TIDMRDLZ
RNS Number : 5372M
Ranger Direct Lending ZDP PLC
30 April 2018
ANNUAL FINANCIAL REPORT ANNOUNCEMENT
(Registered No. 10247619)
RANGER DIRECT LING ZDP PLC
FOR THE YEARED 31(ST) DECEMBER 2017
Ranger Direct Lending ZDP Plc (the "Company") announces that it
has published its Annual Report and Accounts 2017. Copies of the
Annual Report and Accounts 2017 and the Notice of the 2018 Annual
General Meeting are available to view on the Company's website at
http://www.rangerdirectlending.uk/. They have also been submitted
to the National Storage Mechanism and will shortly be available for
inspection at www.morningstar.co.uk/NSM.
Copies of those documents, together with a form of proxy for use
in connection with the 2017 Annual General Meeting, will be posted
or made available to the Company's shareholders shortly.
The Company also announces that it will hold its Annual General
Meeting at 4.00 pm on 19 June 2018 at Travers Smith LLP, 10 Snow
Hill, London, EC1A 2AL.
The financial information set out below does not constitute the
Company's statutory accounts for the year ended 31 December 2017
but is derived from those accounts. Statutory accounts for 31
December 2017 will be delivered to the Companies House following
the Company's annual general meeting.
The unedited full text of those parts of the annual report and
accounts for the year ended 31 December 2017, which require to be
published are set out below.
CHAIRMAN'S STATEMENT
I am pleased to present the Company's Annual Report and accounts
for the year ended 31 December 2017 for Ranger Direct Lending ZDP
plc (the "Company").
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.
The current year loss is GBP 2,037,983 (2016: GBP 655,441).
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) so 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 31 December 2017 was
3.19 times.
From the perspective of the Directors, the Company's activities
are integrated with the RDLF Group (the "Group"), for which the
Annual 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
BOARD OF DIRECTORS
Christopher Waldron (Chairman) (independent) appointed on 23
June 2016
Mr Waldron has more than thirty years' experience as an asset
manager. He is Chairman of UK Mortgages Limited, which is also on
the Main Market of the London Stock Exchange and Chairman of
Crystal Amber Fund Limited, which is AIM traded. He is a director
of JZ Capital Partners Limited, which trades on the Specialist Fund
Segment of the London Stock Exchange, as well as a number of
unlisted companies. 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.
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
(EMBA) programme which is currently ranked as one of 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 credit special situations hedge fund. He is the Executive
Chairman of Capital Step a UK based mid-market lender. 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, a pan African consumer
finance business, Iwoca.com an SME lender (of which he is Chairman)
and Mode, an emerging market airtime credit provider. Mr Schneider
has held numerous previous directorships, including serving as on
the Board of publicly listed Talon Metals Inc. and Aqua Online
Limited.
STRATEGIC REPORT AND OTHER STATUTORY INFORMATION
The Strategic Report has been prepared in accordance with
Section 414A of the Companies Act 2006 (the "Act"). Its purpose is
to inform members of Ranger Direct Lending ZDP plc (the "Company")
and help them understand how the Directors have performed their
duty under Section 172 of the Act.
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 Group as explained in the Chairman's
Statement.
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.
Important events and financial performance
The current year loss is GBP 2,037,983 (2016: GBP 655,441).
The Board reviews the 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:
-- Accrued capital entitlement - represents the Company's
liability per ZDP share. As at 31 December 2017, the total accrued
capital entitlement is GBP56,360,557 (see below).
-- Cover(2) - measures the ability of RDLF to meet the Company's
final capital entitlement based on RDLFs net asset value.
-- Share Price of ZDP Shares(3) - the price at which each
preference share can be sold in the London Stock Exchange.
The ZDP Shares' Cover as at 31 December 2017 was 3.19 times (31
December 2016: 3.70 times).
As at 31 December 2017, the capital entitlement which had
accrued on the ZDP Shares was GBP 1.0634 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.
Date Share Price
of ZDP Shares(2)
IPO 1.000
------------------
31/08/2016 1.063
------------------
30/09/2016 1.071
------------------
31/10/2016 1.070
------------------
30/11/2016 1.068
------------------
29/12/2016 1.045
------------------
31/01/2017 1.055
------------------
28/02/2017 1.050
------------------
31/03/2017 1.043
------------------
28/04/2017 1.035
------------------
31/05/2017 1.010
------------------
30/06/2017 1.005
------------------
31/07/2017 1.013
------------------
31/08/2017 1.018
------------------
29/09/2017 1.048
------------------
31/10/2017 1.041
------------------
30/11/2017 1.020
------------------
29/12/2017 1.019
------------------
(2) 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.(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.
Further KPIs for the parent company can be found in RDLF's
annual report.
The Company's market capitalisation as of 31 December 2017 was
GBP 53.994 million (31 December 2016: GBP 55.385 million) based on
53,000,000 ZDP Shares at a Share Price of 101.875 pence
(31 December 2016: 104.5 pence) per ZDP share.
Current and future developments
The current and future developments of the Company are set out
in the Chairman's Statement above and can also be reviewed as part
of the Group's activities by reference to RDLF's Annual Report and
Accounts.
External service providers
Administrative functions are contracted to external service
providers. However, the Directors retain responsibility for
exercising overall control and supervision of these external
service providers.
Principal risks and uncertainties
Due to the Company's dependence on 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 Board has
carried out a robust assessment of this risk. The specific risks
faced by RDLF are described in its annual report, which include:
macroeconomic risks, legal and compliance risks, investment risks,
taxation risks, cyber security risks and an update on any effect of
Brexit.
In addition, the Company is also focused on the following
principal risk:
Principal risk Mitigation Link to KPI
Final capital entitlement
RDLF's debt to the Company To protect the interests Cover
pursuant to the Loan of ZDP Shareholders,
Agreement and RDLF's the Undertaking contains
obligations under the the following restrictions:
Undertaking will rank
behind any secured creditors
of RDLF therefore it
is not guaranteed that
the final capital entitlement
will be paid.
* Group incurring any bank borrowings which would
exceed an amount equal to the sum of:
(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.
Employees, environmental, human rights and community issues
The Board recognises the requirement under Section 414C of the
Act to detail information about employees, human rights and
community issues, including information about any policies it had
in relation to these matters and the effectiveness of these
policies.
The Company has no greenhouse gas emissions to report from its
operations, nor does it have responsibility for any other emissions
producing sources under the Companies Act 2006 (Strategic Report
and Directors' Report) Regulations 2013, including those within
RDLF's underlying investment portfolio.
The Company has no employees and the Board is comprised entirely
of non-executive Directors who are also directors of RDLF. The
Company itself has no environmental, human rights or community
policies. However in carrying out its activities in relation with
its suppliers, by way of RDLF, the Company aims to conduct itself
responsibly, ethically and fairly.
Gender Diversity
At the end of the financial period, the Company had three male
directors. The Board considers the current structure, size and
composition required of the Board taking into account the
challenges and opportunities facing the Company. The Directors are
committed to diversity and are supportive of increased gender
diversity but recognise that it may not always be in the best
interest of Shareholders to prioritise this above other factors. In
considering future candidates, appointments will be made with
regard to a number of different criteria, including diversity of
gender, background and personal attributes, alongside the
appropriate skills, experience and expertise.
The Directors are satisfied that the Board currently contains
members with an appropriate breadth of skills and experience. No
new appointments to the Board have been made or are contemplated at
present.
On behalf of the Board
Christopher Waldron
Chairman
The following disclosures are extracted from the Directors'
Report of the Annual Report and are repeated here solely for the
purpose of complying with DTR 6.3.5.
Capital Structure
As at 31 December 2017, the issued share capital of the Company
comprised 50,000 Ordinary Shares of GBP 1.00 each (representing
8.6% of the Company's issued share capital), and 53,000,000 ZDP
Shares of GBP 0.01 each (representing 91.4% of the Company's issued
share capital), all of which are fully paid. The Ordinary Shares of
the Company are not admitted to trading on a regulated market. The
Company's Articles permit the Board to issue or buy back shares,
however, no authority to buy back shares has yet been sought from
Shareholders. The Company has therefore not bought back any shares
during the year.
Corporate Governance
As set out in the Company's prospectus dated 26 July 2016, the
Company has a Standard Listing on the London Stock Exchange so is
not obliged to comply with the UK Corporate Governance Code (the
"UK Corporate Governance Code"), nor does the Company intend to
comply with the Governance Code on a voluntary basis. In the
opinion of the Board, the interests of the Company and the
Shareholders will be protected by the governance procedures adopted
by RDLF, which are set out in the corporate governance section of
RDLF's annual report (which can be found here
http://www.rangerdirectlending.uk/documents/ and which includes
compliance with the Association of Investment Companies ('AIC')
Code).
It is the responsibility of the Board to ensure that there is
effective stewardship of the Company's affairs. As such, the Board
meets quarterly to consider RDLF's compliance with the terms of the
Loan and the Undertaking, based on reports from RDLF's investment
manager. The Board also considers the Company's interim and annual
reports. The Board met quarterly during the year and all Directors
attended each meeting. In addition the Board met and established
committees where necessary, including to approve a supplementary
prospectus to the prospectus issued on 24 October 2016 in
connection with the twelve month placing programme of up to 75
million zero dividend preference shares of GBP0.01 each in the
capital of the Company. All Directors attended each meeting.
The Directors believe that the Board has an appropriate balance
of skills and experience to enable it to provide effective
leadership and proper governance of the Company. Information on
each of the Directors, including their relevant experience is set
out above.
Given the nature of the Company's business and the number of
Directors, the Board has not established separate committees and
instead deals with all business as a full Board.
Since the Company has no actual business (in terms of
transactions or cash flows), it is not considered necessary for the
Board to include any independent directors and all matters relevant
for consideration by the Board will be addressed by the
non-independent Board who will have due regard to the interests of
the ZDP Shareholders.
Main features of the Company's internal control and risk
management systems in relation to the financial reporting
process
The Board of Directors is responsible for establishing and
maintaining adequate internal control and risk management systems
of the Company in relation to the financial reporting process. Such
systems are designed to manage rather than eliminate the risk of
error or fraud in achieving the Company's financial reporting
objectives and can only provide reasonable and not absolute
assurance against material misstatement or loss.
The Board of Directors has contracted with the Administrator to
put procedures in place to ensure all relevant accounting records
are properly maintained and are readily available, including
production of annual financial statements. The annual financial
statements of the Company are required to be approved by the Board
of Directors of the Company and audited by the independent auditor
who report annually to the Board on their findings. The Board of
Directors evaluates and discusses significant accounting and
reporting issues as the need arises.
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.
Viability statement
The Directors have assessed the prospects of the Company over
the three year period up to the ZDP Repayment Date of 31 July 2021.
The Directors believe this period to be appropriate as they will be
required by the Articles to pass a special resolution in a general
meeting and at a class meeting of ZDP Shareholders.
The Board has reviewed the viability statement of RDLF, which
can be found in the Strategic Report of RDLF's annual report, and
has assessed that RDLF has sufficient resources to fulfil its
obligations to the Company. The key assumptions taken include
having adequate Cover for the final capital entitlement and cash
flow forecast for the Company's general and administrative costs.
Based on the Directors' evaluation of these factors, they concluded
that there is a reasonable expectation that the Company will be
able to continue in operation and meet its liabilities as they fall
due over the three year period to the final repayment date.
The following responsibility statement is extracted from the
Annual Report and is repeated here solely for the purpose of
complying with DTR 6.3.5. This statement does not relate to the
extracted information presented in the annual financial report
announcement.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the financial
statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial
statements for each financial period. Under that law they have
elected to prepare the financial statements in accordance with
International Financial Reporting Standards as adopted by the
European Union ("IFRS").
Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Company and of the profit or
loss of the Company for that period. In preparing these financial
statements, the Directors are required to:
-- properly select and apply accounting policies;
-- present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
-- provide additional disclosures when compliance with the
specific requirements in IFRSs are insufficient to enable users to
understand the impact of particular transactions, other events and
conditions on the entity's financial position and financial
performance; and
-- make an assessment of the Company's ability to continue as a going concern.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the Companies Act 2006. They
have general responsibility for taking such steps as are reasonably
open to them to safeguard the assets of the Company and to prevent
and detect fraud and other irregularities.
Responsibility statement
We confirm to the best of our knowledge that:
-- the financial statements, prepared in accordance with IFRS,
give a true and fair view of the assets, liabilities, financial
position and loss of the Company;
-- the strategic report includes a fair review of the
development and performance of the business and the position of the
Company, together with a description of the principal risks and
uncertainties that they face; and
-- the Annual Report, taken as a whole, includes a fair review
of the development and performance of the business and the position
of the Company, together with a description of the principal risks
and uncertainties.
This responsibility statement was approved by the Board of
Directors on 30 April 2018 and is signed on behalf of the
Board.
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF RANGER DIRECT LING
ZDP PLC
Report on the audit of the financial statements
Opinion
In our opinion the financial statements:
-- give a true and fair view of the state of the company's
affairs as at 31 December 2017 and of its loss for the year then
ended;
-- have been properly prepared in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the European
Union; and
-- have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of Ranger Direct
Lending ZDP plc (the 'company') which comprise:
-- the statement of comprehensive income;
-- the company balance sheet;
-- the company statement of changes in equity;
-- the cash flow statement; and
-- the related notes 1 to 14.
The financial reporting framework that has been applied in their
preparation is applicable law and IFRSs as adopted by the European
Union.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
auditor's responsibilities for the audit of the financial
statements section of our report.
We are independent of the company in accordance with the ethical
requirements that are relevant to our audit of the financial
statements in the UK, including the FRC's Ethical Standard as
applied to listed public interest entities, and we have fulfilled
our other ethical responsibilities in accordance with these
requirements. We confirm that the non-audit services prohibited by
the FRC's Ethical Standard were not provided to the company.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Summary of audit approach
Key audit matters The key audit matter that was identified in
the current year was the accuracy of the calculation
of interest income on the loan instrument provided
to Ranger Direct Lending Fund Plc.
Within this report, the key audit matter is
the same as the prior year.
Materiality The materiality that we used for the company
financial statements was GBP185,000 which was
determined on the basis of 10% of the loss
before taxation.
Scoping Audit work to respond to the risks of material
misstatement was performed directly by the
audit engagement team.
Significant changes The prior period was the first period of account
in our approach following incorporation. We have changed the
basis of our materiality from a judgemental
measure to be based upon a percentage of loss
before taxation.
In the prior period we identified a key audit
matter relating to the appropriateness of the
effective interest rate applied to the intercompany
loan held with the parent company; in the current
period our key audit matter relates to the
calculation of the interest income on the loan.
Conclusions relating to going concern
We are required by ISAs (UK) to report We have nothing to report
in respect of the following matters where: in respect of these matters.
-- the directors' use of the going concern
basis of accounting in preparation of
the financial statements is not appropriate;
or
-- the directors have not disclosed in
the financial statements any identified
material uncertainties that may cast significant
doubt about the company's ability to continue
to adopt the going concern basis of accounting
for a period of at least twelve months
from the date when the financial statements
are authorised for issue.
Key audit matter
The key audit matter is the matter that, in our professional
judgement, was of most significance in our audit of the financial
statements of the current period and includes the most significant
assessed risk of material misstatement (whether or not due to
fraud) that we identified. This matter was that which had the
greatest effect on: the overall audit strategy, the allocation of
resources in the audit; and directing the efforts of the engagement
team.
This matter was addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on this
matter.
Accuracy of the EIR calculation
Key audit matter Investment income of GBP1 million has been
description recognised for the year ended 31 December 2017.
This is the sole source of income for the company,
which acts to provide financing for the parent
company, Ranger Direct Lending Fund Plc.
Refer to note 2 to the financial statements
for the investment income accounting policy
and for details of the critical accounting
policy judgement made by the directors in relation
to the determination of the interest rate.
We presume a risk of material misstatement
due to fraud related to revenue recognition.
We have identified that this risk relates specifically
to the accuracy of the calculation of interest
income on the loan instrument provided to Ranger
Direct Lending Fund Plc.
How the scope of Our procedures included:
our audit responded
to the key audit Assessing related controls: We performed a
matter detailed walkthrough of the process, assessing
the design and implementation of key controls
around the recognition of interest income.
We assessed the design and implementation of
key controls around related party transactions.
Tests of detail: We reperformed the interest
income calculation, by agreeing the calculation
to governing documents and source documentation,
verifying the calculation methodology and the
accuracy of the inputs used in the calculation.
Key observations Based on our work, we concluded that investment
income is not materially misstated in the context
of the audit of the company's financial statements.
Our application of materiality
We define materiality as the magnitude of misstatement in the
financial statements that makes it probable that the economic
decisions of a reasonably knowledgeable person would be changed or
influenced. We use materiality both in planning the scope of our
audit work and in evaluating the results of our work.
Based on our professional judgement, we determined materiality
for the financial statements as a whole as follows:
Materiality GBP185,000 (2016: GBP5,729)
Basis for determining 10% of pre-tax loss
materiality
Rationale for the Profit or loss before tax is a relevant benchmark
benchmark applied as it is a key figure used by analysts in assessing
the performance of the business.
The change in the basis for materiality is
because the prior period was the period of
incorporation and initial listing.
We agreed with the Audit Committee that we would report to the
Committee all audit differences in excess of GBP9,250 (2016:
GBP206) as well as differences below that threshold that, in our
view, warranted reporting on qualitative grounds. We also report to
the Audit Committee on disclosure matters that we identified when
assessing the overall presentation of the financial statements.
An overview of the scope of our audit
A full scope audit has been performed for the company's
financial statements. Audit work to respond to the risk of material
misstatement was performed directly by the audit engagement
team.
Other information
The directors are responsible for the other We have nothing to report
information. The other information comprises in respect of these
the information included in the annual report matters.
other than the financial statements and
our auditor's report thereon.
Our opinion on the financial statements
does not cover the other information and,
except to the extent otherwise explicitly
stated in our report, we do not express
any form of assurance conclusion thereon.
In connection with our audit of the financial
statements, our responsibility is to read
the other information and, in doing so,
consider whether the other information is
materially inconsistent with the financial
statements or our knowledge obtained in
the audit or otherwise appears to be materially
misstated.
If we identify such material inconsistencies
or apparent material misstatements, we are
required to determine whether there is a
material misstatement in the financial statements
or a material misstatement of the other
information. If, based on the work we have
performed, we conclude that there is a material
misstatement of this other information,
we are required to report that fact.
Responsibilities of directors
As explained more fully in the directors' responsibilities
statement, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true
and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to
fraud or error.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor's report.
Use of our report
This report is made solely to the company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the company and the company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
In preparing the financial statements, the directors are
responsible for assessing the company's ability to continue as a
going concern, disclosing as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Legal and regulatory requirements
Report on other legal and regulatory requirements
Opinions on other matters prescribed by the Companies Act
2006
In our opinion, based on the work undertaken in the course of
the audit:
-- the information given in the strategic report and the
directors' report for the financial year for which the financial
statements are prepared is consistent with the financial
statements; and
-- the strategic report and the directors' report have been
prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the company
and its environment obtained in the course of the audit, we have
not identified any material misstatements in the strategic report
or the directors' report.
Matters on which we are required to report by exception
Adequacy of explanations received
and accounting records We have nothing to report in respect
Under the Companies Act 2006 we of these matters.
are required to report to you if,
in our opinion:
* we have not received all the information and
explanations we require for our audit; or
* adequate accounting records have not been kept, or
returns adequate for our audit have not been received
from branches not visited by us; or
the financial statements are not
in agreement with the accounting
records and returns.
Directors' remuneration We have nothing to report in respect
Under the Companies Act 2006 we of this matter.
are also required to report if
in our opinion certain disclosures
of directors' remuneration have
not been made.
Other matters
Auditor tenure
Following the recommendation of the audit committee we were
appointed by the directors of the Company on 22 July 2016 to audit
the financial statements of the Company for the period ending 31
December 2016 and subsequent financial periods. Our total
uninterrupted period of engagement is 2 years, covering periods
from our appointment through to the period ending 31 December
2017.
Consistency of the audit report with the additional report to
the audit committee
Our audit opinion is consistent with the additional report to
the audit committee we are required to provide in accordance with
ISAs (UK).
Garrath Marshall, ACA (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London, United Kingdom
30 April 2018
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2017
31 Dec 2017 31 Dec 2016
Notes (GBP) (GBP)
ASSETS
Non-current assets
Loan and receivables 3 54,595,547 53,525,047
------------------------------- ------------------------------
Total non-current assets 54,595,547 53,525,047
------------------------------- ------------------------------
Current assets
Prepayments 170 1,758
Cash and cash equivalents 50,000 50,000
Total current assets 50,170 51,758
------------------------------- ------------------------------
TOTAL ASSETS 54,645,717 53,576,805
------------------------------- ------------------------------
Non-current liabilities
Zero Dividend Preference
Shares 4 56,360,557 53,563,069
------------------------------- ------------------------------
Total non-current liabilities 56,360,557 53,563,069
------------------------------- ------------------------------
Current liabilities
Income tax liability 214,799 44,026
Accrued expenses and other
liabilities 42,839 45,744
------------------------------- ------------------------------
Total current liabilities 257,638 89,770
------------------------------- ------------------------------
TOTAL LIABILITIES 56,618,195 53,652,839
------------------------------- ------------------------------
NET LIABILITIES (1,972,478) (76,034)
=============================== ==============================
SHAREHOLDER'S EQUITY
Capital and reserves
Called-up share capital 5 50,000 50,000
Capital contribution 3 670,946 529,407
Accumulated losses (2,693,424) (655,441)
------------------------------- ------------------------------
TOTAL SHAREHOLDER'S DEFICIT (1,972,478) (76,034)
=============================== ==============================
Christopher Waldron
Chairman
The accompanying notes below are an integral part of these
financial statements.
The financial statements below for the year ended 31 December
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 30 April 2018.
Signed on behalf of the Board of Directors
Christopher Waldron
Chairman
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31 DECEMBER 2017
1 Jan to 23 Jun to
31 Dec 2017 31 Dec 2016
(GBP) (GBP)
Notes
Income
Investment income 3 1,070,500 318,599
1,070,500 318,599
------------------------- --------------------------
Expenses
Company secretarial, administration
and registrar (81,833) (52,204)
Audit fees 12 (37,760) (24,000)
Legal fees (1,500) (19,148)
VAT and tax fees (2,530) -
Other operating expenses (6,314) (3,118)
------------------------- --------------------------
Total expenses (129,937) (98,470)
------------------------- --------------------------
Result from operating activities 940,563 220,129
------------------------- --------------------------
Finance costs (2,797,488) (831,544)
------------------------- --------------------------
Total finance costs (2,797,488) (831,544)
------------------------- --------------------------
Loss before tax (1,856,925) (611,415)
Tax 6 (181,058) (44,026)
------------------------- --------------------------
Loss after tax and total comprehensive
loss for the year/period (2,037,983) (655,441)
========================= ==========================
Basic and Diluted Loss Per Ordinary
Share 9 (40.76) (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
year and prior period therefore the loss for the year and prior
period are also the total comprehensive loss for the year and prior
period.
STATEMENT OF CHANGES IN SHAREHOLDER'S DEFICIT
FOR THE YEARED 31 DECEMBER 2017
Called-up Capital Accumulated
Notes share capital contribution losses Total
(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) (655,441)
----------------------- -----------------------
Balance at 31
December
2016 50,000 529,407 (655,441) (76,034)
======================= ======================= ======================= ======================
Called-up Capital Accumulated
Notes share capital contribution losses Total
(GBP) (GBP) (GBP) (GBP)
----------------------- ----------------------- ----------------------- ----------------------
Balance at 1
January
2017 50,000 529,407 (655,441) (76,034)
Capital
contribution
during the
year 3 - 175,280 - 175,280
Tax relating
to capital
contribution - (33,741) - (33,741)
Loss after tax
and total
comprehensive
loss for
the year - - (2,037,983) (2,037,983)
----------------------- -----------------------
Balance at 31
December
2017 50,000 670,946 (2,693,424) (1,972,478)
======================= ======================= ======================= ======================
The accompanying notes are an integral part of these financial
statements.
STATEMENT OF CASH FLOWS
FOR THE YEARED 31 DECEMBER 2017
1 Jan to 23 Jun to
31 Dec 2017 31 Dec 2016
Note (GBP) (GBP)
Cash flows from operating activities
Loss before tax (1,856,925) (611,415)
Adjustments for:
Investment income (1,070,500) (318,599)
Finance costs 2,797,488 831,544
Income tax paid (44,026) -
------------- ------------------------
Operating cash flows before movements
in working capital (173,963) (98,470)
Decrease/(Increase) in prepayments 1,588 (1,758)
(Decrease)/Increase in accrued expenses
and other liabilities (2,905) 45,744
------------- ------------------------
Net cash flows used in operating
activities (175,280) (54,484)
------------- ------------------------
Financing activities
Capital contributions 175,280 54,484
Proceeds on issue of Ordinary Shares 5 - 50,000
------------- ------------------------
Net cash flows from financing activities 175,280 104,484
------------- ------------------------
Net change in cash and cash equivalents - 50,000
Cash and cash equivalents at the
beginning of the year/period 50,000 -
------------- ------------------------
Cash and cash equivalents at the
end of the year/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 FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 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.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of accounting and preparation
These financial statements have been prepared in compliance with
applicable International Financial Reporting Standards ("IFRS") as
adopted by the European Union ("EU") and have been prepared on a
historical cost basis. There are no new standards or amendments to
standards effective for the period presented that have a material
impact on the Company.
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.
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.
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. Upon
adoption of IFRS 9, the loan and receivables and zero dividend
preference shares will continue to be classified and accounted for
at amortised cost. Therefore, the Directors believe that the
adoption of IFRS 9 will result in re-evaluation of the impairment
model for financial assets and liabilities measured at amortised
cost. This will include estimation of an expected credit loss on
those financial instruments. The Directors believe that the 12
month credit risk of ZDP is minimal or effectively zero given the
level of cover.
Use of estimates, judgements and assumptions
The following are the 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 ZDP 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 year.
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 Pounds Sterling
("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 year 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 paid 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 original maturities
of three months or less from the date of acquisition.
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
(Audited) (Audited)
31 Dec 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 year/period 1,070,500 318,599
------------ ----------------
Closing balance 54,595,547 53,525,047
============ ================
Intercompany Loan Agreement
On 25 July 2016, the Company 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 paid 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 year, the parent company contributed GBP 175,280 (23
June 2016 to 31 December 2016: GBP 529,407) to the Company. The
total capital contribution by the parent company as at 31 December
2017 amounted to GBP 704,687 (31 December 2016: GBP 529,407).
4. ZERO DIVID PREFERENCE SHARES
31 Dec 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 year/period 91,718 45,482
Amortisation of premium during the year/period - (20,175)
Accrued interest during the year/period 2,705,770 806,236
------------
Closing balance 56,360,557 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 the 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 a 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)
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.
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 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.
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), 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:
31 Dec 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
31 Dec 2017 23 Jun
to 31
Dec 2016
(GBP) (GBP)
Corporation tax:
Current 181,058 44,026
Deferred tax - -
-------------------------- ---------------------
Total tax expense for the year/period 181,058 44,026
========================== =====================
The Company's tax charge for the year can be reconciled to the
loss in the statement of comprehensive income as follows:
31 Dec 2017 23 Jun
to 31
Dec 2016
(GBP) (GBP)
Loss before tax on continuing operations (1,856,925) (611,415)
----------------------- -------------------
Tax effect at the UK corporation tax rate
of 19.25% (357,485) (122,283)
Tax effect of expenses that are not deductible
in determining taxable profit 538,516 166,309
----------------------- -------------------
Tax expense for the year/period 181,058 44,026
======================= ===================
The UK Corporation tax rate has changed from 20% to 19%
effective 19 April 2017. The Company applied a weighted average
corporation tax of 19.25% for 2017.
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:
31 Dec 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 year 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 101.875 pence (31 December 2016: GBP 104.5
pence) per share which was observed on the London Stock Exchange on
29 December 2017 (31 December 2016: 29 December 2016) 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 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 31 December 2017:
Fair value (GBP) (GBP) (GBP) (GBP)
Level Level Level Total
1 2 3
Loan and receivable - 53,993,750 - 53,993,750
========================== ====================== ====================== ================
Zero Dividend
Preference Shares 53,993,750 - - 53,993,750
========================== ====================== ====================== ================
As at 31 December 2016:
Fair value (GBP) (GBP) (GBP) (GBP)
Level Level Level Total
1 2 3
Loan and receivable - 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 year of GBP 2,037,983 (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 year and pursuant to the Deed of Undertaking, the
parent company contributed GBP 175,280 (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 above.
The Company had no employees for the year ended 31 December 2017
(23 June 2016 to 31 December 2016: none).
The Directors received no remuneration for their services to the
Company during the year and prior period.
12. AUDITOR'S REMUNERATION
The analysis of the auditor's remuneration is as follows:
31 Dec 2017 23 Jun
to 31
Dec 2016
(GBP) (GBP)
Audit fees for the audit of the Company's
financial statements 24,960 24,000
Non-audit fees related to corporate financial
services charged to Zero Dividend
Preference Shares 12,800 123,600
------------------------------ -------------------
37,760 147,600
============================== ===================
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
Christopher Waldron
Jonathan Schneider
Matthew Mulford
Company Secretary
Link Company Matters Limited
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
United Kingdom
Registrar
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
United Kingdom
Auditor
Deloitte LLP
Chartered Accountants and Statutory Auditor
2 New Street Square
London EC4A 3BZ
United Kingdom
Company website
www.rangerdirectlending.uk/ranger-direct-lending-zdp-plc/
Registered Office
6(th) Floor,
65 Gresham Street,
London, United Kingdom
EC2V 7NQ
Broker
Liberum Capital Limited
Level 12, Ropemaker Place
25 Ropemaker Street
London EC2Y 9LY
United Kingdom
Administrator
Sanne Fiduciary Services Limited
13 Castle Street
St Helier
Jersey JE4 5UT
Channel Islands
English and US Securities Law Legal Adviser
Travers Smith LLP
10 Snow Hill
London EC1A 2AL
United Kingdom
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR URAWRWNASORR
(END) Dow Jones Newswires
April 30, 2018 04:20 ET (08:20 GMT)
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