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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Alcentra European Floating Rate Income Fund Limited | LSE:AEFS | London | Ordinary Share | GG00BL649943 | RED ORD NPV GBP |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 82.00 | 81.50 | 82.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMAEFS
RNS Number : 8211W
Alcentra European Fltng Rate Inc Fd
17 November 2017
17 NOVEMBER 2017
FOR IMMEDIATE RELEASE
THE BOARD OF DIRECTORS OF ALCENTRA EUROPEAN FLOATING RATE INCOME FUND LIMITED ANNOUNCES THE INTERIM REPORT AND UNAUDITED CONDENSED FINANCIAL STATEMENTS FOR THE PERIODED 30 SEPTEMBER 2017.
Financial Highlights and Performance Summary
Financial Highlights
Alcentra European Floating Rate Income Fund Limited (the "Company") repurchased and cancelled 3,247,036 Ordinary Shares during the six month period for a total cost of EUR3,767,481 (GBP3,287,420) (Year ended 31 March 2017: 6,365,065 Ordinary Shares were repurchased and cancelled during the year for a total cost of EUR7,564,758 (GBP6,345,793)).
Performance Summary
Hot Features
Premium
(In millions, except At 30 September At 31 March
per share data and the 2017 2017
number of Ordinary Shares
in issue)
Number of Ordinary Shares
in issue 166,363,860 169,610,896
Market capitalisation(1)
- Ordinary Shares (in GBP168.4 GBP174.7
Sterling)
- Ordinary Shares (in
Euro) EUR191.2 EUR204.8
Net Asset Value ("NAV")
attributable to Sterling
shareholders
- Ordinary Shares EUR197.3 EUR207.1
NAV per share attributable
to Sterling shareholders
- Ordinary Shares (in GBP1.0448 GBP1.0414
Sterling)
- Ordinary Shares (in
Euro) EUR1.1857 EUR1.2210
Ordinary Share price
(bid price)(1)
In Sterling GBP1.0125 GBP1.0300
In Euro EUR1.1490 EUR1.2076
Ordinary Share price
discount to NAV
In Sterling GBP0.0323 GBP0.0114
In Euro EUR0.0367 EUR0.0134
Investment in Alcentra
European Floating Rate
Income S.A. at fair
value EUR192.2 EUR203.9
Cash and cash equivalents EUR1.3 EUR1.1
Dividend yield - Ordinary
Shares 4.26% 5.34%
Dividend History
During the period, the Company declared and paid dividends of 1.09p per Ordinary Share for the quarter ended 31 March 2017 and 1.07p per Ordinary Share for the quarter ended 30 June 2017. Subsequent to the period end, the Company declared and paid a dividend of 0.98p per Ordinary Share for the quarter ended 30 September 2017.
Please refer to note 9 for further details on dividends paid during the period and note 15 for the dividend paid subsequent to the period end.
(1) Source: London Stock Exchange
Chairman's Statement
Dear Shareholder,
I'm pleased to present the Interim Report of the Company for the period to 30(th) September 2017.
The Company demonstrated NAV growth over the 6 months with the NAV per share increasing from 104.14p as at 31 March 2017 to 104.48p as at 30 September 2017. In relation to the period, the Company declared and paid dividends of 2.16p per Ordinary share and subsequent to the period end declared and paid a dividend of 0.98p per Ordinary Share covering the period 1 July to 30 September 2017. This brings the total dividend paid since IPO to 28.37p per Ordinary Share giving an overall return of 35.56% since inception
The Board actively monitors the share price, working closely with the Company's brokers within an agreed framework. We have instigated a buyback programme with the aim of limiting the discount to NAV. During the period, 3,247,036 Ordinary shares were repurchased and cancelled, bringing the number of issued shares of the Company to 166,363,860 Ordinary Shares. The buyback transactions are so far proving successful in managing the discount to NAV.
The Company invests in senior secured loans and senior secured bonds issued by European corporates and has additional capacity to invest in mezzanine loans and other debt securities. The highly diversified portfolio of well managed credits has yielded stable dividends over the four years since inception. The Company targets long term returns (net of fees and expenses) in excess of 5% per annum and will continue to pay quarterly dividends. The near term outlook in the global credit market is for continuing spread compression which is likely to put pressure on returns. The Board is monitoring the situation and maintains confidence in the asset class owing to its floating rate nature that has the ability to benefit from future interest rate rises.
The Board closely monitors the markets in the current environment, including the consequences of the Brexit vote, within the risk management framework that has been established by the Risk Committee. Whilst the impact of Brexit remains unknown, continued currency volatility is expected. Nevertheless, your Board remains confident in the Company's portfolio comprised of well-selected, robust credits and with the Investment Manager will continue to seek opportunities in our markets to add further value.
Alcentra Limited (the "Investment Manager") believes that the loan market performance over 2017 to date, given the level of financial markets volatility, demonstrates that the loan market continues to provide attractive risk adjusted returns compared to other asset classes. Your Board continues to be satisfied with the portfolio's performance to date and the strategy that is being applied by the Investment Manager. The Investment Manager will continue to update you on the Company's progress by way of the monthly performance updates.
On behalf of the Board, I would like to close by thanking shareholders for your continued commitment and I look forward to updating you on the Company's progress later on this year.
Ian Fitzgerald
Chairman
16 November 2017
Investment Manager's Report
Summary
The NAV of the Company has remained relatively stable over the period, with the Company focusing on clipping coupons, with relatively little opportunity for capital gain in the current market.
The Company (Bloomberg ticker: AEFS) share price was slightly more volatile than the NAV; this can be attributed to broader market pressures. The Company has been active in buying back Ordinary Shares to support the share price, resulting in improved discount performance. The widening of the discount at certain periods has allowed the Board to buy back 3,247,036 Ordinary Shares during the period, providing liquidity to those investors requiring it while benefitting the remaining holders of the stock.
As at 30 September 2017, the NAV was 1.0448 pence per Ordinary Share.
Portfolio
As at 30 September 2017, the portfolio was invested in line with the Company's investment policy and was diversified by obligor and industry with 109 issuers/borrowers across 27 different industry sectors and no individual borrower representing an exposure of more than 5 percent of the portfolio. Against a volatile financial markets backdrop over the past few years, the Company's performance has been strong, outperforming both US and European loan indices, as shown below:
Key Portfolio Statistics as at 30 September 2017
Number of Issuers 109 ----------------------------- ------ Number of Assets 135 ----------------------------- ------ Number of Industries 27 ----------------------------- ------ Weighted Average Mid Price of the Portfolio 99.63 ----------------------------- ------ Portfolio Current Yield 4.90% ----------------------------- ------ Yield to Maturity (Legal) 5.14% ----------------------------- ------ Percentage of Portfolio in Floating Rate Assets 95.22% ----------------------------- ------ Weighted Average Floating Rate Plus Margin 4.80% ----------------------------- ------ Weighted Average Coupon 5.15% ----------------------------- ------ Weighted Average Maturity (Years) 5.49 ----------------------------- ------
Portfolio Statistics as at 30 September 2017
5 Largest Holdings
=======================================================
Issuer % of NAV Currency Country
================= ========== ============ ==========
Motor Fuel 2.62 GBP UK
Group
----------------- ---------- ------------ ----------
ERM 2.48 USD UK
----------------- ---------- ------------ ----------
Stada 2.40 EUR / GBP Germany
----------------- ---------- ------------ ----------
Vivarte 2.04 EUR France
----------------- ---------- ------------ ----------
Cabot Financial 2.02 EUR / GBP USA
----------------- ---------- ------------ ----------
Currency Breakdown % of
NAV
===================== =======
Euro 68.33
--------------------- -------
Pound Sterling 23.05
--------------------- -------
US Dollar 4.90
--------------------- -------
Swiss Franc 0.67
--------------------- -------
Cash 3.05
--------------------- -------
Top 5 Industries
===================================
Issuer % of NAV
======================= ==========
Health care 16.65
----------------------- ----------
Business
equipment
and services 11.73
----------------------- ----------
Retailers
(other than
food/drug) 7.41
----------------------- ----------
Chemical/Plastics 7.38
----------------------- ----------
Electronics/electric 7.05
----------------------- ----------
Performance
Since inception the portfolio has evolved as follows:
-- Increased the number of assets to 135 further diversifying the portfolio by sector and geography.
-- Maintained high UK exposure to take advantage of the better margins available for Sterling loans.
-- No significant increase in our US exposure, given better total return on non-US Dollar tranches on cross-border deals (including benefit from LIBOR/EURIBOR floors).
Current Geographical Positioning (30 September 2017)
Geographical Region % of NAV ======================== UK 27.07 ----------------- ----- France 18.15 ----------------- ----- Germany 11.79 ----------------- ----- Netherlands 10.93 ----------------- ----- USA 6.80 ----------------- ----- Sweden 5.08 ----------------- ----- Spain 4.07 ----------------- ----- Luxembourg 3.78 ----------------- ----- Ireland 2.85 ----------------- ----- Other 6.43 ----------------- ----- Cash 3.05 ----------------- -----
Geographical Region (as at completion of initial investment - 30 April 2012)
Country % of NAV ===================== UK 44.29 -------------- ----- France 27.95 -------------- ----- Sweden 6.59 -------------- ----- USA 4.11 -------------- ----- Netherlands 3.10 -------------- ----- Germany 3.09 -------------- ----- Belgium 2.05 -------------- ----- Luxembourg 1.05 -------------- ----- Cash 7.77 -------------- -----
Outlook
Key attractions of Floating Rate Secured Loans and Bonds:
-- In Q3 2017 the average new issue spread was E+ 3.80%(1)
-- Senior secured, so lower risk of loss in the event of default than unsecured asset classes
-- Low market default rates (1.44%)(1)
-- Active new issue market with EUR73 billion of leveraged loans issued up to the end of October 2017(1) and a liquid secondary market with over EUR10.0 billion traded in Q3 2017(2)
-- Low secondary market price volatility compared to other asset classes
-- Floating rate income benefiting from interest rate rises
(1) S&P LCD Playbook, 1(st) November 2017
(2) Markit European Loan Volume Survey 3Q 2017
Review
-- The European Loan market returned +0.80% for the quarter ended 30 September 2017 based on the Credit Suisse Western European Leveraged Loan Index (EUR hedged) ("CS WELLI"), slightly down from +0.88% in the prior quarter and bringing year-to-date returns to +2.88%.
-- European Loan market technicals were stable. Year-to-date leveraged loan volume stands at EUR73 billion at the October 2017 month-end, circa. 70% up on 2016. With new money, M&A issuance picking up, the level of new investment opportunities is better than it has been for most of the year, although for the year as a whole a significant proportion of issuance has been refinancing driven. The market has also seen a sizeable number of repayments over the year and so net issuance is significantly lower, although the market has seen some growth with the CS WELLI now exceeding EUR200 billion of face value compared to EUR166 billion a year ago. The combination of repayments and continued inflows into the asset class continues to provide robust demand for loans, as a broad range of institutional investors look to the asset class to provide yield without adding duration to their portfolios. CLO issuance has also continued to be strong, with year-to-date volume reaching EUR12.8 billion, compared to the EUR16.8 billion for the full year 2017.
-- Defaults stayed low during the period with S&P's default rate at 1.44% in September 2017, versus 2.40% at the end of 2016. S&P's Distress Ratio (which measures the percentage of the S&P ELLI trading below 80) had fallen to 1.58% in September 2017, versus 1.72% in November 2016. This is normally a good indicator of future defaults but will also be influenced by secondary loan price improvements from increased investor demand(3) .
-- At quarter-end, the weighted average price of the CS WELLI was 99.17 compared to 98.83 at end of Q2, while the 3-year discount margin was roughly unchanged at 398 bps(4) .
-- Alcentra employ a bottom-up fundamental credit investment process. Prior to investment, Alcentra run financial modelling and different scenarios - management case, base case, and downside case. If Alcentra are not comfortable with the outcome of their thorough due diligent process a credit line will not be approved. Therefore, in response to Brexit, Alcentra are comfortable with their UK exposure at this point.
Outlook
-- Alcentra expect to continue to see strong demand for the asset class over the remainder of 2017 and into 2018. A broad range of investors are moving into the asset class, given the low yields available elsewhere and an increased appetite for low duration assets as rates begin to rise. CLO formation is expected to be robust, continuing the strong demand for loans.
-- Given the strong demand for the European loan asset class and the amount of Private Equity dry powder, Alcentra is cautiously optimistic that new issue volumes will improve as we move into 2018. The pipeline for the remainder of 2017 includes some large M&A transactions which is encouraging, but overall volumes are expected to be relatively modest.
-- The new issue supply will have a direct impact on spreads, which have already tightened in over 2017, particularly in the early part of the year and again more recently, with the period either side of the summer seeing an increase in spreads as primary issuance increased.
-- As a result of the strong demand for the asset class, secondary markets have remained well bid. As a result, Alcentra expect to continue to allocate more to the primary market, where Alcentra can use its sourcing capabilities to participate in more attractive opportunities.
Risks to Outlook
-- Geopolitical events continue to create some uncertainty and although financial markets have remained resilient to date, there could be volatility ahead.
-- The new issue pipeline is difficult to predict and will have an influence on returns.
Alcentra Limited
16 November 2017
(3) Standard & Poor's LCD Global View, 29 September 2017
(4) Credit Suisse Western European Leveraged Loan Index, 29 September 2017
Corporate Summary
Principal Activities and Business Review
The principal activity of the Company is to carry out business as an investment company. The Directors do not envisage any changes in this activity for the foreseeable future.
The following review is designed to provide information primarily about the Company's business, the principal risks and uncertainties it faces, and results for the period. The review should be read in conjunction with the Chairman's Statement and with the Investment Manager's Report which give a detailed review of the investment activities for the period and an outlook on the future.
Structure
The Company is a non-cellular company limited by shares incorporated in Guernsey on 3 November 2011 under the Companies (Guernsey) Law, 2008, as amended (the "Companies Law"). The Company has registration number 54200, and has been authorised by the Guernsey Financial Services Commission as an authorised closed-ended collective investment scheme.
The Initial Public Offering of the Company took place on 29 February 2012 and the Company commenced business on 6 March 2012, when its Ordinary Shares were admitted to the premium segment of the UK Listing Authority's Official List and to trading on the Main Market of the London Stock Exchange. For details on the Company's share capital refer to note 8.
The Company's Ordinary Shares are denominated in Sterling.
Investment Manager
The investment manager during the period was Alcentra Limited (the "Investment Manager"), a company incorporated in England and Wales on 4 March 2003, with registration number 2958399. The Investment Manager is regulated by the UK's Financial Conduct Authority and the US Securities and Exchange Commission.
Investment Objective
The investment objective of the Company is to provide its shareholders with quarterly dividends and the opportunity for capital growth by utilising the skills of the Investment Manager in selecting suitable investments.
The Company, together with its wholly-owned Subsidiary, Alcentra European Floating Rate Income S.A., as advised by the Investment Manager, invests either directly or, through sub-participation, indirectly in floating rate, secured loans or high-yield bonds issued by European and US corporate entities predominantly rated below investment grade or deemed by the Investment Manager to be of a corresponding credit quality.
The Company aims to satisfy the guideline in its investment policy that at least 80% of its investments are to be in debt obligations of corporate entities with significant operations, or which are domiciled, in Western Europe (including the United Kingdom). Investments are expected to be denominated in, but not limited to, Euro, Sterling or US Dollars. The Investment Manager seeks to identify investment opportunities that combine an attractive current return with a strong probability of ultimate return of capital.
Discount Control Mechanism
As per the Articles of the Company, under the discount control mechanism, if, as at 31 March, 30 June, 30 September or 31 December in any calendar year, the Shares of any class in issue have, on average over the last twelve calendar months preceding such date (a "Discount Calculation Period"), traded at a discount in excess of 5% of the average net asset value (the "NAV") per share of that class(1) , the Directors will, subject to any legal or regulatory requirements, implement a redemption offer (a "Redemption Offer") pursuant to which each shareholder of the relevant class shall be permitted to redeem up to 50% of his shares of that class. No more than one Redemption Offer shall be made in respect of any class of Ordinary Share in a twelve month period.
The Ordinary Shares did not trade at a discount in excess of 5% of the average NAV per share over the 6 month period ended 30 September 2017.
Share Buybacks
The Directors operate an active discount management policy through the use of share buy backs. On 20 September 2017, the Directors were granted authority to repurchase 24,937,942 Shares for cancellation or to be held as treasury shares. This authority will expire at the next AGM which will be held in 2018.
Pursuant to this authority, and subject to the Companies Law and the discretion of the Directors, the Company may purchase Ordinary Shares in the market on an ongoing basis with a view to addressing any imbalance between the supply of and demand for Ordinary Shares, thereby increasing the NAV per Ordinary Share and assisting in controlling the discount to NAV per Ordinary Share in relation to the price at which the Ordinary Shares may be trading.
Please refer to note 8 for details of Ordinary Share buy backs during the period ended 30 September 2017.
Life of the Company
The Company does not have a fixed life. As required by the Articles of Incorporation, the Directors were required to convene a general meeting on or before the third anniversary of the date that the Company's Ordinary Shares were listed on the Official List of the Financial Conduct Authority and to trading on the London Stock Exchange ("Admission") to propose an ordinary resolution that the Company continues its business as a closed-ended collective investment scheme (a "Continuation Resolution"). The Directors were required to propose a further Continuation Resolution on or before the sixth anniversary of Admission. Thereafter, the Directors are required to convene a general meeting to propose a Continuation Resolution on or before the anniversary of the date on which the previous Continuation Resolution was passed. If a Continuation Resolution is not passed, the Directors shall put proposals to shareholders for the reconstruction or reorganisation of the Company.
In accordance with the Articles of Incorporation, a Continuation Resolution was passed at the Annual General Meeting (the "AGM") on 25 September 2014 and at the AGM on 20 September 2017. The next Continuation Resolution will be considered at the AGM on 27 September 2018.
The Board have a reasonable expectation that the next Continuation Resolution will be passed and as such consider that the Company remains a going concern.
(1) Calculated by reference to the middle market quotations of the shares of that class on the Daily Official List of the London Stock Exchange on each trading day in the relevant Discount Calculation Period and the most recently published NAV per share of the relevant class for each such trading day.
Directors' Biographies
Ian Fitzgerald (Non-Executive Chairman, Chairman of the Management Engagement Committee and Chairman of the Risk Committee)
Ian is currently a Director and Chief Executive Officer of Loans Specialist Advisory Services Limited, a company established to provide specialist loan product business services. Ian held senior management positions within Lloyds Bank Capital Markets from 1997 to 2011. From 2004 he was Managing Director and Head of Loan Markets, responsible for the bank's primary and secondary loan market businesses globally, including all corporate, acquisition, leveraged, project, infrastructure and property-related loan finance.
Ian joined Lloyds from Hill Samuel as Head of Loan Syndication and Distribution, upon Lloyds' merger with Hill Samuel TSB Bank plc in 1997. Prior to joining Hill Samuel in 1992, Ian held senior lending and syndicate roles at Chemical Bank, Manufacturers Hanover Limited, Bankers Trust International Limited, and other financial institutions. Ian commenced his banking career with Barclays Bank International in 1975. Ian was chairman of the Loan Market Association ("LMA") from 2009 to 2011, having been appointed as a non-executive Director of the LMA in 2006.
Jonathan Bridel (Non-Executive Director and Chairman of the Audit Committee)
Jonathan is a Guernsey resident and is currently a non-Executive Director of the Renewables Infrastructure Group Limited (FTSE 250), Starwood European Real Estate Finance Limited, Funding Circle SME Income Fund Limited and Sequoia Economic Infrastructure Income Fund Limited (FTSE 250) which are listed on the Main Market of the London Stock Exchange. He is also a Director of Phaunos Timber Fund Limited which is currently in the process of divesting its assets. Other companies for which Jonathan acts as a Director include DP Aircraft I Limited and Fair Oaks Income Fund Limited. Jonathan was previously Managing Director of Royal Bank of Canada's investment businesses in the Channel Islands and served as a Director on other RBC companies including RBC Regent Fund Managers Limited. Prior to joining RBC, Jonathan served in a number of senior management positions in banking, specialising in credit and corporate finance and private businesses as Chief Financial Officer in London, Australia and Guernsey having previously worked at Price Waterhouse Corporate Finance in London.
Jonathan graduated from the University of Durham with a degree of Master of Business Administration, holds qualifications from the Institute of Chartered Accountants in England and Wales (1987) where he is a Fellow, the Chartered Institute of Marketing and the Australian Institute of Company Directors. Jonathan is a Chartered Marketer and a member of the Chartered Institute of Marketing and the Institute of Directors and a Chartered Fellow of the Chartered Institute for Securities and Investment.
Anne Ewing (Non-Executive Senior Independent Director, Chairman of the Remuneration and Nomination Committee)
Anne serves as a Non-Executive Director of Global Mena Financial Assets Limited, CDC Holdings (Guernsey) Limited, Silverfleet Capital (Guernsey) Limited, Silverfleet Capital (Guernsey) II Limited, SG Kleinwort Hambros Bank (Channel Islands) Limited, SG Kleinwort Hambros Trust Company (Channel Islands) Limited and Clareant Structured Credit Opportunities Fund III. Anne was previously an Executive Director and Licensee of Imperium Trust Company Limited and has held executive and senior management positions with Dexion Capital (Guernsey) Limited, Dominion Fund Management Limited, KPMG Channel Islands Limited, Rothschild Bank CI Limited, Rothschild Asset Management, Old Mutual and Citibank NA.
Anne holds an ACCA Certified Diploma in Accounting & Finance, graduated from Bournemouth University with Masters of Science Degree in Corporate Governance & Administration/Grad ICSA, is a Chartered Fellow of the Chartered Institute of Securities & Investment, a Fellow of the Institute of Chartered Secretaries and Administrators, an Associate Member of the Association of Corporate Treasurers, and past Guernsey Branch Chairman of the Institute of Directors and ICSA, The Governance Institute. Anne is a member of the Guernsey Investment Fund Association.
Directors' Responsibilities Statement
The principal risks and uncertainties of the Company remain unchanged from what was disclosed in the Audited Financial Statements for the year ended 31 March 2017. The Board's view is that these risks remain appropriate up to 31 March 2018.
We confirm that to the best of our knowledge:
-- the Unaudited Condensed Financial Statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union;
-- the Chairman's Statement, the Investment Manager's Report and the notes to the Unaudited Condensed Financial Statements together meet the requirements of an interim management report, and include a fair view of the information required by:
1. Rule 4.2.7R of the Disclosure Rules and Transparency Rules of the UK's Financial Conduct Authority ("DTR"), being an indication of important events that have occurred during the first six months of the financial year and their impact on the set of Unaudited Condensed Financial Statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and
2. DTR 4.2.8R, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the Company during that period; and any changes in the related party transactions described in the last Annual Report that could do so.
Signed on behalf of the Board of Directors on 16 November 2017
Anne Ewing Jonathan Bridel Director Director
Independent Review Report to the Members of Alcentra European Floating Rate Income Fund Limited
Conclusion
We have been engaged by Alcentra European Floating Rate Income Fund Limited (the "Company") to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2017 of the Company which comprises the Unaudited Condensed Statement of Comprehensive Income, the Unaudited Condensed Statement of Financial Position, the Unaudited Condensed Statement of Changes in Equity, the Unaudited Condensed Statement of Cash Flows and the related explanatory notes.
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2017 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting as adopted by the EU and the Disclosure Guidance and Transparency Rules (the "DTR") of the UK's Financial Conduct Authority (the "UK FCA").
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. We read the other information contained in the half-yearly financial report and consider whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA.
As disclosed in note 3, the annual financial statements of the Company are prepared in accordance with International Financial Reporting Standards as adopted by the EU. The Directors are responsible for preparing the condensed set of financial statements included in the half-yearly financial report in accordance with IAS 34 as adopted by the EU.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
The purpose of our review work and to whom we owe our responsibilities
This report is made solely to the Company in accordance with the terms of our engagement to assist the Company in meeting the requirements of the DTR of the UK FCA. Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this 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 for our review work, for this report, or for the conclusions we have reached.
Dermot A. Dempsey
For and on behalf of KPMG Channel Islands Limited
Chartered Accountants, Guernsey
16 November 2017
Unaudited Condensed Statement of Comprehensive Income
For the six months ended 30 September 2017
Notes Six months Six months
ended 30 ended 30
September September
2017 2016
(Unaudited) (Unaudited)
EUR EUR
Income
Other income 41,374 -
------------ -------------
Total income 41,374 -
------------ -------------
Realised foreign exchange
loss on forwards (5,506,285) (32,092,763)
Unrealised foreign exchange
gain on forwards 2,348,100 755,716
Foreign exchange (loss)
/ gain (56,214) 13,615,122
Net gain on investment
at fair value through
profit or loss 6 2,338,359 6,796,869
Net realised and unrealised
loss (876,040) (10,925,056)
------------ -------------
Expenses
Investment management
fees 11 (696,385) (777,742)
Directors' fees and
travel expenses 11 (68,705) (83,036)
Administration and professional
fees (278,949) (141,885)
------------ -------------
Total expenses (1,044,039) (1,002,663)
------------ -------------
Total comprehensive
loss for the period (1,878,705) (11,927,719)
============ =============
Basic and diluted loss
per Ordinary Share (in
Euro) 4 (1.1216)c (6.7780)c
Basic and diluted loss
per Ordinary Share (in
Sterling) 4 (0.9883)p (5.8671)p
All results are derived from continuing operations.
The accompanying notes form an integral part of these unaudited condensed financial statements.
Unaudited Condensed Statement of Financial Position
As at 30 September 2017
Notes 30 September 31 March
2017 2017
(Unaudited) (Audited)
EUR EUR
Non-current assets
Investment at fair value
through profit or loss 6 192,198,435 203,860,076
Current assets
Cash and cash equivalents 1,305,265 1,107,637
Other receivables and
prepayments 75,741 44,469
Derivative assets 6 5,395,951 3,047,851
6,776,957 4,199,957
------------- ------------
Total assets 198,975,392 208,060,033
------------- ------------
Current liabilities
Other payables and accrued
expenses 7 (1,716,238) (963,565)
(1,716,238) (963,565)
------------- ------------
Net assets 197,259,154 207,096,468
============= ============
Capital and reserves
Share capital 8 205,635,576 209,403,057
Retained earnings (8,376,422) (2,306,589)
Equity shareholders'
funds 197,259,154 207,096,468
============= ============
Number of Ordinary Shares 8 166,363,860 169,610,896
NAV per Ordinary Share
(in Euro) 5 118.5709c 122.1009c
NAV per Ordinary Share
(in Sterling) 5 104.4823p 104.1435p
These unaudited condensed financial statements were approved and authorised for issue by the Board of Directors on 16 November 2017, and signed on its behalf by:
Anne Ewing Jonathan Bridel
Director Director
The accompanying notes form an integral part of these unaudited condensed financial statements.
Unaudited Condensed Statement of Changes in Shareholders' Equity
For the six months ended 30 September 2017 (Unaudited)
Share Retained
capital earnings Total
Notes EUR EUR EUR
------------ ------------ ------------
Opening equity shareholders'
funds at 1 April
2017 209,403,057 (2,306,589) 207,096,468
------------ ------------ ------------
Total comprehensive
loss for the period - (1,878,705) (1,878,705)
Transactions with
owners, recorded
directly to equity
Dividends 9 - (4,191,128) (4,191,128)
Ordinary Shares repurchased
and cancelled during
the period 8 (3,767,481) - (3,767,481)
------------ ------------ ------------
Closing equity shareholders'
funds at 30 September
2017 205,635,576 (8,376,422) 197,259,154
============ ============ ============
For the six months ended 30 September 2016 (Unaudited)
Share Retained
capital earnings Total
Note GBP GBP GBP
------------ ------------- -------------
Opening equity shareholders'
funds at 1 April
2016 216,967,815 12,338,786 229,306,601
------------ ------------- -------------
Total comprehensive
loss for the period - (11,927,719) (11,927,719)
Transactions with
owners, recorded
directly to equity
Dividends 9 - (6,201,088) (6,201,088)
Ordinary Shares repurchased
and cancelled during
the period (22,165) - (22,165)
------------ ------------- -------------
Closing equity shareholders'
funds at 30 September
2016 216,945,650 (5,790,021) 211,155,629
============ ============= =============
The accompanying notes form an integral part of these unaudited condensed financial statements.
Unaudited Condensed Statement of Cash Flows
For the six months ended 30 September 2017
Six months Six months
ended ended 30
30 September September
2017 2016
(Unaudited) (Unaudited)
EUR EUR
Cash flow from operating
activities
Loss for the period (1,878,705) (11,927,719)
Adjustments for:
Net gain on investment
at fair value through
profit or loss (2,338,359) (6,796,869)
Unrealised foreign exchange
gain on forwards (2,348,100) (755,716)
(Increase)/decrease in
other receivables and
prepayments (31,272) 10,096
Proceeds from sale of
investment at fair value
through profit or loss 14,000,000 26,000,000
Increase/(decrease) in
other payables and accrued
expenses 752,673 (245,974)
Net cash inflow from
operating activities 8,156,237 6,283,818
Cash flow from financing
activities
Ordinary Shares repurchased
during the period (3,767,481) (7,077)
Dividends paid (4,191,128) (6,201,088)
--------------
Net cash flows used in
financing activities (7,958,609) (6,208,165)
Net decrease in cash
and cash equivalents 197,628 75,653
Cash and cash equivalents
at start of the period 1,107,637 1,785,849
Cash and cash equivalents
at end of the period 1,305,265 1,861,502
============== ==============
The accompanying notes form an integral part of these unaudited condensed financial statements.
Notes to the Unaudited Condensed Financial Statements
For the six months ended 30 September 2017
1. General Information
The Company is a non-cellular company limited by shares and was registered in Guernsey under the Companies (Guernsey) Law, 2008 (as amended) (the "Companies Law") on 3 November 2011 with registered number 54200 as a closed-ended investment company. The Company's Ordinary Shares are listed on the FCA's Official List and on the main market of the London Stock Exchange.
The registered office and principal place of business of the Company is BNP Paribas House, St Julian's Avenue, St Peter Port, Guernsey, GY1 1WA.
The Company controls its subsidiary, Alcentra European Floating Rate Income S.A. (the "Subsidiary"), through a holding of 100% (31 March 2017: 100%) of its shares. The Subsidiary is domiciled in Luxembourg and has no subsidiaries. No financial or other support was provided without a contractual obligation to do so during the reporting period. As at 30 September 2017, there were no significant restrictions on the ability of the Subsidiary to transfer funds to the Company in the form of redemption of the shares held by the Company.
The Company's investment objective is to provide its shareholders with regular quarterly dividends and the opportunity for capital growth by utilising the skills of Alcentra Limited (the "Investment Manager") in selecting suitable investments. To pursue its investment objective, the Company uses net issue proceeds to invest into Profit Participating Bonds issued by the Subsidiary. The Subsidiary then uses these proceeds to invest in floating rate, secured loans or high-yield bonds issued by European or US corporate entities predominantly rated below investment grade or deemed by the Investment Manager to be of corresponding credit quality.
The Company expects at least 80% of the Subsidiary's investments to be debt obligations of corporate entities domiciled or with significant operations in Western Europe (including the United Kingdom). Investments are expected to be denominated in Euros, Sterling or US Dollars.
Alcentra Limited has been appointed by the Company as the Investment Manager and the administration of the Company is delegated to BNP Paribas S.C.A., Guernsey Branch (the "Administrator").
2. Going Concern
Going concern refers to the assumption that the Company has the resources to continue in operation for the foreseeable future being twelve months from the date of approval of the financial statements. The Directors believe that it is appropriate to adopt the going concern basis in preparing these unaudited condensed financial statements based on the following assessment:
1. Working capital - As at 30 September 2017, the working capital surplus in the Company was approximately EUR5.06 million. The Company has the ability to sell bonds in the Subsidiary and/or request repayment of accrued interest. The Subsidiary has a working capital surplus of approximately EUR0.97 million.
2. Closed-ended company - The Company has been registered with the Guernsey Financial Services Commission as a registered closed-ended collective investment scheme. As such shareholders have no right to have their Ordinary Shares redeemed, and therefore no cash flows out of the Company in this respect.
3. In accordance with the Articles of Incorporation, a continuation resolution was passed (with 99.5% for the continuation) at the Annual General Meeting (the "AGM") on 20 September 2017. The next continuation resolution will be considered at the AGM on 27 September 2018. If a Continuation Resolution is not passed, the Directors shall put proposals to shareholders for the reconstruction or reorganisation of the Company. The Board have a reasonable expectation that the next continuation resolution will also be passed.
4. Discount Control Mechanism - the Company's Ordinary Shares did not trade at an average discount in excess of 5% of the NAV per share over the Discount Calculation Period ended 30 September 2017 and as a result the Discount Control Mechanism has not been triggered. The Company has repurchased Ordinary Shares in the market for cancellation to assist in controlling the discount in the Ordinary Share price to NAV per Ordinary Share. Although the Board operates an active discount management policy to mitigate any discount to NAV per Ordinary Share, there can be no guarantee that they will do so or that such mechanisms will be successful. Please refer to the Discount Control Mechanism and Redemption Offer and note 8 for details of Ordinary Share buybacks.
Taking into consideration the analysis detailed above, the Company's ability to meet its liabilities as they fall due and reasonably manage any uncertainties as they arise, and after making enquiries of the Company's Investment Manager and corporate brokers, the Directors are satisfied that it is appropriate to continue to prepare the condensed financial statements on a going concern basis.
3. Principal Accounting Policies
a) Basis of preparation
The Unaudited Condensed Financial Statements for the period ended 30 September 2017 have been prepared in accordance with IAS 34 - Interim Financial Reporting, as adopted by the European Union.
The Unaudited Condensed Financial Statements do not include all the information and disclosures required in the Annual Audited Financial Statements and therefore should be read in conjunction with the 31 March 2017 Audited Financial Statements, which were prepared in accordance with International Financial Reporting Standards, as adopted by the European Union ("IFRS").
The Directors have determined that the Company continues to meet the investment entity criteria. Therefore, in accordance with the investment entity exemption within IFRS 10 - Consolidated Financial Statements, the Company has prepared individual financial statements and measures its investment in the Subsidiary at fair value.
b) Significant accounting policies
The accounting policies adopted in the preparation of the Unaudited Condensed Financial Statements are consistent with those followed in the preparation of the Audited Financial Statements for the year ended 31 March 2017.
4. Basic and Diluted Earnings per Ordinary Share
30 September 2017 30 September 2016
In Euro In Sterling In Euro In Sterling
Total comprehensive
loss for the
period EUR(1,878,705) GBP(1,655,477) EUR(11,927,719) GBP(10,324,634)
Weighted average
number of Ordinary
Shares in issue
during the period 167,503,908 167,503,908 175,975,829 175,975,829
Basic and diluted
loss per Ordinary
Share (1.1216)c (0.9883)p (6.7780)c (5.8671)p
5. NAV per Ordinary Share
30 September 2017 31 March 2017
In Euro In Sterling In Euro In Sterling
NAV EUR197,259,154 GBP173,820,821 EUR207,096,468 GBP176,638,790
Number of Ordinary
Shares in issue
at period/year
end 166,363,860 166,363,860 169,610,896 169,610,896
NAV per Ordinary
Share 118.5709c 104.4823p 122.1009c 104.1435p
6. Financial Assets and Liabilities Designated at Fair Value Through Profit or Loss
The Company's investment at fair value through profit and loss is the Profit Participating Bonds it holds in the Subsidiary. The fair value of the Profit Participating Bonds is based on the NAV of the Subsidiary, which has been prepared in accordance with IFRS.
Fair values of the Company's forward foreign exchange contracts are determined with reference to the forward exchange rates applicable as at valuation date.
Fair Value Hierarchy
The Company categorises its financial assets according to the following fair value hierarchy, that reflects the significance of the inputs used in determining their fair values:
Level 1: Inputs that reflect unadjusted price quotes in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date;
Level 2: Inputs that reflect price quotes of similar assets and liabilities in active markets, and price quotes of identical assets and liabilities in markets that are considered to be less than active as well as inputs other than price quotes that are observable for the asset or liability either directly or indirectly; and
Level 3: Inputs that are unobservable for the asset or liability and reflect the Investment Manager's own assumptions.
When observable prices are not available, the Investment Manager may use one or more valuation methods for which sufficient and reliable data is available. Within Level 3, the use of the market approach generally consists of using comparable market transactions, while the use of the income approach generally consists of the net present value of estimated future cash flows, adjusted as appropriate for liquidity, credit, market and/or other risk factors.
The inputs used in estimating the value of Level 3 investments include the original transaction price, recent transactions in the same or similar instruments, completed or pending third-party transactions in the underlying investment or comparable issuers, subsequent rounds of financing, recapitalisations and other transactions across the capital structure, offerings in the equity or debt capital markets, and changes in financial ratios or cash flows. Level 3 investments may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the Investment Manager in the absence of market information.
The following table details the Company's fair value hierarchy.
30 September 2017 Level Level Level
(Unaudited) 1 2 3 Total
EUR EUR EUR EUR
Financial assets
----------------------- ------- ---------- ------------ ------------
Investment at fair
value through profit
or loss - - 192,198,435 192,198,435
----------------------- ------- ---------- ------------ ------------
Derivative assets - 5,395,951 - 5,395,951
----------------------- ------- ---------- ------------ ------------
Level Level Level
31 March 2017 (Audited) 1 2 3 Total
EUR EUR EUR EUR
Financial assets
------------------------- ------- ---------- ------------ ------------
Investment at fair
value through profit
or loss - - 203,860,076 203,860,076
------------------------- ------- ---------- ------------ ------------
Derivative assets - 3,047,851 - 3,047,851
------------------------- ------- ---------- ------------ ------------
Reconciliation of the Company's Financial Assets Categorised Within Level 3
The following table shows a reconciliation of all movements in the fair value of financial assets categorised within Level 3 during the period/year.
30 September 31 March
2017 2017
(Unaudited) (Audited)
EUR EUR
Opening balance 203,860,076 229,376,731
Capitalised interest during the
period/year - 42,123,590
Return of capital during the
period/year (14,000,000) (39,200,000)
Net gain on investment at fair
value through profit or loss 2,338,359 13,973,386
Dividend received - (290,041)
Interest received in specie(1) - (42,123,590)
Closing balance 192,198,435 203,860,076
============= =============
During the period ended 30 September 2017 and the year ended 31 March 2017, there were no reclassifications between levels of the fair value hierarchy.
Company's Investment in the Subsidiary
The NAV of the Subsidiary predominantly comprises the fair values of the investment portfolio of the Subsidiary consisting of Level 1, Level 2 and Level 3 investments and other financial assets and liabilities at carrying value, which together form the NAV of the Subsidiary.
(1) As at 31 March 2016, accumulated interest of EUR42,123,590 was due to the Company by the Subsidiary. On 4 January 2017, the Subsidiary elected to pay the interest due to the Company by way of the issue and allocation to the Company of new Profit Participating Bonds for which no cash payment was required. No interest has been paid during the period ended 30 September 2017.
The investments in the Subsidiary's portfolio are valued as follows:
Fair values of debt instruments are initially based on price quotes, where available. Price quotes are sourced from the Company's approved pricing providers. The approved pricing providers source price quotes from brokers/market makers and determine an average bid price based on the quotes obtained, after adjusting for outliers as identified by the approved pricing providers.
Where price quotes are unavailable, the Investment Pricing Committee of the Investment Manager determines fair value using valuation techniques. Valuation techniques used include comparison to similar instruments for which market observable prices exist. Assumptions and inputs used in the valuation technique include interest rates and credit spreads used in estimating discount rates. The Investment Pricing Committee has applied judgement and estimation and used significant unobservable inputs in selecting the appropriate valuation technique used, consideration of identical or similar instruments, and selection of appropriate discount rates.
As at 30 September 2017 and 31 March 2017, the fair value measurement of the Profit Participating Bonds is categorised into Level 3 within the fair value hierarchy. This classification reflects the Company's ability to redeem its investment in the Subsidiary on the reported date at the reported NAV and whether adjustments to the NAV are required to reflect the inherent uncertainty in the timing and range of possible outcomes of any realisation between the reported NAV and the ultimate recoverable amount. The fair value level of the investment in the Subsidiary reflects management's consideration that this investment is not readily tradable. Management has considered that there are no reasonably possible alternatives in determining the fair value of the Subsidiary.
The fair value of the Subsidiary is predominantly influenced by the fair value determination of the underlying debt investments held by the Subsidiary. The Company recognises any transfers between levels of the fair value hierarchy as at the end of the reporting period during which the change occurred.
The following table provides a reconciliation of the Company's investment in the Subsidiary measured at fair value:
30 September 31 March
2017 2017
(Unaudited) (Audited)
EUR EUR
Subsidiary's investments at
fair value through profit and
loss 191,223,889 202,478,555
Subsidiary's net current assets 974,546 1,381,521
Balance as at end of the period/year 192,198,435 203,860,076
============= ============
As at 30 September 2017, the net gain on the Company's investment in the Subsidiary included in the Statement of Comprehensive Income amounted to EUR2,338,359 (31 March 2017: EUR13,973,386), the breakdown of the gain is detailed in the table below:
30 September 31 March
2017 2017
(Unaudited) (Audited)
Investment income 4,667,809 11,939,070
Realised loss on investments
at fair value through profit
or loss (2,911,678) (5,218,024)
Realised gain on forward currency
contracts - 7,608,092
Unrealised gain / (loss) on
investments at fair value through
profit or loss 666,635 (159,874)
Dividend paid / payable to
the Company (41,329) (77,398)
Expenses (43,078) (118,480)
Total 2,338,359 13,973,386
============== ==============
Subsidiary Financial Assets and Liabilities Designated at Fair Value Through Profit or Loss
The following table details the investment holding of the Subsidiary, categorising these assets by level according to the fair value hierarchy. The disclosures have been included to provide an insight to shareholders of the asset class mix held by the Subsidiary.
Level Level Level
30 September 2017 (Unaudited) 1 2 3 Total
EUR EUR EUR EUR
Financial assets
Interest bearing securities
Corporate bonds and
debt instruments(1) 185,451,774 5,772,115 191,223,889
Total - 185,451,774 5,772,115 191,223,889
======= ============ ========== ============
Level Level Level
31 March 2017 (Audited) 1 2 3 Total
EUR EUR EUR EUR
Financial assets
Interest bearing securities
Corporate bonds and
debt instruments(2) 2,407,218 195,210,772 4,860,565 202,478,555
Total 2,407,218 195,210,772 4,860,565 202,478,555
========== ============ ========== ============
(1) One investment was reclassified from Level 3 to level 2.
(2) Three investments were reclassified from Level 2 to Level 1 and one investment from Level 3 to Level 2.
7. Other Payables and Accrued Expenses
30 September 31 March
2017 2017
(Unaudited) (Audited)
EUR EUR
Investment management fees 1,549,756 853,371
Administration and company
secretarial fees 13,619 14,753
Audit fees 93,066 60,578
Other expenses 26,506 7,010
Loan administration fees 5,486 6,195
Printing fees 5,619 2,009
Director fees and travel expenses 6,449 13,144
Registrar fees 15,737 6,505
Total 1,716,238 963,565
============= ==========
The Company has financial risk management policies in place to ensure that all payables are paid within the credit time frame. The Directors considers that the carrying amount of all payables approximates to their fair value.
8. Share Capital
The authorised share capital of the Company is represented by an unlimited number of Ordinary Shares with or without a par value, which upon issue, the Directors may designate as: (a) Ordinary Shares; (b) B Shares; (c) C Shares, in each case of such classes and denominated in such currencies as the Directors may determine. Since inception of the Company, no B or C shares have been issued.
Since inception of the Company, only Sterling Ordinary Shares have been issued, however the Company has the authority to issue Euro Ordinary Shares.
The Company had issued and fully paid up share capital as follows:
30 September 31 March 2017
2017
Ordinary Shares of no
par value
------------- --------------
Issued and fully paid 166,363,860 169,610,896
------------- --------------
Rights attached to Ordinary Shares
The Company's share capital may be denominated in Sterling and Euro. At any general meeting of the Company each Euro share carries one vote and each Sterling share carries 1.2 votes. The shares also carry rights to receive all income and capital available for distribution by the Company.
Share Buybacks
The Directors operate an active discount management policy through the use of share buybacks. On 20 September 2017, the Directors were granted authority to repurchase 24,937,942 Ordinary Shares for cancellation or to be held as treasury shares. This authority will expire at the next AGM which will be held on 27 September 2018.
To assist in controlling the discount in the Ordinary Share price to NAV per Ordinary Share, during the period ended 30 September 2017, the Company used its authority to repurchase and cancel 3,247,036 Ordinary Shares in the market at a total cost of EUR3,767,481 (GBP3,287,420).
Significant Share Movements
30 September
2017 31 March 2017
Number EUR Number EUR
Balance at start
of the period/year 169,610,896 209,403,057 175,975,961 216,967,815
Ordinary Shares
repurchased and
cancelled during
the period/year (3,247,036) (3,767,481) (6,365,065) (7,564,758)
Balance at end of
the period/year 166,363,860 205,635,576 169,610,896 209,403,057
============== ============== ============== ==============
9. Dividends
In any financial year, the Company will aim to pay regular quarterly dividends to shareholders subject to the solvency test prescribed by the Companies Law. It is expected that a distribution will be made by way of a dividend with respect to each calendar quarter. Immediately after the distribution of dividends the Board of Directors is of the opinion that the Company will satisfy the solvency test.
The Directors in their absolute discretion can offer a scrip dividend alternative to shareholders when a cash dividend is declared from time to time.
The Company has declared and paid the following dividends to its shareholders:
Period ended Date declared Payment Amount per Amount
30 September date Ordinary
2017 Share
1 January
2017 to
31 March 11 April
2017 2017 12 May 2017 1.09p EUR2,205,701
1 April 2017
to 13 July 11 August
30 June 2017 2017 2017 1.07p EUR1,985,427
Total EUR4,191,128
===============
Period ended Date declared Payment Amount per Amount
30 September date Ordinary
2016 Share
1 January
2016
to 31 March 14 April
2016 2016 13 May 2016 1.34 EUR2,991,042
1 April 2016
to 30 June 14 July 12 August
2016 2016 2016 1.52 EUR3,210,046
Total EUR6,201,088
===============
10. Reconciliation of NAV to Published NAV
30 September 2017 31 March 2017
NAV NAV per NAV NAV per
Ordinary Ordinary
Share Share
EUR EUR EUR EUR
Published NAV 198,351,239 1.1923 208,163,997 1.2273
Impact of fair value
adjustment on investments
held by the Subsidiary(1) (1,073,709) (0.0066) (1,067,529) (0.0063)
Accrual adjustment
(2) (18,375) (0.0001) - -
NAV attributable
to shareholders 197,259,155 1.1856 207,096,468 1.2210
============== =========== ============== ===========
11. Related Party Transactions
Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions.
Total investment management fees for the period amounted to EUR696,385 (30 September 2016: EUR777,742, 31 March 2017: EUR1,508,430), with outstanding fees of EUR1,549,756 at 30 September 2017 (31 March 2017: EUR853,371).
As at 30 September 2017, BNY Mellon held 19,114,000 (31 March 2017: 20,164,000) shares in the Company. BNY Mellon is wholly owned by the parent company of the Investment Manager.
The table below provides details of the Ordinary Shares held in the Company by the Directors:
30 September 31 March 2017
2017
Ian Fitzgerald 15,000 15,000
Jonathan Bridel (together
with their spouse) 5,000 5,000
Anne Ewing (together with
their spouse) 5,000 5,000
The Directors of the Company are remunerated per annum as follows:
Chairman and Chairman of the Risk Committee and of the Management Engagement Committee - GBP50,000.
Chairman of the Audit Committee - GBP42,000.
Chairman of the Remuneration and Nomination Committee - GBP40,000.
The total Directors' fees and travel expenses for the year amounted to EUR68,705 (30 September 2016: EUR83,036, 31 March 2017: EUR160,567), with outstanding fees of EUR6,449 (31 March 2017: EUR13,144), due to the Directors at 30 September 2017.
(1) The investments held by the Subsidiary have been valued at bid price which is consistent with the basis used in the prior year audited financial statements.
(2) The published NAV was calculated as at 29 September 2017, which did not take into consideration expense accruals for the day of 30 September 2017.
12. Risk Management Policies and Procedures
The Company's financial risk management objectives and policies are consistent with those disclosed in the Audited Financial Statements for the year ended 31 March 2017. In the opinion of the Directors, there have been no changes to the financial risk management objectives.
13. Seasonality of Operations
The Company's operations are not cyclical or seasonal in nature. As such its performance is not subject to seasonal fluctuations.
14. Operating Segments
The Chief Operating Decision Makers of the Company are the Board of Directors. The Directors are of the opinion that the Company is engaged in a single segment of business, being investing, via its Subsidiary, in investments in floating rate, secured loans or high-yield bonds. Segment information is measured on the same basis as those used in the preparation of the Company's financial statements with the exception of the valuation of financial instruments. For the purpose of segment reporting, at the Subsidiary level, financial instruments are measured in accordance with the method set out in the Company's prospectus, this being the mid-price of the securities as at the valuation day.
The Board of Directors reviews internal management reports on a quarterly basis. The Investment Manager, together with the Administrator and the Company Secretary, ensure that the Directors receive relevant information in a timely manner.
The key measurement of performance used by the Board to assess the Company's performance and to allocate resources is the movement in the NAV which is prepared on a daily basis.
The majority of the Subsidiary's assets are held in Europe and are held in Sterling, Euros, Swiss Franc and US Dollars.
A detailed analysis of the operating segment with respect to geographical disclosures is included in the Investment Manager's Report.
The Company's only shareholders with a holding of greater than 10% as at 30 September 2017 were BNY Mellon Investment Management Seed Capital Limited ("BNY Mellon") with a holding of 11.49% and Vidacos Nominees Limited UKCP100 Acct with a holding of 11.19% (31 March 2017: BNY Mellon with a holding of 11.89% and Vidacos Nominees Limited NRWICH4 Acct with a holding of 17.13%).
15. Events After the Reporting Date
On 12 October 2017, the Company declared a dividend of 0.98p per Ordinary Share, covering the period 1 July 2017 to 30 September 2017. This dividend was paid to the shareholders on 10 November 2017.
The Company repurchased 347,825 Ordinary Shares subsequent to the period end at a total cost of EUR389,788 (GBP348,400) and the current number of shares in issue is 166,016,035.
There were no other events which occurred subsequent to the year-end until the date of approval of the financial statements, which would have a material impact on the financial statements of the Company as at 30 September 2017.
Company Information
Directors
Ian Fitzgerald (Non-Executive Chairman)
Anne Ewing (Non-Executive Senior Independent Director)
Jonathan Bridel (Non-Executive Director)
Registered Office
BNP Paribas House, St Julian's Avenue, St Peter Port, GY1 1WA, Guernsey, Channel Islands
Investment Manager
Alcentra Limited
160 Queen Victoria Street, London, EC4V 4LA, United Kingdom
Solicitors to the Company (as to English law)
Linklaters LLP
One Silk Street, London, EC2Y 8HQ, United Kingdom
Advocates to the Company (as to Guernsey law)
Carey Olsen,
P.O. Box 98, Carey House, Les Banques, St. Peter Port, GY1 4BZ, Guernsey, Channel Islands
Corporate Broker
J.P. Morgan Securities Plc
25 Bank Street, London, E14 5JP, United Kingdom
Independent Auditor
KPMG Channel Islands Limited
Glategny Court, Glategny Esplanade, St Peter Port, GY1 1WR, Guernsey, Channel Islands
Registrar
Capita Registrars (Guernsey) Limited
Mont Crevelt House, Bulwer Avenue, St Sampson, GY2 4LH, Guernsey, Channel Islands
Principal Bankers
BNP Paribas Securities Services S.C.A.
BNP Paribas House, St Julian's Avenue, St Peter Port, GY1 1WA, Guernsey, Channel Islands
Designated Manager, Administrator, Custodian and Company Secretary
BNP Paribas Securities Services S.C.A., Guernsey Branch
BNP Paribas House, St Julian's Avenue, St Peter Port, GY1 1WA, Guernsey, Channel Islands
Enquiries:
BNP Paribas Securities Services S.C.A., Guernsey Branch
Company Secretary
Jasper Cross
01481 750859
JP Morgan Cazenove
William Simmonds
Oliver Kenyon
0207 742 4000
Copies of the Company's Interim Report and Unaudited Condensed Financial Statements will be available from the Company Secretary, BNP Paribas Securities Services S.C.A., Guernsey Branch at BNP Paribas House, St Julian's Avenue, St Peter Port, Guernsey, GY1 1WA, or on the Company's website WWW.AEFRIF.COM Neither the contents of the Company's website, nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BGBDBBXBBGRR
(END) Dow Jones Newswires
November 17, 2017 05:44 ET (10:44 GMT)
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