We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Customisable watchlists with full streaming quotes from leading exchanges, such as LSE, NASDAQ, NYSE, AMEX, Bovespa, BIT and more.
| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Real Estate Credit Investments Limited | LSE:RECI | London | Ordinary Share | GB00B0HW5366 | ORD NPV |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -0.50 | -0.42% | 117.50 | 117.50 | 118.00 | 118.50 | 117.50 | 117.50 | 395,965 | 13:04:14 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Unit Inv Tr, Closed-end Mgmt | 30.67M | 20.55M | 0.0896 | 13.17 | 270.61M |
From May 2019 to May 2024
TIDMRECI
RNS Number : 6958G
Real Estate Credit Investments Ltd
27 November 2020
This announcement contains inside information.
Date and time of release: 27 November 2020, 7:00 am
Real Estate Credit Investments Limited (the "Company")
Interim Report for RECI LN (Ordinary Shares)
The Board of Directors of the Company announces the release of the Company's Condensed Unaudited Interim Report for the six months ended 30 September 2020.
View the Interim Report:
http://recreditinvest.com/financialstatements.html
For further information, please contact:
Broker: Richard Bootle / Richard Crawley (Liberum Capital) +44 (0)20 3100 2222
Investment Manager: Richard Lang (Cheyne) +44 (0)20 7968 7328
Real Estate Credit
Investments
Limited
Condensed Unaudited Interim Financial Report
For the six months ended 30 September 2020
Real Estate Credit Investments is a specialist investor in European real estate credit markets with a focus on fundamental credit and value.
Attractive returns from credit exposure to UK and
Continental European real estate markets
What do we offer
-- Defensive credit exposure to UK and European real estate markets
- Stable dividend delivered consistently since October 2013
-- Granular portfolio with detailed disclosure
- 53 positions
- Top position: 14.7% of half year end NAV (by commitment)
-- Attractive and stable income in a low rate environment
- Consistent portfolio yield of 7%+ offering a significant buffer to risk-free rates
- A high-yielding portfolio, combined with a short weighted average life, ensures minimal exposure to yield widening and the ability to redeploy at higher rates quickly
-- Access to Cheyne's established real estate investment team and substantial origination pipeline
Highlights
As at 30 September 2020
Total Assets
GBP411.8m
(31 March 2020: GBP441.8m)
NAV per Share
GBP1.48
(31 March 2020: GBP1.47)
Net Assets
GBP338.9m
(31 March 2020: GBP337.2m)
Net Profit
GBP15.5m
Half year ended 30 September 2020
(H1 2019: GBP11.6m)
At A GLANCE
Our investment strategy provides compelling risk-adjusted returns.
Real Estate Credit Investments ("RECI") is a closed-ended investment company which originates and invests in real estate debt secured by commercial or residential properties in Western Europe, focusing primarily on the United Kingdom, France and Germany.
The Company's aim is to deliver a stable quarterly dividend with minimal portfolio volatility, across economic and credit cycles, through a levered exposure to real estate credit investments.
Investments are predominantly in:
Predominantly bilateral senior real estate loans and bonds.
Market Bonds
Listed real estate debt securities such as Commercial Mortgage Backed Securities (CMBS) bonds.
Investment Portfolio Composition
RECI's investment portfolio, a diversified book of 53 positions in real estate bonds and loans, was valued at GBP347 million as at 30 September 2020, down from GBP375 million as at 31 March 2020. The portfolio had a weighted average levered yield of 9.64% and an average loan-to-value ratio of 62.7% as at 30 September 2020.
Portfolio by Geography (Funded Fair Value)
Hot Features
Premium
30 September 2020
============ =================
UK 65.3%
============ =================
France 22.5%
------------ -----------------
Italy 5.7%
============ =================
Portugal 2.6%
------------ -----------------
Germany 1.8%
============ =================
Finland 1.4%
------------ -----------------
Netherlands 0.1%
============ =================
Excludes 0.6% held in bonds backed by assets in multiple European countries.
Sector Breakdown (funded fair value)
GBP
---------------------- ------
Mixed-Use 77.2m
---------------------- ------
Retail 69.9m
---------------------- ------
Hotel 51.8m
---------------------- ------
Student Accommodation 34.2m
---------------------- ------
Housebuilder 28.7m
---------------------- ------
Healthcare 22.2m
---------------------- ------
Residential 19.2m
---------------------- ------
Serviced Apartments 17.4m
---------------------- ------
Leisure 15.3m
---------------------- ------
Office 5.7m
---------------------- ------
Logistics 3.9m
---------------------- ------
Industrial 1.8m
---------------------- ------
Total 347.3m
---------------------- ------
NAV and Share Price As at 30
September
2020
------------------------ ----------
Net Assets GBP338.9m
------------------------ ----------
Shares Outstanding 229.3m
------------------------ ----------
NAV (per share) GBP1.48
------------------------ ----------
Share Price (per share) GBP1.23
------------------------ ----------
Premium/(Discount) -16.9%
------------------------ ----------
Dividend Yield 9.8%
------------------------ ----------
Market Capitalisation GBP280.9m
------------------------ ----------
Total NAV Return
----------------- -----
YTD / Jan to Sep -5.1%
----------------- -----
1 Year 8.8%
----------------- -----
3 Years 25.2%
----------------- -----
5 Years 49.3%
----------------- -----
YTD = January to September 2020, being Calendar YTD, 1 yr = 2019, 3 yr = 2017-2019,
5 yr = 2015-2019
Chairman's Statement
Delivering a stable quarterly dividend amid uncertain markets
Bob Cowdell
Chairman
I am writing to you with most of the UK and much of Europe in national or regional lockdown in response to the Covid-19 pandemic. Nevertheless, despite a challenging few months for us all, I am pleased to report that your Company achieved an increased profit (half year on half year) and maintained the regular payment of its quarterly 3 pence dividend per share, contributing to an annualised NAV total return to our Shareholders of 9.5% for the half year.
Your Company's half year commenced with the UK having just entered an unprecedented first national lockdown and continued to be overshadowed by the ongoing Covid-19 pandemic and its unfolding social and economic impacts and consequences. With Cheyne and our team of advisers, your Board has worked to react to the challenges faced; keep our investors fully informed; and position RECI to continue to deliver for our Shareholders through this and future economic cycles.
In May, the Investment Manager provided a detailed and comprehensive review of RECI's portfolio to investors. This was recently repeated and updated on 17 November, as part of our programme of enhanced investor communication through this uncertain period. Both your Board and Cheyne are committed to providing detail and transparency regarding the Company's portfolio and investment strategy to all investors, allowing them to focus upon RECI and its merits, notwithstanding the macro market environment.
Financial Performance
RECI reported total net profit for the half year ended 30 September 2020 of GBP15.5 million on half year end total assets of GBP411.8 million; a 34% increase from GBP11.6 million for the half year ended 30 September 2019 on half year end total assets of GBP394 million.
The NAV as at 30 September 2020 was GBP1.48 per share, compared with a NAV of GBP1.47 at the end of the last financial year on 31 March 2020 and GBP1.65 per share as at 30 September 2019.
The 30 September 2020 NAV reflects the payment of 6 pence per share during the half year in respect of the fourth interim dividend for the year ended 31 March 2020 and the first interim dividend of the current financial year; returning GBP13.8 million to Shareholders and providing an annualised NAV total return of 9.5% for the half year.
As at close of trading on 30 September 2020, the Company's shares stood at a discount of 16.9% to NAV (having traded at an average discount to NAV of 18.6% during the half year); and at a discount of 11.5% to the latest reported NAV as at 26 November 2020.
During the half year, the Company funded GBP36.7 million in both the origination of loans and purchases of new bonds for the portfolio. RECI also received net cash inflow from its operating activities (including cash repayments and interest) of GBP59.9 million in this period.
A second interim dividend of 3 pence per share was declared on 26 November 2020.
Half year review
The global spread of Covid-19 saw severe corrections in markets worldwide during March, which impacted upon RECI's NAV, declining from GBP1.67 as at 29 February 2020 to GBP1.47 as at the 31 March 2020 year end, driven predominantly by the reporting of unrealised losses in the Company's bond portfolio (as more fully described in the May Company Update presentation). Since that original month on month decline, the NAV has remained stable throughout the half year to 30 September 2020, notwithstanding the payment of two unchanged dividends, totalling 6 pence per share, to Shareholders during that period.
On 15 May 2020, following detailed cash modelling and forecasting, your Board announced that the Company intended to continue to pay a stable quarterly dividend and that there would be no change to the Company's dividend policy for the current financial year ending 31 March 2021. We also brought forward the declaration of the fourth interim dividend of 3 pence per share in respect of the year ended 31 March 2020, to provide certainty for our Shareholders, at a time when many other companies were suspending or cutting their dividends.
The first interim dividend of the current financial year was declared on 6 August 2020 and the second interim dividend was declared on 26 November 2020, both maintaining a payment of 3 pence per share.
At the beginning of the half year, RECI moved swiftly to reduce its gross leverage from 1.27x to 1.15x (1.06x net of cash) by 30 April 2020 and the Company has continued to retain a modest level of flexible gearing, ending the half year at 1.16x (1.07x net of cash). The Board and Cheyne will continue to monitor and consider the appropriate level and mix of gearing going forward.
Inevitably exacerbated by the broader March market correction and macro concerns, the Board, while not surprised, was disappointed at the extent of RECI's share price fall in March and April. There has been a significant price recovery following the Company Update and dividend declaration and guidance provided on 15 May 2020. As at the close of trading on 26 November, the Company's shares were priced at GBP1.32 each, a discount of 11.5%, which would provide a yield of 9.1% on the basis of continuing to pay a quarterly 3 pence dividend for the rest of the current financial year.
By aiming to continue to deliver a 3 pence quarterly dividend and by reinvesting bond and loan repayments received in attractive, enhanced return opportunities, the Board and its advisers believe the Company's shares should continue to re-rate and the discount reduce.
Cash Management
During the half year, your Board was mindful, particularly following the steep market correction in March, of maintaining sufficient cash resources to ensure that the Company would be resiliently positioned, should there be any future negative cash flow impacts upon the portfolio. RECI also received net cash inflow from its operating activities (including cash repayments and interest) of GBP59.9 million during the half year and GBP26.9 million since 30 September 2020. We remain focused on how best to deploy RECI's available cash resources.
The November Company Update presentation described Cheyne's view of the attractive opportunities for RECI, which should benefit from the current dislocation in real estate markets. This is confirmed by the attractive terms of recent investments and the pipeline of further opportunities, providing enhanced returns, identified by them. Your Board and Cheyne are encouraged by the opportunities available to strengthen further the portfolio; continue to deliver an attractive and sustainable dividend to investors seeking a reliable income; and, over time, grow the NAV of the Company.
The Company has its next continuation vote at the AGM to be convened in September 2021; and your Board remains mindful of the need to consider all options and balance both the short and long-term implications, when considering how and when to deploy our cash in the interests of all our Shareholders.
Operational Challenges
The first national lockdown imposed swift and demanding operational challenges upon all businesses and their employees. I must express the Board's appreciation for the professionalism and commitment shown by our team at Cheyne and all our advisers, who worked tirelessly to respond to great market uncertainty and to keep our Shareholders promptly and fully informed during the hectic months of Spring and continue to do so. Having returned to national lockdown on 5 November 2020, the Board continues to monitor closely the operational effectiveness of the Company and all our advisers and service providers.
Outlook
The World continues to respond to the effects of the spread of Covid-19 and, while the recent positive news of the potential efficacy of new vaccines is very welcome, one has to be cautious in expressing a view on the broader economic "outlook" as we all wrestle with unprecedented challenges. However, while acknowledging that our portfolio is not immune from wider market impacts, it is worthwhile to focus on that which we and our Investment Manager can exercise control over, namely: expert origination capability; highly disciplined investment selection; modest levels of flexible gearing; maintaining the payment of an attractive and consistent dividend; and positioning the portfolio to enhance NAV.
These factors combine to confirm that the RECI portfolio is defensively positioned and the Cheyne origination team are ready to take advantage of potential market volatility and selectively invest in opportunities in the UK and Europe, so that RECI can continue to deliver attractive returns for our Shareholders.
Bob Cowdell
Chairman
26 November 2020
financial highlights and kpi s
Key Performance Indicators
30 Sep 31 Mar
2020 2020
--------------------------- -------- --------
Balance Sheet
--------------------------- -------- --------
Net Asset Value ("NAV") GBP1.48 GBP1.47
per share
--------------------------- -------- --------
Share price GBP1.23 GBP1.16
--------------------------- -------- --------
Discount (16.90)% (21.40)%
--------------------------- -------- --------
Average (discount)/premium
in period/year* (18.60)% 0.16%
--------------------------- -------- --------
Leverage (% of NAV)** 21.30% 24.20%
--------------------------- -------- --------
* Average (discount)/premium is the average of the difference in the share price and the NAV per share divided by NAV per share.
** Leverage is the financing divided by the net assets.
30 Sep 30 Sep
2020 2019
---------------------------- ------ ------
Profit and Loss (6 months
ended)
---------------------------- ------ ------
Earnings per share 6.8p 6.3p
---------------------------- ------ ------
Dividends per share
declared for the period 6.0p 6.0p
---------------------------- ------ ------
NAV total return (including 9.52
dividends) annualised % 7.30%
---------------------------- ------ ------
Financial Highlights
30 Sep 31 Mar
2020 2020
---------------------------- ---------- ----------
Balance Sheet
---------------------------- ---------- ----------
Fair value of bilateral GBP276.9m GBP287.3m
loans and bonds*
---------------------------- ---------- ----------
Fair value of market GBP70.4m GBP87.9m
bonds*
---------------------------- ---------- ----------
Financing** GBP(71.1)m GBP(97.0)m
---------------------------- ---------- ----------
Cash, cash equivalents GBP48.4m GBP52.0m
and cash
held by brokers
---------------------------- ---------- ----------
Other assets and liabilities GBP14.3m GBP7.0m
---------------------------- ---------- ----------
Net assets GBP338.9m GBP337.2m
---------------------------- ---------- ----------
* The Company's two reportable segments changed during the year ended 31 March 2020 to reflect the separate management of the two portfolios by the Investment Manager. Please refer to Note 14 of the condensed unaudited interim financial statements for further detail.
** Financing comprised of short-term repo financing.
30 Sep 30 Sep
2020 2019
----------------------------- --------- ---------
Profit and Loss (6 months
ended)
----------------------------- --------- ---------
Operating income GBP19.7m GBP15.1m
----------------------------- --------- ---------
Finance costs GBP(1.2)m GBP(0.8)m
----------------------------- --------- ---------
Operating expenses GBP(3.0)m GBP(2.7)m
----------------------------- --------- ---------
Net profit GBP15.5m GBP11.6m
----------------------------- --------- ---------
Weighted average yield
of bilateral loan and
bond portfolio (unlevered)* 9.50% 9.60%
----------------------------- --------- ---------
Weighted average yield
of market bond portfolio
(unlevered)** 6.70% 6.00%
----------------------------- --------- ---------
* The effective yield of the loans is the accounting yield based on the funded loan balances, which includes interest and fees. Some loans also enjoy equity upside participation, which is only recognised following evidenced high probability of receipt, which can result in material incremental gains in excess of the accounting yield. The yield is based on Cheyne Capital's pricing assumptions and actual returns may differ materially from those expressed or implied herein.
** The weighted average effective yield is based on Cheyne Capital's pricing assumptions and actual returns may differ materially from those expressed or implied herein.
Further Information
Monthly fact sheets as well as quarterly update presentations are available on the Company's website: www.recreditinvest.com
Investment Manager's Report
Managing a resilient, well diversified European real estate debt portfolio, through changing market
conditions
Ravi Stickney
Portfolio Manager
Market Commentary
RECI's positioning in a fast-changing world
The onset of the Covid-19 pandemic brought with it substantial uncertainty, both for the trajectory of the virus itself and also for its consequences on economies, financial institutions and individuals. At the end of June 2020, there still remained substantial uncertainty over the end-game for the pandemic and how individuals, institutions and assets will be impacted in the long run. Governments responded with an unprecedented deployment of fiscal and monetary stimulus to ameliorate the worst of the crisis on populations and corporations.
In response to that uncertainty, RECI moved quickly to defend its credits and to materially strengthen its balance sheet. It did this by working with every sponsor to help them in addressing the pressures on their assets, whilst de-risking its own investments. It also set about materially reducing its balance sheet leverage as well as shoring up its cash reserves.
Today, we see the first indications of a possible pathway towards the resolution of the virus itself, via a combination of improved testing and also the encouraging efficacy results from three vaccine candidates. While the end to this global pandemic will necessarily be a long way off, the visibility on paths to that end provides a welcome reduction in uncertainty, which promotes the ability of institutions, investors and asset owners to make decisions with increasing confidence.
For the real estate asset class, the virus has had a significant negative impact on the operational performance and valuations of some asset classes whilst benefiting others.
As uncertainty gradually diminishes, what is going to become much more important is the long-term (potentially irreversible) trends that are now becoming evident in the need for, and use of, real assets. The more sophisticated investors are going to see that opportunity and embrace those trends and reposition, redevelop or build assets that will address the permanent shift in asset use.
RECI's bilateral borrowers are, by and large, sophisticated and well capitalised. In the first half of 2020, they worked constructively with the Company in addressing the immediate challenges they faced. What we see now is a growing deployment of sponsor capital towards investments that capture those long-term trends. We note the rapid escalation in significant capital deployment on development, redevelopment and repositioning plays in European real estate.
That growing investment demand is, however, unmet in a European context by the provision of debt capital. This is unique to the European real estate debt markets which are characterised by poorly capitalised banks, onerous regulatory regimes and high barriers of entry for new entrants or foreign funds.
All of the above, along with RECI's balance sheet strength and access to Cheyne Capital's wider real estate business, now positions RECI to deploy its capital towards working with the sponsor community in creating these much needed assets for the future. With the lack of competing sources of capital, RECI is able to do so whilst maintaining a low risk profile (with deployment heavily skewed to lower LTV senior loans) and being rewarded with a material increase in its yield.
In this manner, RECI is now able to move to building a book of investments to further its core aim of providing its investors with stable long-term dividends together with capital preservation.
In an investment world that will continue to be defined by very low rates of return (across virtually all fixed income assets), we believe that RECI's share price will recover and the higher returns combined with a defensive risk profile it offers, are unique.
Lastly, we are mindful of the discount to RECI's NAV that has appeared during this crisis. We are confident that, with the demonstration of the stable superior yield RECI offers, along with the greater transparency provided to investors, the share price will recover and the gap to NAV will close as markets move to find a safe and reliable income-producing home for their unprecedented levels of liquidity.
Portfolio Construction and Investment Approach
RECI's investment focus is on UK and European real estate credit comprising loans (mainly senior loans) and bonds. Since the 2016 Brexit vote, RECI has benefited from pivoting its investment strategy away from mezzanine (and subordinate) loans towards lower risk senior loans and bonds and that has continued in the current market environment. This repositioning reflected the fact that global volatility and uncertainty were likely to persist and economic cycles were likely to be increasingly short.
As the Company has grown, it has also continued to move its origination away from the mid-market borrowers towards larger, well capitalised and experienced borrower counterparties. These pivots positioned the Company's investment book well coming into the present crisis.
Portfolio by Geography (Funded
Fair Value)
-----------------------------------
30 Sep 31 Mar
2020* 2020*
---------------- -------- -------
UK 65.3% 68.9%
---------------- -------- -------
France 22.5% 20.2%
---------------- -------- -------
Italy 5.7% 4.9%
---------------- -------- -------
Portugal 2.6% 2.2%
---------------- -------- -------
Germany 1.8% 1.5%
---------------- -------- -------
Finland 1.4% 1.5%
---------------- -------- -------
Netherlands 0.1% 0.1%
---------------- -------- -------
* Excludes 0.6% (31 March 2020: 0.7%) held in bonds backed by assets in multiple European countries.
RECI's balance sheet leverage and liquidity have been managed to position it well for periods of stress. As at 31 October 2020, the Company's leverage was just 20% of NAV or 1.20x (7% of NAV or 1.07x on a net look through basis).
Top 10 Positions(1) (by commitment)
-------------------------------------------------------------------------------------------------------------------
Description Commitment LTV Investment Asset Type Manager Commentary
Strategy
--------------------------------- ---------- --- ----------- ----------- ---------------------------------
Income producing prime
Paris prime residential/retail central Paris retail and
1 building GBP49.6m 67% Senior Loan Core residential (for rent)
--------------------------------- ---------- --- ----------- ----------- ---------------------------------
Income producing granular
UK portfolio (mainly residential
UK mixed use portfolio, for rent and sale, offices,
2 predominantly office/residential GBP38.0m 58% Senior Loan Core+ light industrial)
--------------------------------- ---------- --- ----------- ----------- ---------------------------------
PC reached on time in
June 2020 with ongoing
partial repayments from
London mixed use sales income. Full repayment
development, predominantly anticipated ahead of maturity
3 office/residential GBP34.8m 45% Senior Loan Development date
--------------------------------- ---------- --- ----------- ----------- ---------------------------------
Serviced apartment Development in progress.
development Expected completion in
4 in Lisbon GBP34.6m 63% Senior Loan Development early 2022
--------------------------------- ---------- --- ----------- ----------- ---------------------------------
Office development Refurbishment and extension
in Saint Ouen, of a freehold
5 Paris GBP29.3m 58% Senior Loan Development office building
--------------------------------- ---------- --- ----------- ----------- ---------------------------------
Substantially complete
London mixed use (delivery scheduled for
development, predominantly December 2020), partially
6 residential/office GBP27.2m 58% Senior Loan Development pre-let
--------------------------------- ---------- --- ----------- ----------- ---------------------------------
Development in progress.
Expected completion in
7 Cambridge Aparthotel GBP25.4m 64% Senior Loan Development early 2022
--------------------------------- ---------- --- ----------- ----------- ---------------------------------
Stable, income producing
8 UK Care Homes GBP23.2m 65% Senior Loan Core UK care homes
--------------------------------- ---------- --- ----------- ----------- ---------------------------------
Stable income producing
Mezzanine UK student accommodation
9 UK Student Housing GBP22.4m 73% Loan Core assets
--------------------------------- ---------- --- ----------- ----------- ---------------------------------
Development completed,
Commercial accommodation
London Office to is fully let. Residential
10 Residential GBP20.0m 78% Senior Loan Development pre-sales at 20%
--------------------------------- ---------- --- ----------- ----------- ---------------------------------
(1) Based on total commitment of bonds and loans
Maintaining Dividend Stability
A second interim dividend of 3 pence per Share was declared on 26 November 2020. This represents a dividend yield of 9.1% on the share price of 26 November 2020.
It remains the Company's intention to maintain a stable quarterly dividend-paying capability through economic cycles.
Portfolio Composition as at Financial Half Year End (30 September 2020)
RECI's investment portfolio, a diversified book of 53 positions in real estate bonds and loans, was valued at GBP347.3 million as at 30 September 2020. The portfolio had a weighted average levered yield of 9.64% and an average loan-to-value of 62.7% as at 30 September 2020.
Bilateral Loan and Bond Portfolio
The drawn fair value of the self-originated bilateral loan and bond portfolio, excluding accrued interest, decreased slightly from GBP287.3 million as at 31 March 2020 to GBP276.9 million as at 30 September 2020. The average loan portfolio LTV exposure as at 30 September 2020 was 65.6%. The portfolio continues to provide attractive risk-adjusted returns with a weighted average unlevered yield of 9.5% per annum, before any back end fees, profit share or equity element contributions are taken into account.
Bilateral Loan and Bond Portfolio Summary as at 30 September 2020 ----------------------------------------- Number of bilateral loans and bonds 26 ---------------------------------- ----- Drawn value (GBP millions) 276.9 ---------------------------------- ----- Undrawn loan and bond commitments (GBP millions) 131.3 ---------------------------------- ----- Weighted average yield of portfolio 9.5% ---------------------------------- ----- Weighted average yield of portfolio (levered) 11.0% ---------------------------------- ----- Weighted average LTV of portfolio 65.6% ---------------------------------- ----- Weighted average life of portfolio (years) 1.6 ---------------------------------- -----
Market Bond Portfolio
As at 30 September 2020, the market bond portfolio of 27 bonds (excluding the self-originated bonds) was valued at GBP70.4 million.
The market bond portfolio has the potential for strong defensive returns:
-- The portfolio is characterised by a relatively short duration (4.1 years) and high coupon, which is defensive to interest rate rise and provides resilience in turbulent markets.
-- The weighted average unlevered yield of the market bond portfolio as at 30 September 2020 was 6.7%, and the weighted average levered yield of the market bond portfolio as at 30 September 2020 was 13.8%.
Market Bond Portfolio Summary as at 30 September 2020 ----------------------------------------- Number of market bonds 27 ---------------------------------- ----- Fair value (GBP millions) 70.4 ---------------------------------- ----- Weighted average yield of portfolio 6.7 % ---------------------------------- ----- Weighted average yield of portfolio (levered) 13.8% ---------------------------------- ----- Weighted average LTV of portfolio 51.4% ---------------------------------- ----- Weighted average life of portfolio (years) 4.1 ---------------------------------- -----
Leverage
In tandem with decreasing its leverage, RECI has maintained its strong financing relationships throughout 2020. Financing rates rose in the initial months post the first Covid-19 impact as liquidity tightened. While rates remain higher than pre-Covid, there has been a trend decrease in recent months as ample liquidity comes into financial markets via monetary easing. We expect the weighted average cost of financing to be lower in the second half of RECI's financial year. Cheyne have already extended the term of these financings spread over Q1 2020. As at 30 September 2020, RECI's gross leverage was just 21% of NAV (against a maximum of 40%).
Cheyne Capital Management (UK) LLP
26 November 2020
Directors' Responsibility Statement
We confirm that to the best of our knowledge:
(a) the condensed unaudited interim financial statements has been prepared in accordance with IAS 34 "Interim Financial Reporting";
(b) the interim management report (contained in the Chairman's Statement and Investment Manager's Report) includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and a description of principal risks and uncertainties for the remaining six months of the year); and
(c) the interim management report (contained in the Chairman's Statement and Investment Manager's Report) includes a fair review of the information required by DTR 4.2.8R (disclosure of related party transactions and changes therein).
Principal Risks and Uncertainties
The principal risks and uncertainties faced at the time of the last annual report remain valid for the purposes of the interim management report. The detailed explanation of the principal risks and uncertainties can be found in the Strategic Report section under the Risk Management section of the 31 March 2020 annual report.
By order of the Board
Bob Cowdell Susie Farnon Director Director
26 November 2020
Financial Statements
Independent
Review Report
We have been engaged by Real Estate Credit Investments Ltd (the "Company") to review the condensed set of financial statements in the Condensed Interim Financial Report for the six months ended 30 September 2020 which comprises the Condensed Unaudited Statement of Comprehensive Income, the Condensed Unaudited Statement of Financial Position, the Condensed Unaudited Statement of Changes in Equity and Condensed Unaudited Statement of Cash Flows and related notes 1 to 20. We have read the other information contained in the Condensed Interim Financial Report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
Directors' Responsibilities
The Condensed Interim Financial Report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the Condensed Interim Financial Report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the Company are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this Condensed Interim Financial Report has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the Condensed Interim Financial Report based on our review.
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 Financial Reporting Council for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. 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.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the Condensed Interim Financial Report for the six months ended 30 September 2020 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.
Use of our report
This report is made solely to the Company 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 Financial Reporting Council. Our work has been undertaken so that we might state to the Company those matters we are required to state to it in an independent review 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 formed.
Deloitte LLP
Recognised Auditor
Guernsey, Channel Islands
26 November 2020
Condensed Unaudited Statement
of Comprehensive Income
For the six months ended 30 September 2020
30 Sep 2020 30 Sep 2019
Note GBP GBP
---------------------------------------------- ---- ------------ ------------
Interest income 5 13,502,199 12,455,820
---------------------------------------------- ---- ------------ ------------
Net gains on financial assets and liabilities
at fair value through profit or loss 3 6,090,446 2,625,485
---------------------------------------------- ---- ------------ ------------
Other income 134,025 -
---------------------------------------------- ---- ------------ ------------
Operating income 19,726,670 15,081,305
---------------------------------------------- ---- ------------ ------------
Operating expenses 4 (3,039,897) (2,752,368)
---------------------------------------------- ---- ------------ ------------
Profit before finance costs 16,686,773 12,328,937
---------------------------------------------- ---- ------------ ------------
Finance costs 5 (1,186,773) (763,080)
---------------------------------------------- ---- ------------ ------------
Net profit 15,500,000 11,565,857
---------------------------------------------- ---- ------------ ------------
Other comprehensive income - -
---------------------------------------------- ---- ------------ ------------
Total comprehensive income 15,500,000 11,565,857
---------------------------------------------- ---- ------------ ------------
Earnings per Ordinary Share
---------------------------------------------- ---- ------------ ------------
Basic and diluted 10 6.8p 6.3p
---------------------------------------------- ---- ------------ ------------
Weighted average Ordinary Shares outstanding Number Number
---------------------------------------------- ---- ------------ ------------
Basic and diluted 10 229,332,478 184,581,786
---------------------------------------------- ---- ------------ ------------
All items in the above statement are derived from continuing operations.
The accompanying notes form an integral part of the condensed unaudited interim financial statements.
Condensed Unaudited Statement
of Financial Position
As at 30 September 2020
30 Sep 2020 31 Mar 2019
Note GBP GBP
---------------------------------------------- ----- ------------ ------------
Assets
---------------------------------------------- ----- ------------ ------------
Non-current assets
---------------------------------------------- ----- ------------ ------------
Financial assets at fair value through profit
or loss 12,14 347,282,921 375,160,577
---------------------------------------------- ----- ------------ ------------
347,282,921 375,160,577
---------------------------------------------- ----- ------------ ------------
Current assets
---------------------------------------------- ----- ------------ ------------
Cash and cash equivalents 46,078,333 27,019,773
---------------------------------------------- ----- ------------ ------------
Cash collateral at broker 15 2,279,376 24,956,945
---------------------------------------------- ----- ------------ ------------
Other assets 6 16,140,852 14,641,472
---------------------------------------------- ----- ------------ ------------
64,498,561 66,618,190
---------------------------------------------- ----- ------------ ------------
Total assets 411,781,482 441,778,767
---------------------------------------------- ----- ------------ ------------
Equity and liabilities
---------------------------------------------- ----- ------------ ------------
Equity
---------------------------------------------- ----- ------------ ------------
Reserves 338,897,249 337,157,197
---------------------------------------------- ----- ------------ ------------
338,897,249 337,157,197
---------------------------------------------- ----- ------------ ------------
Current liabilities
---------------------------------------------- ----- ------------ ------------
Financing agreements 8 71,106,150 96,966,878
---------------------------------------------- ----- ------------ ------------
Derivative financial liabilities 13 430,218 6,176,905
---------------------------------------------- ----- ------------ ------------
Other liabilities 7 1,347,865 1,477,787
---------------------------------------------- ----- ------------ ------------
Total liabilities 72,884,233 104,621,570
---------------------------------------------- ----- ------------ ------------
Total equity and liabilities 411,781,482 441,778,767
---------------------------------------------- ----- ------------ ------------
Ordinary Shares outstanding 11 229,332,478 229,332,478
---------------------------------------------- ----- ------------ ------------
Net asset value per Ordinary Share GBP1.48 GBP1.47
---------------------------------------------- ----- ------------ ------------
The accompanying notes form an integral part of the condensed unaudited interim financial statements.
Signed on behalf of the Board of Directors by:
Bob Cowdell Susie Farnon Director Director
26 November 2020
Condensed Unaudited Statement
of Changes in Equity
For the six months ended 30 September 2020
Note GBP
------------------------------------------- ---- -------------
Balance as at 31 March 2020 337,157,197
------------------------------------------- ---- -------------
Total comprehensive income 15,500,000
------------------------------------------- ---- -------------
Ordinary Share dividends 9 (13,759,948)
------------------------------------------- ---- -------------
Balance as at 30 September 2020 338,897,249
------------------------------------------- ---- -------------
For the six months ended 30 September 2019
------------------------------------------- ---- -------------
Balance as at 31 March 2019 253,198,289
------------------------------------------- ---- -------------
Total comprehensive income 11,565,857
------------------------------------------- ---- -------------
Issue of Ordinary Shares of the Company 11 76,595,506
------------------------------------------- ---- -------------
Ordinary Share dividends 9 (11,952,218)
------------------------------------------- ---- -------------
Balance as at 30 September 2019 329,407,434
------------------------------------------- ---- -------------
The accompanying notes form an integral part of the condensed unaudited interim financial statements.
Condensed Unaudited Statement
of Cash Flows
For the six months ended 30 September 2020
30 Sep 2020 30 Sep 2019
GBP GBP
------------------------------------------------------- ------------ ------------
Profit before finance costs 16,686,773 12,328,937
------------------------------------------------------- ------------ ------------
Sales/(purchases) of financial assets 36,670,863 (26,914,071)
------------------------------------------------------- ------------ ------------
Purchases of derivative financial liabilities (8,033,683) -
------------------------------------------------------- ------------ ------------
Movement in realised and unrealised gains on financial
assets (8,793,207) (4,632,952)
------------------------------------------------------- ------------ ------------
Movement in derivative financial liabilities 2,286,996 (2,205,307)
------------------------------------------------------- ------------ ------------
Operating cash flows before movement in working
capital 38,817,742 (21,423,393)
------------------------------------------------------- ------------ ------------
(Increase)/decrease in other assets (1,499,380) 1,558,931
------------------------------------------------------- ------------ ------------
(Decrease)/increase in other liabilities (129,922) 513,541
------------------------------------------------------- ------------ ------------
Movement in cash collateral at/due to broker 22,677,569 2,766,387 ------------------------------------------------------- ------------ ------------ Movement in working capital 21,048,267 4,838,859 ------------------------------------------------------- ------------ ------------ Net cash flow from/(used in) operating activities 59,866,009 (16,584,534) ------------------------------------------------------- ------------ ------------ Financing activities ------------------------------------------------------- ------------ ------------ Ordinary Shares issued - 76,595,506 ------------------------------------------------------- ------------ ------------ Distributions paid to Ordinary Shareholders (13,759,948) (11,952,218) ------------------------------------------------------- ------------ ------------ Net repayments under financing agreement & the related finance charges (27,047,501) (39,948,516) ------------------------------------------------------- ------------ ------------ Net cash (outflow)/inflow from financing activities (40,807,449) 24,694,772 ------------------------------------------------------- ------------ ------------ Net increase in cash and cash equivalents 19,058,560 8,110,238 ------------------------------------------------------- ------------ ------------ Cash and cash equivalents at the start of the period 27,019,773 38,644,984 ------------------------------------------------------- ------------ ------------ Cash and cash equivalents at the end of the period 46,078,333 46,755,222 ------------------------------------------------------- ------------ ------------
The accompanying notes form an integral part of the condensed unaudited interim financial statements.
Notes to the Condensed Unaudited Interim Financial Statements
For the six months ended 30 September 2020
1. General Information
Real Estate Credit Investments Limited ("RECI" or the "Company") was incorporated in Guernsey, Channel Islands on 6 September 2005 with registered number 43634. The Company commenced its operations on 8 December 2005.
The Company invests in real estate debt secured by commercial or residential properties in the United Kingdom and Western Europe, focusing primarily on those countries where it sees the changing dynamics in the real estate debt market offering a sustainable deal flow for the foreseeable future. The Company has adopted a long-term strategic approach to investing and focuses on identifying value in real estate debt. In making these investments the Company uses the expertise and knowledge of its Alternative Investment Fund Manager ("AIFM"), Cheyne Capital Management (UK) LLP ("Cheyne" or the "Investment Manager").
The ordinary shares ("Ordinary Shares") are currently listed on the premium segment of the Official List of the UK Listing Authority and trade on the Main Market of the London Stock Exchange. Ordinary Shares offer investors a levered exposure to a portfolio of Real Estate Credit Investments and aim to pay a quarterly dividend.
The Company's investment management activities are managed by the Investment Manager, who is also the AIFM.
The Company has entered into an Investment Management Agreement (the "Investment Management Agreement") under which the Investment Manager manages its day-to-day investment operations, subject to the supervision of the Company's Board of Directors. The Company is an Alternative Investment Fund ("AIF") within the meaning of the Alternative Investment Fund Manager Directive ("AIFMD") and accordingly the Investment Manager has been appointed as AIFM of the Company, which has no employees of its own. For its services, the Investment Manager receives a monthly management fee, expense reimbursements and accrues a performance fee (see Note 16). The Company has no ownership interest in the Investment Manager.
Citco Fund Services (Guernsey) Limited is the Administrator and provides all administration services to the Company in this capacity. The Bank of New York Mellon (International) Limited is the Depositary and undertakes the custody of assets. Aztec Financial Services (Guernsey) Limited is the Company Secretary.
2. Significant Accounting Policies
Statement of Compliance
The condensed unaudited interim financial statements for the period ended 30 September 2020 have been prepared in accordance with International Accounting Standard ("IAS") 34 Interim Financial Reporting ("IAS 34") as issued by the International Accounting Standards Board ("IASB"). With the exception of those described below, the same accounting policies, presentation and methods of computation have been followed in these condensed unaudited interim financial statements as were applied in the preparation of the Company's audited financial statements for the year ended 31 March 2020.
The condensed unaudited interim financial statements do not contain all the information and disclosures required in a full set of annual financial statements and should be read in conjunction with the audited financial statements of the Company for the year ended 31 March 2020, which were prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the IASB.
The comparative information for the year ended 31 March 2020 does not constitute Statutory Accounts as defined by Guernsey Law. A copy of the Statutory Accounts for that year has been delivered to the Shareholders and is available on the Company's website: www.recreditinvest.com
The operations of the Company are not subject to seasonal fluctuations.
New Standards, Amendments and Interpretations Issued and Effective for the Financial Year Beginning 1 April 2020
Amendments to IFRS 3 - Definition of a Business
In October 2018, the IASB issued amendments to the definition of a business in IFRS 3 Business Combinations. The amendments are intended to assist entities to determine whether a transaction should be accounted for as a business combination or as an asset acquisition. The amendments: clarify the minimum requirements for a business; remove the assessment of whether market participants are capable of replacing any missing elements; add guidance to help entities assess whether an acquired process is substantive; narrow the definitions of a business and of outputs; and introduce an optional fair value concentration test. The amendments to IFRS 3 are effective for annual reporting periods beginning on or after 1 January 2020. Amendments to IFRS 3 have no material impact on the financial statements as the Company has not entered into business combinations.
Amendments to References to Conceptual Framework in IFRS Standard
Together with the revised Conceptual Framework for Financial Reporting, which became effective upon publication on 29 March 2018, the IASB has also issued Amendments to References to the Conceptual Framework in IFRS Standards. The document contains amendments to IFRS 2, IFRS 3, IFRS 6, IFRS 14, IAS 1, IAS 8, IAS 34, IAS 37, IAS 38, IFRIC 12, IFRIC 19, IFRIC 20, IFRIC 22 and SIC-32. Not all amendments, however, update those pronouncements with regard to references to and quotes from the framework so that they refer to the revised Conceptual Framework. Some pronouncements are only updated to indicate which version of the Framework they are referencing to (the IASC Framework adopted by the IASB in 2001, the IASB Framework of 2010, or the new revised Framework of 2018) or to indicate that definitions in the Standard have not been updated with the new definitions developed in the revised Conceptual Framework. The amendments, where they actually are updates, are effective for annual periods beginning on or after 1 January 2020. The amendments has no material impact on the financial statements of the Company.
New Standards, Amendments and Interpretations Issued but not Effective for the Financial Year Beginning 1 April 2020 and not Early Adopted
Effective for periods beginning
Title on or after
--------------------------------------------------- -------------------------------
IFRS 17 Insurance Contracts 1 January 2023
--------------------------------------------------- -------------------------------
Amendments to IAS 1 - Classification of Liabilities 1 January 2023
as Current or Non-current
--------------------------------------------------- -------------------------------
IFRS 17 Insurance Contracts has no material impact on the financial statements as the Company does not have
insurance contracts.
Amendments to IAS 1 affect only the presentation of liabilities in the Statement of Financial Position and not the amount or timing of recognition of any asset, liability income or expenses, or the information that the Company disclose about those items.
Basis of Preparation
The condensed unaudited interim financial statements of the Company are prepared under IFRS on the historical cost or amortised cost basis except for financial assets and liabilities classified at fair value through profit or loss which have been measured at fair value.
The functional and presentation currency of the Company is GBP (GBP), which the Board considers best represents the economic environment in which the Company operates.
Going Concern
The Directors believe it is appropriate to adopt the going concern basis in preparing the condensed unaudited interim financial statements as, after due consideration, they consider that the Company has adequate resources to continue in operational existence for a period of at least twelve months from the date of signing the condensed unaudited interim financial statements.
The Investment Manager performed an evaluation of each of its positions in light of the likely long-term impact of the Covid-19 crisis on operating models and valuations, and performed a granular analysis of the future liquidity profile of the Company.
A detailed cash flow profile of each investment was completed, incorporating the probability of likely delays to repayments
(and additional cash needs).
Taking account of the updated forecasting, the Directors consider that the cash resources available as at 30 September 2020
of GBP46.1 million (31 March 2020: GBP27.0 million), together with the cash collateral at broker of GBP2.3 million (31 March 2020:
GBP25.0 million), the liquidity of the market bond portfolio and the financing available through activities such as repurchase agreements as described in Note 8, are sufficient to cover normal operational costs and current liabilities, including the proposed dividend, and the expected funding of loan commitments as they fall due for a period of at least twelve months from the date of signing the condensed unaudited interim financial statements. The Directors note that a key assumption adopted in the going concern analysis is that leverage through repurchase agreements is not withdrawn. Between 30 September 2020 and 31 October 2020, there have also been GBP24.2 million further repayments, and net debt (leverage minus cash) as at 31 October 2020 was 6.8%. The Directors consider this to have strengthened the resilience of the Company to future market uncertainty.
Since the onset of the Covid-19 crisis and the resultant market turbulence, the Company moved to take the following measures:
-- An evaluation of each of its positions in light of the likely long-term impact of the crisis on operating models and valuations and hence recovery prospects for the individual positions. The output of this analysis was to write down the value of just two of its mezzanine positions. These impairments are not realised losses, but provisions for potential losses recognised today.
-- Engaged positively with every one of its borrower counterparts to put in place mitigation and de-risking strategies for the
long term.
-- Improved the resilience and flexibility of the Company by increasing its cash balances and reducing its net leverage.
-- Performed a granular analysis of the future liquidity profile of the Company. A detailed cash flow profile of each investment
was completed, incorporating the probability of likely delays to repayments (and additional cash needs).
As disclosed in Note 17, as at 30 September 2020, the Company had committed GBP472.5 million into loans of which GBP276.9 million had been funded. The Investment Manager models these expected commitments, and is only obliged to fund if the borrowers meet specific business plan milestones, and remains comfortable that it has sufficient liquidity over the expected funding timeframes.
Notwithstanding the Directors' belief that this assumption remains justifiable, the Directors have also determined a number of mitigations to address a scenario where all outstanding repurchase agreements are required to be settled as they fall due. Whilst there would be a number of competing strategic factors to consider before implementation of such options, the Directors assert that these are credible and can generate sufficient liquidity to enable the Company to meet its obligations as they fall due. Such strategies include further sales of assets within the bond portfolio, cessation or delay of any future dividends and obtaining longer-term, non-recourse financing.
In consideration of this additional stressed scenario and mitigations identified, the Directors consider that the Company has adequate resources to continue in operational existence for a period of at least twelve months from the date of signing the condensed unaudited interim financial statements.
In line with its Articles of Association, the Company will put forward a resolution for its continuation at the next annual meeting (likely to be scheduled for September 2021). The Directors have no reason to believe that the continuation vote will not be passed by Shareholders. If any continuation resolution is not passed, the Directors are required to put proposals for the reconstruction or reorganisation of the Company to the Shareholders for their approval within six months of the date of the continuation resolution. The Directors are therefore satisfied that it is appropriate to adopt the going concern basis of accounting in preparing these interim financial statements.
3. Net Gains on Financial Assets and Liabilities at Fair Value through Profit or Loss
30 Sep 2020 30 Sep 2019
GBP GBP
------------------------------------------------- ----------- -----------
Net gains/(losses)
------------------------------------------------- ----------- -----------
Net gains on market bonds 3,232,705 1,742,874
------------------------------------------------- ----------- -----------
Net gains on self-originated bonds 4,588,115 1,575,114
------------------------------------------------- ----------- -----------
Net gains on self-originated loans 972,387 1,314,964
------------------------------------------------- ----------- -----------
Net losses on foreign exchange instruments and
other foreign currency transactions (2,702,761) (2,007,467)
------------------------------------------------- ----------- -----------
Net gains on financial assets and liabilities at
fair value through profit or loss 6,090,446 2,625,485
------------------------------------------------- ----------- -----------
4. Operating Expenses
30 Sep 2020 30 Sep 2019
Note GBP GBP
---------------------------------------------------- ------ ----------- -----------
Investment management, administration, depositary
and performance fees
---------------------------------------------------- ------ ----------- -----------
Investment management fee 16 2,131,045 1,930,838
---------------------------------------------------- ------ ----------- -----------
Administration fee 16 122,560 117,313
---------------------------------------------------- ------ ----------- -----------
Depositary fee 16 42,111 35,152
---------------------------------------------------- ------ ----------- -----------
Performance fee 16 - 186,831
---------------------------------------------------- ------ ----------- -----------
2,295,716 2,270,134
---------------------------------------------------- ------ ----------- -----------
Other operating expenses
---------------------------------------------------- ------ ----------- -----------
Legal fees (including portfolio transaction related
costs) 307,143 114,157
---------------------------------------------------- ------ ----------- -----------
Directors' fees 95,000 90,000
---------------------------------------------------- ------ ----------- -----------
Corporate secretary fees 40,648 42,730
---------------------------------------------------- ------ ----------- -----------
Fees to auditor for non-audit services 34,000 28,840
---------------------------------------------------- ------ ----------- -----------
Audit fees 34,000 26,160
---------------------------------------------------- ------ ----------- -----------
Research fees 24,746 15,321
---------------------------------------------------- ------ ----------- -----------
Other expenses 208,644 165,026
---------------------------------------------------- ------ ----------- -----------
744,181 482,234
---------------------------------------------------- ------ ----------- -----------
Total operating expenses 3,039,897 2,752,368
---------------------------------------------------- ------ ----------- -----------
5. Interest Income and Finance Costs
The following table details interest income and finance costs from financial assets and liabilities for the period:
30 Sep 2020 30 Sep 2019
GBP GBP
------------------------------------------------- ----------- -----------
Interest income
------------------------------------------------- ----------- -----------
Real Estate Credit Investments - market bonds 1,376,742 2,065,730
------------------------------------------------- ----------- -----------
Real Estate Credit Investments - self-originated
bonds 3,415,464 2,976,901
------------------------------------------------- ----------- -----------
Real Estate Credit Investments - self-originated
loans 8,706,257 7,353,770
------------------------------------------------- ----------- -----------
Cash and cash equivalents and other receivables 3,736 59,419
------------------------------------------------- ----------- ----------- Total interest income 13,502,199 12,455,820 ------------------------------------------------- ----------- ----------- Finance costs ------------------------------------------------- ----------- ----------- Net cost of financing agreements (1,186,773) (763,080) ------------------------------------------------- ----------- ----------- Total finance costs (1,186,773) (763,080) ------------------------------------------------- ----------- -----------
6. Other Assets
30 Sep 2020 31 Mar 2020
GBP GBP
----------------------------------------- ----------- -----------
Market bond interest receivable 1,054,081 495,409
----------------------------------------- ----------- -----------
Self-originated bond interest receivable 495,713 2,010,495
----------------------------------------- ----------- -----------
Self-originated loan income receivable 14,577,967 12,112,059
----------------------------------------- ----------- -----------
Other receivables and prepaid expenses 13,091 23,509
----------------------------------------- ----------- -----------
16,140,852 14,641,472
----------------------------------------- ----------- -----------
7. Other Liabilities
30 Sep 2020 31 Mar 2020
GBP GBP
---------------------------------- ----------- -----------
Investment management fee payable 382,367 363,935
---------------------------------- ----------- -----------
Interest payable 88,332 241,432
---------------------------------- ----------- -----------
Administration fee payable 21,850 22,272
---------------------------------- ----------- -----------
Depositary fee payable 13,352 15,628
---------------------------------- ----------- -----------
Other expense accruals 841,964 834,520
---------------------------------- ----------- -----------
1,347,865 1,477,787
---------------------------------- ----------- -----------
8. Financing Agreements
The Company enters into repurchase agreements with several banks to provide leverage. This financing is collateralised against certain of the Company's market bond and bilateral bond portfolio assets with a fair value totalling GBP104.7 million (31 March 2020: GBP108.1 million) and a weighted average cost of 3.23% (31 March 2020: 1.80%) per annum. The average period to maturity of the repurchase arrangements is 2 months (31 March 2020: 2 months).
This short-term financing is shown as a current liability in the Condensed Unaudited Statement of Financial Position whereas the collateralised assets are shown as non-current. The movement in financing agreement and the related finance charges amounting to GBP27.0 million (31 March 2020: GBP4.6 million) is shown as a financing activity in the Condensed Unaudited Statement of Cash Flows.
9. Dividends
30 Sep 2020 30 Sep 2019
GBP GBP
---------------------------------------------------- ----------- -----------
Ordinary Share Dividends
---------------------------------------------------- ----------- -----------
Fourth interim dividend for the year ending 31
March 2020/31 March 2019 6,879,974 5,976,109
---------------------------------------------------- ----------- -----------
First interim dividend for the year ending 31 March
2021/31 March 2020 6,879,974 5,976,109
---------------------------------------------------- ----------- -----------
Dividends paid to Ordinary Shareholders in the
period 13,759,948 11,952,218
---------------------------------------------------- ----------- -----------
The total dividends paid during the financial period ended 30 September 2020 amounted to 6 pence per Ordinary Share
(30 September 2019: 6 pence per Ordinary Share).
Under Guernsey law, companies can pay dividends provided they satisfy the solvency test prescribed under The Companies (Guernsey) Law, 2008 which considers whether a company is able to pay its debts when they become due and whether the value of a company's assets is greater than its liabilities.
The Directors considered that the Company satisfied the solvency test for each dividend payment during the periods ended
30 September 2020 and 30 September 2019.
10. Earnings per Ordinary Share
The calculation of the basic and diluted earnings per Ordinary Share is based on the following data:
30 Sep 2020 30 Sep 2019
GBP GBP
--------------------------------------------------- ----------- -----------
Net earnings attributable to Ordinary Shares (GBP) 15,500,000 11,565,857
--------------------------------------------------- ----------- -----------
Weighted average number of Ordinary Shares for
the purposes
of basic and diluted earnings per Ordinary Share 229,332,478 184,581,786
--------------------------------------------------- ----------- -----------
Earnings per Ordinary Share
--------------------------------------------------- ----------- -----------
Basic and diluted (pence) 6.8 6.3
--------------------------------------------------- ----------- -----------
11. Share Capital
The issued share capital of the Company consists of Ordinary Shares and its capital as at the period end is represented by the net proceeds from the issuance of Ordinary Shares and profits retained up to that date. The Company does not have any externally imposed capital requirements. As at 30 September 2020, the Company had capital of GBP338.9 million (31 March 2020: GBP337.2 million).
30 Sep 2020 31 Mar 2020
Number of Number of
Authorised Share Capital Shares Shares
---------------------------------------------- ----------- -----------
Ordinary Shares of no par value each Unlimited Unlimited
---------------------------------------------- ----------- -----------
30 Sep 2020 31 Mar 2020
Number of Number of
Ordinary Shares issued and fully paid Shares Shares
---------------------------------------------- ----------- -----------
Balance at the start of the period/year 229,332,478 153,321,282
---------------------------------------------- ----------- -----------
Ordinary Shares issued during the period/year - 76,011,196
---------------------------------------------- ----------- -----------
Balance at end of the period/year 229,332,478 229,332,478
---------------------------------------------- ----------- -----------
On 21 February 2020, the Company launched a third placing programme for the issue of up to 150 million new Ordinary Shares, which was approved by Shareholders at an extraordinary general meeting held on 10 March 2020. No Ordinary Shares have been issued to date.
The Company manages its capital to ensure that it will be able to continue as a going concern while maximising the return to Shareholders. The Company's overall strategy was outlined in the Prospectus which was published on 21 February 2020 to launch the third placing programme. The capital structure of the Company consists of the equity of the Company as disclosed
in the Condensed Unaudited Statement of Changes in Equity
12. Valuation of Financial Instruments
IFRS 13 Fair Value Measurement requires disclosures surrounding the level in the fair value hierarchy in which fair value measurement inputs are categorised for assets and liabilities measured in the Condensed Unaudited Statement of Financial Position. The determination of the fair value for financial assets and financial liabilities for which there is no observable market price requires the use of valuation techniques. For financial instruments that trade infrequently and have little price transparency, fair value is less objective.
The Company categorises investments using the following hierarchy as defined by IFRS 13:
-- Level 1 - Quoted market prices in an active market for an identical instrument.
-- Level 2 - Valuation techniques based on observable inputs. This category includes instruments valued using: quoted market prices in active markets for similar instruments; quoted prices for similar instruments in markets that are considered less than active; or other valuation techniques where all significant inputs are directly or indirectly observable from market data.
-- Level 3 - Valuation techniques using significant unobservable inputs. This category includes all instruments where the valuation technique includes inputs not based on observable data and the unobservable inputs could have a significant impact on the instrument's valuation. This category includes instruments that are valued based on quoted prices for similar instruments where significant unobservable adjustments or assumptions are required to reflect differences between
the instruments.
The following tables analyse the fair value hierarchy of the Company's financial assets and liabilities measured at fair value at the period/year end date:
Level 1 Level 2 Level 3 Total
As at 30 September 2020 GBP GBP GBP GBP
------------------------------------------------- ------- ------------ ----------- ------------
Non-current assets
------------------------------------------------- ------- ------------ ----------- ------------
Real Estate Credit Investments - market
bonds - 70,249,976 140,997 70,390,973
------------------------------------------------- ------- ------------ ----------- ------------
Real Estate Credit Investments - self-originated
bonds - 109,024,216 - 109,024,216
------------------------------------------------- ------- ------------ ----------- ------------
Real Estate Credit Investments - self-originated
loans - - 167,867,732 167,867,732
------------------------------------------------- ------- ------------ ----------- ------------
Current liabilities
------------------------------------------------- ------- ------------ ----------- ------------
Real Estate Credit Investments - repurchase
agreements - (71,106,150) - (71,106,150)
------------------------------------------------- ------- ------------ ----------- ------------
Forward foreign exchange contracts - (430,218) - (430,218)
------------------------------------------------- ------- ------------ ----------- ------------
- 107,737,824 168,008,729 275,746,553
------------------------------------------------- ------- ------------ ----------- ------------
Level 1 Level 2 Level 3 Total
As at 31 March 2020 GBP GBP GBP GBP
------------------------------------------------- ------- ------------ ----------- ------------
Non-current assets
------------------------------------------------- ------- ------------ ----------- ------------
Real Estate Credit Investments - market
bonds - 87,690,906 214,253 87,905,159
------------------------------------------------- ------- ------------ ----------- ------------
Real Estate Credit Investments - self-originated
bonds - 149,653,980 - 149,653,980
------------------------------------------------- ------- ------------ ----------- ------------
Real Estate Credit Investments - self-originated
loans - - 137,601,438 137,601,438
------------------------------------------------- ------- ------------ ----------- ------------
Current liabilities
------------------------------------------------- ------- ------------ ----------- ------------
Real Estate Credit Investments - repurchase
agreements - (96,966,878) - (96,966,878)
------------------------------------------------- ------- ------------ ----------- ------------
Forward foreign exchange contracts - (6,176,905) - (6,176,905)
------------------------------------------------- ------- ------------ ----------- ------------
- 134,201,103 137,815,691 272,016,794
------------------------------------------------- ------- ------------ ----------- ------------
The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
The fair value of forward contracts is the difference between the contracts price and reported market prices of the underlying contract variables. These are included in Level 2 of the fair value hierarchy.
The fair values of investments that trade in markets that are not considered to be active but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs are classified within Level 2. These include investment-grade corporate bonds ("Real Estate Credit Instruments"), repurchase agreements and over-the-counter derivatives.
As Level 2 investments include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information. In cases where material discounts are applied, the positions will be valued as Level 3.
The Company makes loans into structures to gain exposure to real estate secured debt in the UK and Western Europe.
These loans are not traded in an active market and there are no independent quotes available for these loans. Such holdings
are classified as Level 3 investments. The fair value of these loans are linked directly to the value of the real estate loans, the underlying structures invests in, which are determined based on modelled expected cash flows (drawdown principal and interest repayments, and maturity dates) with effective yields ranging from 5.1% to 24.0% (31 March 2020: 4.9% to 24.0%) (the unobservable input).
Fair value of the real estate loans is adjusted for changes in the credit quality of both the borrower and the underlying property collateral, and changes in the market rate on similar instruments. On origination of the loan, the Investment Manager performs due diligence on the borrower and related security/property. This includes obtaining a valuation of the underlying property (to assess loan-to-value of the investment). In most instances, the terms of the loan require periodic revaluation of the underlying property to check against loan-to-value covenants. All the fees associated with the investments (arrangement fees, exit fees, etc.) are paid directly to the Company and not paid to the Manager.
The majority of the Company's investments in loans are made through a Luxembourg based entity, Stornoway Finance SARL,
via loan note instruments. As and when market information, such as market prices from recognised financial data providers becomes available, the Company will assess the impact on its portfolio of loans and whether there should be any transfers between levels in the fair value hierarchy.
As at 30 September 2020, the Investment Manager was not aware of any significant movement in the market rates, any indications of impairment, significant credit events or significant negative performance of the underlying property structures that have not already been taken into account when determining the fair value of the loans and bonds. Whilst no defaults in the underlying investment are expected, a 1% or 2% decrease in the discount rate would decrease the fair value by GBP6.5 million or GBP13.0 million (31 March 2020: GBP6.9 million or GBP13.8 million), respectively and increase net profit by an equal amount; an equal change in the opposite direction would decrease the equity of the loan and bond portfolio within the Company and decrease net profit by an equal amount.
Level 3 Reconciliation
The following table shows a reconciliation of all movements in the fair value of financial instruments categorised within Level 3 between the beginning and the end of the financial period/year:
Level 3 Level 3
30 Sep 31 Mar
2020 2020
GBP GBP
----------------------------------------------------------- ------------ ------------
Financial assets at fair value through profit or loss
----------------------------------------------------------- ------------ ------------
Opening balance 137,815,691 139,383,640
----------------------------------------------------------- ------------ ------------
Total gains/(losses) recognised in the Condensed Unaudited
Statement of Comprehensive Income for the period/year 900,127 (14,147,498)
----------------------------------------------------------- ------------ ------------
Purchases 50,147,214 72,177,884
----------------------------------------------------------- ------------ ------------
Sales (47,611,956) (59,870,537)
----------------------------------------------------------- ------------ ------------
Transfer into Level 3* 26,757,653 272,202
----------------------------------------------------------- ------------ ------------
Closing balance 168,008,729 137,815,691
----------------------------------------------------------- ------------ ------------
Unrealised gain/(loss) on investments classified as
Level 3 at period/year end 467,456 (15,421,280)
----------------------------------------------------------- ------------ ------------
*Following a review of the levels for some of the bonds and loans,
they have been moved from Level 2 to Level 3.
13. Derivative Contracts
The Company has credit exposure in relation to its derivative contracts. The Company invested in derivative contracts with the Bank of New York Mellon with the following credit quality according to Standard and Poor's:
30 Sep 2020 31 Mar 2020
Rating GBP GBP
------------------------------------------------ ----------- -----------
The Bank of New York Mellon - AA- (Derivatives) (430,218) (6,176,905)
------------------------------------------------ ----------- -----------
Transactions involving derivative instruments are usually with counterparties with whom the Company has signed master netting agreements. Master netting agreements provide for the net settlement of contracts with the same counterparty in the event of default. The impact of the master netting agreements is to reduce credit risk from the amounts shown as derivative financial assets on the Condensed Unaudited Statement of Financial Position. The credit risk associated with derivative financial assets subject to a master netting arrangement is eliminated only to the extent that financial liabilities due to the same counterparty will be settled after the assets are realised.
The exposure to credit risk reduced by master netting arrangements may change significantly within a short period of time as a result of transactions subject to the arrangement. The corresponding assets and liabilities have not been offset on the Condensed Unaudited Statement of Financial Position.
Below are the derivative liabilities by counterparty as at 30 September 2020 and 31 March 2020.
Forward Foreign Exchange Contracts
The following forward foreign exchange contracts were open as at 30 September 2020:
Unrealised
Settlement Buy Buy Sell Sell Loss
Counterparty Date Currency Amount Currency Amount GBP
--------------------- ------------ ---------- ---------- --------- ------------ ----------
The Bank of New York 20 November
Mellon 2020 GBP 80,105,418 EUR (88,700,000) (430,218)
--------------------- ------------ ---------- ---------- --------- ------------ ----------
Unrealised loss on forward foreign exchange contracts (430,218)
------------------------------------------------------------------------------------ ----------
The following forward foreign exchange contracts were open as at 31 March 2020:
Unrealised
Settlement Buy Buy Sell Sell Loss
Counterparty Date Currency Amount Currency Amount GBP
--------------------- ------------ ---------- ----------- --------- ------------- -----------
The Bank of New York
Mellon 19 May 2020 GBP 101,991,786 EUR (122,200,000) (6,176,905)
--------------------- ------------ ---------- ----------- --------- ------------- -----------
Unrealised loss on forward foreign exchange contracts (6,176,905)
-------------------------------------------------------------------------------------- -----------
14. Segmental Reporting
The Company has adopted IFRS 8 Operating Segments. The standard requires a "management approach", under which segment information is presented on the same basis as that used for internal reporting purposes.
Whilst the Investment Manager may make the investment decisions on a day-to-day basis regarding the allocation of funds to different investments, any changes to the investment strategy or major allocation decisions have to be approved by the Board, even though they may be proposed by the Investment Manager. The Board retains full responsibility as to the major allocation decisions made on an ongoing basis and is therefore considered the "Chief Operating Decision Maker" under IFRS 8.
The Company invests in Real Estate Credit Investments. The Real Estate Credit Investments may take different forms but will be likely to be: (i) secured real estate loans; and (ii) debentures or any other form of debt instrument, securitised tranches of secured real estate related debt securities, for example, RMBS and CMBS (together "MBS"). The real estate debt strategy focuses on secured residential and commercial debt in the UK and Western Europe, seeking to exploit opportunities in publicly traded securities and real estate loans.
The Company has two reportable segments, being the Market Bond Portfolio and the self-originated Bilateral Loan and Bond Portfolio.
For each of the segments, the Board of Directors reviews internal management reports prepared by the Investment Manager on a quarterly basis. The Investment Manager has managed each of the Market Bond Portfolio and the Bilateral Loan and Bond Portfolio separately; thus two reportable segments are displayed in the condensed unaudited interim financial statements.
14. Segmental Reporting (Continued)
Information regarding the results of each reportable segment is included below. Performance is measured based on segment profit/(loss), as included in the internal management reports that are reviewed by the Board of Directors. Segment profit/(loss) is used to measure performance as management believes that such information is the most relevant in evaluating the results.
Market Bond Bilateral Total
Portfolio Loan and GBP
GBP Bond Portfolio
GBP
-------------------------------------- ----------- --------------- -----------
For the six months ended 30 September
2020:
-------------------------------------- ----------- --------------- -----------
Reportable segment profit 4,609,447 17,685,959 22,295,406
-------------------------------------- ----------- --------------- -----------
For the six months ended 30 September
2019:
-------------------------------------- ----------- --------------- -----------
Reportable segment profit 3,808,605 13,280,167 17,088,772
-------------------------------------- ----------- --------------- -----------
As at 30 September 2020:
-------------------------------------- ----------- --------------- -----------
Total assets - - 411,781,482
-------------------------------------- ----------- --------------- -----------
Non-segmental assets - - 48,370,800
-------------------------------------- ----------- --------------- -----------
Reportable segment assets 71,445,054 291,965,628 363,410,682
-------------------------------------- ----------- --------------- -----------
As at 31 March 2020:
-------------------------------------- ----------- --------------- -----------
Total assets - - 441,778,767
-------------------------------------- ----------- --------------- -----------
Non-segmental assets - - 52,000,227
-------------------------------------- ----------- --------------- -----------
Reportable segment assets 88,400,568 301,377,972 389,778,540
-------------------------------------- ----------- --------------- -----------
Information regarding the basis of geographical segments is presented in the Investment Manager's Report and is based on the countries of the underlying collateral.
All segment revenues are from external sources. There are no inter-segment transactions between the reportable segments during the period. Certain income and expenditure is not considered part of the performance of either segment. This includes gains/(losses) on net foreign exchange and derivative instruments, expenses and interest on borrowings.
The following table provides a reconciliation between net reportable income and operating profits.
30 Sep 2020 30 Sep 2019
GBP GBP
----------------------------------------------- ----------- -----------
Reportable segment profit 22,295,406 17,088,772
----------------------------------------------- ----------- -----------
Net losses on foreign exchange instruments and
other foreign currency transactions (2,702,761) (2,007,467)
----------------------------------------------- ----------- -----------
Other income 134,025 -
----------------------------------------------- ----------- -----------
19,726,670 15,081,305
----------------------------------------------- ----------- -----------
Operating expenses (3,039,897) (2,752,368)
----------------------------------------------- ----------- -----------
Finance costs (1,186,773) (763,080)
----------------------------------------------- ----------- -----------
Net profit 15,500,000 11,565,857
----------------------------------------------- ----------- -----------
Certain assets and liabilities are not considered to be attributable to either segment, these include other receivables and prepayments, cash and cash equivalents and derivative financial assets.
The following table provides a reconciliation between net total segment assets and total assets.
30 Sep 2020 31 Mar 2020
GBP GBP
-------------------------- ----------- -----------
Reportable segment assets 363,410,682 389,778,540
-------------------------- ----------- -----------
Cash and cash equivalents 46,078,333 27,019,773
-------------------------- ----------- -----------
Cash collateral at broker 2,279,376 24,956,945
-------------------------- ----------- -----------
Other assets 13,091 23,509
-------------------------- ----------- -----------
411,781,482 441,778,767
-------------------------- ----------- -----------
The following is a summary of the movements in the Company's investments analysed by the loan and bond portfolios for the period ended 30 September 2020:
Bilateral
Market Bond Loan and
Portfolio Bond Portfolio Total
GBP GBP GBP
----------------------------------------------- ------------ --------------- -------------
As at 30 September 2020:
----------------------------------------------- ------------ --------------- -------------
Financial assets at fair value through profit
or loss
----------------------------------------------- ------------ --------------- -------------
Opening fair value 87,905,159 287,255,418 375,160,577
----------------------------------------------- ------------ --------------- -------------
Purchases 25,378,402 128,535,613 153,914,015
----------------------------------------------- ------------ --------------- -------------
Repayments/sales proceeds (46,125,300) (144,459,578) (190,584,878)
----------------------------------------------- ------------ --------------- -------------
Realised (loss)/gain on sales (4,160,317) 1,326,459 (2,833,858)
----------------------------------------------- ------------ --------------- -------------
Net movement in unrealised gain on investments
at fair value through profit or loss 7,393,029 4,234,036 11,627,065
----------------------------------------------- ------------ --------------- -------------
Closing fair value 70,390,973 276,891,948 347,282,921
----------------------------------------------- ------------ --------------- -------------
The following is a summary of the movements in the Company's investments analysed by the loan and bond portfolios for the year ended 31 March 2020:
Bilateral
Market Bond Loan and
Portfolio Bond Portfolio Total
GBP GBP GBP
----------------------------------------------- ------------ --------------- -------------
As at 31 March 2020:
----------------------------------------------- ------------ --------------- -------------
Financial assets at fair value through profit
or loss
----------------------------------------------- ------------ --------------- -------------
Opening fair value 92,473,719 209,976,793 302,450,512
----------------------------------------------- ------------ --------------- -------------
Purchases 51,485,476 232,287,095 283,772,571
----------------------------------------------- ------------ --------------- -------------
Repayments/sales proceeds (44,373,875) (132,378,633) (176,752,508)
----------------------------------------------- ------------ --------------- -------------
Realised (loss)/gain on sales (1,889,465) 902,341 (987,124)
----------------------------------------------- ------------ --------------- -------------
Net movement in unrealised loss on investments
at fair value through profit or loss (9,790,696) (23,532,178) (33,322,874)
----------------------------------------------- ------------ --------------- -------------
Closing fair value 87,905,159 287,255,418 375,160,577
----------------------------------------------- ------------ --------------- -------------
15. Cash Collateral
The Company manages some of its financial risks through the use of financial derivative instruments which are subject to collateral requirements. As at 30 September 2020, a total of GBP2.3 million (31 March 2020: GBP25.0 million) was due from various financial institutions under the terms of the relevant arrangements. The cash held by brokers is restricted and is shown as Cash collateral at broker on the Condensed Unaudited Statement of Financial Position.
16. Material Agreements and Related Party Transactions
Loan Investments
The Company has made, and will continue to make, certain loan investments through a Luxembourg based entity, Stornoway Finance SARL, via Loan Note Instruments. This entity has separate compartments for each loan deal which effectively ringfences each loan deal. Other funds managed by the Investment Manager may invest pari passu in these compartments.
Investment Manager
The Company is party to an Investment Management Agreement with the Investment Manager, dated 22 February 2017, pursuant to which the Company has appointed the Investment Manager to manage its assets on a day-to-day basis in accordance with its investment objectives and policies, subject to the overall supervision and direction of the Board of Directors.
The Company pays the Investment Manager a management fee and a performance fee.
Management Fee
Under the terms of the Investment Management Agreement, the Investment Manager is entitled to receive from the Company an annual management fee of 1.25% on an adjusted NAV, being the NAV of the Ordinary Shares.
During the period ended 30 September 2020, the management fee totalled GBP2.1 million (30 September 2019: GBP1.9 million),
of which GBP0.4 million (31 March 2020: GBP0.4 million) was outstanding at the period end.
Performance Fee
Under the terms of the Investment Management Agreement, the Investment Manager is entitled to receive from the Company
a performance fee calculated as ((A-B) x 20% x C) where:
A = the Adjusted Performance NAV per Ordinary Share, as defined in the Prospectus.
B = the NAV per Ordinary Share as at the first business day of the Performance Period increased by a simple annual rate of return of 7% over the Performance Period or, if no performance fee was payable in the previous Performance Period, the NAV per Ordinary Share on the first business day of the Performance Period immediately following the last Performance Period in which a performance fee was paid (the "Starting Date") increased by a simple annual rate of return of 7% over the period since the Starting Date ("Hurdle Assets").
C = the time weighted average number of Ordinary Shares in issue in the period since the Starting Date.
On 1 October 2017, the Company entered a new Performance Period which is expected to run until the end date of the quarter in which the second continuation resolution, to be proposed at the AGM to be held in September 2021, is passed.
With the commencement of a new Performance Period, the NAV on which the Hurdle Assets will be determined in accordance with the above formula was reset to the NAV per Ordinary Share on 2 October 2017 (being the Starting Date of the new Performance Period).
During the period ended 30 September 2020, the performance fee totalled GBPNil (30 September 2019: GBP0.2 million) and the related aggregate performance fee payable at the period end date amounted to GBPNil (31 March 2020: GBPNil).
Administration Fee
Under the terms of the Administration Agreement, the Administrator is entitled to receive from the Company a monthly administration fee based on the prior month gross assets of the Company adjusted for current month subscriptions and redemptions of the Company at the relevant basis points per annum rate, subject always to a minimum monthly fee GBP10,000.
During the period ended 30 September 2020, the administration fee totalled GBP122,560 (30 September 2019: GBP117,313), of which GBP21,850 (31 March 2020: GBP22,272) was outstanding at the period end.
Depositary Fee
Under the terms of the Depositary Agreement, the Depositary is entitled to receive from the Company an annual depositary fee of 0.02% (31 March 2020: 0.02%) of the NAV of the Company. During the period ended 30 September 2020, the depositary fee totalled GBP42,111 (30 September 2019: GBP35,152). The Company owed GBP13,352 to the Depositary at the period end date (31 March 2020: GBP15,628).
17. Contingencies and Commitments
As at 30 September 2020, the Company had committed GBP472.5 million into loans of which GBP276.9 million had been funded
(31 March 2020: GBP222.6 million commitment of which GBP161.2 million was funded).
18. Subsequent Events
The Directors declared a second interim dividend of 3 pence per Ordinary Share on 26 November 2020.
There have been no other significant events affecting the Company since the period end date that require amendment to or disclosure in the condensed unaudited interim financial statements.
19. Foreign Exchange Rates Applied to Combined Totals Used in the Preparation of the Condensed Unaudited Interim Financial Statements
The following foreign exchange rates relative to the GBP were used as at the period/year end date:
Currency 30 Sep 2020 31 Mar 2020
GBP GBP
--------- ----------- -----------
EUR 1.10 1.13
--------- ----------- -----------
USD 1.29 1.24
--------- ----------- -----------
20. Approval of the Condensed Unaudited Interim Financial Statements
The condensed unaudited interim financial statements of the Company were approved by the Directors on 26 November 2020.
Directors and Advisers
Directors
Bob Cowdell (Chairman)
Susie Farnon
John Hallam
Graham Harrison
Secretary of the Company
Aztec Financial Services (Guernsey) Limited
PO Box 656
East Wing
Trafalgar Court
Les Banques, St. Peter Port
Guernsey, GY1 3PP
Corporate Broker
Liberum Capital Limited
Ropemaker Place, Level 12
25 Ropemaker Street
London, EC2Y 9LY
Registrar
Link Market Services (Guernsey) Limited
Mount Crevelt House
Bulwer Avenue
St. Sampson
Guernsey, GY2 4LH
Depositary
The Bank of New York Mellon (International) Limited
One Canada Square
London, E14 5AL
Registered Office
PO Box 656
East Wing
Trafalgar Court
Les Banques, St. Peter Port
Guernsey, GY1 3PP
Alternative Investment Fund Manager
Cheyne Capital Management (UK) LLP
Stornoway House
13 Cleveland Row
London, SW1A 1DH
Independent Auditor
Deloitte LLP
Regency Court
Glategny Esplanade
St. Peter Port
Guernsey, GY1 3HW
UK Transfer Agent
Link Market Services
The Registry
34 Beckenham Road
Beckenham
Kent, BR3 4TU
Administrator
Citco Fund Services (Guernsey) Limited
Arnold House
St. Julian's Avenue
St. Peter Port
Guernsey, GY1 3RD
Sub-Administrator
Citco Fund Services (Ireland) Limited
Custom House Plaza, Block 6
International Financial Services Centre
Ireland, Dublin 1
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
END
IR DDBDBSGDDGGL
(END) Dow Jones Newswires
November 27, 2020 02:00 ET (07:00 GMT)
1 Year Real Estate Credit Inves... Chart |
1 Month Real Estate Credit Inves... Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
