London Stock Exchange on 30
June 2017 (31 December 2016: 29 December 2016) being the last
observable traded price before period-end. The Loan Agreement and
Undertaking expire on the same date as the ZDP Repayment Date. Due
to the dependence on RDLF to repay the Loan and provide the support
to meet the Company's obligation to the ZDP holders, the fair value
of the Loan (including the amount receivable under the Undertaking)
is estimated to be equal and opposite to the fair value of the ZDP
Shares.
Fair value hierarchy
IFRS 13 defines a fair value hierarchy that prioritises the
inputs to valuation techniques used to measure fair value. The
hierarchy gives the highest priority to unadjusted quoted prices in
active markets for identical assets and liabilities (Level 1
measurements) and the lowest priority to unobservable inputs (Level
3 measurements).
The three levels of fair value hierarchy under IFRS 13 are as
follows:
Level 1: Inputs that reflect unadjusted quoted prices in active
markets for identical assets and liabilities at the valuation
date;
Level 2: Inputs other than quoted prices included in Level 1
that are observable for the assets or liability either directly (as
prices) or indirectly (derived from prices), including inputs from
markets that are not considered to be active; and
Level 3: Inputs that are not based upon observable market
data.
However, the determination of what constitutes "observable"
requires significant judgement by the Directors. The Directors
consider observable data to be market data which is readily
available, regularly distributed or updated, reliable and
verifiable, not proprietary, provided by multiple independent
sources that are actively involved in the relevant market.
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 Loan and receivables is classified
within Level 2 of the fair value hierarchy on the basis that the
fair value of the Loan has been determined directly from the fair
value of the ZDP Shares.
The following tables include the fair value hierarchy of the
Company's financial assets and liabilities not measured at fair
value but for which fair value is disclosed:
As at 30 June 2017 (Unaudited):
Fair value (GBP) (GBP) (GBP) (GBP)
Level 1 Level 2 Level 3 Total
Loans and
receivables - 53,265,000 - 53,265,000
========================== ====================== ====================== ============
Zero Dividend
Preference
Shares 53,265,000 - - 53,265,000
========================== ====================== ====================== ============
As at 31 December 2016 (Audited):
Fair value (GBP) (GBP) (GBP) (GBP)
Level 1 Level 2 Level 3 Total
Loans and receivables - 55,385,000 - 55,385,000
==================== ================= ================= ============
Zero Dividend Preference
Shares 55,385,000 - - 55,385,000
==================== ================= ================= ============
9. BASIC AND DILUTED LOSS PER ORDINARY SHARE
The calculation of loss per share is based on the net loss for
the period of GBP 989,234 (23 June 2016 to 31 December 2016: GBP
655,441) and on a weighted average number of shares of 50,000
Ordinary Shares.
10. ULTIMATE CONTROLLING PARTY
The voting rights in the Company are wholly owned by Ranger
Direct Lending Fund Plc, a company incorporated and registered in
England and Wales, and is therefore the immediate and ultimate
controlling party.
11. RELATED PARTIES
During the period and pursuant to the Deed of Undertaking, the
parent company contributed GBP 85,311 (23 June 2016 to 31 December
2016: GBP 529,407) to the Company.
On 25 July 2016, the Company entered into a Loan Agreement and
Undertaking with its parent company which are disclosed in more
detail in note 3.
The Company had no employees for the period ended 30 June 2017
(23 June 2016 to 31 December 2016: none).
The Directors received no remuneration for their services to the
Company during the period and prior period.
12. AUDITOR'S REMUNERATION
The analysis of the auditor's remuneration is as follows:
(Unaudited) (Audited)
1 Jan to 23 Jun to
30 Jun 2017 31 Dec 2016
(GBP) (GBP)
Audit fees for the financial statements 12,800 24,000
Non-audit fees related to corporate financial
services charged to Zero Dividend Preference
Shares - 122,400
-------------------------- -------------------
12,800 146,400
========================== ===================
13. OPERATING SEGMENTS
Geographical information
The Company is managed as a single asset management business,
being the provision of a loan to RDLF from the Company's ZDP Shares
proceeds.
The chief operating decision maker is the Board of Directors.
Under IFRS 8 the Company is required to disclose the geographical
location of revenue and amounts of non-current assets other than
financial instruments.
Revenues
All of the Company's revenue is generated from the UK.
Non-current assets
The Company does not have non-current assets other than its
loans and receivables.
14. SUBSEQUENT EVENTS
There are no subsequent events that require disclosure in these
financial statements.
COMPANY INFORMATION
Directors Registered Office
Christopher Waldron 40 Dukes Place
Jonathan Schneider London EC3A 7NH
Matthew Mulford United Kingdom
Company Secretary Sponsor and Broker
Capita Company Secretarial Services Liberum Capital Limited
Limited Level 12, Ropemaker Place
The Registry 25 Ropemaker Street
34 Beckenham Road London EC2Y 9LY
Beckenham United Kingdom
Kent BR3 4TU
United Kingdom
Registrar Administrator
Capita Asset Services Sanne Fiduciary Services Limited
The Registry 13 Castle Street
34 Beckenham Road St Helier
Beckenham Jersey JE4 5UT
Kent BR3 4TU Channel Islands
United Kingdom
Auditor English and US Securities Law
Deloitte LLP Legal Adviser
Chartered Accountants and Statutory Travers Smith LLP
Auditor 10 Snow Hill
2 New Street Square London EC1A 2AL
London EC4A 3BZ United Kingdom
United Kingdom
Company website
www.rangerdirectlending.uk/ranger-direct-lending-zdp-plc/
END
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SEDFMIFWSEIU
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September 26, 2017 02:02 ET (06:02 GMT)
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