We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Register for real-time alerts, custom portfolio, and market movers
| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Rm Secured Direct Lending Plc | LSE:RMDL | London | Ordinary Share | GB00BYMTBG55 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 90.00 | 88.00 | 92.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMRMDL
RNS Number : 5391N
RM Secured Direct Lending PLC
09 August 2017
RM SECURED DIRECT LING PLC
LEGAL ENTITY IDENTIFIER ('LEI'): 213800RBRIYICC2QC958
HALF YEARLY FINANCIAL REPORT
For the period from incorporation on 27 October 2016 to 30 June 2017
Hot Features
Premium
Investment Objective
The Company aims to generate attractive and regular dividends through
investment in secured debt instruments of UK SMEs and mid-market
corporates and/or individuals including any loan, promissory notes,
lease, bond, or preference share (such debt instruments, as further
described below, being "Loans") sourced or originated by the Investment
Manager with a degree of inflation protection through index-linked
returns where appropriate.
Financial Information
As at
30 June 2017
------------------------------------------------------- ---------------------
Net asset value ("NAV") GBP55.9m
-------------------------------------------------------- ---------------------
NAV per Ordinary Share 97.6p
----------------------------------------------------------- ---------------------
Ordinary Share price 102.0p
------------------------------------------------------------- ---------------------
Ordinary Share price premium to NAV 4.5%
---------------------------------------------------------- ---------------------
Performance Summary
% change
------------------------------------------------------- ---------------------
Share price total return per Ordinary Share +2.0%
----------------------------------------------------------- ---------------------
Total return (%) - NAV and Dividends* -0.2%
---------------------------------------------------------- ---------------------
Total return (%) - Share price and
Dividends +2.2%
-------------------------------------------------------- ---------------------
*Based on opening NAV per Ordinary Share after share issue expenses of
98.0p.
Chairman's Statement
Introduction
RM Secured Direct Lending plc (the "Company") listed on the premium segment of the main market of the London Stock Exchange on 15 December 2016, issuing 50,300,000 Ordinary Shares at a price of 100 pence per share. In May 2017, the Company issued a further 7,000,000 Ordinary Shares at 101.25 pence each.
Portfolio
Over the period from admission, RM Capital Markets Limited ("RM" or the "Investment Manager") has made 18 debt investments across 10 sectors. Approximately 20% of the investments are in public debt transactions with the remainder split between club transactions, private bilateral loans or cash. The Company has made GBP58m of commitments of which GBP42m has been deployed on a cash basis with good visibility over the final cash deployment over the near term. The Company is not obliged to fund the undrawn commitments. The average yield on the investments made within the portfolio is 7.72%, which is expected to rise as additional investments are made.
Overall, the deployment of proceeds has been in line with expectations and now that the majority of the portfolio has been invested the Company has a portfolio of cash generating loans which will provide stable income stream to pay regular dividend distributions.
The Board is pleased with the diversification across the 10 business sectors and has reviewed the sector exposure limits in light of the opportunities being reviewed by the Investment Manager. The Technology, Media & Telecoms Sector as well as the Industrial Sector will see the maximum limits reduced by 5% each to 25% with a re-allocation of these limits to the Property Sector. This will increase the maximum Property sector risk weighting from 25% to 35% and is consistent with the transaction opportunities currently being screened by the Investment Manager.
NAV and Share Price Performance
As at 30 June 2017, the net asset value ("NAV") per Ordinary Share was 97.57 pence and the share price was 102 pence, representing a premium of 4.5% to NAV.
On 24 May 2017, the Company declared a first interim dividend of 0.2 pence, which was subsequently paid in June. The directors have declared a second interim dividend of 0.2 pence per Ordinary Share which will be paid on 15 September 2017 to shareholders on the register on 18 August 2017. As stated in the Company's prospectus, the dividend target for the financial period ending 31 December 2017 is 4 pence per Ordinary Share. It is still the expectation of the Board and the Investment Manager that this dividend target will be met.
As described in the Company's prospectus, following the listing the Company applied to the Court for the premium of GBP48.75 million arising on the first issue to be cancelled and transferred to a distributable capital reserve. The process was completed in March 2017 and the reduction became effective at that time.
Finally, I would like to thank shareholders for the support they have shown to the Company since its inception.
Norman Crighton
Chairman
9 August 2017
Investment Manager's Report
During the first half of the year, the Investment Manager worked towards meeting the Investment Objectives outlined in the Prospectus by deploying the funds raised at the IPO and developing a diverse portfolio of debt investments which would generate a steady return for Shareholders. This initial portfolio deployment phase is now largely complete as a significant amount of the initial capital has been deployed. RM is now finalising investments which will take the Company to being fully invested on a cash basis and generating a steady income stream in order to pay the target returns outlined to investors.
The Market Environment
During the period, there has been significant volatility in both bonds and currencies. Post the Brexit referendum the pound has weakened against the Euro and the Dollar. This has had a negligible effect on NAV as currently nearly all of the currency exposure is fully hedged. Central Bankers globally have been commenting on the likely timing of the reduction or removal of Quantitative Easing which has had an effect on underlying bond yields as the market adjusts future interest rate expectations. Sentiment has also been weakened by the result of the 2017 General Election and how this affects Brexit negotiations along with a concern as to how they will be conducted with a divergence of views between the hard and soft Brexit camps. These moves unsettle the credit market and we have seen a period of weakness across public transactions.
The Portfolio
Over the period, the Company has focused on private debt where borrowers pay an illiquidity premium for bespoke loans which can be combined with security packages negotiated by the Investment Manager, thus giving optimum risk adjusted returns. There have been a number of such transactions completed over the period and the pipeline of such transactions remains strong for the second half of the year. Within this pipeline the Investment Manager sees the most attractive risk adjusted opportunities within two sectors, Property Bridging and Asset Finance. Property Bridging is where loans are made on very limited Loan to Value basis over property and where for a number of reasons borrowers need funding faster than a bank can provide. The Company believes it can fill this gap within the unregulated space by providing the "bridge" and adds value by conducting the due diligence and legal process within an expedited time period. Funding Asset Finance opportunities are attractive due to recourse to a wide pool of hard assets, guarantees from underlying borrowers and significant sponsor equity.
The Investment Manager has reviewed a large number of investment opportunities and the significant majority of these have not been progressed. Typically, the main reasons for transactions not proceeding through initial screening are expectations on pricing not being met, sector restrictions, geography of borrower, ethical restrictions, transaction structure not being deemed attractive, transaction size or loan to value.
The Company also invests in more public transactions which meet the Investment Policy. During the early part of the year public transactions provided some initial opportunities thus reducing the cash drag whilst the Investment Manager conducted due diligence and documentation on the transactions directly originated with borrowers. Whilst there is additional volatility from the public transactions as they are more susceptible to price movements driven by market sentiment, they are important for several reasons. Initially it allows a tactical allocation of capital whilst the Company is holding cash. Secondly it gives the Company diversity into high quality companies which are typically of larger scale with larger financing requirements. Finally, these transactions offer liquidity should the Company wish to participate in another opportunity or require cash for any other corporate purposes.
Over the second half of 2017, the Company will seek to raise capital which should increase diversity for shareholders as well as spreading the fixed costs in order to bring down the Total Expense Ratio.
Outlook
As we look forward to the second half of the year, the Investment Manager is cautious due to the uncertain market outlook and remains vigilant with regards to property prices and the broader economy. However, there are still good opportunities to invest in higher yielding secure debt investments and the current pipeline reflects this. RM continues to identify secured investment opportunities offering downside protection which offer an above average return. Investors are keen to source these investments in this increasingly volatile environment and this is reflected by the strong trading of the shares since launch.
RM Capital Markets Limited
9 August 2017
Ten Largest Holdings
As at 30 June 2017
Valuation* % of
Market Sector Business Activity GBP'000 Net Assets
------------------------------- ------------------------ --------------------- ------------------------------
Healthcare & Pharmaceuticals Care provider 4,863 8.7
Sovereign & Public Finance Student accommodation 4,420 7.9
Services (Consumer) Forecourt operator 4,093 7.3
Energy (Electricity) Power plant 4,000 7.2
Healthcare & Pharmaceuticals Care provider 3,870 6.9
Beverage, Food & Tobacco Casual Dining 3,765 6.7
Fire (Insurance) Insurance Broking 2,945 5.3
Energy (Electricity) Power plant 2,575 4.6
Energy (Electricity) Power plant 2,575 4.6
Fire (Finance) Consumer finance 1,954 3.5
------------------------------- ------------------------ --------------------- ------------------------------
Ten largest holdings 35,060 62.7
Other holdings 7,239 12.9
Total holdings 42,299 75.6
--------------------------------------------------------- --------------------- ------------------------------
Cash and other net assets 13,611 24.4
Total net assets 55,910 100.0
--------------------------------------------------------- --------------------- ------------------------------
*Valuation based on fair values of drawn down amounts, which may be different to the par values as at the reporting date.
Interim Management Report
The directors are required to provide an Interim Management Report in accordance with the UK Listing Authority's Disclosure Guidance and Transparency Rules ('DTR'). The directors consider that the Chairman's Statement and the Investment Manager's Report in this Half-yearly Report, the following statement on related party transactions and the Statement of Directors' Responsibility below, together constitute the Interim Management Report for the Company for the period from its incorporation to 30 June 2017. The principal risks and uncertainties to the Company are detailed in note 14 to the financial statements. The outlook for the Company in the remaining six months of the Company's first financial period is discussed in the Investment Manager's Report.
Related party transactions
Details of the amounts paid to the Company's Investment Manager and the directors during the period are detailed in the notes to the financial statements.
Statement of Directors' Responsibility for the Half-Yearly Report
The directors confirm to the best of their knowledge that:
-- The condensed set of financial statements contained within the Half-yearly financial report has been prepared in accordance with IAS 34 Interim Financial Reporting.
-- The interim management report includes a fair review of the information required by 4.2.7R and 4.2.8R of the FCA's DTR.
Norman Crighton
Chairman of the Board of directors
9 August 2017
Unaudited Statement of Comprehensive Income
For the period from incorporation on 27 October 2016
to 30 June 2017
Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000
----------------------------------- ---------- ------------- --------- -------------------
Loss on investments - (376) (376)
Income 3 806 - 806
Investment management fee 4 (139) - (139)
Other expenses (444) - (444)
Return before finance costs and
taxation 223 (376) (153)
Finance costs (3) - (3)
Return on ordinary activities
before taxation 220 (376) (156)
Taxation on ordinary activities - - -
Return on ordinary activities
after taxation 220 (376) (156)
----------------------------------- ---------- ------------- --------- -------------------
Return per Ordinary Share (pence) 8 0.43p (0.73p) (0.30p)
----------------------------------- ---------- ------------- --------- -------------------
The total column of this statement is the profit and loss account of
the Company.
All the revenue and capital items in the above statement derive from
continuing operations.
'Return on ordinary activities after taxation' is also the 'Total comprehensive
income for the period'.
The notes form an integral part of these financial statements.
Unaudited Statement of Financial Position
As at 30 June 2017
Notes GBP'000
----------------------------------------- ------ -------------------
Fixed assets
Investments at fair value through
profit or loss 5 42,299
Current assets
Receivables 352
Cash and cash equivalents 15,946
----------------------------------------- ------ -------------------
16,298
Payables: amounts falling due within one year
Creditors 6 (2,687)
Net current assets 13,611
Total assets less current liabilities 55,910
----------------------------------------- ------ -------------------
Net assets 55,910
----------------------------------------- ------ -------------------
Capital and reserves: equity
----------------------------------------- ------ -------------------
Share capital 7 573
Share premium 6,853
Special reserve 48,640
Capital reserve (376)
Revenue reserve 220
Total equity 55,910
----------------------------------------- ------ -------------------
NAV per share - Ordinary Shares (pence) 9 97.57p
----------------------------------------- ------ -------------------
The notes form an integral part of these financial statements.
Unaudited Statement of Changes in Equity
For the period from incorporation on 27 October 2016 to 30 June 2017
Share Share Special Capital Revenue
capital premium reserve reserve reserve Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------- ------- ---------- ---------- ------------- --------- --------- --------
Balance as
at beginning
of the
period - - - - - -
Return on
ordinary
activities - - - (376) 220 (156)
Issue of
Ordinary
Shares 7 573 56,815 - - - 57,388
Transfer to
special
reserve - (48,755) 48,755 - - -
Share issue
costs - (1,207) - - - (1,207)
Dividend
paid 10 - - (115) - - (115)
Balance as
at 30
June 2017 573 6,853 48,640 (376) 220 55,910
------------- ------- ---------- ---------- ------------- --------- --------- --------
Distributable reserves comprise: the revenue reserve; and capital reserves
attributable to realised profits including the special reserve.
Share capital represents the nominal value of shares that have been issued.
The share premium includes any premiums received on the issue of share
capital. Any transaction costs associated with the issuing of shares are
deducted from share premium.
The notes form an integral part of these financial statements.
Unaudited Statement of Cash Flows
For the period from incorporation on 27 October 2016
to 30 June 2017
Notes GBP'000
---------------------- ---------------------- ------------- ---------
Operating activities
Return on ordinary activities before finance
costs and taxation (153)
Add: Realisation of investments at book
cost 8,355
Less: Purchase of investments (50,884)
Adjustment for losses on investments 230
Increase in debtors (352)
Increase in creditors 2,687
Net cash flow from operating activities (40,117)
----------------------------------------------- ------------- ---------
Financing activities
Finance costs paid (3)
Share issue proceeds 7 57,388
Share issue costs 7 (1,207)
Equity dividends paid 10 (115)
Net cash flow from financing activities 56,063
----------------------------------------------- ------------- ---------
Increase in cash 15,946
Opening balance at beginning of the period -
----------------------------------------------- ------------- ---------
Balance as at 30 June 2017 15,946
----------------------------------------------- ------------- ---------
The notes form an integral part of these
financial statements.
Notes to the financial statements
1. General information
RM Secured Direct Lending plc (the "Company") was incorporated in
England and Wales on 27 October 2016 with registered number 10449530,
as a closed-ended investment company. The Company commenced its operations
on 15 December 2016. The Company intends to carry on business as
an investment trust within the meaning of Chapter 4 of Part 24 of
the Corporation Tax Act 2010.
The Company's investment objective is to generate attractive and
regular dividends through investment in secured debt instruments
of UK SMEs and mid-market corporates including any loan, promissory
notes, lease, bond or preference share sourced or originated by the
Investment Manager with a degree of inflation protection through
index-linked returns where appropriate.
The Company's shares were admitted to the Official List of the UK
Listing Authority with a premium listing on 15 December 2016. On
the same day, trading of the Ordinary Shares commenced on the London
Stock Exchange. The registered office is Mermaid House, 2 Puddle
Dock, London, EC4V 3DB.
2. Accounting policies
The principal accounting policies followed by the Company are set
out below:
(a) Basis of accounting
The condensed interim financial statements have been prepared in
accordance with IAS 34 Interim
Financial Reporting and the Disclosure Guidance and Transparency
Rules ('DTRs') of the UK's Financial Conduct Authority. They do not
include all of the information required for full annual financial
statements. The financial statements have been prepared on the historical
cost basis except for the modification to a fair value basis for
certain financial instruments as specified in the accounting policies
below.
They have also been prepared on the assumption that approval as an
investment trust will continue to be granted. The financial statements
have been prepared on a going concern basis.
The functional and presentational currency of the Company is Sterling
(GBP).
(b) Investments
Investments consist of loans made by the Company. The loans are designated
at initial recognition at fair value through profit and loss and
are recorded at fair value. Subsequently, loans are measured at fair
value through profit and loss and gains / losses are attributed to
the capital column of the Statement of Comprehensive Income. When
the loan term expires, the loan is no longer held as an asset.
(c) Foreign currency
Transactions denominated in foreign currencies are translated into
sterling at actual exchange rates as at the date of the transaction.
Monetary assets and liabilities and non-monetary assets held at fair
value denominated in foreign currencies are translated into sterling
using London closing foreign exchange rates at the period end. Any
gain or loss arising from a change in exchange rates is included
as an exchange gain or loss to capital or revenue in the Statement
of Comprehensive Income as appropriate. Foreign exchange movements
on investments are included in the Statement of Comprehensive Income
within loss on investments.
(d) Income
Interest income is recognised in the revenue column of the Statement
of Comprehensive Income on a time-apportioned basis using the effective
interest rate method.
(e) Capital reserves
Realised and unrealised gains and losses on the Company's investments
are recognised in the capital column of the Statement of Comprehensive
Income and allocated to the capital reserve.
(f) Expenses
All expenses are accounted for on an accruals basis. Expenses are
recognised in the revenue column of the Statement of Comprehensive
Income.
Management fees and finance costs
The Company is expecting to derive its returns predominantly from
interest income. Therefore, the Board has adopted a policy of allocating
all management fees and finance costs to the revenue column of the
Statement of Comprehensive Income.
(g) Taxation
The charge for taxation is based upon the net revenue for the year.
The tax charge is allocated to the revenue and capital accounts according
to the marginal basis whereby revenue expenses are first matched
against taxable income arising in the revenue account. Deferred taxation
will be recognised as an asset or a liability if transactions have
occurred at the initial reporting date that give rise to an obligation
to pay more taxation in the future, or a right to pay less taxation
in the future. An asset will not be recognised to the extent that
the transfer of economic benefit is uncertain.
(h) Financial liabilities
Bank loans and overdrafts are initially recorded at the proceeds
received net of direct issue costs and subsequently measured at amortised
cost using the effective interest rate.
(i) Dividends
Interim dividends to the holders of shares are recorded in the Statement
of Changes in Equity on the date that they are paid. Final dividends
are recorded in the Statement of Changes in Equity when they are
approved by Shareholders.
(j) Estimates and assumptions
The preparation of financial statements requires the directors to
make estimates and assumptions that affect the application of accounting
policies and the reported amounts of assets, liabilities, income
and expenses. Although these estimates are based on management's
best knowledge of current facts, circumstances and, to some extent,
future events and actions, the Company's actual results may ultimately
differ from those estimates, possibly significantly.
3. Income
Period ended
30 June 2017
GBP'000
----- ------------------------ --------------- ------------------------------------------------------------------------------------------
Income from investments
Bond and loan interest 754
Bank interest 17
Other income 35
------------------------------------------------------------------------------------------
806
------------------------ --------------- ------------------------------------------------------------------------------------------
4. Investment management fee
As at 30 June 2017
GBP'000
------------------------- -------------------
Basic fee:
100% charged to revenue 139
-------------------
139
------------------------- -------------------
The Company's investment manager is RM Capital Markets Limited (the
'Investment Manager'). The Investment Manager is entitled to receive
a management fee payable monthly in arrears and is at the rate of
one-twelfth of 0.5% if funds raised are less than GBP75 million.
If the Investment Manager raises funds in excess of GBP75 million
then they are entitled to receive a management fee one twelfth of
0.875% per calendar month of Net Asset Value payable monthly in arrears.
There is no performance fee payable to the Investment Manager. 5. Investment at fair value through profit or loss
As at 30 June 2017
GBP'000
-------------------------- ----------------------------------------------
Financial assets held:
Debt securities and loan
investments 42,299
----------------------------------------------
42,299
-------------------------- ----------------------------------------------
6. Creditors
As at 30 June 2017
GBP'000
--------------------------------- -------------------
Amounts falling due within
one year:
Purchases for future settlement 2,109
Other creditors 578
-------------------
2,687
--------------------------------- -------------------
7. Share capital
30 June 2017 30 June 2017
No. of Shares GBP'000
------------------------ --------------- ------------------------------------------ ----------------------------------------------
Allotted, issued &
fully paid:
Ordinary Shares of
1p 57,300,000 573
------------------------------------------ ----------------------------------------------
57,300,000 573
------------------------ --------------- ------------------------------------------ ----------------------------------------------
On incorporation, the issued share capital of the Company was GBP0.01
represented by one Ordinary Share, held by RM Capital Markets Limited
as subscriber to the Company's memorandum of association. The Ordinary
share was fully paid up.
To enable the Company to obtain a certificate of entitlement to conduct
business and to borrow under Section 761 of the Act, on 3 November
2016, 50,000 redeemable management shares of GBP1 each ("Management
Shares") were allotted to the Investment Manager. The Management
Shares were fully paid up and were redeemed at the same price, immediately
following Admission 15 December 2016 out of the proceeds of the Issue.
On 15 December 2016, 50,300,000 Ordinary Shares of 1p each ("Ordinary
Shares") were allotted and issued to shareholders as part of the
placing and offer for subscription in accordance with the Company's
prospectus dated 24 November 2016.
Share Movement
The table below sets out the share movement since incorporation on
27 October 2016 to 30 June 2017.
For the period from 27 October 2016 to 30 June 2017
Shares in
issue at
Shares issued Shares redeemed 30 June 2017
------------------------ --------------- ------------------------------------------ ----------------------------------------------
Management Shares 50,000 (50,000) -
Ordinary Shares 57,300,000 - 57,300,000
------------------------ --------------- ------------------------------------------ ----------------------------------------------
On 19 May 2017, a further 7,000,000 Ordinary Shares of 1p each were
allotted and issued to shareholders.
8. Return per Ordinary Share
Total return per Ordinary Share is based on the loss on ordinary
activities after taxation of GBP156,000.
Based on the weighted average of number of 51,608,081 Ordinary Shares
in issue from commencement of the Company's operations on 15 December
2016 to 30 June 2017, the returns per share were as follows:
Period ended
30 June 2017
Revenue Capital Total
Return per Ordinary
Share 0.43p (0.73p) (0.30p)
----- ------------------------- --------------- ------------------------------------------ ----------------------------------------------
9. Net asset value per share
The net asset value per share attributable to the ordinary shareholders
at the period end were as follows:
Net Asset Value Net assets
per share available
30 June 2017 30 June 2017
(pence) GBP'000
Ordinary Shares (57,300,000 shares
in issue) 97.57 55,910
----- ------------------------------------------ ------------------------------------------ ----------------------------------------------
The net asset value per share is based on total shareholders' funds
above, and on 57,300,000 Ordinary Shares in issue at the period end.
10. Dividend
On the 23 May 2017, the directors approved the payment of an interim
dividend to ordinary shareholders at the rate of 0.2 pence per Ordinary
Share. The dividend had a record date of 2 June 2017 and was paid
on 30 June 2017. The dividend was funded from the Company's Special
Reserve.
On 4 August 2017, the directors approved the payment of an interim
dividend at the rate of 0.2 pence per Ordinary Share. The dividend
will have a record date of 18 August 2017 and will be payable on
15 September 2017. The dividend will be funded from the Company's
Special Reserve.
11. Related party transactions
Fees payable to the Investment Manager are shown in the Statement
of Comprehensive Income. At 30 June 2017 the fee outstanding to the
Investment Manager was GBP23,296.
Fees are payable at an annual rate of GBP36,000 to the Chairman,
GBP33,000 to the Chairman of the Audit Committee and GBP30,000 to
the other director.
The directors had the following shareholdings in the Company, all
of which are beneficially owned.
Ordinary shares
At 30 June 2017
------------------------ --------------- ------------------------------------------------------------------------------------------
Norman Crighton 20,000
Guy Heald 20,000
Marlene Wood 20,000
------------------------ --------------- ------------------------------------------------------------------------------------------
12. Classification of financial instruments
IFRS 13 requires the Company to classify its investments in a fair
value hierarchy that reflects the significance of the inputs used
in making the measurements. IFRS 13 establishes a fair value hierarchy
that prioritises the inputs to valuation techniques used to measure
fair value. The three levels of fair value hierarchy under IFRS 13
are as follows:
Level 1
Inputs are quoted prices in active markets for identical assets or
liabilities that the entity can access at the measurement date.
Level 2
Inputs other than quoted market prices included within Level 1 that
are observable for the asset or liability, either directly or indirectly.
Level 3
Inputs are unobservable for the asset or liability.
The classification of the Company's investments held at fair value
through profit or loss is detailed in the table below:
30 June 2017
Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
----- ------------------------ --------------- ----------------------- ----------------- ---------------- ----------------------------
Financial assets - 21,491 20,808 42,299
- 21,491 20,808 42,299
----- ------------------------ --------------- ----------------------- ----------------- ---------------- ----------------------------
Level 3 holdings are valued using a discounted cash flow analysis
and benchmarked discount/interest rates appropriate to the nature
of the underlying loan and the date of valuation. Alternative valuation
methodologies, if appropriate, are applied if the particular loan
is "non-standard".
There have been no movements between levels during the reporting
period.
13. Post balance sheet events
There are no other post balance sheet events to report.
14. Principal risks and uncertainties
(i) Market risks
Availability of appropriate investments
There is no guarantee that loans will be made in a timely manner.
Before the Company is able to make or acquire loans, the Investment Manager is required to complete necessary due diligence and enter into appropriate legal documentation. There can be no guarantee these steps will occur.
In addition the Company may become subject to competition in sourcing and making investments. Some of the Company's competitors may have greater financial, technical and marketing resources or a lower cost of capital and the Company may not be able to compete successfully for investments. Competition for investments may lead to the available interest coupon on investments decreasing, which may further limit the Company's ability to generate its desired returns.
If the Investment Manager is not able to source a sufficient number of suitable investments within a reasonable time frame whether by reason of lack of demand, competition or otherwise, a greater proportion of the Company's assets will be held in cash for longer than anticipated and the Company's ability to achieve its investment objective will be adversely affected. To the extent that any investments to which the Company is exposed prepay, mature or are sold it will seek to reinvest such proceeds in further investments in accordance with the Company's investment policy.
Market sectors
Loans will be made to borrowers that operate in different market sectors each of which will have risks that are specific to that particular market sector.
UK exit from the European Union
A referendum was held on 23 June 2016 to decide whether the UK should remain in the EU. A vote was given in favour of the UK leaving the EU ("Brexit"). The extent of the impact on the Company will depend in part on the nature of the arrangements that are put in place between the UK and the EU following Brexit and the extent to which the UK continues to apply laws that are based on EU legislation. In addition, the macroeconomic effect of a Brexit on the value of investments in the lending market and, by extension, the value of investments in the Portfolio is unknown. As such, it is not possible to state the impact that Brexit will have on the Company and its investments. It could also potentially make it more difficult for the Company to raise capital in the EU and/or increase the regulatory compliance burden on the Company. This could restrict the Company's future activities and thereby negatively affect returns.
Management of risks
The Company has appointed an experienced investment Manager who directly sources loans. The Company is investing in a wide range of loan types and sectors and therefore benefits from diversification. Investment restrictions are relatively flexible giving the advisor ability to take advantage of diverse loan opportunities.
The Investment Manager, AIFM, Broker and the Board review market conditions on an ongoing basis.
(ii) Risks associated with meeting the Company's investment objective or target dividend yield
The Company's investment objective is to generate attractive and regular dividends through investment in loans sourced or originated by the Investment Manager and to generate capital appreciation by virtue of the fact that the returns on some loans will be index-linked. The declaration, payment and amount of any future dividends by the Company will be subject to the discretion of the directors and will depend upon, amongst other things, the Company successfully pursuing the investment policy and the Company's earnings, financial position, cash requirements, level and rate of borrowings and availability of profit, as well the provisions of relevant laws or generally accepted accounting principles from time to time.
Management of risks
The Investment Manager has a target portfolio yield which covers the level of dividend targeted by the Company. The Board reviews the position at Board meetings.
(iii) Credit risks
The Company's investments will be predominantly in the form of loans whose revenue streams are secured against contracted, predictable medium to long-term cash flows and/or physical assets, and whose debt service payments are dependent on such cash flows and/or the sale or refinancing of the physical assets.
There are a number of risks that could result in either the cash flows of the borrower being lower than anticipated or the sale or refinancing of the physical assets not generating as much capital as anticipated. This would potentially adversely affect the ability of the borrower to service its debts including any loans. The key risks relating to the loans include risks relating to residual value, counterparty default, reliance on sub-contractors and/or servicers, senior debt covenant breach risk, bridge loans, no control over decisions made at project and asset level, assumptions and errors in targeted returns on loans and financial models, liability of operating risk, rates of inflation, rates of interest, insurance costs and availability, delays in the receipt of anticipated cash flows, acquisition risks and borrower default, loan non-performance and collateral risks.
Management of risks
The Asset Finance Team of the Investment Manager reports a number of key metrics on a monthly basis to its Credit Committee including pipeline project information, outstanding loan balances, lending book performance and early warning indicators. The Team also monitors ongoing credit risks in respect of the loans.
(iv) Leverage risks
The Company may use borrowings to seek to enhance investment returns. While the use of borrowings should enhance the total return on the Shares where the return on the Company's underlying assets is rising and exceeds the cost of borrowing, it will have the opposite effect where the return on the Company's underlying assets is falling or rising at a lower rate than the cost of borrowing, reducing the total return on the Shares. As a result, the use of borrowings by the Company may increase the volatility of the Net Asset Value per Share.
Any reduction in the value of the Company's investments may lead to a correspondingly greater percentage reduction in its Net Asset Value (which is likely to adversely affect the market price of a Share). Any reduction in the number of Shares in issue (for example, as a result of buy-backs or tender offers) will, in the absence of a corresponding reduction in borrowings, result in an increase in the Company's level of gearing.
Management of risks
In accordance with its borrowing and gearing policy, the Company borrowings are limited to up to 20% of its net asset value calculated at the time of draw down.
(v) Interest rate risks
Loans
The Company may make loans based on estimates or projections of future interest rates because the Investment Manager expects that the underlying revenues and/or expenses of a borrower to whom the Company provides loans will be linked to interest rates, or that the Company's returns from a loan are linked to interest rates. If actual interest rates differ from such expectation, the net cash flows of the borrower or payable to the Company may be lower than anticipated.
Borrowings
The Company will pay interest on its borrowings. As such, the Company is exposed to interest rate risk due to fluctuations in the prevailing market rates.
Management of risks
The Investment Manager's investment process takes into account interest rate risk. The investment strategy is to invest in loans with maturities typically between 2 and 10 years. Exposure to predominantly higher yielding loans and possible floating rate investments can mitigate interest rate risk to some extent.
(vi) Corporate governance and internal control risks
The Company has no employees and the directors have all been appointed on a non-executive basis. The Company must therefore rely upon the performance of third party service providers to perform its executive functions. In particular, the AIFM, the Investment Manager, the Administrator, the Company Secretary, the Registrar and their respective delegates, if any, will perform services that are integral to the Company's operations and financial performance.
Poor performance of the above service providers could lead to various consequences including the loss of the Company's assets, inadequate returns to shareholders and loss of investment trust status.
Management of risks
Each of the above contracts was entered into after full and proper consideration of the quality and cost of services offered, including the financial control systems in operation in so far as they relate to the affairs of the Company. All of the above services are subject to ongoing oversight of the Board and the performance of the principal service providers is reviewed on a regular basis.
(vii) Regulatory risks
The Company and its operations are subject to laws and regulations enacted by national and local governments and government policy. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time-consuming and costly. Any change in the laws, regulations and/or government policy affecting the Company or any changes to current accountancy regulations and practice in the UK may have a material adverse effect on the ability of the Company to successfully pursue its investment policy and meet its investment objective and/or on the value of the Company and the Shares. In such event, the performance of the Company, the Net Asset Value, the Company's earnings and returns to Shareholders may be materially adversely affected.
Management of risks
The Company has contracted out relevant services to appropriately qualified professionals. The Secretary and AIFM report on compliance matters to the Board on a quarterly basis and the Board has access to the advice of its Corporate Broker on a continuing basis. The assessment of regulatory risks forms part of the Board's risk assessment programme.
15. Status of this report These financial statements are not the Company's statutory accounts for the purposes of section 434 of the Companies Act 2006. They are unaudited. The Half-yearly financial report will be made available to the public at the registered office of the Company. The report will be available in electronic format on the Company's website (www.rm-funds.co.uk). The Half-yearly financial report was approved by the Board on 9 August 2017.
Directors, investment manager and advisers
Directors (all non-executive)
Norman Crighton (Non-Executive Chairman)
Guy Heald
Marlene Wood
Registered Office*
Mermaid House
2 Puddle Dock
London
EC4V 3DB
Investment Manager
RM Capital Markets Limited
7 Melville Crescent
Edinburgh
EH3 7JA
AIFM
International Fund Management Limited
Sarnia House
Le Truchot
St Peter Port
Guernsey
GY1 4NA
Administrator and Company Secretary
PraxisIFM Fund Services (UK) Limited
Mermaid House
2 Puddle Dock
London
EC4V 3DB
Auditor
Ernst & Young LLP
25 Churchill Place
London
E14 5EY
Registrar
Capita Registrars Limited
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
Broker
Nplus1 Singer Advisory LLP
1 Bartholomew Lane
London
EC2N 2AX
Solicitors to the Company
Gowling WLG (UK) LLP
4 More London Riverside
London
SE1 2AU
* Registered in England and Wales No. 10449530
For further information contact:
Anthony Lee / Ciara McKillop
PraxisIFM Fund Services (UK) Limited
Tel: 020 7653 9690
The Half-yearly financial report will be submitted to the National Storage Mechanism and will shortly be available for inspection at: http://www.morningstar.co.uk/uk/NSM
END
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BGGDISXGBGRC
(END) Dow Jones Newswires
August 09, 2017 07:00 ET (11:00 GMT)
1 Year Rm Secured Direct Lending Chart |
1 Month Rm Secured Direct Lending 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
