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Share Name Share Symbol Market Type Share ISIN Share Description
Secured Income Fund Plc LSE:SSIF London Ordinary Share GB00BYMK5S87 ORD 1P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.0% 44.00 41.00 47.00 44.00 44.00 44.00 0.00 01:00:00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
General Financial 4.3 -0.9 -1.7 - 23

Secured Income Fund PLC Annual Financial Report

09/10/2020 7:00am

UK Regulatory (RNS & others)


Secured Income (LSE:SSIF)
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TIDMSSIF

RNS Number : 5618B

Secured Income Fund PLC

09 October 2020

9 October 2020

Secured Income Fund plc

("SSIF" or the "Company")

Annual Financial Report

For the year ended 30 June 2020

 
 
 A copy of the Company's Annual Report and Financial Statements for 
  the year ended 30 June 2020 will shortly be available to view and 
  download from the Company's website, https://kkvim.com/secured-income-fund/ 
  . Neither the contents of the Company's website nor the contents 
  of any website accessible from hyperlinks on the Company's website 
  (or any other website) is incorporated into or forms part of this 
  announcement. 
 Enquiries to: 
 
 
 Directors 
  David Stevenson (Chair)              tel: +44 7973 873785 
  Susan Gaynor Coley                   tel: +44 7977 130673 
  Brett Miller                         tel: +44 7770 447338 
 KKV Investment Management Limited   tel: +44 20 7429 2200 
  Catherine Halford Riera / Nicola 
  Bird 
 finnCap Ltd.                        tel: +44 20 7220 0500 
  Corporate Finance: William Marle 
  / Giles Rolls 
  Sales: Mark Whitfeld 
 https://kkvim.com/secured-income-fund/ 
 
 
 The contents of this preliminary announcement have been extracted 
  from the Company's Annual Report, which is currently in print and 
  will be distributed within the week. The information shown for the 
  years ended 30 June 2020 and 30 June 2019 does not constitute statutory 
  accounts and has been extracted from the full accounts for the years 
  ended 30 June 2020 and 30 June 2019. The reports of the auditors 
  on those accounts were unqualified and did not contain adverse statements 
  under sections 498(2) or (3) of the Companies Act 2006. The accounts 
  for the year ended 30 June 2019 have been filed with the Registrar 
  of Companies. The accounts for the year ended 30 June 2020 will be 
  delivered to the Registrar of Companies in due course. 
 
 
                                                  Strategic Report 
                                                     Key Points 
                                                                     30 June 2020                       30 June 2019 
 Net assets ([1])                                                   GBP45,532,000                      GBP50,129,000 
 NAV per Ordinary Share                                                    86.37p                             95.10p 
 Share price at 30 June 2020                                               76.50p                             92.00p 
 Discount to NAV                                                            11.4%                               3.3% 
 (Loss)/profit for the year                                          GBP(913,000)                       GBP2,236,000 
 Dividend per share declared in respect of the 
  year                                                                      7.00p                              7.00p 
 Dividend cover                                                              0.44                               0.79 
 Total return per Ordinary Share (based on 
  NAV) 
  ([2])                                                                     -1.8%                              +4.4% 
 Total return per Ordinary Share (based on 
  share 
  price) ([2])                                                              -9.2%                              +8.2% 
 Ordinary Shares in issue                                              52,660,350                         52,660,350 
 
 [1]                                            In addition to the Ordinary Shares in issue, 50,000 Management 
                                                 Shares of GBP1 each are in issue (see note 21). 
 [2]                                            Total return per Ordinary Share has been calculated by comparing 
                                                 the NAV or share price, as applicable, at the start of the year 
                                                 with the NAV or share price, as applicable, plus dividends paid, 
                                                 at the year end. 
 
 
 
                                Strategic Report 
                        Overview and Investment Strategy 
 
 General information 
 Secured Income Fund plc (the "Company", "Fund" or "SIF") was incorporated 
  in England and Wales under the Companies Act 2006 on 13 July 2015 
  with registered number 09682883. It is an investment company, as 
  defined in s833 of the Companies Act 2006. Its shares were admitted 
  to trading on the London Stock Exchange Specialist Fund Segment on 
  23 September 2015 ("Admission"). 
 
 Change of Investment Manager 
 On 5 June 2020, the Company novated the contract to manage the portfolio 
  to KKV Investment Management Limited (the "Investment Manager" or 
  "KKV"), following the management team into their new entity from 
  SQN Asset Management Limited ("SQN UK" or the "Former Investment 
  Manager"). 
 
 Change of name 
 On 18 July 2020, the Company changed its name from SQN Secured Income 
  Fund plc to Secured Income Fund plc. 
 
 Continuation vote 
 On 19 June 2020, the Company held a continuation vote (the "Continuation 
  Vote") that, in line with the Directors' recommendation, did not 
  pass. This vote was required under the Articles as the Company did 
  not have a Net Asset Value of at least GBP250 million as at 31 December 
  2019. As the Continuation Vote did not pass, the Directors (as required 
  under the Articles) convened a further general meeting of the Company 
  on 17 September 2020 at which Shareholders approved the managed wind-down 
  of the Company. 
 
 Investment objective and policy 
 On 17 September 2020, the Shareholders approved the adoption of a 
  new investment objective and policy of the Company, as follows: 
 The Company will be managed with the intention of realising all remaining 
  assets in the Portfolio in a prudent manner consistent with the principles 
  of good investment management and with a view to returning cash to 
  Shareholders in an orderly manner. 
 
  The Company will pursue its investment objective by effecting an 
  orderly realisation of its assets in a manner that seeks to achieve 
  a balance between maximising the value received from those assets 
  and making timely returns of capital to Shareholders. This process 
  might include sales of individual assets, mainly structured as loans, 
  or running off the Portfolio in accordance with the existing terms 
  of the assets, or a combination of both. 
 
 As part of the realisation process, the Company may also exchange 
  existing debt instruments for equity securities where, in the opinion 
  of the Board, the Company is unlikely to be able to otherwise realise 
  such debt instruments or will only be able to realise them at a material 
  discount to the outstanding principal balance of that debt instrument. 
 
  The Company will cease to make any new investments or to undertake 
  capital expenditure except where, in the opinion of both the Board 
  and the Investment Manager (or, where relevant, the Investment Manager's 
  successors): 
 
        *    the investment is a follow-on investment made in 
             connection with an existing asset in order to comply 
             with the Company's pre-existing obligations; or 
 
 
        *    failure to make the follow-on investment may result 
             in a breach of contract or applicable law or 
             regulation by the Company; or 
 
 
        *    the investment is considered necessary to protect or 
             enhance the value of any existing investments or to 
             facilitate orderly disposals. 
 
 
 
       Any cash received by the Company as part of the realisation process 
       prior to its distribution to Shareholders will be held by the Company 
       as cash on deposit and/or as cash equivalents. 
 
       The Company will not undertake new borrowing. 
 
       Any material change to the investment policy would require Shareholder 
       approval. 
 
 Prior to 17 September 2020, the investment objective and policy was 
  as follows: 
 
 Investment objective 
 The investment objective of the Company was to provide Shareholders 
  with attractive risk adjusted returns, principally in the form of 
  regular, sustainable dividends, through investment predominantly 
  in a range of secured loans and other secured loan-based instruments 
  originated through a variety of channels and diversified by way of 
  asset class, geography and duration. 
 
 Investment policy 
 The Company achieved its investment objective by investing in a range 
  of secured loan assets mainly through wholesale secured lending opportunities, 
  secured trade and receivable finance and other collateralised lending 
  opportunities. Loan assets included both direct loans as well as 
  other instruments with loan-based investment characteristics (for 
  example, but not limited to, bonds, loan participations, syndicated 
  loans, structured notes, collateralised obligations or hybrid securities) 
  and may have included (subject to the limit set out below) other 
  types of investment (for example, equity or revenue- or profit-linked 
  instruments). The Company may have made investments through alternative 
  lending platforms that present suitable investment opportunities 
  identified by the Investment Manager. 
 
 
                              Chairman's Statement 
 
 Introduction 
 I am pleased to provide Shareholders with my first Chairman's statement, 
  covering the financial year from 1 July 2019 to 30 June 2020. Over 
  the reporting period, the Company has continued to reduce platform 
  and third party debt. Despite continued macro uncertainty caused 
  by Brexit, wider geopolitical issues and the onset of the Covid-19 
  pandemic, income has continued to be delivered for Shareholders. 
 
 Secured Income Fund plc (LSE: SSIF) is a UK-listed specialist investment 
  trust with a focus on secured investments that produce regular, collateralised 
  income from investments made in a portfolio of loans to lower middle 
  market companies in the UK and the rest of the world. 
 
 Performance 
 All loans underwritten since April 2017 are performing in line with 
  expectations however, the impact of Covid-19 has meant a requirement 
  to relax some covenants, with deferral of interest and the maturity 
  of some loans. The Investment Manager has continued to strive to 
  limit legacy third party exposure and as at 30 June 2020 this portion 
  of the overall portfolio had been reduced to GBP9.8 million (including 
  accrued interest) from GBP15.2 million at 30 June 2019. It is noted 
  that progress in reducing peer to peer loan exposure has slowed as 
  we approach the residual of this segment and aged positions have 
  now been impaired. 
 
 For the reporting period ended 30 June 2020, the Company has generated 
  a net loss of GBP0.9 million (2019: profit of GBP2.2 million), a 
  loss per Ordinary Share of 1.73p (2019: profit per Ordinary Share 
  of 4.25p). The Company's NAV at 30 June 2020 was GBP45.5 million 
  (86.37p (cum income) per Ordinary Share) compared to GBP50.1 million 
  (95.10p per Ordinary Share) as at 30 June 2019. The total return 
  for the reporting period was a loss of 1.8% (2019: total return of 
  4.4%). 
 
 Foreign exchange exposure on the 26.1% of non-Sterling loans has 
  continued to be fully hedged and any liquidity calls arising from 
  the hedging strategy are considered manageable within the Company's 
  cash flow even with increased volatility assigned to Covid-19 impact 
  and Brexit uncertainty. 
 
 Note that all returns are net of all fees and no gearing was applied 
  to the portfolio during the reporting period. 
 
 Corporate Activity 
 On 5 June 2020, the Company novated the contract to manage the portfolio 
  to KKV Investment Management Limited, following the management team 
  into their new entity. This provides continuity of management and 
  allows for the opportunity for a smooth run-off of the portfolio. 
  Detail on the new manager is provided in our accompanying Investment 
  Manager's Report. 
 
 Upon the recommendation of the Board, in June 2020, Shareholders 
  voted to wind the Company up. This decision was made after the Company 
  was unable to raise new capital and meet its original goal to increase 
  shareholder capital to GBP250 million by December 2019. The Board 
  of Directors and the Investment Manager have now begun work on an 
  orderly wind-down of the business and hope to return capital to investors 
  expeditiously, avoiding capital erosion. In anticipation of a vote 
  to wind-down the Company, the Board instructed the Investment Manager 
  to cease all new underwriting commitments from January 2020 and only 
  one commitment of EUR1.4 million to an existing counterparty, an 
  Irish SME and Leasing Fund, remains in place, although negotiation 
  will take place to consider withdrawing from this further investment. 
 
 We have also reviewed costs in recent months and have taken steps 
  to reduce ongoing expenses going forward. These measures have included 
  a mutually agreed reduction in investment management fees to 0.75% 
  for 12 months from 18 September 2020, and thereafter to 0.55%. Advisor 
  and PR costs have also been reduced post year-end to allow for better 
  value for money for Shareholders. The amendment date from which these 
  changes will take effect is 17 September 2020. 
 
 Dividends 
 The Company elected to designate all dividends for the period ended 
  30 June 2020 as interest distributions to its Shareholders. In doing 
  so, the Company took advantage of UK tax treatment by "streaming" 
  income from interest-bearing investments into dividends that will 
  be taxed in the hands of Shareholders as interest income. 
 
 As set out in the Prospectus, the Company intended to distribute 
  at least 85% of its distributable income by way of dividends on a 
  monthly basis, retaining some of the distributable income as a loss 
  reserve to smooth future dividend flows. 
 
 The Company has maintained its dividend of 7.00p for the reporting 
  period. During the reporting period, dividend cover has fluctuated 
  due to specific transaction flows, impairment of peer to peer and 
  venture debt positions and the decision not to apply leverage until 
  more platform and peer to peer investments had been removed from 
  the portfolio. 
 
 As a consequence of the decision to proceed with a managed wind-down, 
  the Board has reviewed the dividend policy going forward and has 
  decided to cease paying monthly dividends and intends to pay quarterly 
  dividends as well as returning excess capital as and when the Company 
  has excess cash reserves available for distribution. 
 
 Discount 
 During the reporting period, the Company traded at an average discount 
  to NAV of 7.74%. 
 
 Board of Directors 
 In May 2020, Ken Hillen resigned as Chairman of the Company and I 
  would like to thank him on behalf of the Board and Shareholders for 
  his work over his tenure in the role. 
 
 In order to maintain strong corporate governance, the remaining Directors 
  embarked on a recruitment exercise and in July 2020, appointed Brett 
  Miller as a Director of the Company. Brett brings significant experience 
  of closed end funds and the alternative lending sector and has experience 
  of working with companies that are in wind-down and so we welcome 
  him to the Board and look forward to his positive contribution over 
  the remainder of the life of the Company. 
 
 Outlook 
 During the reporting period impairments to aged legacy peer to peer 
  positions dampened NAV performance. Despite this, a healthy cash 
  balance has enabled the continued payment of dividends. In addition, 
  we anticipate to be able to commence some return of capital to Shareholders 
  in the first half of the next reporting period. 
 
 The Board expects the wind-down plan that will likely take two or 
  three years to execute with the objective of delivering investors 
  total proceeds as close to NAV as possible less the unavoidable expenses 
  required in the process. However, as stated, we have already taken 
  steps to reduce costs and will continue to do this over the coming 
  months. If we are able to identify a suitable buyer to purchase some 
  or all of the existing direct loan portfolio to expedite early capital 
  return, the Board will also consider these proposals. Our goal in 
  the managed wind-down is to achieve a balance between maximising 
  the value received from those assets and making timely returns of 
  capital to Shareholders. 
 
 Market conditions have been very challenging. The Investment Manager 
  has worked with borrowers to ensure that their businesses remain 
  "alive" since the onset of the pandemic and so far, no impairment 
  provisions have been considered necessary for this element of the 
  portfolio. These decisions have been taken after careful consideration 
  of PRA guidance and IFRS 9 treatment of such loans. Specific Covid-19 
  guidance has been issued by the PRA, details of which are outlined 
  further within the Investment Manager's Report. However, the Investment 
  Manager considers that the most challenging period is ahead of us, 
  as various furlough and bounce back assistance is withdrawn from 
  the economy with Q4 2020 and Q1 2021 presenting a risk to our borrowers. 
  We will keep investors informed of any developments as they occur, 
  in the months to come. 
 
 We thank investors for their continued support during this period 
  and hope that the consistent high level of income has provided at 
  least a degree of solace as the Board and the Investment Manager 
  now work on a constructive plan to return capital to Shareholders. 
 
 David Stevenson 
 Chairman 
 8 October 2020 
 
 
                         Investment Manager's Report 
 
 Overview 
 KKV Investment Management Limited ("KKV") assumed investment management 
  responsibility for the Company on 5 June 2020. 
 
 Following the decision by Shareholders not to support continuation, 
  we are working hard on plans to return capital to Shareholders in 
  as expeditious a way as possible without damaging capital value. 
 
 We are again able to report continued steady progress in delivering 
  a 7.00p dividend despite having to impair aged legacy debt held within 
  the portfolio. The Company has continued to reduce peer to peer lending 
  to only 0.5% of the portfolio and has reduced legacy exposure overall 
  to 21.5%. IFRS 9 impairment provisions have been increased on legacy 
  investments and now stands at 8.88% of the total NAV value. The Company 
  has no debt. 
 
 Since our last report when we expressed concern regarding Brexit 
  impact on the UK economy, events have overtaken somewhat, and we 
  are now in the grips of a global pandemic. Despite both these challenges, 
  we have not had cause to impair our direct loan exposures to date 
  but we have applied a sensible and pragmatic approach to helping 
  our borrowers get through this unprecedented period with amortisation, 
  interest and covenant relief. We are mindful that businesses rarely 
  fail over a covenant breach and that in times of significant stress, 
  cash balances remain key. These measures have been taken having considered 
  guidance from the PRA on monitoring our borrowers in relation to 
  IFRS 9 provisioning, where the directive is to ensure appropriate 
  consideration of expected credit losses and risk of default etc. 
  It explains that Covid-19 related measures do not automatically lead 
  to direct increase in risk of default or increase in the stage of 
  the loans in the IFRS 9 categories. Management are still required 
  to assess the risk and particulars of each loan and consider whether 
  there is any increase in the probability of default when assessing 
  for impairment, and the Company has not had cause to credit impair 
  any of our direct loan exposures to date as the outlook has remained 
  reasonably comfortable. However, as the pandemic draws on into the 
  second half of the year, with heightened risk of a second wave, we 
  will keep this decision under regular review. 
 
 Since the Company's financial year end, we had observed an improvement 
  in the performance of our direct loan exposure with borrowers reporting 
  better performance in terms of sales and general business activity. 
  However, since the beginning of September we have noted a marked 
  increase in overall volatility and a generic uncertainty in the SME 
  sector which has a particular pertinence to the industries and types 
  of loan to wholesale providers that our loan book targets. We have 
  undergone a rigorous review of our processes and monitoring of these 
  loans with no cause for concern with regard to specific debt service, 
  but given the nature of the portfolio, it would be unwise of us to 
  ignore the elevated risk that this uncertainty represents to our 
  borrowers and to flag the loan loss provisions we may have to apply 
  in the future as the global economy braces itself for further economic 
  contraction. 
 
 Throughout the Covid-19 pandemic, we have increased our interaction 
  with borrowers and received far more regular trading updates from 
  them than we would ordinarily request; our relationships with these 
  counterparties have remained strong and we have welcomed the transparency 
  and the open dialogue with which they have provided this information. 
  In some cases where required, we have awarded maturity extensions 
  and amortisation holidays to allow them time to adjust to the prevailing 
  operating conditions. We are pleased that there have been no defaults 
  which we consider testament to the strong active management deployed 
  by our team and would expect that under normal market conditions 
  to return the full capital value of the loans to our investors upon 
  maturity. However, in the shorter term, the impact of the macro economy 
  on trading conditions could be detrimental, meaning that loss provisioning 
  may need to increase and we consider this to be prudent risk management 
  under extenuating circumstances. 
 
 We have provided a thorough review of each of our investments in 
  the following commentary with a higher than usual level of disclosure 
  for investments in the private domain and of this nature. We will 
  continue to review and undertake ongoing due diligence in relation 
  to these loans to ensure that any future impairments caused by the 
  unprecedented economic circumstances are recognised appropriately. 
 
 Background 
 KKV assumed the role of portfolio manager for Secured Income Fund 
  plc on 5 June 2020 via a novation arrangement. This new business 
  is owned by Kvika banki, an Icelandic bank specialising in asset 
  management with a total of EUR 3 billion assets under management 
  with KKV representing 16% of this total. 
 
 Despite opening for business during a global pandemic, we are pleased 
  to report that the company was able to commence operational management 
  with few glitches. KKV has the use of three offices in London and 
  Surrey but all employees have been equipped to work remotely throughout 
  the current Covid-19 Emergency with the majority choosing to do so. 
  All processes are functioning and business continuity has been maintained 
  to a good level. The transition of employees under the TUPE scheme 
  has been completed and a good start has been made to their working 
  relationships with new colleagues. 
 
 The analyst team working on this fund has been reduced due to the 
  resignation of our former Head of Credit. We have recruited further 
  fund management personnel and credit analysts to replace and make 
  a considerable enhancement to our capability within the team. 
 
 Market backdrop 
 Highly volatile pricing of all assets across the risk spectrum and 
  intermittent volatility spurts have been facets of all fixed income 
  sectors during the reporting period. All fixed income products fell 
  violently from March onwards and this was particularly severe for 
  higher yielding assets although even US Treasury bonds were affected 
  by a general malaise and also suffered reduction in capital value. 
  Since the introduction of emergency market support packages from 
  central banks such as the US Federal Reserve (Fed), European Central 
  Bank and Bank of England these markets have settled but the economic 
  picture remains uncertain. 
 
 As developed markets in the US, UK and Europe begin to ease lockdown 
  measures, market commentators were expectant of a so-called V shaped 
  recovery as businesses begin to emerge from their forced hibernation. 
  Our appraisal is more circumspect and despite spread tightening in 
  recent weeks for investment grade credits, as companies shore up 
  their balance sheets with additional borrowing, we are particularly 
  focussed on data relating to SME performance and securitised products 
  such as CLO's and lower sub investment grade markets where the greatest 
  pain has been observed. We expect coupon obligations to be put under 
  pressure and forbearance to be the watch word for the next 9-12 months. 
 
 SME business confidence has fallen sharply and lower turnover due 
  to Covid-19 has caused severe cash-flow difficulties for many businesses, 
  increasing demand for working capital finance. This has been coupled 
  with a sharp increase in demand for loans and uptake of government 
  backed schemes encouraging commercial banks to lend into the sector. 
  Easing of credit criteria for loans by these banks, has a second 
  derivative effect of weakening capital adequacy and it is our expectation 
  that once market conditions begin to normalise, lending patterns 
  will revert to more conventional levels, allowing alternative lenders 
  to pick up the baton once again. 
 
 The speed of recovery is unclear at the present time. By way of stark 
  illustration, unemployment in the US increased by 14 million in six 
  weeks at the height of the Covid-19 emergency whereas the total number 
  of those losing jobs between June 2008 and June 2009 was 3.5 million 
  and it took four years for employment to return to pre-recession 
  levels. Reversal of lost jobs takes time for an economy to absorb 
  and so we expect this to impact consumption and consumer confidence. 
  For lenders and borrowers alike, the safest route to normalisation 
  is to keep sustainable business alive with support and forbearance 
  including maturity extensions and interest or amortisation "holidays", 
  so that they can resume trading and servicing their loans as rapidly 
  as possible; an approach we have adopted across our portfolios since 
  March 2020. 
 
 For equity investors, the reduction in dividend and share buy-back 
  programmes across the equity market landscape, should, in our opinion, 
  focus attention on regular coupon paying fixed income strategies. 
  These are contractual and any missed coupons are rolled up, unlike 
  missed dividend payments. Once the current and immediate crisis subsides, 
  we believe regular income will be a highly valued commodity. 
 
 Portfolio 
 There are eleven (2019: 13) direct loans in the portfolio with an 
  average of GBP3.1 million (2019: GBP2.6 million) deployed per loan, 
  at an average rate of 11.1% (2019: 10.9%). Each loan has bespoke 
  legal documentation and is designed to fit to the Company's and the 
  borrower's requirements. There have been no defaults in this portion 
  of the portfolio underwritten by the portfolio management team although 
  we should caveat this statement with a warning that as the pandemic 
  continues we may see cause for future impairment. At present and 
  where required we have provided covenant and amortisation relief 
  or maturity extensions to our borrowers. To date, managements ongoing 
  monitoring has not identified write downs on these loans and we will 
  continue to monitor for this risk as the market continues to grapple 
  with the uncertainty that the Covid-19 pandemic and Brexit represents 
  to this segment. 
 
  As reported last year, we have changed the way in which we categorise 
  the legacy portfolio. With GBP9.8 million now held in this part of 
  the portfolio, we have differentiated between peer to peer loans 
  and those that are held in loan note structures with professional 
  counterparties. These loans are larger in quantum and we have a closer 
  relationship with the underlying companies (further details relating 
  to these investments is provided later in the report). The total 
  number of loans via third parties have been reduced from 213 to 17 
  (April 2017 to June 2020) with a small number of loans amortising 
  down each month. As mentioned above, peer to peer lending now represents 
  only 0.5% of the portfolio with the majority of the remaining exposure 
  impaired 100% as at the end of the reporting period. 
 
 No leverage has been used throughout the reporting period. Given 
  the nature of the investments and the less predictable nature of 
  repayments from legacy positions, we would continue to see this as 
  a challenge if reinvesting loan capital, however the Company ceased 
  new investments as at January 2020 ahead of the continuation vote 
  to allow for cash to build. Despite this, we have paid close attention 
  to delivering a covered monthly dividend and although dividend cover 
  has fluctuated over the year as we have impaired platform loans and 
  ceased accruing income, we have enough cash availability to maintain 
  a 7.00p per share dividend for the rest of the calendar year. The 
  Board intends to move to making quarterly dividend payments and ad-hoc 
  special dividends, when appropriate, during the course of the managed 
  wind-down process so that the Company is able to return available 
  cash as soon as reasonably practicable. 
 
 Apart from the concentration limit for film financing that had received 
  prior approval from the Board, there were no breaches of investment 
  guidelines during the reporting period and all non-Sterling capital 
  and income has been fully hedged. Fluctuations in the value of Sterling 
  during the reporting period has made for some significant moves and 
  margin requirements have increased. The Board has asked for a review 
  of FX hedging and it may decide to remove FX hedges as the portfolio 
  is wound down. If the hedges are removed we will update our FX exposures 
  regularly in the factsheets. 
 
 As the portfolio is now in wind-down, we have been focussed on urging 
  our third-party borrowers to repay debt and expect to begin return 
  of capital to shareholders early in the next reporting period. We 
  shall be encouraging them and assisting them to refinance early so 
  we may return capital to our shareholders. In line with this plan, 
  post 30 June, the Board were able to approve an increased dividend 
  payment of 3.5p in July. 
 
 The investment portfolio as at 30 June 2020 exhibited the following 
  characteristics: 
 
 
                                      30 June 2020 (1) 
 Largest Loan                         GBP 9,995,000 
 Weighted Average Remaining Term      2.9 years 
  ("WART") 
 Investment Yield Range               8.0% - 13.0% 
 Weighted Average Portfolio Yield     10.0% 
 [1]                                 Analysis based on post-impairment figures. 
 
 
 
 The largest individual investments have the following characteristics: 
 
 
                        Total balance outstanding 
                         (including accrued         % of Net Asset   Remaining Term 
 Borrower Industry       interest)                   Value            (years) 
                        GBP 
 Wholesale Portfolio    GBP 9,995,000               22.0%            1.3 years 
 UK Diversified         GBP 7,405,035               16.3%            5.7 years 
  Portfolio 
 Healthcare             GBP 4,853,641               10.7%            4.5 years 
 European Diversified   GBP 4,316,605               9.5%             3.2 years 
  Portfolio 
 Media                  GBP 3,044,113               6.7%             2.0 years 
 
 
 Portfolio Activity 
 We sold two direct loans during the reporting period: 
 
 
        *    Medical services provider in UK - as reported last 
             year, the business was in a sale process and we had 
             covenants requiring the loan to be repaid in the 
             event of a change of control with penalty costs 
             applied. The company requested a roll over of the 
             debt into the new entity but we were uncomfortable 
             with the balance sheet and domicile in Northern 
             Cyprus. So, after a period of intense negotiation, we 
             secured full repayment. 
 
 
 
        *    Marine servicing company - a service company 
             specialising in renewable energy build and 
             maintenance contracts as well as bridge and oil field 
             service maintenance. The company expanded during the 
             reporting period acquiring a significant fleet in the 
             US as this was part of a strategic expansion plan 
             implemented in 2018. However, despite having equity 
             support from infrastructure investors, the level of 
             debt held by the group became significant and so we 
             made plans to sell the loan and this was achieved in 
             December 2019, leading to a gain for the Company of 
             c.GBP140k and an IRR upon exit of 12.7%. 
 
 Direct Loans 
 Loan Summary Table: 
 
 
                                                             Carrying 
                                                              Value 
                                                              of Loans 
                                                              at Amortised 
                               Principal        ECL           Cost 
                                Balance          provision    ([1]) 
                Original        Outstanding      at 30        at 30            Amortisation/ 
                Loan            at 30            June         June             Bullet             Term 
                Amount          June 2020        2020         2020             repayment/         remaining     Asset 
   Borrower     GBP             GBP              GBP          GBP              other              (years)       Type            Currency     Yield 
                                                                              Interest 
                                                                               only during 
                                                                               availability 
                                                                               period, 
 Borrower                                                                      then             1.3           Wholesale 
  1           GBP10,000,000    GBP10,000,000    GBP5,000     GBP9,995,000      amortisation      years         Lending        GBP          10% 
                                                                              Interest 
                                                                               only for 
                                                                               12 months, 
 Borrower                                                                      then             4.5           Medical 
  2           GBP4,838,319     GBP4,838,319     GBP2,419     GBP4,835,900      amortisation      years         Services       USD          12% 
 Borrower     GBP4,137,699     GBP4,137,699     GBP2,069     GBP4,135,630     Bullet            3.2           SME and         EUR          Variable 
  3                                                                           repayment          years         Leasing 
                                                                                                               Fund 
                                                                                                              Film 
 Borrower                                                                                       2.0            Production 
  4           GBP2,458,950     GBP3,045,636     GBP1,523     GBP3,044,113     Cash sweep         years         Financing      GBP          12% 
                                                                                                              Film 
 Borrower                                                                                       2.9            Production 
  5           GBP2,504,341     GBP2,796,007     GBP1,398     GBP2,794,609     Cash sweep         years         Financing      GBP          11% 
                                                                                                              Film 
 Borrower                                                                                       2.8            Production 
  6           GBP2,556,790     GBP2,590,731     GBP1,295     GBP2,589,435     Cash sweep         years         Financing      GBP          12% 
                                                                                                              Film 
 Borrower                                                                                       2.9            Production 
  7           GBP2,314,769     GBP2,509,046     GBP1,255     GBP2,507,791     Cash sweep         years         Financing      GBP          11% 
                                                                                                              Film 
 Borrower                                                                                       2.4            Production 
  8           GBP1,703,435     GBP2,070,283     GBP1,035     GBP2,069,248     Cash sweep         years         Financing      USD          12% 
                                                                              Interest 
                                                                               only during 
                                                                               availability 
                                                                               period, 
 Borrower                                                                      then             1.0           Leasing 
  9           GBP1,500,000     GBP1,500,000     GBP750       GBP1,499,250      amortisation      year          Group          GBP          9.5% 
                                                                                                              Film 
 Borrower                                                                                       1.2            Production 
  10          GBP1,624,248     GBP502,945       GBP251       GBP502,693       Cash sweep         years         Financing      GBP          12% 
                                                                                                              Laser 
 Borrower                                                                                       2.5            and LED 
  11          GBP700,000       GBP428,138       GBP215       GBP427,923       Amortisation       years         Manufacturer   GBP          10% 
 Direct                         GBP34,418,804    GBP17,210    GBP34,401,593 
  Loans 
  Total 
 
 
 ([1])   The carrying values of loans at amortised cost disclosed in the 
          table above do not include capitalised transaction fees, which 
          totalled GBP90,000 at 30 June 2020. 
 
 
 The following provides a narrative relating to some of our direct 
  loan investments. Names of counterparties have been omitted for commercial 
  and business sensitive reasons for our borrowers. 
 
 SME loan company (Borrower 1) - 22.0% of NAV 
 This is the largest individual facility provided by the Company and 
  has been in place since May 2017. This is a long established lender 
  to the SME market. The loan is interest only and upon maturity, the 
  debt amortises over nine months although a longer repayment plan 
  would need to be negotiated given the Covid-19 impact. It is secured 
  by receivables from a pool of diversified loans to small businesses 
  which is advanced at 90% against the security pool and borrower director 
  guarantees together with underlying security. Each underlying loan 
  is rated to a four stage system with our collateral only acceptable 
  for the highest category. If a loan slips into a lower category, 
  there is a requirement for it to be replaced by another better performing 
  credit. We receive a report from the company's auditors on a monthly 
  basis that provides detail on the performance and the entire loan 
  pool. 
 
 Loans within the portfolio have been affected at the start of the 
  Covid-19 pandemic but management have reported that things have steadily 
  started to improve with June at breakeven in terms of net new advances. 
  All loans are accompanied by a personal guarantee and any amount 
  over GBP50,000 has to be secured by a lien on property. They have 
  also reported that they had a reasonably small exposure to the retail 
  sector which had been the hardest hit. 
 
 We have allowed covenant breaches regarding the collateralised pool 
  to 95% since April and we have relaxed the terms of the ratings allowed 
  within the pool whilst the period of economic uncertainty remains 
  and are comfortable that the borrower is monitoring performance adequately, 
  all loans were considered "green" in terms of performance and overall 
  loan to value at 93% as at the end June, all interest payments have 
  continued to be paid on time. The company has now relaunched their 
  lending activity in Q3 due to an increase in demand from performing 
  SMEs. 
 
 US healthcare services company (Borrower 2) - 10.7% of NAV 
 This credit replaced the loan to a remote operating vehicle business 
  in December which was sold over concerns regarding the overall indebtedness 
  of the company. This loan, by comparison, offered far greater comfort 
  by way of being guaranteed by its insurance company owner and the 
  seniority of the debt in the overall stack. Faced with the uncomfortable 
  choice of our first default on a direct loan and reduction in dividend 
  cover, we chose to invest. Subsequently, the remote vehicle business 
  had to be restructured during Q1/Q2, 2020 which would have led to 
  impairment for the Company. 
 
 This company specialises in ancillary medical services to a number 
  of hospitals in the American Midwest including optometry, audiology, 
  dentistry and podiatry. Security is provided by debenture over all 
  assets other than accounts receivable (although considered to be 
  of low value), pledge over equity that may not be diluted and a parental 
  guarantee over all scheduled interest and principal repayments. This 
  last element being the most important given the weaker balance sheet 
  of the underlying business. 
 
 This direct loan was considered of greatest risk of default when 
  the pandemic started given the nature of business and so we have 
  monitored interest receivables very tightly. We are pleased to report 
  that all interest payments have been made on time. 
 
 Irish SME and leasing fund investment (Borrower 3) - 9.5% of NAV 
 This portfolio of some 26 loans has continued to perform and in some 
  cases underlying credits have seen an increase in activity and therefore 
  performance. The majority of the loans are focused on technology 
  companies specialising in online educational software, online publishing 
  and PPE manufacture which has seen threefold increases in sales since 
  the beginning of the year. This has meant a higher than expected 
  distribution to the Company as at the end of the reporting period. 
  One loan extended to a cosmetic dental service representing 1.9% 
  of their portfolio, was due to be sold, this process has been put 
  on hold and the credit expectation reduced. The manager considered 
  this to be a temporary position and expects to recoup the value of 
  the loan. 
 
 Media financing (Borrowers 4 through to 8 and Borrower 10) - 29.7% 
  of NAV 
 Over the course of the last three years, SIF has funded 8 films, 
  two of which have been fully repaid and loan obligations met in full. 
  The remaining six are at various stages of filming and distribution. 
 
  At the beginning of the pandemic, as investment adviser to the lender 
  we recognised the risk that tax credits and distribution sales may 
  be delayed and noted the cancellation of a number of film festivals 
  when sales activity is at its most productive. We expected the shortfall 
  in airline and cinema sales to be somewhat compensated by online 
  content providers such as Sky and Netflix. 
 
 We duly offered three months extension to the timetables originally 
  set for these projects and monitored the progress of each films. 
  As at July, we have further extended and fully documented the maturity 
  dates for these loans by 12 months to allow for a longer period of 
  repayment. 
 
 All six loans are individual facilities and are ring-fenced as individual 
  risks. However, to mitigate the volatility of performance on individual 
  projects, we had allowed for a waterfall structure to allow for profit 
  share from higher performing assets to contribute to the overall 
  repayment of the whole portfolio. It is the managers view that this 
  mechanism will allow for all loans to be repaid in full over the 
  extended period granted. As at year end, we have not allowed any 
  further loss provision and will closely monitor for risk of lifetime 
  credit loss over the coming months as we attempt to emerge into more 
  normal conditions. 
 
 UK leasing company (Borrower 9) - 3.3% of NAV 
 This loan has been underwritten since July 2017 on a rolling twelve 
  month basis. It is a working capital facility to be used to warehouse 
  deals financed by block facilities already in place. The loan is 
  supported by a debenture and the company provides quarterly management 
  accounts and full year audited financials. The underlying portfolio 
  comprises of a basket of loans split between two types of lending; 
  85% asset finance/ leases with a typical deal size of GBP15,000 and 
  15% professional loans to white collar industry professionals supported 
  by personal guarantee. 
 
 Updates from the borrower through Q2 highlighted the increased number 
  of requests for forbearance. Overall to the end of May, they reported 
  25% delinquencies versus a comparison of 9% during the credit crunch. 
  However, 75% of all loans were being paid on time and in full and 
  they reported that they did not expect the position to be terminal 
  and reporting since the end of June 2020 has demonstrated a significant 
  improvement in rental payments to 102%, providing enough comfort 
  for the loan to remain unimpaired. Their team has been working well 
  with the underlying borrowers to achieve furlough for their staff 
  and to apply for CBIL loans. As the pandemic lockdown restrictions 
  have loosened, many of those businesses that asked for forbearance 
  have been able to resume the servicing of their debt, and the borrower 
  have set up amended payment plans to recoup outstanding balances. 
  This has led to payments for July and August exceeding expected amounts. 
  Even with this level of delinquency to the end of June, cash flow 
  analysis shows that they remain cash positive and have enough financial 
  headroom until Autumn 2020. The company has not needed to access 
  their block financing lines over the period. 
 
 LED manufacturer in Ireland (Borrower 11) - 0.9% of NAV 
 This is a secured term loan that has been in place since May 2017 
  and is secured by a guarantee from the parent company, a debenture 
  over the borrower and a charge over equipment purchased via Capex 
  portion of the facility. 
 
 Their business has operated on a business as usual basis throughout 
  the pandemic. They have changed some working practices to allow for 
  split shifts and those who are able to work from home are doing so. 
  The supply chain is working and customers continue to operate. 
 
 We had intended to extend a further EUR500,000 loan facility to the 
  company but withdrew from the commitment at the start of the pandemic 
  in March 2020. Since then, we have granted a three, then six month 
  amortisation deferral with an extension to the original loan. All 
  interest has been received during this time and the management of 
  the company have kept us abreast of developments. 
 
 Legacy portfolio 
 
 
                                                                             Loan Carrying 
                                                                              Value at 
                                  Principal                                   Amortised 
                   Original        Balance Outstanding      ECL provision     Cost at 
                   Loan Amount     at 30 June               at 30 June        30 June 
   Borrower        GBP             2020 GBP                 2020 GBP          2020 GBP          Currency      Yield 
 Borrower        GBP14,800,664    GBP7,450,655            GBP1,059,756       GBP6,390,899     GBP           Variable 
  12 
 
 Borrower 
  13             GBP1,000,000     GBP1,000,000            GBP1,000           GBP999,000       GBP           17.0% 
 
 Borrower 
  14             GBP524,151       GBP524,151              GBP524             GBP523,627       USD           8.0% 
 
 Borrower        GBP500,000       GBP415,714              GBP415,714         GBP0             GBP           - 
  15 
 
 Borrower 
  16             GBP1,565,297     GBP508,019              GBP279,822         GBP228,197       GBP           9.8% 
 
 Borrower        GBP563,270       GBP345,239              GBP345,239         GBP0             GBP           - 
  17 
 
 Borrower        GBP2,317,199     GBP2,317,199            GBP2,317,199       GBP0             USD           - 
  18 
 
 Legacy Loans                      GBP12,560,977           GBP4,419,254       GBP8,141,723 
  Total 
 
 
 Co-Investments 
 In line with our reclassification adopted in the last reporting period 
  we continue to separate pure peer to peer, technology platform based 
  lending and three investments that are characterised by professional 
  co-investment alongside other professional investors. After significant 
  corporate change for all three of these investments, we provide the 
  following narrative: 
 
 UK venture debt (Borrower 12) - 16.3% of NAV: after the turbulence 
  of two of the three principals leaving the company and triggering 
  a clause in the Loan Note agreement that allowed us to take closer 
  control of the process of managing the portfolio, the business has 
  stabilised and made very good progress in winding down the portfolio. 
  As the portfolio runs off, we have received GBP1.6 million cash shortly 
  after year end leaving a balance of GBP5.8 million. 
 
 The largest position in the portfolio, a broadband company, has been 
  restructured and is currently impaired by 59% representing 2.1% of 
  the Company's NAV. However, the reorganisation of the business has 
  progressed well and a new CEO employed. Their order book has increased 
  and they have been able to operate throughout the current pandemic 
  crisis. We therefore expect some improvement in recovery. 
 
 UK offshore platform (Borrower 13) - 3.3% of NAV 
 One loan remains in the portfolio and has been in place since early 
  2017 and is a real estate linked loan to a developer on the island 
  of Gibraltar. It is senior in a stack of other loans underwritten 
  by the platform itself. After two years of careful monitoring and 
  pressing for repayment, we have now been given notification that 
  this will be repaid in full with accrued and penalty interest. Throughout 
  the period of delinquency, we had not impaired the loan as to do 
  so would have encouraged the borrower to urge us to take a haircut 
  on final settlement. Our senior position ahead of the platform lender 
  also gave us comfort that the loan would be repaid in full but this 
  has required patience and perseverance. 
 
 US business promissory note (Borrower 14) - 1.4% of NAV 
 This loan is a working capital facility via a promissory note. It 
  has a maturity to July 2020 and had been due to be repaid early as 
  the business was due to be sold to a larger lending business based 
  in the Netherlands. This transaction failed in Q4 2019 and so an 
  outstanding loan is to be repaid. 
 
 The company specialises in Microsoft hardware and software sales 
  to SMEs via a global franchise. It has recently commenced a new product 
  line with X-Box to commence in Q4 2020. The borrower has been unable 
  to settle the loan and so we have agreed an extension by 6 months 
  to January 2021 to allow for the business to settle after the initial 
  pandemic and for the new business line to start over the Q4 holiday 
  season. 
 
 Small company bond platform (Borrower 15) - 0.0% of NAV 
 All three loans outstanding from this platform were repaid during 
  the reporting period including a car leasing business and a school, 
  both of which repaid in full. A third investment with a technology 
  company was settled at 50% of its net value (realising a loss of 
  GBP402,000) after it delisted from AIM and this is reflected in the 
  financial statements. The only outstanding debt from this platform 
  is a recruitment business that had undergone a protracted recovery 
  process through the courts. In Q1 2020, we took the decision to fully 
  impair the loan due to slow progress and the increased risk that 
  fees and expenses would erode any repayment to the Company. 
 
 Peer to Peer 
 During the reporting period, the Company has been able to reduce 
  the number of peer to peer loans in the portfolio from 40 to 14. 
 
 UK peer to peer loan platform (Borrower 16) - 0.5% of NAV 
 The platform is slowly amortising down and represents 0.5% of the 
  overall portfolio. Two of the largest loans are 50% and 80% impaired 
  respectively and represent 90.8% of the total outstanding balance. 
  Continuous requests for information and insistence that these loans 
  should be repaid have led to some progress in regard to a wind turbine 
  loan. So, despite these positions being aged, we still press for 
  repayment. Other loans that had already been 100% impaired, matured 
  and are reflected as realised losses of GBP223,000 in the financial 
  report and accounts. 
 
 Spanish peer to peer loan platform (Borrower 17) - 0.0% of NAV 
 We have assigned zero probability of any further collections on the 
  remaining 7 loans within the portfolio. We continued to push for 
  some return from these loans but after receiving a number of formal 
  liquidation confirmations, we concluded that there was very little 
  probability of recouping any further capital. 
 
 
 US peer to peer business (Borrower 18) - 0.0% of NAV 
 The final outstanding balance of this position has been fully impaired 
  and we have assigned no further ability to recoup funds from the 
  platform. At the beginning of the reporting period, we had impaired 
  25% of the total outstanding loan and taken the decision to try and 
  assume collections with a management agreement. It took longer than 
  expected to arrange the legal documentation to gain access to files 
  and we had believed it reasonable to expect some success but upon 
  review over the course of the year, we came to the conclusion that 
  there was little to gain from pursuing the outstanding balances and 
  so by end Q1 2020 and the start of the Covid-19 led difficulties, 
  we impaired the remaining balance. 
 
 Outlook 
 The reporting period has not been without its challenges due to external 
  economic pressures of Brexit and then the onset of the Covid-19 pandemic. 
 
 All things considered, the loan book has held up reasonably well 
  and we have made reasonable, albeit slower progress with the ongoing 
  cleanup of peer to peer exposures. However, it has been disappointing 
  that we were not able to recoup more capital from the US and European 
  positions and with the benefit of hindsight, our original expectation 
  was too optimistic. 
 
 Given the ongoing complexity of Covid-19 impact on the wider economy, 
  the probability of the impact was a lot lower but now there is increased 
  likelihood of deteriorating prospects in the medium term. However, 
  on the balance of probabilities it is likely that our direct loan 
  underwriting representing 76% of the portfolio can ultimately repay 
  at full value. 
 
 The Company is now in wind-down and we are working to deliver the 
  Company's new investment policy. Meanwhile, we shall monitor and 
  manage the assets within the portfolio as carefully as possible and 
  urge early repayment by borrowers if the occasion arises. All of 
  the loans in the portfolio require care and diligence, each borrower 
  has specific needs and have to be carefully monitored and indeed, 
  on some occasions, helped through difficult periods. If they are 
  not managed with this level of due care and diligence, there is a 
  risk that the credit outlook for these loans may deteriorate. It 
  is as much about the manager as the borrower in these circumstances. 
 
 We would like to thank Shareholders for their support and look forward 
  to sharing updates on the progress made on wind down in future months. 
 
 Dawn Kendall 
  Portfolio Manager 
  KKV Investment Management Ltd 
 8 October 2020 
 
 
                       Principal Risks and Uncertainties 
 Risk is inherent in the Company's activities, but it is managed through 
  an ongoing process of identifying and assessing risks and ensuring 
  that appropriate controls are in place. The key risks faced by the 
  Company, along with controls employed to mitigate those risks, are 
  set out below. 
 Macroeconomic risk 
  Adverse macroeconomic conditions may have a material adverse effect 
  on the Company's yield on investments, default rate and cash flows. 
  The Board and the Investment Manager keep abreast of market trends 
  and information to try to prepare for any adverse impact. 
 
  The Company's assets are diversified by geography, asset class, and 
  duration, thereby reducing the impact that macroeconomic risk may 
  have on the overall portfolio. 
 
  Interest rate risk arises from the possibility that changes in interest 
  rates will affect future cash flows and/or fair values of the Company's 
  investments. Exposure to interest rate risk is limited by the use 
  of fixed rate interest on the majority of the Company's loans, thereby 
  giving security over future loan interest cash flows. 
 
  Currency risk is the risk that changes in foreign exchange rates 
  will impact future profits and net assets. Currency risk is mitigated 
  to a certain extent through the use of forward foreign exchange contracts 
  to hedge movements in foreign currency exchange rates. 
 
  Following the UK's exit from the EU on 31 January 2020, and until 
  trade agreements are signed, there may be some uncertainty in UK 
  and European markets as they adjust to the new relationship between 
  the UK and the EU and the rest of the world. Although the exact impact 
  of Brexit is not known, the Board believes that the Company is well 
  placed to deal with future impacts from it. 
 
  Covid-19 
  The Covid-19 outbreak is a risk to the global economy. Details of 
  the macroeconomic impact, as it may affect the Company, are provided 
  in the "Market Backdrop" section of the Investment Manager's Report. 
  The Investment Manager and Administrator invoked their business continuity 
  plans to help ensure the safety and well-being of their staff thereby 
  retaining the ability to maintain business operations. These actions 
  helped to ensure business resilience. 
 
  The situation is changing so rapidly that the full impact cannot 
  yet be understood, but future cashflows and valuations are more uncertain 
  at the current time, and may be more volatile than in recent years. 
  Indeed, the level of estimation uncertainty and judgement for the 
  calculation of expected credit losses has increased as a result of 
  the economic effects of the Covid-19 outbreak. However, the impact 
  of defaults that might occur in future under different economic scenarios 
  has been reflected in various models to enable the Board to evaluate 
  the Company's viability, and the Directors believe that the Company 
  is well placed to survive the impact of the Covid-19 outbreak, thereby 
  enabling the Company to realise its assets in an orderly manner. 
      Credit risk 
       The Company invests in a range of secured loan assets mainly through 
       wholesale secured lending opportunities, secured trade and receivable 
       finance and other collateralised lending opportunities. The Company 
       is also exposed to direct loans. Significant due diligence is undertaken 
       on the borrowers of these loans and security taken to cover the loans 
       and to mitigate the credit risk on such loans. 
 
       The key factor in underwriting secured loans is the predictability 
       of cash flows to allow the borrower to perform as per the terms of 
       the contract. 
 
       Following the change of investment objective on 17 September 2020, 
       the Company ceased to make any new investments or to undertake capital 
       expenditure except where, in the opinion of both the Board and the 
       Investment Manager (or, where relevant, the Investment Manager's 
       successors): 
        *    the investment is a follow-on investment made in 
             connection with an existing asset in order to comply 
             with the Company's pre-existing obligations; or 
 
 
        *    failure to make the follow-on investment may result 
             in a breach of contract or applicable law or 
             regulation by the Company; or 
 
 
        *    the investment is considered necessary to protect or 
             enhance the value of any existing investments or to 
             facilitate orderly disposals. 
 
 The impact of the Covid-19 outbreak on general credit risk is provided 
  in the Investment Manager's Report. 
 
  The Company's assets are diversified by geography, asset class, and 
  duration, thereby reducing the impact that investment risk may have 
  on the overall portfolio. This diversification may reduce as assets 
  are realised, but is an acceptable, and to some extent unavoidable, 
  risk associated with the realisation process. 
  The credit risk associated with the investments is reduced not only 
  by diversification but also by the use of security. Despite the use 
  of security, credit risk is not reduced entirely and so the Investment 
  Manager monitors the recoverability of the loans (on an individual 
  loan basis) each month and impairs loans in accordance with IFRS 
  9 Financial Instruments. 
 
 Platform risk 
  The Company is dependent on platforms, albeit to a lesser extent 
  for that reducing part of the loan portfolio originated through platforms 
  than was the case prior to the change of Investment Manager in April 
  2017, to operate the loan portfolio (to effectively monitor loans; 
  and to pay and receive monies as necessary). If a platform were no 
  longer able to operate effectively this could put at risk loans made 
  with/through such a platform and increase credit risk. 
 
  The Investment Manager undertakes due diligence on all the platforms 
  and part of this work is to confirm that the platforms have disaster 
  recovery policies in place whereby a third party administrator would 
  step in to manage the loans in the event the platform could no longer 
  do so. If such an event were to occur, the Company's approach would 
  vary depending on the platform and the circumstances, and would be 
  determined by the Board after discussion with the Investment Manager 
  and other advisers. 
 
  The Company's exposure to platform risk is decreasing as it realises 
  platform loans and exits positions on certain platforms entirely. 
 
 Regulatory risk 
  The Company's operations are subject to wide ranging regulations, 
  which continue to evolve and change. Failure to comply with these 
  regulations could result in losses and damage to the Company's reputation. 
 
  The Company employs third party service providers to ensure that 
  regulations are complied with. 
 
 Reputational risk 
  Any adverse impact on the Company's reputation would likely result 
  in a fall in its share price, thereby adversely affecting Shareholders. 
 
               Environment, Employee, Social and Community Issues 
 As an investment company, the Company does not have any employees 
  or physical property, and most of its activities are performed by 
  other organisations. Therefore, the Company does not combust fuel 
  and does not have any greenhouse gas emissions to report from its 
  operations, nor does it have responsibility for any other emissions 
  producing sources under the Companies (Directors' Report) and Limited 
  Liability Partnerships (Energy and Carbon Report) Regulations 2018. 
 
  When making investment decisions, the Investment Manager has not, 
  historically, considered the impact that an entity in which the Company 
  invests may have on the community. However, whilst the Board believes 
  that all companies have a duty to consider their impact on the community 
  and the environment, the Company does not have a direct impact on 
  the community or environment and, as a result, does not maintain 
  policies in relation to these matters. 
 
 Going forward, the Investment Manager is committed to achieving the 
  best possible risk-adjusted returns through integrating Environmental, 
  Social and Governance ("ESG") considerations into its core investment 
  analysis and decision making process. The Investment Manager recognises 
  the value in considering ESG risks and has adopted the following 
  ESG approach in conducting its business: 
 
                    *    Taking into account the non-financial performance of 
                         target companies, specifically related to governance, 
                         social and environmental policy. 
 
 
                    *    Adopting responsible and ethical approach to 
                         governance including: 
 
 
                    *    Remuneration of senior management and a policy on 
                         bonuses that is compliant with international 
                         standards; 
 
 
                    *    Implementation of compliance policies and procedures 
                         and on-going monitoring of the firm's systems and 
                         controls; 
 
 
                    *    Implementation of risk controls throughout the 
                         business; and 
 
 
                    *    Consideration of our ethical obligations in all 
                         business conduct (anti money laundering, 
                         anti-corruption, reputational due diligence). 
 
 
                    *    Encouraging a human resource policy which values and 
                         respects all staff members through: 
 
 
                    *    Objective criteria to measure performance and 
                         competencies; 
 
 
                    *    Support programs requiring senior management 
                         involvement in all staff members career progression; 
                         and 
 
 
                    *    Equality across all staff irrespective of role, 
                         gender, race, age, religious belief or sexual 
                         orientation. 
 
                                Gender Diversity 
 The Board of Directors of the Company currently comprises two male 
  Directors and one female Director. Further information in relation 
  to the Board's policy on diversity can be found in the Directors' 
  Remuneration Report in the Annual Report and Financial Statements. 
 
                           Key Performance Indicators 
 
 The Board uses the following key performance indicators ("KPIs") 
  to help to assess the Company's performance against its objectives. 
  Further information on the Company's performance is provided in the 
  Chairman's Statement and the Investment Manager's Report. 
 
 Dividend yield 
 The Company distributes at least 85% of its distributable income 
  by way of dividends on a monthly basis. During any year the Company 
  may retain some of the distributable income and use these to smooth 
  future dividend flows. The Company's annual dividend target for the 
  period under review was 7.00p per Share. 
 
 The Company has announced dividends of GBP3,684,000 (7.00p per Ordinary 
  Share) for the year ended 30 June 2020 (2019: GBP3,684,000 (7.00p 
  per Ordinary Share)), being 228.5% (2019: 128.9%) of distributable 
  income for the year (see notes 5 and 22 for further details). To 
  ensure the tax efficient streaming of qualifying interest income, 
  the Company may announce an additional dividend out of the profits 
  for the year ended 30 June 2020, once the tax advisers have finalised 
  the tax computations. 
 
 NAV and total return 
 The Directors regard the Company's NAV as a key component to delivering 
  value to Shareholders, but believe that total return (which includes 
  dividends) is the best measure for shareholder value. 
 
 Premium/discount of share price to NAV 
 Prior to the Continuation Vote, in the event that the Ordinary Shares 
  had been trading at a daily discount to NAV of greater than 10% for 
  three consecutive months (calculated on a rolling three monthly average 
  of daily numbers), the Board were required to convene a general meeting 
  to propose a continuation resolution. 
 
  Although this requirement is no longer applicable, the Board understand 
  the importance of minimising the discount to NAV at which the Company's 
  Ordinary Shares trade and the Board regularly monitors the premium/discount 
  of the price of the Ordinary Shares to the NAV per share. During 
  the year, the Company traded at an average discount to NAV of 7.74%. 
  In normal market conditions, stabilisation of dividend cover would 
  have resulted in a narrowing of discount to NAV. However, sector 
  volatility and some sales of shares by investors created a stock 
  overhang during most of the reporting period, and a t 30 June 2020 
  the shares were trading at 76.50p, an 11.4% discount to NAV (2019: 
  92.00p, a 3.26% discount to NAV). However, FinnCap, the Company's 
  corporate broker, has maintained a good job of matching sales to 
  purchases and retail interest in the stock has been ongoing. 
 
 Capital returned to Shareholders 
 Following the change in investment objective on 17 September 2020, 
  the Directors consider it important to measure the amount of capital 
  returned to Shareholders. In the six days since 17 September 2020, 
  no capital has been returned to Shareholders. However, on 26 August 
  2020, the Company announced a dividend of 3.50 pence per Ordinary 
  Share with a payment date of 25 September 2020. 
 
  This was not a KPI during the year ended 30 June 2020. 
 
 David Stevenson 
 Chairman 
 8 October 2020 
 
 
                     Promoting the Success of the Company 
 
 The following disclosure outlines how the Directors have had regard 
  to the matters set out in Section 172(1)(a) to (f) of the Companies 
  Act 2006. 
 
   The Board considers the needs of a number of stakeholders when considering 
    the long-term future of the Company. The key stakeholders with which 
    the Board has liaised during the year ended 30 June 2020 were: 
     *    Shareholders; and 
 
 
     *    Key service providers. 
 Shareholders 
 The Company's significant Shareholders at the year end can be found 
  in the Directors' Report in the Annual Report and Financial Statements 
  . 
 
 When making principal decisions the Board consider it imperative 
  to analyse the views of the Company's investors to ensure that its 
  decisions are aligned with the wishes of Shareholders and that the 
  Company can achieve its Investment Policy. The key performance indicators 
  have been considered on an ongoing basis as part of the Board's decision 
  making process. 
 
 Details of how the Directors communicate with Shareholders can be 
  found in the Corporate Governance Report. 
 
 Other than the routine engagement with investors regarding strategy 
  and performance, the Company's continuation was discussed with investors. 
  A continuation vote was held on 19 June 2020 that, in line with the 
  Directors' recommendation, did not pass. A further general meeting 
  of the Company was held on 17 September 2020 at which a special resolution 
  approved the managed wind-down of the Company and the adoption of 
  the new investment policy of the Company. 
 
 Key service providers 
 Details of the Company's key service providers can be found in the 
  Directors' Report in the Annual Report and Financial Statements . 
 
 The key service providers are fundamental to the Company's ability 
  to continue in the same state as any changes could disrupt the expected 
  timeliness of information provided to the markets. In turn, this 
  would be likely to have a detrimental impact on the Company's reputation. 
 
 The Board has continuous access to the Company's key service providers 
  and has open two-way communication with them. Key aspects of discussion 
  with these service providers, other than those regarding Company 
  performance and strategy, were in respect of fees payable to these 
  providers. 
 
 Following these discussions, the Investment Manager's fees were amended 
  post year end as disclosed in note 7. 
 
 David Stevenson 
 Chairman 
 8 October 2020 
 
 
Statement of Comprehensive Income 
 for the year ended 30 June 2020 
 
 
                                                             Year ended     Year ended 
                                                    Note   30 June 2020   30 June 2019 
                                                                GBP'000        GBP'000 
Revenue 
Interest income                                      3f           4,315          4,026 
Other income                                                          -             30 
                                                           ------------   ------------ 
Total revenue                                                     4,315          4,056 
                                                           ------------   ------------ 
Operating expenses 
Management fees                                      7a           (483)          (513) 
Broker fees                                                       (197)           (79) 
Other expenses                                       11           (164)          (169) 
Transaction fees                                     7a           (147)           (81) 
Administration fees                                  7b           (117)          (117) 
Legal and professional fees                                        (97)           (51) 
Directors' remuneration                              8             (94)          (108) 
                                                           ------------   ------------ 
Total operating expenses                                        (1,299)        (1,118) 
                                                           ------------   ------------ 
Investment gains and losses 
Movement in unrealised gains and losses 
 on loans due to movement in foreign exchange 
 on non-Sterling loans                               14             410            110 
Impairment losses on financial assets (or 
 loans)                                              14         (3,299)          (415) 
Movement in unrealised gain on investments 
 at fair value through profit or loss                15              19              1 
Movement in unrealised gain/(loss) on derivative 
 financial instruments                               17             345          (319) 
Realised (loss)/gain on disposal of loans                         (536)             16 
Realised gain on disposal of investments 
 at fair value through profit or loss                15               -              3 
Realised loss on disposal of investments 
 held for sale                                                        -           (51) 
Realised loss on derivative financial instruments    17           (852)          (206) 
                                                           ------------   ------------ 
Total investment gains and losses                               (3,913)          (861) 
                                                           ------------   ------------ 
Net (loss)/profit from operating activities 
 before (loss)/gain on foreign currency exchange                  (897)          2,077 
 
Net foreign exchange (loss)/gain                                   (16)            159 
                                                           ------------   ------------ 
(Loss)/profit and total comprehensive income 
 for the year attributable to the owners 
 of the Company                                                   (913)          2,236 
                                                           ------------   ------------ 
 
(Loss)/earnings per Ordinary Share (basic 
 and diluted)                                        13         (1.73)p          4.25p 
                                                           ------------   ------------ 
 
 
There were no other comprehensive income items in the year. 
 Except for unrealised investment gains and losses, all of the Company's 
 profit and loss items are distributable. 
 The accompanying notes form an integral part of the financial statements 
 . 
 
 
 Statement of Changes in Equity 
 for the year ended 30 June 2020 
 
 
                                          Called up  Special distributable     Profit and 
                               Note   share capital                reserve   loss account         Total 
                                            GBP'000                GBP'000        GBP'000       GBP'000 
At 30 June 2018                                 577                 50,942             20        51,539 
Impact of transition to IFRS 
 9                                                -                      -           (23)          (23) 
                                       ------------           ------------   ------------  ------------ 
At 1 July 2018 - revised for the 
 application of IFRS 9                          577                 50,942            (3)        51,516 
 
Profit for the year             22                -                      -          2,236         2,236 
 
Transactions with Owners in their capacity as owners: 
Dividends paid                 5,22               -                  (689)        (2,934)       (3,623) 
 
                                       ------------           ------------   ------------  ------------ 
At 30 June 2019                                 577                 50,253          (701)        50,129 
 
Loss for the year               22                -                      -          (913)         (913) 
 
Transactions with Owners in their capacity as owners: 
Dividends paid                 5,22               -                (2,072)        (1,612)       (3,684) 
 
                                       ------------           ------------   ------------  ------------ 
At 30 June 2020                                 577                 48,181        (3,226)        45,532 
                                       ------------           ------------   ------------  ------------ 
 
 
There were no other comprehensive income items in the year. 
 The above amounts are all attributable to the owners of the Company. 
 The accompanying notes form an integral part of the financial statements 
 . 
 
 
  Statement of Financial Position 
        as at 30 June 2020 
 
 
                                                             30 June 
                                                Note            2020   30 June 2019 
                                                             GBP'000        GBP'000 
 Non-current assets 
 Loans at amortised cost                         14           31,942         36,614 
 Investments at fair value through profit 
  or loss                                       15,16            251            232 
                                                        ------------   ------------ 
 Total non-current assets                                     32,193         36,846 
                                                        ------------   ------------ 
 Current assets 
 Loans at amortised cost                         14           10,691         10,642 
 Cash held on client accounts with platforms     14                -             48 
 Other receivables and prepayments               18            1,625          1,141 
 Cash and cash equivalents                                     1,193          1,987 
                                                        ------------   ------------ 
 Total current assets                                         13,509         13,818 
                                                        ------------   ------------ 
 Total assets                                                 45,702         50,664 
                                                        ------------   ------------ 
 Current liabilities 
 Other payables and accruals                     19            (164)          (184) 
 Derivative financial instruments               16,17            (6)          (351) 
                                                        ------------   ------------ 
 Total liabilities                                             (170)          (535) 
                                                        ------------   ------------ 
 
                                                        ------------   ------------ 
 Net assets                                                   45,532         50,129 
                                                        ------------   ------------ 
 Capital and reserves attributable to owners 
  of the Company 
 Called up share capital                         21              577            577 
 Other reserves                                  22           44,955         49,552 
                                                        ------------   ------------ 
 Equity attributable to the owners of the 
  Company                                                     45,532         50,129 
                                                        ------------   ------------ 
 
 Net asset value per Ordinary Share              23           86.37p         95.10p 
                                                        ------------   ------------ 
 
 
 These financial statements of Secured Income Fund plc (registered 
  number 09682883) were approved by the Board of Directors on 8 October 
  2020 and were signed on its behalf by: 
 
   David Stevenson                         Gaynor Coley 
   Chairman                                Director 
   8 October 2020                          8 October 2020 
 
 The accompanying notes form an integral part of the financial statements 
  . 
 
 
     Statement of Cash Flows 
 for the year ended 30 June 2020 
 
 
                                                            Year ended      Year ended 
                                                               30 June    30 June 2019 
                                                                  2020 
                                                               GBP'000         GBP'000 
 Cash flows from operating activities 
 Net (loss)/profit before taxation                               (913)           2,236 
 Adjustments for: 
  Movement in unrealised gains and losses on loans 
   due to movement in foreign exchange on non-Sterling 
   loans                                                         (410)           (110) 
  Impairment losses on financial assets (or loans)               3,299             415 
  Movement in unrealised gain on investments at 
   fair value through profit or loss                              (19)             (1) 
  Movement in unrealised (gain)/loss on derivative 
   financial instruments                                         (345)             319 
  Realised loss/(gain) on disposal of loans                        536            (16) 
  Realised gain on disposal of investments at fair 
   value through profit or loss                                      -             (3) 
  Realised loss on disposal of investments held 
   for sale                                                          -              51 
  Realised loss on derivative financial instruments                852             206 
  Amortisation of transaction fees                                 147              81 
  Interest received and reinvested by platforms                   (50)           (287) 
  Capitalised interest                                         (1,486)           (915) 
 Decrease/(increase) in investments                              1,783         (2,141) 
                                                          ------------    ------------ 
 Net cash inflow/(outflow) from operating activities 
  before working capital changes                                 3,394           (165) 
 Increase in other receivables and prepayments                   (484)           (369) 
 (Decrease)/increase in other payables and accruals               (20)              19 
                                                          ------------    ------------ 
 Net cash inflow/(outflow) from operating activities             2,890           (515) 
 
 Cash flows from financing activities 
 Dividends paid                                                (3,684)         (3,623) 
                                                          ------------    ------------ 
 Net cash outflow from financing activities                    (3,684)         (3,623) 
 
                                                          ------------    ------------ 
 Decrease in cash and cash equivalents in the 
  year                                                           (794)         (4,138) 
 Cash and cash equivalents at the beginning of 
  the year                                                       1,987           6,125 
                                                          ------------    ------------ 
 Cash and cash equivalents at the year end                       1,193           1,987 
                                                          ------------    ------------ 
 
 Supplemental cash flow information 
 Non-cash transaction - interest income                          1,536           1,202 
 
 
 The accompanying notes form an integral part of the financial statements 
  . 
 
 
Notes to the Financial Statements 
 for the year ended 30 June 2020 
 
1. General information 
The Company is a public company (limited by shares) and was incorporated 
 and registered in England and Wales under the Companies Act 2006 on 
 13 July 2015 with registered number 09682883. The Company's shares 
 were admitted to trading on the London Stock Exchange Specialist Fund 
 Segment on 23 September 2015 ("Admission"). The Company is domiciled 
 in England and Wales. 
 
 The Company is an investment company as defined in s833 of the Companies 
 Act 2006. 
 
 Change of name 
 On 18 July 2020, the Company changed its name from SQN Secured Income 
 Fund plc to Secured Income Fund plc. 
 
 
2. Statement of compliance 
a) Basis of preparation 
 These financial statements present the results of the Company for 
 the year ended 30 June 2020. These financial statements have been 
 prepared in accordance with International Financial Reporting Standards 
 ("IFRS"), as adopted by the European Union. 
 
 These financial statements have not been prepared in full accordance 
 with the Statement of Recommended Practice ("SORP") for investment 
 trusts issued by the AIC in October 2019, as the main driver of the 
 SORP is to disclose the allocation of expenses between revenue and 
 capital, thereby enabling a user of the financial statements to determine 
 distributable reserves. However, with the exception of investment 
 gains and losses, all of the Company's profit and loss items are of 
 a revenue nature as it does not allocate any expenses to capital. 
 Therefore, the Directors believe that full compliance with the SORP 
 would not be of benefit to users of the financial statements. Further 
 details on the distributable reserves are provided in note 22. 
 
 T he Company's capital is raised in Sterling, expenses are paid in 
 Sterling, the majority of the Company's financial assets and liabilities 
 are Sterling based, and (until September 2020) the Company hedged 
 substantially all of its foreign currency risk back to Sterling, Therefore, 
 the Board of Directors consider that Sterling most faithfully represents 
 the economic effects of the underlying transactions of the Company, 
 events and conditions. T hese financial statements are presented in 
 Sterling, which is the Company's functional and presentation currency. 
 All amounts are rounded to the nearest thousand. 
            Non-Going Concern 
             On 19 June 2020, the Company held a continuation vote (the "Continuation 
             Vote") that, in line with the Directors' recommendation, did not pass. 
             This vote was required under the Articles as the Company did not have 
             a Net Asset Value of at least GBP250 million as at 31 December 2019. 
             As this vote did not pass, the Directors (as required under the Articles) 
             convened a further general meeting of the Company on 17 September 
             2020 at which a special resolution approved the managed wind-down 
             of the Company and the adoption of the new investment policy of the 
             Company, to carry out an orderly realisation of the Company's portfolio 
             of assets and distribution of cash to Shareholders . 
 
             This has had no significant impact on the accounting policies, judgements 
             or carrying value of assets and liabilities within the financial statements 
             as the loans are included net of their expected credit loss provision 
             ("ECL") and are expected to be realised in an orderly manner, and 
             the estimated costs of winding up the Company are immaterial . 
The Covid-19 outbreak is a risk to the global economy. Details of 
 the macroeconomic impact and the impact on credit risk are provided 
 in the Investment Manager's Report. The Investment Manager and Administrator 
 invoked their business continuity plans to help ensure the safety 
 and well-being of their staff thereby retaining the ability to maintain 
 business operations. These actions helped to ensure business resilience. 
 The situation is changing so rapidly that the full impact cannot yet 
 be understood, but the Company will continue to monitor the situation 
 closely. 
 
b) Basis of measurement 
 The financial statements have been prepared on a historical cost basis, 
 except for investments at fair value through profit or loss and derivative 
 instruments, which are measured at fair value through profit or loss. 
 
Given the Company's investment policy to carry out an orderly realisation 
 of the Company's portfolio of assets and distribution of cash to Shareholders, 
 the financial statements have been prepared on a non-going concern 
 basis. 
 
            c) Segmental reporting 
             The Directors are of the opinion that the Company is engaged in a 
             single economic segment of business, being investment in a range of 
             SME loan assets. 
 
d) Use of estimates and judgements 
            The preparation of financial statements in conformity with IFRS requires 
             management to make judgements, estimates and assumptions that affect 
             the application of policies and the reported amounts of assets and 
             liabilities, income and expenses. The estimates and associated assumptions 
             are based on historical experience and various other factors that 
             are believed to be reasonable under the circumstances, the results 
             of which form the basis of making the judgements about carrying values 
             of assets and liabilities that are not readily apparent from other 
             sources. Actual results may differ from these estimates. 
 
             The estimates and underlying assumptions are reviewed on an ongoing 
             basis. Revisions to accounting estimates are recognised in the period 
             in which the estimate is revised, if the revision affects only that 
             period, or in the period of the revision and future periods, if the 
             revision affects both current and future periods. 
 
             Judgements made by management in the application of IFRS that have 
             a significant effect on the financial statements and estimates with 
             a significant risk of material adjustment in the next year are discussed 
             in note 4. 
 
 
3. Significant accounting policies 
a) Foreign currency 
 Foreign currency transactions are translated into Sterling using the 
 exchange rates prevailing at the dates of the transactions. Foreign 
 exchange gains and losses resulting from the settlement of such transactions 
 and from the translation at period-end exchange rates of monetary 
 assets and liabilities denominated in foreign currencies are recognised 
 in the Statement of Comprehensive Income. Translation differences 
 on non-monetary financial assets and liabilities are recognised in 
 the Statement of Comprehensive Income. 
 
b) Financial assets and liabilities 
 The financial assets and liabilities of the Company are defined as 
 loans, bonds with loan type characteristics, investments at fair value 
 through profit or loss, cash and cash equivalents, other receivables, 
 derivative instruments and other payables. 
 
      Classification 
       IFRS 9 requires the classification of financial assets to be determined 
       on both the business model used for managing the financial assets 
       and the contractual cash flow characteristics of the financial assets. 
       Loans have been classified at amortised cost as: 
        *    they are held within a "hold to collect" business 
             model with the objective to hold the assets to 
             collect contractual cash flows; and 
 
 
        *    the contractual terms of the loans give rise on 
             specified dates to cash flows that are solely 
             payments of principal and interest on the principal 
             amount outstanding. 
 
 
 
       The Company's unquoted investments have been classified as held at 
       fair value through profit or loss as they are held to realise cash 
       flows from the sale of the investments. 
 
Recognition 
 The Company recognises a financial asset or a financial liability 
 when, and only when, it becomes a party to the contractual provisions 
 of the instrument. Purchases and sales of financial assets that require 
 delivery of assets within the time frame generally established by 
 regulation or convention in the marketplace are recognised on the 
 trade date, i.e. the date that the Company commits to purchase or 
 sell the asset. 
 
            Derecognition 
             A financial asset (or, where applicable, a part of a financial asset 
             or part of a group of similar assets) is derecognised where: 
              *    The rights to receive cash flows from the asset have 
                   expired; or 
 
 
              *    The Company has transferred its rights to receive 
                   cash flows from the asset or has assumed an 
                   obligation to pay the received cash flows in full 
                   without material delay to a third party under a 
                   "pass-through" arrangement; and 
 
 
              *    Either (a) the Company has transferred substantially 
                   all the risks and rewards of the asset, or (b) the 
                   Company has neither transferred nor retained 
                   substantially all the risks and rewards of the asset, 
                   but has transferred control of the asset. 
 
 
 
             When the Company has transferred its rights to receive cash flows 
             from an asset (or has entered into a pass-through arrangement) and 
             has neither transferred nor retained substantially all the risks and 
             rewards of the asset nor transferred control of the asset, the asset 
             is recognised to the extent of the Company's continuing involvement 
             in the asset. 
 
             The Company derecognises a financial liability when the obligation 
             under the liability is discharged, cancelled or expires. 
 
Initial measurement 
 Financial assets and financial liabilities at fair value through profit 
 or loss are recorded in the Statement of Financial Position at fair 
 value. All transaction costs for such instruments are recognised directly 
 in profit or loss. 
 
 Financial assets and financial liabilities not designated as at fair 
 value through profit or loss, such as loans, are initially recognised 
 at fair value, being the amount issued less transaction costs. 
 
Subsequent measurement 
 After initial measurement, the Company measures financial assets and 
 financial liabilities not designated as at fair value through profit 
 or loss, at amortised cost using the effective interest rate method, 
 less impairment allowance. Gains and losses are recognised in the 
 Statement of Comprehensive Income when the asset or liability is derecognised 
 or impaired. Interest earned on these instruments is recorded separately 
 as investment income. 
 
 After initial measurement, the Company measures financial instruments 
 which are classified at fair value through profit or loss at fair 
 value. Subsequent changes in the fair value of those financial instruments 
 are recorded in net gain or loss on financial assets and liabilities 
 at fair value through profit or loss. 
 
 The carrying value of cash and cash equivalents and other receivables 
 and payables equals fair value due to their short-term nature. 
 
Impairment 
      A financial asset is credit-impaired when one or more events that 
       have occurred have a significant impact on the expected future cash 
       flows of the financial asset. It includes observable data that has 
       come to the attention of the holder of a financial asset about the 
       following events: 
        *    Significant financial difficulty of the issuer or 
             borrower; 
 
 
        *    A breach of contract, such as a default or past-due 
             event; 
 
 
        *    The lenders for economic or contractual reasons 
             relating to the borrower's financial difficulty 
             granted the borrower a concession that would not 
             otherwise be considered; 
 
 
        *    It becoming probable that the borrower will enter 
             bankruptcy or other financial reorganisation; 
 
 
        *    The disappearance of an active market for the 
             financial asset because of financial difficulties; or 
 
 
        *    The purchase or origination of a financial asset at a 
             deep discount that reflects incurred credit losses. 
 
Each direct loan is assessed on a continuous basis by the Investment 
 Manager's own underwriting team with peer review occurring on a regular 
 basis. 
 
 Each platform loan is monitored via the company originally deployed 
 to conduct underwriting and management of the borrower relationship. 
 When a potential impairment is identified, the Investment Manager 
 requests data and management information from the platform. The Investment 
 Manager will then actively pursue collections, giving guidance to 
 the platforms on acceptable levels of impairment. In some cases, the 
 Investment Manager will proactively take control of the process. 
 
 Impairment of financial assets is recognised on a loan-by-loan basis 
 in stages: 
Stage             As soon as a financial instrument is originated or purchased, 
 1:                12-month expected credit losses are recognised in profit or loss 
                   and a loss allowance is established. This serves as a proxy for 
                   the initial expectations of credit losses. For financial assets, 
                   interest revenue is calculated on the gross carrying amount (i.e. 
                   without deduction for expected credit losses). 
 
Stage             If the credit risk increases significantly and is not considered 
 2:                low, full lifetime expected credit losses are recognised in profit 
                   or loss. The calculation of interest revenue is the same as for 
                   Stage 1. This stage is triggered by scrutiny of management accounts 
                   and information gathered from regular updates from the borrower 
                   by way of email exchange or face-to-face meetings. The Investment 
                   Manager extends specific queries to borrowers if they acquire 
                   market intelligence or channel-check the data received. A covenant 
                   breach may be a temporary circumstance due to a one-off event 
                   and will not trigger an immediate escalation in risk profile 
                   to stage 2. 
 
                   At all times, the Investment Manager considers the risk of impairment 
                   relative to the cash flows and general trading conditions of 
                   the company and the industry in which the borrower resides. 
 
Stage             If the credit risk of a financial asset increases to the point 
 3:                that it is considered credit-impaired, interest revenue is calculated 
                   based on the amortised cost (i.e. the gross carrying amount less 
                   the loss allowance). Financial assets in this stage will generally 
                   be assessed individually. Lifetime expected credit losses are 
                   recognised on these financial assets. This stage is triggered 
                   by a marked deterioration in the management information received 
                   from the borrower and a view taken on the overall credit conditions 
                   for the sector in which the company resides. A permanent breach 
                   of covenants and a deterioration in the valuation of security 
                   would also merit a move to stage 3. 
 
                   The Investment Manager also takes into account the level of security 
                   to support each loan and the ease with which this security can 
                   be monetised. This has a meaningful impact of the way in which 
                   impairments are assessed, particularly as the Investment Manager 
                   has a very strong track record in managing write-downs and reclaim 
                   of assets. 
 
                   For more details in relation to judgements, estimates and uncertainty 
                   see note 4. 
 
c) Cash and cash equivalents 
 Cash and cash equivalents are defined as cash in hand, demand deposits 
 and short-term, highly liquid investments readily convertible to known 
 amounts of cash and subject to insignificant risk of changes in value. 
 
 The carrying values of cash and cash equivalents are deemed to be 
 a reasonable approximation of their fair values. 
 
d) Receivables and prepayments 
 Receivables are carried at the original invoice amount, less impairments, 
 as discussed above. 
 
 The carrying values of the accrued interest and other receivables 
 are deemed to be reasonable approximations of their fair values. 
 
            e) Transaction costs 
             Transaction costs incurred on the acquisition of loans are capitalised 
             upon recognition of the financial asset and amortised over the term 
             of the respective loan. 
            f) Income and expenses 
             Interest income and bank interest are recognised on a time-proportionate 
             basis using the effective interest rate method. 
 
             Dividend income is recognised when the right to receive payment is 
             established. 
 
             All expenses are recognised on an accruals basis. All of the Company's 
             expenses (with the exception of share issue costs, which are charged 
             directly to the distributable reserve) are charged through the Statement 
             of Comprehensive Income in the period in which they are incurred. 
 
g) Taxation 
 The Company is exempt from UK corporation tax on its chargeable gains 
 as it satisfies the conditions for approval as an investment trust. 
 The Company is, however, liable to UK corporation tax on its income. 
 However, the Company has elected to take advantage of modified UK 
 tax treatment in respect of its "qualifying interest income" in order 
 to deduct all, or part, of the amount it distributes to Shareholders 
 as dividends as an "interest distribution". 
 
h) Changes in accounting policy and disclosures 
New and amended standards and interpretations 
 The Company adopted the following new and amended relevant IFRS in 
 the year: 
IFRIC 23            Uncertainty over income tax treatment 
 
The adoption of this accounting standard did not have any effect on 
 the Company's Statement of Comprehensive Income, Statement of Financial 
 Position or equity. 
 
 
 
i) Accounting standards issued but not yet effective 
            The International Accounting Standards Board ("IASB") has issued/revised 
             a number of relevant standards with an effective date after the date 
             of these financial statements. Any standards that are not deemed relevant 
             to the operations of the Company have been excluded. The Directors 
             have chosen not to early adopt these standards and interpretations 
             and they do not anticipate that they would have a material impact 
             on the Company's financial statements in the period of initial application. 
                                                                                                Effective date 
            IFRS               Financial Instruments: Disclosures - amendments                  1 January 2020 
             7                  regarding pre-replacement issues in the context 
                                of the IBOR reform 
            IFRS               Financial Instruments - amendments regarding                     1 January 2020 
             9                  pre-replacement issues in the context of the 
                                IBOR reform 
            IAS 1              Presentation of Financial Statements - amendments 
                                regarding the definition of materiality                         1 January 2020 
            IAS 1              Presentation of Financial Statements - amendments 
                                regarding the classification of liabilities                     1 January 2023 
            IAS 8              Accounting Policies, Changes in Accounting 
                                Estimates and Errors - amendments regarding                     1 January 2020 
                                the definition of materiality 
 
 
4. Use of judgements and estimates 
The preparation of the Company's financial statements requires the 
 Directors to make judgements, estimates and assumptions that affect 
 the reported amounts recognised in the financial statements. However, 
 uncertainty about these assumptions and estimates could result in 
 outcomes that could require a material adjustment to the carrying 
 amount of the asset or liability in future periods. 
Judgements 
In the process of applying the Company's accounting policies, management 
 made the following judgement, which has had a significant effect on 
 the amounts recognised in the financial statements: 
 
 Covid-19 
 The Covid-19 outbreak is impacting virtually all businesses and the 
 Board expects that it will continue to impact economies over the coming 
 months. The Board and Investment Manager is monitoring any impact 
 this may have on the Company, its investments and income. The situation 
 continues to change rapidly so the full impact cannot yet be understood, 
 a result of which is that future cashflows and valuations are more 
 uncertain at the current time, and may be more volatile than in recent 
 years. Indeed, the level of estimation uncertainty and judgement for 
 the calculation of expected credit losses has increased as a result 
 of the economic effects of the Covid-19 outbreak. However, the impact 
 of defaults that might occur in future under different economic scenarios 
 has been reflected in various models to enable the Board to evaluate 
 the Company's viability, and the Directors believe that the Company 
 is well placed to survive the impact of the Covid-19 outbreak, thereby 
 enabling the Company to realise its assets in an orderly manner. 
 
Estimates and assumptions 
 The Company based its assumptions and estimates on parameters available 
 when the financial statements were approved. However, existing circumstances 
 and assumptions about future developments may change due to market 
 changes or circumstances arising beyond the control of the Company. 
 Such changes are reflected in the assumptions when they occur. 
 
The current economic uncertainty (and the frequent changes in outlook 
 for different economic sectors) has created increased volatility and 
 uncertainty (as mentioned above and in the Investment Manager's Report). 
 In such circumstances the level of estimation uncertainty and judgement 
 of expected credit losses has increased. As noted in the Investment 
 Manager's Report, there are uncertainties about the need for future 
 provisions that may need to be made against individual loans and receivables. 
 Notwithstanding the best endeavours of management to obtain full repayment 
 there is a material uncertainty in relation to the level of provisioning 
 made in these financial statements. Due to this material uncertainty 
 the Directors are unable to update the expected credit loss assessment 
 (as set out in note 3b) to reflect the likely impact on the Company's 
 loan portfolio. 
 
      i) Recoverability of loans and other receivables 
       In accordance with IFRS 9, the impairment of loans and other receivables 
       has been assessed as described in note 3b. When assessing the credit 
       loss on a loan, and the stage of impairment of that loan, the Company 
       considers whether there is an indicator of credit risk for a loan 
       when the borrower has failed to make a payment, either capital or 
       interest, when contractually due and upon assessment. The Company 
       assesses at each reporting date (and at least on a monthly basis) 
       whether there is objective evidence that a loan classified as a loan 
       at amortised cost is credit-impaired and whether a loan's credit risk 
       or the expected loss rate has changed significantly. As part of this 
       process: 
        *    Platforms are contacted to determine default and 
             delinquency levels of individual loans; and 
 
 
        *    Recovery rates are estimated. 
      The analysis of credit risk is based on a number of factors and a 
       degree of uncertainty is inherent in the estimation process. As mentioned 
       above, due to the Covid-19 pandemic future cashflows and valuations 
       are more uncertain at the current time, and may be more volatile than 
       in recent years. Indeed, the level of estimation uncertainty and judgement 
       for the calculation of expected credit losses has increased as a result 
       of the economic effects of the Covid-19 outbreak. 
 
       The determination of whether a specific factor is relevant and its 
       weight compared with other factors depends on the type of product, 
       the characteristics of the financial instrument and the borrower, 
       and the geographical region. It is not possible to provide a single 
       set of criteria that will determine what is considered to be a significant 
       increase in credit risk. Events that the Company will assess when 
       deciding if a financial asset is credit impaired include: 
        *    significant financial difficulty of the borrower; 
 
 
        *    a breach of contract, such as a default or past-due 
             event; and 
 
 
        *    it becoming probable that the borrower will enter 
             bankruptcy or other financial reorganisation. 
 
 
 
       Although it may not always be the case (e.g. if discussions with a 
       borrower are ongoing), generally a loan is deemed to be in default 
       if the borrower has missed a payment of principal or interest by more 
       than 90 days, unless the Company has good reason not to apply this 
       rule. If the Company has evidence to the contrary, it may make an 
       exception to the 90 day rule to deem that a borrower is, or is not, 
       in default. Therefore, the definitions of credit impaired and default 
       are aligned as far as possible so that stage 3 represents all loans 
       that are considered defaulted or otherwise credit impaired. 
 
       At present no direct loans to SMEs fall within Stage 2 or Stage 3. 
       However, if a situation were to arise where a direct loan to an SME 
       were reclassified as Stage 2 or Stage 3, the probability of default 
       and lifetime expected credit loss would be assessed on a case by case 
       basis and would be pertinent to the probability of recovery. 
 
IFRS 9 confirms that a Probability of Default ("PD") must never be 
 zero as everything is deemed to have a risk of default; this has been 
 incorporated by the Company. All PDs are assessed against historic 
 data as well as the prevailing economic conditions at the reporting 
 date, adjusted to account for estimates of future economic conditions 
 that are likely to impact the risk of default. 12-month PD is applied 
 across the collective as a cumulative in Stage 1, currently set at 
 2% in line with the Investment Manager's historic performance data, 
 market knowledge, and credit enhancements (this is equivalent to there 
 being 1 default for an average portfolio of 50 unique borrowers. Once 
 an investment moves to Stage 2 then PD will be calculated on an individual 
 basis (and adjusted for Stage 3 if appropriate). All assessment is 
 based on reasonable and supportive information available at the time. 
 
 12 month ECL is applied across the collective as a cumulative in Stage 
 1, split according to the investment's classification. For direct 
 loan investments this is calculated as 2% of the individual investment's 
 Contracted Cash Flows ("CCF"), and 2% of the investment's CCF for 
 platform investments. These Stage 1 12 month ECL amounts are taken 
 to be the investments' floor amounts - the Lifetime ECL for any investment 
 can never be less than its floor amount. Once an investment moves 
 to Stage 2, Lifetime ECL is calculated on an individual basis. Lifetime 
 ECL is reviewed at each reporting date based on reasonable and supportive 
 information available at the time. 
 
  The following borrower information should be read in conjunction with 
  the current economic environment and, in particular, the impact of 
  Covid-19. 
 
US Peer to Peer business (Borrower 18) impairment 
 The Company's largest peer to peer investment is a junior position 
 and represents a risk of write-down. In March 2019, the Former Investment 
 Manager met with the owner/founder and agreed an incentive plan to 
 expedite collections of the underlying portfolio and agreed a three 
 month period to show improvement. They informed the Company that they 
 had written down a large proportion of this portfolio in their accounts 
 due to a sales process underway at the time. They were advised that 
 if no improvement was forthcoming, the Former Investment Manager would 
 take over collections and it was explained that the Former Investment 
 Manager had a good track record, together with its partners, in achieving 
 better recoveries. 
In June 2019, having observed slow progress, the Former Investment 
 Manager began a series of meetings to agree interaction mooted in 
 the previous quarter. Two executives from the Former Investment Manager 
 visited Borrower 18 in New York in July 2019 and August 2019, to agree 
 a process for the way forward and to have an update on the sale of 
 the business. At the time, they were in the middle of a two stage 
 due diligence, which caused delays to the provision of information. 
 With effect from 30 June 2020, the Company has impaired this platform 
 exposure by 100% with a 100% expectation of write-down for this part 
 of the portfolio. This is a pre-emptive move and takes into account 
 a best estimate of loans that are now being managed out by attorneys. 
 The decision to use a 100% impairment rate is based upon the Investment 
 Manager's past experience of platform performance. 
 
 Whilst a 100% impairment is based on past experience, the amount finally 
 received may be higher than this. A 10% decrease in the impairment 
 on this loan would result in a GBP232,000 increase in the net asset 
 value of the Company. 
 
UK Venture Debt (Borrower 12) impairment 
 In September 2019, this platform made the Company aware that a loan 
 was to be sold at a discount to the price originally expected, due 
 to a series of potential acquirers falling away. This resulted in 
 an impairment provision in the year. After the turbulence of two of 
 the three principals leaving the company and triggering a clause in 
 the Loan Note agreement that allowed us to take closer control of 
 the process of managing the portfolio, the business has stabilised 
 and made very good progress in winding down the portfolio. The Company 
 received GBP1.6 million shortly after year end, leaving a balance 
 of GBP5.8 million outstanding. 
 
 The largest position in the portfolio, a broadband company, has been 
 restructured and was impaired by 59% at the year end, which has been 
 informed by the guidance provided by the platform . However, the reorganisation 
 of the business has progressed well and a new CEO employed. Its order 
 book has increased and it has been able to operate throughout the 
 current pandemic crisis. The Investment Manager, therefore, expects 
 some improvement in recovery. 
 
Small Company Bond Platform (Borrower 15) impairment 
 Two loans outstanding from this platform were repaid during the reporting 
 period and a further loan was sold to a third party. The only outstanding 
 debt from this platform had undergone a protracted recovery process 
 through the courts. In Q1 2020, the Investment Manager took the decision 
 to fully impair the loan due to slow progress and the increased risk 
 that fees and expenses would erode any repayment to the Company. 
 
Further details of the judgements applied in assessing the recoverability 
 of loans can be found in the Investment Manager's Report. 
 
Collateral 
 While the presence of collateral is not a key element in the assessment 
 of whether there has been a significant increase in credit risk, it 
 is of great importance in the measurement of ECL. IFRS 9 states that 
 estimates of cash shortfalls reflect the cash flows expected from 
 collateral and other credit enhancements that are integral to the 
 contractual terms. Due to the business nature of the Investment Manager, 
 this is a key component of its ECL measurement and interpretation 
 of IFRS 9, as any investment would include elements of (if not all): 
 a fully collateralised position, fixed and floating charges, a corporate 
 guarantee, a personal guarantee, coverage ratios between 130% to 150%, 
 and an average LTV of 85%. 
 
Loans written off 
 Financial assets (and the related impairment allowances) are normally 
 written off, either partially or in full, when there is no realistic 
 prospect of recovery. Where loans are secured, this is generally after 
 receipt of any proceeds from the realisation of security. In circumstances 
 where the net realisable value of any collateral has been determined 
 and there is no reasonable expectation of further recovery, write-off 
 may be earlier. Platform loans of GBP268,000 were written off in the 
 year (2019: GBP126,000) . 
Renegotiated loans 
 A loan is classed as renegotiated when the contractual payment terms 
 of the loan are modified because the Company has significant concerns 
 about a borrower's ability to meet payments when due. On renegotiation, 
 the loan will also be classified as credit impaired, if it is not 
 already. Renegotiated loans will continue to be considered to be credit 
 impaired until there is sufficient evidence to demonstrate a significant 
 reduction in the risk of non-payment of future payments. 
 
All data calculated for IFRS 9 purposes is consistent with the overall 
 methodology employed by KKV across all of its UK public funds. In 
 addition to the methodology used, the Company has taken impairment 
 data from Platforms for the assessment of loans with third party exposure. 
 Again, this is consistent with the approach KKV would expect to take 
 in these circumstances. 
 
There were no new assets originated during the year that were credit-impaired 
 at the point of initial recognition. There were no financial assets 
 that have been modified since initial recognition at a time when the 
 loss allowance was measured at an amount equal to lifetime expected 
 credit losses and for which the loss allowance changed during the 
 year to an amount equal to 12-month expected credit losses. 
 
 There were no financial assets for which cash flows were modified 
 in the year while they had a loss allowance measured at an amount 
 equal to the lifetime expected credit loss. 
 
In April 2020, as a result of the impact of Covid-19 a Stage 1 direct 
 loan (gross value of GBP428,000 at the year end) was renegotiated 
 to allow the payment of interest only for three months, which was 
 subsequently extended to six months. No write-down has been applied 
 to this loan as the Investment Manager has determined, after extensive 
 discussion with the borrower and as the interest continues to be paid 
 in full, that there was not a significant increase in credit risk 
 and thus not necessary to reclassify the loan to Stage 2. 
 
Please see note 3b, note 14 and note 24 for further information on 
 the loans at amortised cost and credit risk. 
 
 
 
5. Dividends 
The Company distributes at least 85% of its distributable income earned 
 in each financial year by way of dividends. Following discussions 
 with the Investment Manager regarding the anticipated returns from 
 the Company's portfolio (both in the shorter and longer terms), the 
 Company rebased its annual dividend target to 7.00p per Ordinary Share 
 with effect from July 2018, and a dividend of 0.583p per Ordinary 
 Share has been paid every month since then. The monthly dividend at 
 the new rate of 0.583p per Ordinary Share was first paid in September 
 2018. 
 
T he Company elected to designate all of the dividends for the year 
 ended 30 June 2020 as interest distributions to its Shareholders. 
 In doing so, the Company took advantage of UK tax treatment by "streaming" 
 income from interest-bearing investments into dividends that will 
 be taxed in the hands of Shareholders as interest income. 
To date, the Company has declared the following dividends in respect 
 of earnings for the year ended 30 June 2020: 
 
 
                                                Total dividend 
                                           declared in respect 
                                                of earnings in       Amount per 
Announcement date    Pay date                         the year   Ordinary Share 
                                                       GBP'000 
29 August 2019       27 September 2019                     307           0.583p 
25 September 2019    25 October 2019                       307           0.583p 
31 October 2019      29 November 2019                      307           0.583p 
27 November 2019     27 December 2019                      307           0.583p 
18 December 2019     24 January 2020                       307           0.583p 
30 January 2020      28 February 2020                      307           0.583p 
27 February 2020     27 March 2020                         307           0.583p 
25 March 2020        24 April 2020                         307           0.583p 
30 April 2020        29 May 2020                           307           0.583p 
28 May 2020          26 June 2020                          307           0.583p 
25 June 2020         24 July 2020                          307           0.583p 
30 July 2020         28 August 2020                        307           0.583p 
                                                  ------------     ------------ 
Dividends declared (to date) for the 
 year                                                    3,684            7.00p 
Less, dividends paid after the year 
 end                                                     (614)          (1.17)p 
Add, dividends paid in the year in 
 respect of the prior year                                 614            1.17p 
                                                  ------------     ------------ 
Dividends paid in 
 the year                                                3,684            7.00p 
                                                  ------------     ------------ 
 
 
In accordance with IFRS, dividends are only provided for when they 
 become a contractual liability of the Company. Therefore, during the 
 year a total of GBP3,684,000 (2019: GBP3,623,000) was incurred in 
 respect of dividends, none of which was outstanding at the reporting 
 date (2019: none). The dividends of GBP307,010 each, which were declared 
 on 25 June 2020 and 30 July 2020, had not been provided for at 30 
 June 2020 as, in accordance with IFRS, they were not deemed to be 
 liabilities of the Company at that date. 
 
 All dividends in the year were paid out of revenue (and not capital) 
 profits. 
 
On 26 August 2020, the Company declared a dividend of 3.50p per Share 
 for the period from 1 July 2020 to 31 July 2020. This dividend was 
 paid on 25 September 2020. 
 
Mechanics for returning cash to Shareholders 
The Board has carefully considered the potential mechanics for returning 
 cash to Shareholders and the Company's ability to do so. The Board 
 believes it is in the best interests of Shareholders as a whole to 
 make distributions to Shareholders without a significant delay following 
 realisations of a material part of the Portfolio (whether in a single 
 transaction or through multiple, smaller transactions concluded on 
 similar timing). In the Board's view, making distributions by way 
 of a declaration of dividends has the benefit of being faster, providing 
 a more regular return (as opposed to simply waiting to return all 
 available amounts on a liquidation) and being more cost effective 
 to administer than other mechanisms, such as a tender offer or B share 
 scheme, although the Board notes that returning investment principal 
 by way of a declaration of dividends may not be the most tax efficient 
 method of returning monies to investors who are UK tax resident individuals. 
 However, the Board may consider making tender offers for Shares in 
 the future although Shareholders should have no expectation that this 
 will be the case. 
 
The Board intends to make quarterly dividend payments for the time 
 being (instead of the current monthly dividends) but will keep this 
 under review. It may become more appropriate in future as the size 
 of the Company declines to instead make payments by way of ad-hoc 
 special dividends, when appropriate, during the course of the managed 
 wind-down process so that the Company is able to return available 
 cash to Shareholders as soon as reasonably practicable after cash 
 becomes available in the Portfolio. The Company will also look to 
 structure its dividend payments to maintain investment trust status 
 for so long as it remains listed. 
 
 
6. Related parties 
As a matter of best practice and good corporate governance, the Company 
 has adopted a related party policy which applies to any transaction 
 which it may enter into with any Director, the Investment Manager, 
 or any of their affiliates which would constitute a "related party 
 transaction" as defined in, and to which would apply, Chapter 11 of 
 the Listing Rules. In accordance with its related party policy, the 
 Company obtained: (i) the approval of a majority of the Directors; 
 and (ii) a third-party valuation in respect of these transactions 
 from an appropriately qualified independent adviser. 
 
Loan to Medical Equipment Solutions Limited ("MESL") 
In June 2017, the Company loaned GBP1,380,000 to MESL, whose Chairman 
 was Neil Roberts, who was chairman of SQN Capital Management, LLC 
 at that time. The loan bore interest at 10.0% per annum and was for 
 a period of five years from the date of drawdown. The loan was to 
 be repaid via 60 monthly payments. The loan was repaid early in March 
 2020. 
 
 Loan interest of GBP57,000 was earned in the year (2019: GBP104,000), 
 none of which was outstanding at 30 June 2020 (2019: GBP2,000). 
 
 At 30 June 2020, the balance of the loan was GBPnil (2019: GBP909,000). 
 
The Directors and the Investment Manager are also considered to be 
 related parties. See notes 7 and 8 for further details. 
 
 
7. Key contracts 
a) Investment Manager 
On 5 June 2020, the Company novated the contract to manage the portfolio 
 to KKV Investment Management Limited, following the management team 
 into their new entity from the Former Investment Manager (SQN UK). 
 
      The Investment Manager has responsibility for managing the Company's 
       portfolio. For their services, the Investment Manager was entitled 
       to a management fee (on the same terms as the Former Investment Manager) 
       at a rate equivalent to the following schedule (expressed as a percentage 
       of NAV per annum, before deduction of accruals for unpaid management 
       fees for the current month): 
        *    1.0% per annum for NAV lower than or equal to GBP250 
             million; 
 
 
        *    0.9% per annum for NAV greater than GBP250 million 
             and lower than or equal to GBP500 million; and 
 
 
        *    0.8% per annum for NAV greater than GBP500 million. 
 
 
 
       The management fee is payable monthly in arrears on the last calendar 
       day of each month. No performance fee is payable by the Company to 
       the Investment Manager. 
 
       During the year, a total of GBP483,000 (SQN UK, GBP452,000 and KKV, 
       GBP31,000) (2019: GBP513,000 all SQN UK) was incurred in respect of 
       management fees, of which GBP37,000 was payable at the reporting date 
       (SQN UK, GBP6,000 and KKV, GBP31,000) (2019: GBP42,000 to SQN UK). 
 
      From 17 September 2020, the 1.0% per annum base management fee was 
       reduced as follows: 
        *    for 12 months from 17 September 2020 to 16 September 
             2021, to 0.75% per annum of the Company's NAV; and 
 
 
        *    from 17 September 2021, to 0.55% of the Company's 
             NAV. 
 
Performance fee 
 From 17 September 2020, the Investment Manager is entitled to a performance 
 fee. The performance fee will be calculated using the most recent 
 NAV prior to the Company failing the June 2020 Continuation Vote (being 
 the NAV as at 31 May 2020) as the benchmark NAV (the "Benchmark NAV"). 
 If 99% of the Benchmark NAV is returned to Shareholders by way of 
 dividend, share buy backs or other methods of return of capital within 
 12 months from 17 September 2020 then a performance fee of 0.6% of 
 the value returned to Shareholders would be payable to KKV. This will 
 be reduced by 0.1% for every 1% less than 99% of Benchmark NAV that 
 is returned to Shareholders. 
 
 Should the time taken to realise the Portfolio exceed 12 months from 
 17 September 2020, then for the period from 17 September 2021 to 17 
 September 2022, the incentive fee would reduce by 33% (so that, for 
 example if 99% of Benchmark NAV is returned by month 17, the performance 
 fee would be two-thirds of 0.6%). 
 
The introduction of an outperformance fee, under the terms of the 
 amended Investment Management Agreement, states that KKV will be entitled 
 to 10% of all funds returned to Shareholders in excess of the Benchmark 
 NAV within 12 months from 17 September 2020, reducing to 5% within 
 12-24 months. 
 
Effective from 17 September 2021, the notice period applicable to 
 termination of the Investment Management Agreement by either party 
 was reduced from 12 months to 4 months. 
 
Transaction costs 
 Prior to the change in the investment policy, the Company incurred 
 transaction costs for the purposes of structuring investments for 
 the Company. These costs formed part of the overall transaction costs 
 that were capitalised at the point of recognition and were taken into 
 account by the Former Investment Manager when pricing a transaction. 
 When structuring services were provided by the Former Investment Manager 
 or an affiliate of them, they were entitled to charge an additional 
 fee to the Company equal to up to 1.0% of the cost of acquiring the 
 investment (ignoring gearing and transaction expenses). This cost 
 was not charged in respect of assets acquired from the Former Investment 
 Manager, the funds they managed or where they or their affiliates 
 did not provide such structuring advice. 
 
 The Former Investment Manager agreed to bear all the broken and abortive 
 transaction costs and expenses incurred on behalf of the Company. 
 Accordingly, the Company agreed that the Former Investment Manager 
 may retain any commitment commissions received by the Former Investment 
 Manager in respect of investments made by the Company, save that if 
 such commission on any transaction were to exceed 1.0% of the transaction 
 value, the excess would be paid to the Company. 
 
During the year, transaction costs of GBP147,000 (2019: GBP81,000) 
 were amortised. 
 
b) Administration fees 
Elysium Fund Management Limited ("Elysium") is entitled to an administration 
 fee of GBP100,000 per annum in respect of the services provided in 
 relation to the administration of the Company, together with time 
 based fees in relation to work on investment transactions. During 
 the year, a total of GBP117,000 (2019: GBP117,000) was incurred in 
 respect of administration fees, of which GBP28,000 (2019: GBP30,000) 
 was payable at the reporting date. 
 
 
8. Directors' remuneration 
During the year, a total of GBP93,513 (2019: GBP108,044) was incurred 
 in respect of Directors' remuneration, none of which was payable at 
 the reporting date (2019: none). No bonus or pension contributions 
 were paid or payable on behalf of the Directors. Further details can 
 be found in the Directors' Remuneration Report in the Annual Report 
 and Financial Statements. 
 
 
9. Key management and employees 
The Company had no employees during the year (2019: none). Therefore, 
 there were no key management (except for the Directors) or employees 
 during the year. 
 
The following dividends were paid to the Directors during the year 
 by virtue of their holdings of Ordinary Shares (these dividends were 
 not additional remuneration): 
 
 
David Stevenson              GBP1,417 (2019: GBP1,394) 
Gaynor Coley                 GBP143 (2019: GBP12) 
Ken Hillen (resigned 26 May  GBP291 (2019: GBP344) 
 2020) 
Richard Hills (resigned 18   GBP0 (2019: GBP428) 
 December 2018) 
 
 
10. Auditor's remuneration 
For the year ended 30 June 2020, total fees, plus VAT, charged by 
 RSM UK Audit LLP, together with amounts accrued at 30 June 2020, amounted 
 to GBP40,000 (2019: GBP42,000), all of which related to audit services 
 (2019: GBP42,000). As at 30 June 2020, GBP40,000 (2019: GBP40,000) 
 was due to RSM UK Audit LLP. 
 
 
11. Other expenses 
                                   Year ended     Year ended 
                                 30 June 2020   30 June 2019 
                                      GBP'000        GBP'000 
Audit fees (note 10)                       40             42 
Registrar fees                             36             37 
Other expenses                             33             34 
Directors' national insurance              26             28 
Listing fees                               18             17 
Accountancy and taxation fees              11             11 
                                 ------------   ------------ 
                                          164            169 
                                 ------------   ------------ 
 
 
12. Taxation 
The Company has received confirmation from HMRC that it satisfied 
 the conditions for approval as an investment trust, subject to the 
 Company continuing to meet the eligibility conditions in s.1158 of 
 the Corporation Tax Act 2010 and the ongoing requirements for approved 
 investment trust companies in Chapter 3 of Part 2 of the Investment 
 Trust (approved Company) Tax Regulations 2011 (Statutory Instrument 
 2011.2999). The Company intends to retain this approval and self-assesses 
 compliance with the relevant conditions and requirements. 
 
 As an investment trust the Company is exempt from UK corporation tax 
 on its chargeable gains. The Company is, however, liable to UK corporation 
 tax on its income. However, the Company has elected to take advantage 
 of modified UK tax treatment in respect of its "qualifying interest 
 income" in order to deduct all, or part, of the amount it distributes 
 to Shareholders as dividends as an "interest distribution". 
 
 
                                                          Year ended     Year ended 
                                                        30 June 2020   30 June 2019 
                                                             GBP'000        GBP'000 
Reconciliation of tax charge: 
(Loss)/profit before taxation                                  (913)          2,236 
                                                        ------------   ------------ 
Tax at the standard UK corporation tax rate 
 of 19% (2019: 19%)                                            (173)            425 
Effects of: 
 
        *    Non-taxable investment gains and losses             743            164 
 
        *    Interest distributions                            (570)          (589) 
                                                        ------------   ------------ 
Total tax expense                                                  -              - 
                                                        ------------   ------------ 
 
 
Domestic corporation tax rates in the jurisdictions in which the Company 
 operated were as follows: 
                                           Year ended                Year ended 
                                         30 June 2020              30 June 2019 
United Kingdom                                    19%                       19% 
Guernsey                                          nil                       nil 
 
Due to the Company's status as an investment trust and the intention 
 to continue to meet the required conditions, the Company has not provided 
 for deferred tax on any capital gains and losses. 
 
 
13. (Loss)/earnings per Ordinary Share 
The (loss)/earnings per Ordinary Share of (1.73)p (2019: 4.25p) is 
 based on a (loss)/profit attributable to the owners of the Company 
 of GBP(913,000) (2019: GBP2,236,000) and on a weighted average number 
 of 52,660,350 (2019: 52,660,350) Ordinary Shares in issue since Admission 
 . There is no difference between the basic and diluted earnings per 
 share. 
 
 
14. Loans at amortised cost 
                                                        Year ended      Year ended 
                                                      30 June 2020    30 June 2019 
                                                           GBP'000         GBP'000 
Loans                                                       45,944          47,726 
Unrealised loss*                                           (3,311)           (422) 
                                                      ------------    ------------ 
Balance at year end                                         42,633          47,304 
                                                      ------------    ------------ 
Loans:              Non-current                             31,942          36,614 
 Current                                                    10,691          10,642 
Cash held on client accounts with platforms                      -              48 
                                                      ------------    ------------ 
Loans at amortised cost and cash held on client 
 accounts with platforms                                    42,633          47,304 
                                                      ------------    ------------ 
*Unrealised loss 
Foreign exchange on non-Sterling loans                       1,125             715 
Impairments of financial assets                            (4,436)         (1,137) 
                                                      ------------    ------------ 
Unrealised loss                                            (3,311)           (422) 
                                                      ------------    ------------ 
 
The movement in unrealised gains/losses on loans comprises: 
                                                        Year ended      Year ended 
                                                      30 June 2020    30 June 2019 
                                                           GBP'000         GBP'000 
Movement in foreign exchange on non-Sterling 
 loans                                                         410             110 
Movement in impairments                                    (3,299)           (415) 
                                                      ------------    ------------ 
Movement in unrealised gains and losses on 
 loans                                                     (2,889)           (305) 
Impact of transition to IFRS 9                                   -            (23) 
                                                      ------------    ------------ 
Total movement in unrealised gains and losses 
 on loans                                                  (2,889)           (328) 
                                                      ------------    ------------ 
 
 
The weighted average interest rate of the loans as at 30 June 2020 
 was 10.44% (2019: 10.31%). 
 
The table below details expected credit loss provision ("ECL") of 
 financial assets in each stage at 30 June 2020: 
                                 30 June 2020                                            30 June 2019 
                   Stage       Stage 2         Stage         Total       Stage 1         Stage         Stage         Total 
                       1                           3                                         2             3 
                 GBP'000       GBP'000       GBP'000       GBP'000       GBP'000       GBP'000       GBP'000       GBP'000 
 
Direct 
 loans 
 ([1])            34,419             -             -        34,419        33,032             -             -        33,032 
ECL on 
 direct 
 loans              (17)             -             -          (17)          (16)             -             -          (16) 
            ------------  ------------  ------------  ------------  ------------  ------------  ------------  ------------ 
Direct 
 loans 
 net of 
 the ECL          34,402             -             -        34,402        33,016             -             -        33,016 
            ------------  ------------  ------------  ------------  ------------  ------------  ------------  ------------ 
 
Platform 
 loans 
 ([1])             7,214             -         5,346        12,560        11,585         3,117           426        15,127 
ECL on 
 platform 
 loans               (7)             -       (4,412)       (4,419)          (12)         (735)         (374)       (1,121) 
            ------------  ------------  ------------  ------------  ------------  ------------  ------------  ------------ 
Platform 
 loans 
 net of 
 the ECL           7,207             -           934         8,141        11,573         2,382            52        14,007 
            ------------  ------------  ------------  ------------  ------------  ------------  ------------  ------------ 
 
Accrued 
 interest          1,585             -             -         1,585           799           288             3         1,090 
            ------------  ------------  ------------  ------------  ------------  ------------  ------------  ------------ 
 
Total 
 loans 
 ([1])            41,633             -         5,346        46,979        44,617         3,117           426        48,160 
Total ECL           (24)             -       (4,412)       (4,436)          (28)         (735)         (374)       (1,137) 
            ------------  ------------  ------------  ------------  ------------  ------------  ------------  ------------ 
Total net 
 of 
 the ECL          41,609             -           934        42,543        44,589         2,382            52        47,023 
            ------------  ------------  ------------  ------------  ------------  ------------  ------------  ------------ 
 
([1])      These are the principal amounts outstanding at 30 June 2020 and 
            do not include the capitalised transaction fees, which are not 
            subject to credit risk. At 30 June 2020, the amortised cost of 
            the capitalised transaction fees totalled GBP90,000 (2019: GBP233,000). 
 
The table below details the movements in the year ended 30 June 2020 
 of the principal amounts outstanding and the ECL on those loans: 
 
 
 
                                              Non-credit impaired                         Credit impaired 
                                      Stage 1                     Stage 2                     Stage 3                      Total 
                                Principal                   Principal                   Principal                   Principal 
                              outstanding     Allowance   outstanding     Allowance   outstanding     Allowance   outstanding     Allowance 
                                    ([1])       for ECL         ([1])       for ECL         ([1])       for ECL         ([1])       for ECL 
                                  GBP'000       GBP'000       GBP'000       GBP'000       GBP'000       GBP'000       GBP'000       GBP'000 
At 1 July 2019                     44,617          (28)         3,117         (735)           426         (374)        48,160       (1,137) 
  Transfers from: 
    *    stage 1 to stage 3       (2,066)             2             -             -         2,066           (2)             -             - 
 
    *    stage 2 to stage 3             -             -       (3,117)           735         3,117         (735)             -             - 
Net re-measurement 
 of ECL arising 
 from transfer 
 of stage                               -             -             -             -             -       (3,584)             -       (3,584) 
Net new and further 
 lending/repayments, 
 and foreign exchange 
 movements                          (918)             2             -             -             5            15         (913)            17 
Loans written-off 
 in the year                            -             -             -             -         (268)           268         (268)           268 
                             ------------  ------------  ------------  ------------  ------------  ------------  ------------  ------------ 
At 30 June 2020                    41,633          (24)             -             -         5,346       (4,412)        46,979       (4,436) 
                             ------------  ------------  ------------  ------------  ------------  ------------  ------------  ------------ 
 
 
([1])  These are the principal amounts outstanding at 30 June 2020 and 
        do not include the capitalised transaction fees, which are not 
        subject to credit risk. At 30 June 2020, the amortised cost of 
        the capitalised transaction fees totalled GBP90,000. 
 
 
The table below details the movements in the year ended 30 June 2019 
 of the principal amounts outstanding and the ECL on those loans: 
 
 
                                              Non-credit impaired                         Credit impaired 
                                      Stage 1                     Stage 2                     Stage 3                      Total 
                                Principal                   Principal                   Principal                   Principal 
                              outstanding     Allowance   outstanding     Allowance   outstanding     Allowance   outstanding     Allowance 
                                    ([1])       for ECL         ([1])       for ECL         ([1])       for ECL         ([1])       for ECL 
                                  GBP'000       GBP'000       GBP'000       GBP'000       GBP'000       GBP'000       GBP'000       GBP'000 
At 1 July 2018                     28,735          (19)        15,679         (310)           535         (393)        44,949         (722) 
  Transfers from: 
    *    stage 1 to stage 2       (2,176)             2         2,176           (2)             -             -             -             - 
 
    *    stage 2 to stage 1        14,801          (52)      (14,801)            52             -             -             -             - 
Net re-measurement 
 of ECL arising 
 from transfer 
 of stage                               -            41             -         (564)             -             -             -         (523) 
Net new and further 
 lending/repayments, 
 and foreign exchange 
 movements                          3,257             -            68            89            12           (9)         3,337            80 
Loans written-off 
 in the year                            -             -           (5)             -         (121)            28         (126)            28 
                             ------------  ------------  ------------  ------------  ------------  ------------  ------------  ------------ 
At 30 June 2019                    44,617          (28)         3,117         (735)           426         (374)        48,160       (1,137) 
                             ------------  ------------  ------------  ------------  ------------  ------------  ------------  ------------ 
 
 
([1])  These are the principal amounts outstanding at 30 June 2019 and 
        do not include the capitalised transaction fees, which are not 
        subject to credit risk. At 30 June 2019, the amortised cost of 
        the capitalised transaction fees totalled GBP233,000. 
 
 
An increase of 1% of total gross exposure into stage 2 (from stage 
 1) would result in an increase in ECL impairment allowance of GBP11,000 
 (2019: GBP12,000) based on applying the difference in average impairment 
 coverage ratios to the movement in gross exposure. 
 
At 30 June 2020, the Board considered GBP4,436,000 (2019: GBP1,137,000) 
 of loans to be impaired: 
 
 
                      30 June 2020  30 June 2019 
                           GBP'000       GBP'000 
Borrowers 14 and 18          2,318           566 
Borrower 12                  1,060             8 
Borrower 15                    416            17 
Borrower 17                    345            62 
Borrower 16                    280           466 
Direct SME loans                17            15 
Other                            -             3 
                      ------------  ------------ 
Total impairment             4,436         1,137 
                      ------------  ------------ 
 
 
During the year, GBP268,000 (2019: GBP126,000) of loans were written 
 off and included within realised (loss)/gain on disposal of loans 
 in the Statement of Comprehensive Income. 
 
 
See note 3b and note 4i regarding the process of assessment of loan 
 impairment. 
 
The carrying values of the loans at amortised cost (excluding capitalised 
 transaction costs) are deemed to be a reasonable approximation of 
 their fair values. 
 
 
15. Investments at fair value through profit or loss 
                                             Year ended 30  Year ended 30 June 
                                                 June 2020                2019 
                                                   GBP'000             GBP'000 
Balance brought forward                                232                 280 
Disposals in the year                                    -                (52) 
Realised gain on disposal of investments 
 at fair value through profit or loss                    -                   3 
Movement in unrealised gain on investments 
 at fair value through profit or loss                   19                   1 
                                              ------------        ------------ 
Balance at year end                                    251                 232 
                                              ------------        ------------ 
 
Cost at year end                                       159                 159 
                                              ------------        ------------ 
 
 
The GBP251,000 (2019: GBP232,000) investment at fair value through 
 profit or loss relates to an investment in a Luxembourg fund. For 
 further information on the investments at fair value through profit 
 or loss, see note 16. 
 
 
16. Fair value of financial instruments at fair value through profit 
 or loss 
      The following table shows financial instruments recognised at fair 
       value, analysed between those whose fair value is based on: 
        *    Quoted prices in active markets for identical assets 
             or liabilities (Level 1); 
 
 
        *    Those involving inputs other than quoted prices 
             included in Level 1 that are observable for the asset 
             or liability, either directly (as prices) or 
             indirectly (derived from prices) (Level 2); and 
 
 
        *    Those with inputs for the asset or liability that are 
             not based on observable market data (unobservable 
             inputs) (Level 3). 
 
Financial assets and liabilities designated as at fair value through 
 profit or loss 
 At 30 June 2020, the financial instruments designated at fair value 
 through profit or loss were as follows: 
 
 
                                         30 June 2020                                    30 June 2019 
                             Level       Level       Level       Total       Level       Level       Level       Total 
                                 1           2           3                       1           2           3 
Financial                  GBP'000     GBP'000     GBP'000     GBP'000     GBP'000     GBP'000     GBP'000     GBP'000 
assets/(liabilities) 
Unlisted equity shares           -           -         251         251           -           -         232         232 
Derivative financial 
 instruments 
 (note 17)                       -         (6)           -         (6)           -       (351)           -       (351) 
                        ----------  ----------  ----------  ----------  ----------  ----------  ----------  ---------- 
Total financial 
 assets/(liabilities) 
 designated as at fair 
 value 
 through profit or 
 loss                            -         (6)         251         245           -       (351)         232       (119) 
                        ----------  ----------  ----------  ----------  ----------  ----------  ----------  ---------- 
 
 
Level 2 financial instruments include foreign currency forward contracts. 
 They are valued using observable inputs (in this case foreign currency 
 spot rates). 
Level 3 financial instruments include unlisted equity shares. Net 
 asset value is considered to be an appropriate approximation of fair 
 value as, if the Company were to dispose of these holdings, it would 
 expect to do so at, or around, net asset value. 
 
Transfers between levels 
 There were no transfers between levels in the year (2019: none). 
 
Financial assets and liabilities not designated as at fair value through 
 profit or loss 
The carrying values of the loans at amortised cost (excluding capitalised 
 transaction costs) are deemed to be a reasonable approximation of 
 their fair values. The carrying values of all other assets and liabilities 
 not designated as at fair value through profit or loss are deemed 
 to be a reasonable approximation of their fair values due to their 
 short duration. 
 
 
17. Derivative financial instruments 
During the year, the Company entered into foreign currency forward 
 contracts to hedge against foreign exchange fluctuations. The Company 
 realised a loss of GBP852,000 (2019: loss of GBP206,000) on forward 
 foreign exchange contracts that settled during the year. 
 
 As at 30 June 2020, the open forward foreign exchange contracts were 
 valued at GBP(6,000) (2019: GBP(351,000)). 
 
 
18. Other receivables and prepayments 
                    30 June 2020  30 June 2019 
                         GBP'000       GBP'000 
Accrued interest           1,585         1,090 
Prepayments                   27            27 
Other receivables             13            24 
                    ------------  ------------ 
                           1,625         1,141 
                    ------------  ------------ 
 
 
The carrying values of the accrued interest and other receivables 
 are deemed to be reasonable approximations of their fair values. 
 
 
19. Other payables and accruals 
                                30 June 2020  30 June 2019 
                                     GBP'000       GBP'000 
Audit fee                                 40            40 
Management fee                            37            42 
Legal fees                                36            25 
Administration fee                        28            30 
Other payables and accruals               21            24 
Directors' national insurance              2            23 
                                ------------  ------------ 
                                         164           184 
                                ------------  ------------ 
 
 
The carrying values of the other payables and accruals are deemed 
 to be reasonable approximations of their fair values. 
 
 
20. Reconciliation of liabilities arising from financing activities 
IAS 7 requires the Company to detail the changes in liabilities arising 
 from financing activities, including both cash and non-cash changes. 
 Liabilities arising from financing activities are those for which 
 cash flows were, or future cash flows will be, classified in the Company's 
 statement of cash flows as cash flows from financing activities. 
 
 As at 30 June 2020, the Company had no liabilities that would give 
 rise to cash flows from financing activities (2019: none). 
 
 
 21 . Share capital 
                                          30 June 2020   30 June 2019 
                                               GBP'000        GBP'000 
 Authorised share capital: 
 Unlimited number of Ordinary Shares                 -              - 
  of 1 pence each 
 Unlimited C Shares of 10 pence each                 -              - 
 Unlimited Deferred Shares of 1 pence                -              - 
  each 
 50,000 Management Shares of GBP1 each              50             50 
                                          ------------   ------------ 
 
 
                                          30 June 2020   30 June 2019 
                                               GBP'000        GBP'000 
 Called up share capital: 
 52,660,350 Ordinary Shares of 1 pence 
  each                                             527            527 
 50,000 Management Shares of GBP1 each              50             50 
                                          ------------   ------------ 
                                                   577            577 
                                          ------------   ------------ 
 
 
 The Management Shares are entitled (in priority to any payment of 
  dividend of any other class of share) to a fixed cumulative preferential 
  dividend of 0.01% per annum on the nominal amount of the Management 
  Shares. 
 
 
 The Management Shares do not carry any right to receive notice of, 
  nor to attend or vote at, any general meeting of the Company unless 
  no other shares are in issue at that time. The Management Shares 
  do not confer the right to participate in any surplus of assets of 
  the Company on winding-up, other than the repayment of the nominal 
  amount of capital. 
 
 
 22. Other reserves 
                                              Special           Profit and loss 
                                        distributable             account ([2]) 
                                              reserve 
                                                ([1]) 
                                                                        Non-distributable 
                                                         Distributable                            Total 
                                              GBP'000          GBP'000            GBP'000       GBP'000 
At 30 June 2018                                50,942               75               (55)        50,962 
Impact of transition to IFRS 9 
 (see note 3h)                                      -                -               (23)          (23) 
                                         ------------     ------------       ------------  ------------ 
At 30 June 2018 - revised for the 
 application of IFRS 9                         50,942               75               (78)        50,939 
Realised revenue profit                             -            3,097                  -         3,097 
Realised investment gains and losses                -            (238)                  -         (238) 
Unrealised investment gains and 
 losses                                             -                -              (623)         (623) 
Dividends paid                                  (689)          (2,934)                  -       (3,623) 
                                         ------------     ------------       ------------  ------------ 
At 30 June 2019                                50,253                -              (701)        49,552 
Realised revenue profit                             -            3,000                  -         3,000 
Realised investment gains and losses                -          (1,388)                  -       (1,388) 
Unrealised investment gains and 
 losses                                             -                -            (2,525)       (2,525) 
Dividends paid                                (2,072)          (1,612)                  -       (3,684) 
                                         ------------     ------------       ------------  ------------ 
At 30 June 2020                                48,181                -            (3,226)        44,955 
                                         ------------     ------------       ------------  ------------ 
 
 
([1])  During the period ended 30 June 2016, and following the approval 
        of the Court, the Company cancelled the share premium account and 
        transferred GBP51,143,000 to a special distributable reserve, being 
        premium on issue of shares of GBP52,133,000 less share issue costs 
        of GBP990,000. The special distributable reserve is available for 
        distribution to Shareholders. 
([2])  The profit and loss account comprises both distributable and non-distributable 
        elements, as defined by Company Law. Realised elements of the Company's 
        profit and loss account are classified as "distributable", whilst 
        unrealised investment gains and losses are classified as "non-distributable". 
 
 
With the exception of investment gains and losses, all of the Company's 
 profit and loss items are of a revenue nature as it does not allocate 
 any expenses to capital. 
 
 
The two GBP307,010 dividends (see note 5), which were declared on 
 25 June 2020 and 30 July 2020, were paid out of the special distributable 
 reserve. 
 
 
23. Net asset value per Ordinary Share 
The net asset value per Ordinary Share is based on the net assets 
 attributable to the owners of the Company of GBP45,532,000 (2019: 
 GBP50,129,000), less GBP50,000 (2019: GBP50,000), being amounts owed 
 in respect of Management Shares, and on 52,660,350 (2019: 52,660,350) 
 Ordinary Shares in issue at the year end. 
 
 
 
24. Financial Instruments and Risk Management 
The Investment Manager manages the Company's portfolio to provide 
 Shareholders with attractive risk adjusted returns, principally in 
 the form of regular, sustainable dividends, through investment predominantly 
 in a range of secured loans and other secured loan-based instruments 
 originated through a variety of channels and diversified by way of 
 asset class, geography and duration. 
 Prior to the change in investment policy on 17 September 2020, the 
 Company sought to ensure that diversification of its portfolio was 
 maintained, with the aim of spreading investment risk. 
 
Risk is inherent in the Company's activities, but it is managed through 
 a process of ongoing identification, measurement and monitoring. The 
 Company is exposed to market risk (which includes currency risk, interest 
 rate risk and price risk), credit risk and liquidity risk from the 
 financial instruments it holds. Risk management procedures are in 
 place to minimise the Company's exposure to these financial risks, 
 in order to create and protect Shareholder value. 
 
Risk management structure 
The Investment Manager is responsible for identifying and controlling 
 risks. The Board of Directors supervises the Investment Manager and 
 is ultimately responsible for the overall risk management approach 
 within the Company. 
 
 The Company has no employees and is reliant on the performance of 
 third party service providers. Failure by the Investment Manager, 
 Administrator, Broker, Registrar or any other third party service 
 provider to perform in accordance with the terms of its appointment 
 could have a significant detrimental impact on the operation of the 
 Company. 
 
 The market in which the Company participates is competitive and rapidly 
 changing. The risks have not changed from those detailed on pages 
 20 to 30 in the Company's Prospectus, which is available on the Company's 
 website, and as updated in the circular of 20 August 2020. 
 
Risk concentration 
Concentration indicates the relative sensitivity of the Company's 
 performance to developments affecting a particular industry or geographical 
 location. Concentrations of risk arise when a number of financial 
 instruments or contracts are entered into with the same counterparty, 
 or where a number of counterparties are engaged in similar business 
 activities, or activities in the same geographic region, or have similar 
 economic features that would cause their ability to meet contractual 
 obligations to be similarly affected by changes in economic, political 
 or other conditions. Concentrations of liquidity risk may arise from 
 the repayment terms of financial liabilities, sources of borrowing 
 facilities or reliance on a particular market in which to realise 
 liquid assets. Concentrations of foreign exchange risk may arise if 
 the Company has a significant net open position in a single foreign 
 currency, or aggregate net open positions in several currencies that 
 tend to move together. 
In a Managed Wind-Down, the value of the Portfolio will be reduced 
 as investments are realised and concentrated in fewer holdings, and 
 the mix of asset exposure will be affected accordingly. 
 
With the aim of maintaining a diversified investment portfolio, and 
 thus mitigating concentration risks, the Company had established (prior 
 to the change in the investment policy on 17 September 2020) the following 
 investment restrictions in respect of the general deployment of assets: 
 
 
 Investment Restriction                                                                          Investment Policy 
   Geography 
     *    Exposure to UK loan assets 
 
                                                                                                  Minimum of 60% 
     *    Minimum exposure to non-UK loan assets                                                         20% 
   Duration to maturity 
     *    Minimum exposure to loan assets with duration of less 
          than 6 months 
 
 
     *    Maximum exposure to loan assets with duration of 6 - 
          18 months and 18 - 36 months 
 
                                                                                                        None 
     *    Maximum exposure to loan assets with duration of more                                         None 
          than 36 months                                                                                50% 
 Maximum single investment                                                                              10% 
 Maximum exposure to single borrower or group                                                           10% 
 Maximum exposure to loan assets sourced through single alternative lending platform or other 
  third party originator                                                                                25% 
 Maximum exposure to any individual wholesale loan arrangement                                          25% 
 Maximum exposure to loan assets which are neither sterling-denominated nor hedged back to 
  sterling                                                                                              15% 
 Maximum exposure to unsecured loan assets                                                              25% 
 Maximum exposure to assets (excluding cash and cash-equivalent investments) which are not 
  loans or investments with loan-based investment characteristics                                       10% 
 
 
The Company complied with the investment restrictions throughout the 
 year and up to the change in investment policy on 17 September 2020, 
 except that, on 9 September 2020, in preparation for the upcoming 
 change in investment policy, additional foreign currency forward contracts 
 were entered into in order to equally and oppositely match the open 
 contracts at that date. 
 
Market risk 
 (i) Price risk 
 Price risk exposure arises from the uncertainty about future prices 
 of financial instruments held. It represents the potential loss that 
 the Company may suffer through holding market positions in the face 
 of price movements. The investments at fair value through profit or 
 loss (see notes 15 and 16) are exposed to price risk and it is not 
 the intention to mitigate the price risk. 
 
 At 30 June 2020, if the valuation of the investments at fair value 
 through profit or loss had moved by 5% with all other variables remaining 
 constant, the change in net assets and profit/(loss) would amount 
 to approximately +/- GBP13,000 (2019: +/- GBP12,000). The maximum 
 price risk resulting from financial instruments is equal to the GBP251,000 
 (2019: GBP232,000) carrying value of the investments at fair value 
 through profit or loss. 
 
(ii) Foreign currency risk 
Foreign currency risk is the risk that the value of a financial instrument 
 will fluctuate because of changes in foreign currency exchange rates. 
 Currency risk arises when future commercial transactions and recognised 
 assets and liabilities are denominated in a currency that is not the 
 Company's functional currency. The Company invests in securities and 
 other investments that are denominated in currencies other than Sterling. 
 Accordingly, the value of the Company's assets may be affected favourably 
 or unfavourably by fluctuations in currency rates and therefore the 
 Company will necessarily be subject to foreign exchange risks. 
 
 
As at 30 June 2020, a proportion of the net financial assets of the 
 Company, excluding the foreign currency forward contracts, were denominated 
 in currencies other than Sterling as follows: 
              Investments 
                  at fair                                                                              Foreign 
            value through                          Cash and                                           currency 
                profit or        Loans and             cash   Other payables                           forward 
                     loss      receivables      equivalents     and accruals         Exposure        contracts     Net exposure 
30 June           GBP'000          GBP'000          GBP'000          GBP'000          GBP'000          GBP'000          GBP'000 
 2020 
US 
 Dollars                -            7,552                -                -            7,552          (7,531)               21 
Euros                   -            4,316                1                -            4,317          (4,121)              196 
          ---------------  ---------------  ---------------  ---------------  ---------------  ---------------  --------------- 
                        -           11,868                1                -           11,869         (11,652)              217 
          ---------------  ---------------  ---------------  ---------------  ---------------  ---------------  --------------- 
30 June 
 2019 
US 
 Dollars                -            4,359               32                -            4,391          (4,625)            (234) 
Euros                   -            3,658                1                -            3,659          (3,583)               76 
          ---------------  ---------------  ---------------  ---------------  ---------------  ---------------  --------------- 
                        -            8,017               33                -            8,050          (8,208)            (158) 
          ---------------  ---------------  ---------------  ---------------  ---------------  ---------------  --------------- 
 
 
In order to limit the exposure to foreign currency risk, the Company 
 entered into hedging contracts during the year. At 30 June 2020, the 
 Company held foreign currency forward contracts to sell US$9,340,000 
 and EUR4,550,000 (2019: sell US$11,480,000 and EUR4,110,000 and buy 
 US$5,610,000 and EUR120,000) with a settlement date of 30 September 
 2020. 
 
 Other future foreign exchange hedging contracts may be employed, such 
 as currency swap agreements, futures contracts and options. There 
 can be no certainty as to the efficacy of any hedging transactions 
 . In September 2020, the Company closed out its foreign currency forward 
 contracts and it is not intended to enter into foreign exchange hedging 
 contracts in the future. 
 
At 30 June 2020, if the exchange rates for US Dollars and Euros had 
 strengthened/weakened by 5% against Sterling with all other variables 
 remaining constant, net assets at 30 June 2020 and profit/(loss) for 
 the year ended 30 June 2020 would have increased/(decreased) by GBP11,000/GBP(10,000) 
 (2019: (decreased)/increased by GBP(8,000)/GBP7,000), after accounting 
 for the effects of the hedging contracts mentioned above. 
 
(iii) Interest rate risk 
Interest rate risk arises from the possibility that changes in interest 
 rates will affect future cash flows or the fair values of financial 
 instruments. The Company is exposed to risks associated with the effects 
 of fluctuations in the prevailing levels of market interest rates 
 on its financial instruments and cash flow. However, due to the fixed 
 rate nature of the majority of the loans, cash and cash equivalents 
 of GBP1,193,000 (2019: GBP1,987,000) were the only interest bearing 
 financial instruments subject to variable interest rates at 30 June 
 2020. Therefore, if interest rates had increased/decreased by 50 basis 
 points, with all other variables held constant, the change in value 
 of interest cash flows of these assets in the year would have been 
 GBP6,000 (2019: GBP10,000). 
 
 
                                                                                      Non-interest 
                                          Fixed interest        Variable interest          bearing            Total 
30 June 2020                                     GBP'000                  GBP'000          GBP'000          GBP'000 
Financial assets 
Loans ([1])                                       42,633                        -                -           42,633 
Investments at fair value through 
 profit or loss                                        -                        -              251              251 
Other receivables                                      -                        -            1,598            1,598 
Cash and cash equivalents                              -                    1,193                -            1,193 
                                            ------------             ------------     ------------     ------------ 
Total financial assets                            42,633                    1,193            1,849           45,675 
                                            ------------             ------------     ------------     ------------ 
Financial liabilities 
Other payables                                         -                        -            (164)            (164) 
Derivative financial instruments                       -                        -              (6)              (6) 
                                            ------------             ------------     ------------     ------------ 
Total financial liabilities                            -                        -            (170)            (170) 
                                            ------------             ------------     ------------     ------------ 
 
Total interest sensitivity 
 gap                                              42,633                    1,193            1,679           45,505 
                                            ------------             ------------     ------------     ------------ 
 
30 June 2019 
Financial assets 
Loans ([1])                                       47,256                        -                -           47,256 
Cash held on client accounts 
 with platforms                                        -                        -               48               48 
Investments at fair value through 
 profit or loss                                        -                        -              232              232 
Other receivables                                      -                        -            1,114            1,114 
Cash and cash equivalents                              -                    1,987                -            1,987 
                                            ------------             ------------     ------------     ------------ 
Total financial assets                            47,256                    1,987            1,394           50,637 
                                            ------------             ------------     ------------     ------------ 
Financial liabilities 
Other payables                                         -                        -            (184)            (184) 
Derivative financial instruments                       -                        -            (351)            (351) 
                                            ------------             ------------     ------------     ------------ 
Total financial liabilities                            -                        -            (535)            (535) 
                                            ------------             ------------     ------------     ------------ 
 
Total interest sensitivity 
 gap                                              47,256                    1,987              859           50,102 
                                            ------------             ------------     ------------     ------------ 
 
([1])                               Of the loans of GBP42,633,000 (2019: GBP47,256,000), two loans amounting 
                                     to GBP10,527,000 (2019: GBP11,499,000) included both fixed elements 
                                     and variable elements, based on the performance of the borrowers' 
                                     portfolios of loans. 
 
 
 
The Investment Manager manages the Company's exposure to interest 
 rate risk, paying heed to prevailing interest rates and economic conditions, 
 market expectations and its own views as to likely moves in interest 
 rates. 
Although it has not done so to date, t he Company may implement hedging 
 and derivative strategies designed to protect investment performance 
 against material movements in interest rates. Such strategies may 
 include (but are not limited to) interest rate swaps and will only 
 be entered into when they are available in a timely manner and on 
 terms acceptable to the Company. The Company may also bear risks that 
 could otherwise be hedged where it is considered appropriate. There 
 can be no certainty as to the efficacy of any hedging transactions 
 . 
 
 
Credit risk 
Credit risk is the risk that a counterparty to a financial instrument 
 will fail to discharge an obligation or commitment that it has entered 
 into with the Company, resulting in a financial loss to the Company. 
 At 30 June 2020, credit risk arose principally from cash and cash 
 equivalents of GBP1,193,000 (2019: GBP1,987,000) and balances due 
 from the platforms and SMEs of GBP42,633,000 (2019: GBP47,304,000). 
 The Company seeks to trade only with reputable counterparties that 
 the Investment Manager believes to be creditworthy. 
 
 
The Company's credit risks principally arise through exposure to loans 
 provided by the Company, either directly or through platforms. These 
 loans are subject to the risk of borrower default. Where a loan has 
 been made by the Company through a platform, the Company will only 
 receive payments on those loans if the corresponding borrower through 
 that platform makes payments on that loan. The Investment Manager 
 has sought to reduce the credit risk by obtaining security on the 
 majority of the loans and by investing across various platforms, geographic 
 areas and asset classes, thereby ensuring diversification and seeking 
 to mitigate concentration risks, a s stated in the "risk concentration" 
 section earlier in this note. 
 
 
The cash pending investment or held on deposit under the terms of 
 an investment instrument may be held without limit with a financial 
 institution with a credit rating of "single A" (or equivalent) or 
 higher to protect against counterparty failure. 
 The Company may implement hedging and derivative strategies designed 
 to protect against credit risk. Such strategies may include (but are 
 not limited to) credit default swaps and will only be entered into 
 when they are available in a timely manner and on terms acceptable 
 to the Company. The Company may also bear risks that could otherwise 
 be hedged where it is considered appropriate. There can be no certainty 
 as to the efficacy of any hedging transactions. 
 
 Please see note 3b and note 4 for further information on credit risk 
 and note 14 for information on the loans at amortised cost. 
 
Liquidity risk 
 Liquidity risk is defined as the risk that the Company will encounter 
 difficulties in realising assets or otherwise raising funds to meet 
 financial commitments. The principal liquidity risk is contained in 
 unmatched liabilities. The liquidity risk at 30 June 2020 was low 
 since the ratio of cash and cash equivalents to unmatched liabilities 
 was 7:1 (2019: 4:1). 
 
The Investment Manager manages the Company's liquidity risk by investing 
 primarily in a diverse portfolio of loans, in line with the Prospectus 
 and as stated in the "risk concentration" section earlier in this 
 note. The maturity profile of the portfolio is as follows: 
 
 
                        30 June 2020  30 June 2019 
                          Percentage    Percentage 
0 to 6 months                    5.4          11.6 
6 months to 18 months           30.1          31.2 
18 months to 3 years            35.5          24.8 
Greater than 3 years            29.0          32.4 
                        ------------  ------------ 
                               100.0         100.0 
                        ------------  ------------ 
 
 
Capital management 
During the year, the Board's policy was to maintain a strong capital 
 base so as to maintain investor, creditor and market confidence and 
 to sustain future development of the Company. The Company's capital 
 comprises issued share capital, retained earnings and a distributable 
 reserve created from the cancellation of the Company's share premium 
 account. To maintain or adjust the capital structure, the Company 
 could issue new Ordinary and/or C Shares, buy back shares for cancellation 
 or buy back shares to be held in treasury. During the year ended 30 
 June 2020, the Company did not issue any new Ordinary or C shares, 
 nor did it buy back any shares for cancellation or to be held in treasury 
 (2019: none). 
 
 The Company is subject to externally imposed capital requirements 
 in relation to its statutory requirement relating to dividend distributions 
 to Shareholders. The Company meets the requirement by ensuring it 
 distributes at least 85% of its distributable income by way of dividend. 
 
 Following the Shareholder's approval of the change to investment policy 
 and the managed wind-down of the Company, the Board intends to manage 
 the Company's capital to enable it to make quarterly dividend payments 
 for the time being (instead of the current monthly dividends), although 
 this will be kept under review. It may become more appropriate in 
 future as the size of the Company declines to instead make payments 
 by way of ad-hoc special dividends, when appropriate, during the course 
 of the managed wind-down process so that the Company is able to return 
 available cash to Shareholders as soon as reasonably practicable after 
 cash becomes available in the Portfolio. The Company will also look 
 to structure its dividend payments to maintain investment trust status 
 for so long as it remains listed. 
 
 
25. Contingent assets and contingent liabilities 
There were no contingent assets or contingent liabilities in existence 
 at the year end (2019: none). 
 
 
26. Events after the reporting period 
Change of name 
On 18 July 2020, the Company changed its name from SQN Secured Income 
 Fund plc to Secured Income Fund plc. 
 
Appointment of Director 
On 8 July 2020, Brett Miller was appointed as a Director of the Company. 
 
Change of investment policy 
On 19 June 2020, the Company held the Continuation Vote that, in line 
 with the Directors' recommendation, did not pass. This vote was required 
 under the Articles as the Company did not have a Net Asset Value of 
 at least GBP250 million as at 31 December 2019. As this vote did not 
 pass, the Directors (as required under the Articles) convened a further 
 general meeting of the Company on 17 September 2020 at which a special 
 resolution approved the managed wind-down of the Company and the adoption 
 of the new investment policy of the Company. 
 
Change of Investment Management fees 
On 17 September 2020, the Company agreed to amend the terms of the 
 Investment Management Agreement such that the base investment management 
 fee was reduced and a performance fee added (see note 7a). 
 
Dividends 
 Two dividends of 0.583p per Ordinary Share, which (in accordance with 
 IFRS) were not provided for at 30 June 2020, have been declared out 
 of the profits for the year ended 30 June 2020 (see note 5). 
 
 On 26 August 2020, the Company declared a dividend of 3.50p per Ordinary 
 Share for the period from 1 July 2020 to 31 July 2020. This dividend 
 will be paid on 25 September 2020. 
There were no other significant events after the reporting period. 
 
 
27. Parent and Ultimate Parent 
The Directors do not believe that the Company has an individual Parent 
 or Ultimate Parent. 
 

--- ENDS ---

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END

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October 09, 2020 02:00 ET (06:00 GMT)

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